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


**WASHINGTON,
      D.C. 20549**





**FORM
      10-KSB**





[**X**]
            ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934


For
      the
      fiscal year ended **December
      31, 2006**





[
                ]
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
                ACT OF
                1934


For
      the
      transition period from ___________ to _____________





Commission
      File Number: **000-13858**





**PNG
      Ventures, Inc.**


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





**Nevada**
            **88-0350286**(State
                or other jurisdiction of
              incorporation
                or organization)
            (I.R.S.
                Employer
              Identification
                No.)**2038
                Corte Del Nogal, Suite 110**
              **Carlsbad,
                California 92011**
              **________________________________________________________________________**
              (Address
                of principal executive offices, including zip
                code)




Registrant’s
      telephone number, including area
      code: **(760)
      804-8844**


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


Securities
      registered pursuant to Section 12(g) of the
      Act: **$.001
      par value common stock**


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  **X**  No ___




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. [ ]





The
      issuer’s revenues for the most recent fiscal year were $0





The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates of the registrant was approximately $25,209 based upon the
      closing price of our common stock which was $0.30 on March 27, 2007. Shares
      of
      common stock held by each officer and director and by each person or group
      who
      owns 10% or more of the outstanding common stock amounting to 114,276 shares
      have been excluded in that such persons or groups may be deemed to be
      affiliates. This determination of affiliate status is not necessarily a
      conclusive determination for other purposes.




As
      of
      March 27, 2007, there were 198,309 shares of our common stock were issued and
      outstanding.





Documents
      Incorporated by Reference: None.





Transitional
      Small Business Disclosure Format: No.













**INTRODUCTION**





The
      following discussion should be read in conjunction with our audited financial
      statements and notes thereto included herein, including the Company’s Form 10SB
      recently filed and made effective in June of 2005. Because we desire to take
      advantage of, the “safe harbor” provisions of the Private Securities Litigation
      Reform Act of 1995, we caution readers regarding certain forward looking
      statements in the following discussion and elsewhere in this report and in
      any
      other statement made by, or on our behalf, whether or not in future filings
      with
      the Securities and Exchange Commission. Forward looking statements are
      statements not based on historical information and which relate to future
      operations, strategies, financial results or other developments. Forward looking
      statements are necessarily based upon estimates and assumptions that are
      inherently subject to significant business, economic and competitive
      uncertainties and contingencies, many of which are beyond our control and many
      of which, with respect to future business decisions, are subject to change.
      These uncertainties and contingencies can affect actual results and could cause
      actual results to differ materially from those expressed in any forward looking
      statements made by, or our behalf. We disclaim any obligation to update forward
      looking statements.





Forward
      looking statements involve known and unknown risks, uncertainties and other
      factors that may cause our actual results, levels of activity, performance,
      or
      achievements to be materially different from any future results, levels of
      activity, performance, or achievement expressed or implied by such
      forward-looking statements. In some cases, you can identify forward-looking
      statements by terminology such as “may,” “will,” “should,” “could,” “intend,”
“expects,” “plan,” “anticipates,” “believes,” “estimates,” “predicts,”
“potential,” or “continue” or the negative of such terms or other comparable
      terminology. Although we believe that the expectations reflected in the
      forward-looking statements are reasonable, we cannot guarantee future results,
      levels of activity, performance, or achievements. Moreover, neither we nor
      any
      other person assumes responsibility for the accuracy and completeness of such
      statements.





WE
      ARE A
      DEVELOPMENT STAGE BUSINESS AND AN INVESTMENT IN OUR COMPANY IS ***EXTREMELY*** RISKY.






**PART
      I**





Item
      1. Description
      of the Business .





A.  History





PNG
      Ventures, Inc., (“PNG” or the “Registrant” which is sometime referred to as
“We”, “Us”, “Our” and the “Company” whenever practical) was first incorporated
      in the State of Nevada on June 23, 1995, as Telecommunications Technologies,
      Ltd. (“TTL”).





On
      December 31, 1995, we formalized a plan of reorganization and tender to and
      for
      the shareholders of Temple Summit Management Corporation (“Temple Summit”)
      whereby we acquired all the assets of Temple Summit, and by which all the former
      shareholders of Temple Summit became our shareholders. Accordingly, we made
      our
      initial issuance of 47,506,240 shares to the shareholders of Temple Summit.
      Thereafter, Temple Summit became a private company with no further relationship
      with us.





TEMPLE
      SUMMIT MANAGEMENT CORPORATION





Temple
      Summit had been incorporated in Texas in August of 1991, and reincorporated
      in
      Texas in September 1993, without change in equitable ownership, management
      or
      control. Temple Summit was engaged, without success, in creating and managing
      financial participation in special marketing projects. During 1992, Temple
      Summit made its initial issuance of 285,714 shares of its common stock, in
      1992.
      These 285,714 shares were acquired by or for Kirt W. James and William Stocker
      and five other founding shareholders.





On
      or
      about May 5, 1995, Temple Summit completed a limited public offering of
      additional shares of its common stock, pursuant to Rule 504 of Regulation D,
      promulgated by the Securities and Exchange Commission, under the Securities
      Act
      of 1933. 11,200 additional common shares were placed pursuant to the May 5,
      1995, Regulation D Rule 504 offering, at $1.00 per share, resulting in a total
      of 296,914 shares issued and outstanding. The Temple Summit marketing plan
      failed and Temple Summit became inactive at the end of 1995. Immediately
      preceding the transaction by which we reorganized and acquired its initial
      capitalization from Temple Summit, the previously discussed 296,914 Temple
      Summit common shares were forward split 160 for 1, with the result that
      47,506,240 shares of Temple Summit were issued and outstanding.





TELECOMMUNICATIONS
      TECHNOLOGIES, LTD.





On
      December 31, 1995, our corporation, then called Telecommunications Technologies,
      Ltd., formalized a plan of reorganization (the “Reorganization”) and tender to
      acquire from Temple Summit, $5,000 in cash and to issue 1 of our shares for
      every Temple Summit share we received. We received all of the 47,506,240 Temple
      Summit shares and $5,000 in cash. Following this transaction, Temple Summit
      ceased to be a public company and became an inactive wholly-owned subsidiary
      of
      its principal shareholder, Temple Summit Equity Group, Ltd.





