**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549





**FORM
      10-KSB/A**


**(Amendment
      No. 1)**





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





**For
      the fiscal year ended June 30, 2006**





o
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**.











(Name
      of
      small business issuer in its charter)





Commission
      file number: 001-33073





**Delaware**
            
            **33-0954381**(State
                or Other Jurisdiction of
            
            (IRS
                EmployerIncorporation
                or Organization)
            
            Identification
                No.)**1114
                Avenue of the Americas, 30****th****Floor****New
                York, New York**
            
            **10036**(Address
                of Principal Executive Offices)
            
            (Zip
                Code)





**(212)
      754-0774**


(Issuer’s
      Telephone Number, Including Area Code)





Securities
      Registered Pursuant to Section 12(b) of the Act: None.





Securities
      Registered Pursuant to Section 12(g) of the Act: Common stock, $0.001 par value
      per share





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





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


x Yes   ̈ No





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. x










Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).  ̈ Yes  x No





Issuer’s
      revenues for the year ended June 30, 2006 were approximately $1.2M.





The
      aggregate market value of the voting stock held by non-affiliates of the
      registrant, based on the average bid and asked prices on the OTC Bulletin Board
      on August 17, 2006 was approximately $82M.





The
      number of shares outstanding of the issuer’s common stock, $0.001 par value, as
      of the latest practicable date: 17,617,150 shares as of August 17,
      2006.




**DOCUMENTS
      INCORPORATED BY REFERENCE**





None.




Transitional
      Small Business Disclosure Format (Check one):


 ̈ Yes  x No










**EXPLANATORY
      NOTE**





MRU
      Holdings, Inc. (“MRU” or the “Company”) timely filed its Annual Report on Form
      10-KSB for the fiscal year ended June 30, 2006 (the “Annual Report”) with the
      Securities and Exchange Commission on September 29, 2006. On December 4, 2006
      the Company’s Board of Directors concluded, based on the recommendations of the
      Company’s management, independent registered public auditors and Audit
      Committee, that the Company should restate its previously issued financial
      statements (balance sheet, statements of operations, and statements of changes
      in stockholders’ equity) for the fiscal years ended June 30, 2005 and 2006 as
      well as the financial statements (balance sheet and statements of operations)
      for the quarters ended March 31, September 30 and December 31, 2005 and March
      31
      and September 30, 2006.





The
      restatement is being made to give effect to the impact of EITF 98-5, *Accounting
      for Convertible Securities with Beneficial Conversion Features or Contingently
      Adjustable Conversion Ratios,* for the
      issuance and dividends related to the Company’s Series A and B Convertible
      Preferred Stock. The Company decided that its past accounting for these equity
      issuances did not properly account for the difference between the issued price
      per share and the market price of the Company’s common stock on the commitment
      dates for these issuances and related dividends.





As
      a
      result of this decision, the Company is restating its statements of operations
      for the periods identified above to increase the preferred stock dividends
      for
      the effects of the beneficial conversion feature contained in the Company’s
      Series A and B Convertible Preferred Stock; this change will also increase
      the
      Company’s loss available to common shareholders and the resulting earnings per
      share reported. The Company’s decision will also result in a restatement of the
      equity sections of the balance sheets for the dates indicated above to create
      additional paid-in capital accounts for the beneficial conversion features
      of
      the Series A and B Convertible Preferred Stock and to increase the Company’s
      accumulated deficits as of these dates. The restatements have no effect on
      total
      shareholders’ equity. Further, this decision has no other effects on the
      Company’s results of operations or financial condition as previously reported
      for the stated periods.





This
      Amendment No. 1 to the Annual Report on Form 10-KSB (“Amendment