At
      the
      time of the reorganization, Temple Summit had no business or business plan,
      and
      owned no assets other than its cash. Moreover, at the time of the
      reorganization, Temple Summit had no material liabilities, other than to its
      principal shareholder, and all such incidental liabilities were assumed by
      the
      principal shareholder and not acquired by us. Pursuant to the Reorganization,
      we
      issued 47,506,240 shares of common stock to the shareholders of Temple Summit.
      At that time, we intended to take maximum advantage of the growth in
      telecommunications technology using the backgrounds and strengths of Temple
      Summit’s management, by specifically doing the following: making patent filings
      for new technology, financing of new technology, selling or granting of rights
      for the utilization of new technologies, and retaining royalties based on the
      utilization or exploitation of the new technologies.





On
      March
      7, 1996, we completed a Private Placement/Limited Offering of an additional
      500,000 shares of common stock, with the result that the previous total shares
      issued and outstanding (47,506,240) was increased to 48,006,240.





On
      May 9,
      1996, we privately placed an additional 410,400 shares, resulting in our total
      issued and outstanding common shares equaling 48,416,640 shares.





On
      or
      about February 20, 1998, we effected a 1 for 40 reverse split of our common
      stock, from 48,416,640 to 1,210,417, and so that we could engage in an
      technology-related acquisition, pursuant to Rule 504 of Regulation D, we
      authorized the placement of up to an additional 10,000,000 common shares at
      $0.01 per share. This technology-related acquisition did not take place, and
      for
      no shares were issued.





PNG
      VENTURES, INC.





On
      March
      5, 1998, we changed our corporate name to PNG Ventures, Inc. in connection
      with
      our intention to acquire a controlling interest in San Kung Trading Limited
      (“SKTL”). SKTL was a private company based in Guernsey, Channel Islands,
      organized in 1996, to pursue joint-venture resource development projects in
      Papua, New Guinea. Thereafter that plan was abandoned, primarily due to the
      extraordinary difficulty in auditing the assets we intended to
      acquire.




Subsequent
      to the failure of the SKTL transaction, we became a company whose business
      plan
      was to simply engage in a profitable business combination.





PAPER
      COMPUTER.COM, INC. AND PAPER COMPUTER CORPORATION





In
      April
      of 2000, we attempted to engage in a transaction with Paper Computer
      Corporation, a private company. As we reported in a Form 8-K filed with the
      SEC,
      the Paper Computer Corporation transaction failed and resulted in no change
      to
      our financial statements. However, prior to the failure of the Paper Computer
      Corporation transaction, our board of directors, at that time, changed our
      corporate name twice: (i) the first time, on April 25, 2000, to “Paper
      Computer.com, Inc.”; and (ii) the second time on the following day, April 26,
      2000, to “Paper Computer Corporation.”





PNG
      VENTURES, INC.





Following
      all of the aforementioned failed transactions, on June 21, 2001, our Articles
      of
      Incorporation were amended yet again, changing our corporate name back to PNG
      Ventures, Inc.





NO
      ACTIVITY, AND ANOTHER FAILURE ... OIL AND GAS THIS TIME





On
      February 15, all of our directors resigned except for John Spicer. On August
      28,
      2002, Alan Brown was appointed as the sole officer and director and Mr. Spicer
      resigned.





We
      engaged in very little corporate activity until December of 2002, when on
      January 17, 2003, Mr. Brown entered into a joint venture (the “Joint Venture”)
      with a company called Anyhydride Petrolem (Canada), Inc., a wholly owned
      subsidiary of Uranium Power Corporation (“Uranium Power”). The Joint Venture
      provided us with 9.5% of the gross of an overriding royalty from a well located
      beneath the Athabasca Tar Sands in Northeast Alberta, Canada. The Joint Venture
      was yet another failure.





Uranium
      Power Corporation is now Canwest Petroleum Company (“CanWest”) and is listed on
      the over-the-counter bulletin board under the ticker symbol “CWPC.” The Joint
      Venture properties were written off by us as well as CanWest as is more fully
      described on page 30 of an Amended Form SB-2 Registration Statement filed with
      the SEC on December 23, 2004.





MR.
      BROWN RESIGNS; MR. BAUM IS ELECTED





Subsequent
      to the Joint Venture, on June 23, 2004, Mr. Brown resigned from the board of
      directors and Mark L. Baum, Esq. was appointed as our only director.





Mr.
      Baum
      currently serves as our Chairman, Chief Executive Officer and principal
      accounting officer. Additionally, Mr. Baum is an attorney and assists us with
      our corporate legal work.





Our
      common shares are currently traded on the Pink Sheets under the symbol
“PNGX.”





We
      have
      no internet website address.





Item
      2.   Description
      of the Property .





We
      currently do not own any real property and we do not lease any real property.
      We
      receive mail at the office of Mr. Baum, our Chairman and CEO at 2038 Corte
      Del
      Nogal, Suite 110, Carlsbad, California, 92011.





Item
      3. Legal
      Proceedings .





None





Our
      registered agent for service of process is: Paracorp, 318 N. Carson St., Suite
      208, Carson City, NV  89701, telephone number: (775) 883-0104.





Item
      4. Submission
      of Matters to a Vote of Security Holders .





No
      shareholder meetings were held during our fiscal year ending December 31,
      2006.





**PART
      II**





Item
      5. Market
      for Common Equity and Related Stockholder Matters .





Our
      common stock is currently traded on the Pink Sheets market under the symbol
      “PNGX.” The high and low bid prices for the Common Stock, as reported by the
      National Quotation Bureau, Inc., are indicated for the periods described below.
      Such prices are inter-dealer prices without retail markups, markdowns or
      commissions, and may not necessarily represent actual transactions.








**2006**
            **Low**
            **High**First
                Quarter
            $.50
            1.01Second
                Quarter
            .51
            .75Third
                Quarter
            .40
            1.01Fourth
                Quarter
            .40
            .45








**2005**
            **Low**
            **High**First
                Quarter
            $.20
            .20Second
                Quarter
            .25
            .25Third
                Quarter
            .63
            .71Fourth
                Quarter
            .52
            .72








As
      of
      March 27, 2006, there were approximately 181 record holders of our common
      stock.





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.





As
      of the
      date of this filing, there are no securities authorized to be issued under
      an
      equity compensation plan.





Item
      6. Management’s
      Discussion and Analysis or Plan of Operation .





Presently,
      we are engaged in the business of Edgarizing. Edgarizing is the process of
      electronically converting typically Microsoft Word documents into HTML (or
      hypertext markup language) so that the document may be filed with the Securities
      and Exchange Commission. Documents are sent to us via electronic mail and we
      proceed to convert the file and send the file to the SEC through an electronic
      link which is established by the software, from our computers to the SEC Edgar
      filing system.





Our
      Edgarizing software, which is the tool that we use to convert documents from
      Microsoft Word to HTML, is produced by Edgar Filings, Inc., a software company
      based in Houston, Texas. We currently have a license to use this software
      through May of 2007. We intend to renew the license when it
      expires.





Management
      is of the belief that our present activities, while they are not of the scale
      of
      the businesses that past PNG management regimes pursued, is an operating
      business with the potential for cash flow and growth. However, our current
      management believes that there would probably be more value for our shareholders
      if we were able to attract a more substantial operating company and engage
      in a
      merger or business combination of some kind. With this in mind, we have (i)
      registered our common stock pursuant to Section 12 of the 1934 Act; and (ii)
      obtained a listing and quotation on the over-the-counter bulletin board (the
      “OTCBB”).





We
      do not
      intend to restrict our consideration to any particular business or industry
      segment, and we may consider, among others, finance, brokerage, insurance,
      transportation, communications, research and development, service, natural
      resources, manufacturing or high-technology business. Of course, because we
      have
      limited resources, the scope and number of suitable candidates to merge with,
      will be limited accordingly. Because we may participate in a business
      opportunity with a newly organized firm or with a firm which is entering a
      new
      phase of growth, it should be emphasized that we may incur further risk due
      to
      the failure of the target’s management to have proven its abilities or
      effectiveness, or the failure to establish a market for the target’s products or
      services, or the failure to prove or predict profitability.





Results
      of Operations for the Year Ended December 31, 2006





The
      Company had no revenues for the year ended December 31, 2006.





Total
      operating expenses for the year ended December 31, 2006 were $265,695. Net
      loss
      for the year ended December 31, 2006 was $460,095.




Item
      6A. Quantitative
      and Qualitative Disclosures About Market Risk .





We
      face
      exposure to fluctuations in the price of our common stock due to the very
      limited cash resources we have. For example, the Company has very limited
      resources to pay legal and accounting professionals. If we are unable to pay
      a
      legal or accounting professional in order to perform various professional
      services for the company, it may be difficult, if not impossible, for the
      Company to maintain its reporting status under the ‘34 Exchange Act. If the
      Company felt that it was likely that it would not be able to maintain its
      reporting status, it would make a disclosure by filing a Form 8-K with the
      SEC.
      In any case, if the Company was not able to maintain its reporting status,
      it
      would become “delisted” and this would potentially cause an investor or an
      existing shareholder to lose all or part of his investment.





Item
      7. Financial
      Statements .





Our
      Financial Statements can be found on the “F” pages at the end on this
      Report.





Item
      8. Changes
      In and Disagreements with Accountants on Accounting and Financial
      Disclosure





None.





Item
      8A. Controls
      and Procedures





Under
      the
      supervision and with the participation of our management, currently consisting
      of Mark L. Baum, we have evaluated the effectiveness of the design and operation
      of our disclosure controls and procedures as of the end of the period covered
      by
      this annual report, and based on their evaluation, our Chief Executive Officer
      and Chief Financial Officer have concluded that these disclosure controls and
      procedures are effective in timely alerting them to material information
      relating to the Company required to be included in the Company’s periodic SEC
      filings. There were no significant changes in our internal control over
      financial reporting that could significantly affect this control since our
      last
      fiscal quarter.




Disclosure
      controls and procedures are the controls and other procedures that are designed
      to ensure that information required to be disclosed by us in the reports we
      file
      or submit under the Exchange Act is recorded, processed, summarized, and
      reported, within the time periods specified in the Securities and Exchange
      Commission’s rules and forms. Disclosure controls and procedures include,
      without limitation, controls and procedures designed to ensure that information
      required to be disclosed by us in the reports that we file under the Exchange
      Act is accumulated and communicated to our management, including our Chief
      Executive Officer and Chief Financial Officer, as appropriate, to allow timely
      decisions regarding required disclosure.





Item
      8B. Other
      Information .





None.









**PART
      III**





Item
                9.
            Directors,
                Executive Officers, Promoters and Control Persons; Compliance with
                Section
                16(a) of the Exchange Act





**Directors
      and Executive Officers**





As
      of
      March 27, 2007, our executive officers and directors, the positions held by
      them, and their ages are as follows:





**Name**     **Age**   **Position__________________________**





Mark
      L.
      Baum    34   Director,
      President, Chief Executive Officer, Chief Financial
      Officer  and
      Secretary




**Mark
      L. Baum, Esq.**


**Director,
      President, Chief Executive Officer, Chief Financial Officer and
      Secretary**





Mr.
      Baum
      is our sole officer and director. In 2002, Mr. Baum founded Business Consulting
      Group Unlimited, Inc., a Southern California-based merchant banking firm. Mr.
      Baum is a licensed attorney in the State of California and the principal
      attorney for The Baum Law Firm, PC a firm which he founded in 1998. Mr. Baum
      has
      more than 11 years experience in creating, financing and growing development
      stage enterprises in a variety of industries. Mr. Baum has participated in
      numerous public spin-offs, venture fundings, private-to-public mergers,
      corporate restructurings, asset acquisitions and asset divestitures. Mr. Baum’s
      law practice focuses on securities laws and related issues for small-cap and
      micro-cap publicly reporting companies.





We
      have
      no other employees.





Mr.
      Baum
      has not been involved in a legal proceeding within the past 5 years that would
      materially affect his integrity or his ability to act on behalf of our
      company.





Mr.
      Baum
      controls the operational direction of PNG Ventures, Inc.





**Audit
      Committee**





We
      do not
      have an audit committee. We do not have a financial expert serving on our board
      of directors.





**Code
      of Ethics**





We
      have
      not have not adopted a code of ethics at this time.




**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 year ended December 31,
      2006, no Section 16(a) reports required to be filed by our executive
      officers, directors and greater-than-10% stockholders were filed on a timely
      basis.




Item
      10. Executive
      Compensation





The
      following table sets forth the cash compensation paid to the Chief Executive
      Officer and to all other executive officers for services rendered during the
      fiscal years ended December 31, 2005 and 2004.





**Annual
                Compensation**
            
            **Long-Term
                Compensation****Common  Shares****Underlying**
            
            **All****Restricted**
            
            **Options**
            
            **Other****Other Annual**
            
            **Stock**
            
            **Granted**
            
            **Compen****Name
                and Position**
            
            **Year**
            
            **Salary**
            
            **Bonus**
            
            **Compensation**
            
            **Awards ($)**
            
            **(# Shares)**
            
            **sation**Mark
                L. Baum
            
            2006
            
            90,000
            
            -0-
            
            -0-
            
            -0-
            
            ------
            
            -0-*Chairman,
                President,*
            
            2005
            
            90,000
            
            -0-
            
            -0-
            
            -0-
            
            ------
            
            -0-*Chief
                Executive Officer**Chief
                Financial Officer**and
                Secretary*





**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**





Mr.
      Baum
      has an employment agreement with the Company.





**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.





Item
      11. Security
      Ownership of Certain Beneficial Owners and Management and Related Stockholder
      Matters





The
      following table sets forth certain information regarding the beneficial
      ownership of our common stock as of March 27, 2007 by the following
      persons:





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

|· | each
              of our directors and executive officers;
              and
|- | -----------------------------------------------------------------------------

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




**Name
                And Address**
            **Number
                Of Shares****Beneficially
                Owned**
            **Percentage
                Owned**Mark
                L. Baum(1)
            57,388
            28.9%Firle
                Trading, S.A.(2)
            56,888
            28.6%All
                directors and officers as a group
            114,276
            57.5%





(1)  The
      address is 2038 Corte Del Nogal, Suite 110, Carlsbad, California
      92011.


(2)  The
      address is Suite 1-A, Calle Eusebio A Morales, El Canjrejo, Panama City,
      Panama





Beneficial
      ownership is determined in accordance with the rules and regulations of the
      SEC.
      The number of shares and the percentage beneficially owned by each individual
      listed above include shares that are subject to options held by that individual
      that are immediately exercisable or exercisable within 60 days from the date
      of
      this report and the number of shares and the percentage beneficially owned
      by
      all officers and directors as a group includes shares subject to options held
      by
      all officers and directors as a group that are immediately exercisable or
      exercisable within 60 days from the date of this report.





Item
      12. Certain
      Relationships and Related Transactions





On
      June
      25, 2004, The Baum Law Firm, Inc. (“TBLF”), an entity controlled by our Chairman
      and CEO, Mark L. Baum, Esq., purchased, in a private transaction, 78,776 of
      our
      restricted common shares.





On
      June
      25, 2004, TBLF was issued 16,000 restricted common shares in consideration
      for
      legal TBLF performed on behalf of the company.





On
      September 29, 2004, Business Consulting Group Unlimited, Inc., a general
      business consulting entity owned by Mr. Baum, was issued 20,000 restricted
      common shares, in consideration of non-legal services that were performed on
      our
      behalf.





As
      of
      September 29, 2004, Mr. Baum directly controlled approximately 114,776 of the
      200,249 common shares that were then issued and outstanding.





In
      October of 2004, Mr. Baum sold, in a private transaction, 57,387 of the
      restricted shares he was the beneficial owner of, to Firle Trading, S.A.. As
      of
      the date of this filing, Mr. Baum is the beneficial owner of 57,389 of our
      restricted common shares.





Item
      13.
      Exhibits





Exhibit
      No.  Description





2.1  Plan
      of
      Reorganization and Tender. (Attached as an exhibit to our Form 10-SB filed
      with
      the SEC on February 19, 2000 and incorporated herein by reference).





3(i).1  Articles
      of Incorporation. (Attached as an exhibit to our Form 10-SB filed with the
      SEC
      on February 19, 2000 and incorporated herein by reference).





3(i).2  Certificate
      of Amendment to the Articles of Incorporation changing the name of the
      corporation to PNG Ventures, Inc. (Attached as an exhibit to our Form 10-SB
      filed with the SEC on February 19, 2000 and incorporated herein by
      reference).





3(ii)  Bylaws.
      (Attached as an exhibit to our Form 10-SB filed with the SEC on February 19,
      2000 and incorporated herein by reference).





23.1  Consent
      of Chisholm, Bierwolf & Nilson, LLC.





32.1  Certification
      pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.




32.2  Certification
      pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.






Item
      14. Principal
      Accountant Fees and Services





**Appointment
      of Auditors**




Our
      Board
      of Directors selected Chisholm Bierwolf & Nilson, LLC of Bountiful, Utah, as
      our auditors for the year ended December 31, 2006.





**Audit
      Fees**





Chisholm
      Bierwolf & Nilson, LLC, billed us $4,000 in fees for our annual audit for
      the year ended December 31, 2006 and $1,500 in fees for the review of our
      quarterly financial statements for that year.





Chisholm
      Bierwolf & Nilson, LLC, billed us $3,700 in fees for our annual audit for
      the year ended December 31, 2005 and $700 in fees for the review of our
      quarterly financial statements for that year.





**Audit-Related
      Fees**




We
      did
      not pay any fees to Chisholm Bierwolf & Nilson, LLC for assurance and
      related services that are not reported under Audit Fees above, during our fiscal
      years ending December 31, 2006 and December 31, 2005.





**Tax
      and All Other Fees**




We
      did
      not pay any fees to Chisholm Bierwolf & Nilson, LLC for tax compliance, tax
      advice, tax planning or other work during our fiscal years ending December
      31,
      2006 and December 31, 2005.





**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 Chisholm Bierwolf & Nilson, LLC
      the estimated fees related to these services.





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











**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 by the undersigned,
      thereunto duly authorized on March 30, 2007.




**PNG
      VENTURES, INC.**








By :
      /s/
      Mark L. Baum


Mark
      L.
      Baum


Chief
      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/
      Mark L.
      Baum Director,
      President, Chief Executive Officer, Chief Financial Officer and
      Secretary March
      30,
      2007


Mark
      L.
      Baum








**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**




To
      the
      Board of Directors and Officers of




PNG
      Ventures, Inc.




We
      have
      audited the accompanying balance sheet of PNG Ventures, Inc. as of December
      31,
      2006 and 2005 , and the related statements of operations, stockholders’ equity,
      and cash flows for the years then ended, and from inception on June 23, 1995
      through December 31, 2006. These financial statements are the responsibility
      of
      the Company’s management. Our responsibility is to express an opinion on these
      financial statements based on our audits.




We
      conducted our audits in accordance with standards of the PCAOB (United States).
      Those standards require that we plan and perform the audits to obtain reasonable
      assurance about whether the financial statements are free of material
      misstatement. 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 audits provide a reasonable basis for our
      opinion.




In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of PNG Ventures, Inc. at December
      31,
      2006 and 2005, and the results of its operations and cash flows for the years
      then ended and from inception on June 23, 1995 through December 31, 2006 in
      conformity with U.S. generally accepted accounting principles.




The
      accompanying financial statements have been prepared assuming that PNG Ventures,
      Inc. will continue as a going concern. As discussed in Note 2 to the financial
      statements, PNG Ventures, Inc. has suffered recurring losses from operations
      and
      has a net capital deficiency that raises substantial doubt about the company’s
      ability to continue as a going concern. Management’s plans in regard to these
      matters are also described in Note 2. The financial statements do not include
      any adjustments that might result from the outcome of this
      uncertainty.







***/s/Chisholm,
      Bierwolf & Nilson***


Chisholm,
      Bierwolf & Nilson, LLC


Bountiful,
      UT


March
      22,
      2007

















**PNG
                VENTURES, INC.**
            **Page**Balance
                Sheet at December 31, 2006 and 2005
            F-1Statements
                of Operations for the years ended December 31, 2006 and 2005
            F-2Statements
                of Changes in Shareholders' Deficit for the years ended December
                31, 2006
                and 2005
            F-3Statements
                of Cash Flows for the years ended December 31, 2006 and
                2005
            F-4Notes
                to Financial Statements
            F-5











PNG
                VENTURES, INC.(A
                DEVELOPMENT STAGE COMPANY)BALANCE
                SHEETSDecember
                31,
            
            December
                31,ASSETS
            
            2006
            
            2005Current
                assetsCash
            $
            0
            
            0Total
                current assets
            
            0
            
            00TOTAL
                ASSETS
            $
            0
            
            0LIABILITIES
                AND STOCKHOLDERS' EQUITYCurrent
                liabilitiesAccounts
                payable
            $
            35,485
            
            24,790Accrued
                liabilities
            
            199,912
            
            184,912Accrued
                Interest on Notes Payable
            
            14,400Total
                current liabilities
            
            249,797
            
            209,702Convertible
                notes payable net of discount
            
            180,000
            
            0TOTAL
                LIABILITIES
            
            429,797
            
            209,702STOCKHOLDERS'
                EQUITYCommon
                stock, 50,000,000 shares authorized, $0.001 par value198,309
                and 198,309 shares issued and outstanding.
            
            198
            
            198Additional
                paid-in captial
            
            1,162,319
            
            922,319Deficit
                accumulated during the development stage
            
            (1,592,314)
            
            (1,132,219)TOTAL
                STOCKHOLDERS' DEFICIT
            
            (429,797)
            
            (209,702)TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY
            $
            0
            
            0The
                accompanying notes are an integral part of these financial
                statements














PNG
                VENTURES, INC.(A
                DEVELOPMENT STAGE COMPANY)STATEMENTS
                OF OPERATIONSFrom
                InceptionFor
                the Year Ended
            
            For
                the Year Ended
            
            June
                23, 1995December
                31,
            
            December
                31,
            
            thru
                December 31,2006
            
            2005
            
            2006RevenuesSales
            $
            0
            $
            0
            $
            5,000Total
                revenues
            
            0
            
            0
            
            5,000ExpensesGeneral
                and administrative
            
            265,695
            
            319,289
            
            1,402,914Total
                operating expenses
            
            265,695
            
            319,289
            
            1,402,914Loss
                from operations
            
            (265,695)
            
            (319,289)
            
            (1,397,914)Other
                income (expense)Interest
                expense
            
            14,400
            
            0
            
            14,400Interest
                expense attributableto
                BCF
            
            180,000
            
            
            
            180,000-Total
                other income (expense)
            
            (194,400)
            
            0
            
            (194,400)Net
                Loss before Income Tax
            
            (460,095)
            
            (319,289)
            
            (1,592,314)Income
                Tax
            
            0
            
            0
            
            0-NET
                LOSS
            $
            (460,095)
            $
            (319,289)
            
            (1,592,314)Basic
                and diluted lossper
                common share
            $
            (2.32)
            $
            (1.80)
            
            (22.82)Weighted
                average commonshares
                outstanding
            
            198,309
            
            177,564
            
            69,789The
                accompanying notes are an integral part of these financial
                statements














PNG
                VENTURES, INC.(A
                DEVELOPMENT STAGE COMPANY)STATEMENTS
                OF STOCKHOLDERS' EQUITY (DEFICIT)From
                inception on June 23, 1995 through December 31, 2006Common
                Stock
            
            Additional
            
            Deficit
            
            TotalPar
            
            Paid-in
            
            Accumulated
            
            Stockholders'Shares
            
            Value
            
            Capital
            
            During
                Dev.
            
            Equity
                (Deficit)StageIssuance
                of common stock for cash
            7,126
            $
            7
            $
            4,993
            $
            0
            $
            5,000Net
                Loss for the year endedDecember
                31, 1995
            
            
            
            
            
            
            (3,000)
            
            (3,000)Balance
                December 31, 1995
            7,126
            
            7
            
            4,993
            
            (3,000)
            
            2,000Issuance
                of common stock for cash
            
            
            
            
            
            
            
            
            0at
                $333.33 per share
            75
            
            0
            
            25,000
            
            —
            
            25,0000Issuance
                of common stock for cash
            
            
            
            
            
            
            
            
            0at
                $6.61 per share
            62
            
            0
            
            410
            
            —
            
            4100Net
                Loss for the year ended
            
            
            
            
            
            
            (27,410)
            
            (27,410)December
                31, 1996
            
            
            
            
            
            
            
            
            0Balance
                December 31, 1996
            7,263
            
            7
            
            30,403
            
            (30,410)
            
            0Net
                Loss for the year endedDecember
                31, 1997
            —
            
            —
            
            —
            
            
            
            0Balance
                December 31, 1997
            7,263
            
            7
            
            30,403
            
            (30,410)
            
            0Net
                Loss for the year endedDecember
                31, 1998
            —
            
            —
            
            —
            
            
            
            0Balance
                December 31, 1998
            7,263
            
            7
            
            30,403
            
            (30,410)
            
            0Net
                Loss for the year endedDecember
                31, 1999
            —
            
            —
            
            —
            
            
            
            0Balance
                December 31, 1999
            7,263
            
            7
            
            30,403
            
            (30,410)
            
            0Issuance
                of common stock for servicesvalue
                at $.50 per share
            10,000
            
            10
            
            4,990
            
            —
            
            5,000Cancellation
                of common shares
            (10,000)
            
            (10)
            
            (4,990)
            
            —
            
            (5,000)0Issuance
                of common stock in an
            
            
            
            
            
            
            
            
            0acquistion
                valued at $.50 per share
            18,458
            
            18
            
            9,211
            
            
            
            9,229Cancellation
                of common shares
            (18,458)
            
            (18)
            
            (9,211)
            
            —
            
            (9,229)0Net
                Loss for the year ended
            
            
            
            
            
            
            
            
            0December
                31, 2000
            —
            
            —
            
            —
            
            (153,279)
            
            (153,279)0Balance
                at December 31, 2000
            7,263
            $
            7
            $
            30,403
            $
            (183,689)
            $
            (153,279)Issuance
                of common stock for servicesvalued
                at $.25 per share
            10,000
            
            10
            
            2,470
            
            
            
            2,480Net
                Loss for the year ended
            
            
            
            
            
            
            
            
            0December
                31, 2001
            —
            
            —
            
            —
            
            (98,049)
            
            (98,049)0Balance
                at December 31, 2001
            17,263
            $
            17
            $
            32,873
            $
            (281,738)
            $
            (248,848)Issuance
                of common stock for debtconversion
            27,500
            
            28
            
            273,566
            
            
            
            273,594Net
                Loss for the year endedDecember
                31, 2002
            
            
            
            
            
            
            (73,284)
            
            (73,284)Balance
                at December 31, 2002
            44,763
            
            45
            
            306,439
            
            (355,022)
            
            (48,538)Issuance
                of common stock for debtconversion
            119,000
            
            119
            
            446,131
            
            
            
            446,250Net
                Loss for the year endedDecember
                31, 2003
            
            
            
            
            
            
            (242,688)
            
            (242,688)Balance
                at December 31, 2003
            163,763
            
            164
            
            752,570
            
            (597,710)
            
            155,024Issuance
                of common stock for debtconversion
            16,000
            
            16
            
            39,984
            
            
            
            40,000Issuance
                of common stock for servicesvalued
                at $.001 per share
            20,000
            
            20
            
            59,980
            
            
            
            60,000Reclass
                of accounts payable
            
            
            
            
            69,783
            
            
            
            69,783Rounding
                of shares due to 250:1 reverse
            286
            
            
            
            
            
            (1)
            
            (1)stock
                splitNet
                Loss for the year endedDecember
                31, 2004
            
            
            
            
            
            
            (150,507)
            
            (150,507)Balance
                at December 31, 2004
            200,049
            
            200
            
            922,317
            
            (748,218)
            
            174,299Cancellation
                of shares
            (1,740)
            
            (2)
            
            2
            
            
            
            0Net
                Loss for the year endedDecember
                31, 2005
            
            
            
            
            
            
            (384,001)
            
            (384,001)Balance
                at December 31, 2005
            198,309
            
            198
            
            922,319
            
            (1,132,219)
            
            (209,702)Value
                attributed to Beneficialconversion
                feature
            
            
            
            
            240,000
            
            
            
            240,000Net
                Loss for the year endedDecember
                31, 2006
            
            
            
            
            
            
            (460,095)
            
            (460,095)Balance
                at December 31, 2006
            198,309
            $
            198
            $
            1,162,319
            $
            (1,592,314)
            $
            (429,797)The
                accompanying notes are an integral part of these financial
                statements

















PNG
                VENTURES, INC.(A
                DEVELOPMENT STAGE COMPANY)STATEMENTS
                OF CASH FLOWSFrom
                InceptionJune
                23, 1995throughDecember 31,
            
            December 31,
            December 31,2006
            
            2005
            2006CASH
                FLOWS FROM OPERATING ACTIVITIESNet
                Loss
            $
            (460,095)
            $
            (150,507)
            (1,592,314)Adjustments
                to reconcile net loss to netcash
                used in operating activities:Accretion
                of note discount
            
            180,000
            
            
            180,000Conversion
                of accounts payable
            
            240,000
            
            
            240,000Stock
                for services
            
            0
            
            60,000
            62,500Conversion
                of payables
            
            
            
            39,981
            39,982Changes
                in investment asset
            
            
            
            47,197
            47,197Changes
                in operating assets and liabilities:Decrease
                in Joint Venture working interest
            
            
            
            
            177,789Accounts
                payable and accrued expenses
            
            25,695
            
            3,290
            504,079Accounts
                payable - related party
            
            0
            
            
            4,712Accrued
                Interest
            
            14,400
            
            0
            14,400NET
                CASH USED IN OPERATING ACTIVITIES
            
            0
            
            (39)
            (321,655)CASH
                FLOWS FROM INVESTING ACTIVITIESCash
                paid for joint venture interest
            
            0
            
            —
            (224,986)NET
                CASH USED IN INVESTING ACTIVITIES
            
            0
            
            0
            (224,986)CASH
                FLOWS FROM FINANCING ACTIVITIESProceeds
                from debt financing
            
            
            
            0
            516,231Proceeds
                from sale of common stock
            
            0
            
            0
            30,410NET
                CASH PROVIDED BY FINANCING ACTIVITIES
            
            0
            
            0
            546,641NET
                CHANGE IN CASH
            
            0
            
            (39)
            0CASH
                BALANCESBeginning
                of period
            
            0
            
            39
            0End
                of period
            $
            0
            $
            0
            0SUPPLEMENTAL
                DISCLOSURE:Interest
                paid
            $
            0
            $
            —
            —Income
                taxes paid
            
            —
            
            —
            —NON-CASH
                ACTIVITIES:Debt
                converted to common stock
            $
            
            $
            0
            0Deferred
                financing costs
            
            240,000
            
            —
            —Debt
                discount
            
            60,000
            
            —
            —Advances
                from shareholders converted to loans payableIssued
                stock for legal and consulting services
            
            
            
            0
            0The
                accompanying notes are an integral part of these financial
                statements
















**PNG
      VENTURES, INC.**


**(A
      Development Stage Company)**


**Notes
      to the Financial Statements**


**December
      31, 2006 and 2005**








**NOTE
                1.**
            **SUMMARY
                OF ACCOUNTING POLICIES**





**a.
      Organization**





PNG
      Ventures, Inc. (the Company) was incorporated in the state of Nevada on June
      23,
      1995 as Telecommunications Technologies, Ltd. On June 24, 1995, the Company
      entered a plan of reorganization whereby it purchased all the assets of Temple
      Summit Management Corporation (TSMC), organized in the state of Texas on August
      23, 1991 and re-incorporated in September 1994. The substance of the
      re-organization was that the Company acquired $5,000 in cash for 47,506,240
      shares of stock, issued to the shareholders of TSMC, following which TSMC ceased
      to be a public company and became an inactive wholly-owned subsidiary of it’s
      principal shareholder, Temple Summit Equity Group, LTD. This business
      combination was treated as a reverse acquisition for accounting purposes. On
      February 20, 1998, the Company changed its name to PNG Ventures, Inc. The
      Company has had little activity until December 2002, when the Company entered
      into a joint venture agreement and working interest in certain petroleum and
      related gas licenses. The joint venture agreement was entered into with
      Anhydride Petroleum (Canada) Inc. a wholly owned subsidiary of Uranium Power
      Corporation. The agreement provides the Company up to a 12.5% working-interest,
      subject to a 9.5% gross over riding royalty, in the AOC T-32-89-10 W4M well
      located beneath the Athabasca Tar Sands in North East Alberta Canada. There
      is
      currently no activity under the terms of the joint venture agreement and the
      Company has determined that there is presently no current value to the joint
      venture agreement asset.





**b.
      Accounting Method**





The
      Company's policy is to use the accrual method of accounting to prepare and
      present financial statements,
      which conform to generally accepted accounting principles ("GAAP'). The company has
      elected a December 31, year-end.





**c.
      Cash and Cash Equivalents**





The
      Company considers all highly liquid investments with maturities of three months
      or less when purchased to be cash equivalents.





**d.
      Loss Per Share**




Basic
      net
      loss per share of common stock is computed based on the weighted average shares
      outstanding and excludes any potential dilution. Diluted loss per share reflects
      the potential dilution from the exercise or conversion of dilutive securities
      into common stock based on the average market price of common shares outstanding
      during the period. For the periods ended December 31, 2006 and 2005, no effect
      has been given to outstanding options, warrants or convertible debentures in
      the
      diluted computation as their effect would be anti-dilutive.







The
      computations of earnings (loss) per share of common stock are based on the
      weighted average number of share outstanding at the date of the financial
      statements.





From


Inception on


For
      the
      Years                                  
June 23, 1995


December
      31, December
      31,           through
      December 31,


200620052005


Numerator -
      loss $ (460,095)  $  (319,289)  $  (1,592,314)


Denominator -


weighted
      average number


of
      shares
      outstanding 198,309  177,564   69,789


Loss per share    $
      (2.32)  $
      (1.80)  $   (22.82)





**e.
      Provision for Taxes**





No
      provision for income taxes has been recorded due to net operating loss
      carryforwards totaling approximately $1,592,314 that will be offset against
      future taxable income. These NOL carryforwards begin to expire in the year
      2016.
      No tax benefit has been reported in the financial statements because the Company
      believes there is a 50% or greater chance the carryforward will expire
      unused.





Deferred
      tax assets and the valuation account is as follows at December 31, 2006 and
      2005:





Deferred
                tax assets
            
            2006
            2005NOL
                carryforward
            $
            541,387
            384,950Valuation
                allowance
            $
            (541,387)
            (384,950)Total
            $
            -
            -




The
      components of income tax expense are as follows:





$
            2006
            2005Federal
                taxes
            
            -0-
            -0-State
                Taxes
            $
            -0-
            -0-Change
                in tax asset
            $
            (156,437)
            (130,566)Change
                in allowance
            
            156,437
            130,566Income
                tax expense
            $
            -
            -




f. **Recent
      Accounting Pronouncements**




In
      February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid
      Financial Instruments — an amendment of FASB Statements No. 133 and 140. SFAS
      No. 155 resolves issues addressed in SFAS No. 133 Implementation Issue No.
      D1,
      Application of Statement 133 to Beneficial Interests in Securitized Financial
      Assets. SFAS No. 155 will become effective for the Company’s fiscal year after
      September 15, 2006. The impact of SFAS No. 155 will depend on the nature and
      extent of any new derivative instruments entered into after the effective
      date.





In
      March
      2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial
      Assets, an Amendment of FASB No. 140. SFAS 156 requires that all separately
      recognized servicing assets and servicing liabilities be initially measured
      at
      fair value, if practicable. The statement permits, but does not require, the
      subsequent measurement of servicing assets and liabilities at fair value. SFAS
      No. 156 is effective as of the beginning of the first fiscal year that begins
      after September 15, 2006, with earlier adoption permitted.





In
      September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS
      No.
      157 defines fair value and establishes a framework for measuring fair value
      in
      generally accepted accounting principles, and expands disclosures about fair
      value measurement. This statement applies under other accounting pronouncements
      that require or permit fair value measurements and does not require any new
      fair
      value measurements. SFAS No. 157 is effective for the fiscal year beginning
      after November 15, 2007. The company is currently assessing the impact that
      SFAS
      No. 157 will have on the consolidated financial statements.





Effective
      for fiscal year 2006, the company adopted the provisions of SFAS No. 158. SFAS
      No. 158 requires that the funded status of defined-benefit postretirement plans
      be recognized on the company’s consolidated balance sheets, and changes in the
      funded status be reflected in comprehensive income. SFAS No. 158 also requires
      the measurement date of the plan’s funded status to be the same as the company’s
      fiscal year-end.





The
      adoption of these pronouncements will not have a material effect on the
      Company’s financial position or results of operation.





g. **Use
      of Estimates**




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosures and contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those
      estimates.





h. **Financial
      Instruments**





The
      Company includes fair value information in the notes to consolidated financial
      statements when the fair value of its financial instruments is different from
      the book value. When the book value approximates fair value, no additional
      disclosure is made.





**NOTE
      2.**  **GOING
      CONCERN**





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. The Company has had substantial operating
      losses for the past years and is dependant upon outside financing to continue
      operations. The financial statements do not include any adjustments that might
      result from the outcome of this uncertainty. It is management’s plans to raise
      necessary funds from shareholders to satisfy the expense requirements of the
      joint venture and eventually derive revenues there from.





**NOTE
      3.**  **DEVELOPMENT
      STAGE COMPANY**





The
      Company is a development stage company as defined in Financial Standards Board
      Statement No. 7. It is concentrating substantially all of its efforts in raising
      capital and developing its business operations.




**NOTE
      4** . **RELATED
      PARTY TRANSACTIONS**





Various
      shareholders and officers have advanced funds to the Company as needed. As
      of
      December 31, 2006 and 2005, $240,000 and $0 was due to these shareholders.
      The
      $240,000 was advanced on March 31, 2006 through the purchase of 8% Convertible
      Debentures more fully described in Note 8.





Legal
      counsel to the Company is a firm controlled by an Officer and Director of the
      Company.




**NOTE
      5.**  **COMMON
      STOCK**





During
      February 1998, the Board of Directors approved a 4 for 1 reverse stock split.
      These financial statements have been retroactively restated to reflect this
      change.





During
      February 2000, the Company issued 10,000 shares of common stock for services
      valued at $0.50 per share. During April 2000, these 10,000 shares were
      canceled.





During
      March 2000, the Board of Directors approved a 1 for 3 forward split. These
      financial statements have been retroactively restated to reflect this
      change.





During
      April 2000, the Company issued 18,458 shares of common stock to acquire Paper
      Computer Corporation. On December 31, 2000, these 18,458 shares were canceled
      and the acquisition rescinded.





During
      June 2001, the Board of Directors approved a 2 for 1 reverse split. These
      financial statements have been retroactively restated to reflect this
      change.





During
      June 2001, the Company issued 10,000 shares of common stock for services valued
      at $0.25 per share.





During
      August 2002, the Company issued 27,500 shares of common stock for payment of
      payables due in the amount of $273,594.





During
      February 2003, the Company issued 119,000 common shares to shareholders for
      conversion of debt in the amount of $446,250.





During
      June 2004, the Company issued 16,000 shares of common stock for payment of
      payables due in the amount of $40,000.





During
      September 2004, the Company issued 20,000 shares of common stock for services
      valued at $3.00 per share.





During
      October 2004, the Board of Directors approved a 250 for 1 reverse split. These
      financial statements have been retroactively restated to reflect this
      change.





During
      November 2005, the Company cancelled 1,740 shares of its common
      stock.





**NOTE
      6. STOCKHOLDERS' EQUITY**





The
      stockholders' equity section of the Company contains the following classes
      of
      capital


stock as
      of
      December 31, 2006:





Common
      stock, $0.001 par value; 50,000,000 shares authorized: 198,309 shares issued
      and
      outstanding.




**NOTE
      7. ISSUANCE OF SHARES FOR SERVICES - STOCK OPTIONS**





The
      company has a nonqualified stock option plan, which provides for the granting
      of
      options to
      key
      employees, consultants, and non-employee's directors of the Company. These
      issuances shall
      be
      accounted for based on the fair value of the consideration received or the
      fair
      value of the
      equity instruments issued, or whichever is more readily determinable. The
      Company has elected
      to account for the stock option plan in accordance with SFAS 123R where
      the
      compensation to employees should be recognized over the period(s) in which
      the related
      employee services are rendered. In accordance with SFAS 123R the fair value
      of
      a stock option granted is estimated using an option-pricing model. As of
      December 31,


2006 no stock options were outstanding.





**NOTE
      8.**  **CONVERTIBLE
      NOTES**




In
      March
      2006, the Company completed a private placement of $240,000 in principal amount
      of its one year 8% Convertible Debentures (the "Debentures"). The Debentures
      are
      convertible at the option of the holder into the Company's common stock anytime
      before maturity. The Company recorded a $240,000 discount, which represents
      the
      intrinsic value of the beneficial conversion feature at the date the Debentures
      were issued.




The
      holders of the Debentures have the right to convert their debentures plus
      accrued interest into shares of the Company's common stock at 50% of the average
      of the three lowest bid prices for the thirty consecutive trading days
      immediately preceding the date of conversion.




The
      intrinsic value of the beneficial conversion feature in the Debenture issuance
      is being amortized over the term of the Debentures, which is one year. The
      Company recorded $180,000 and $0 of accretion during the year ended December
      31,
      2006 and 2005, respectively. This cost is included as a component of interest
      expense in the accompanying statement of operations and includes the accelerated
      amortization of the beneficial conversion feature for the converted
      debentures.




The
      Debentures were redeemable by the Company, in whole or in part, at the Company's
      option, at the then outstanding principal amount of the Debentures. Accrued
      interest under the Debentures shall be paid in cash at maturity.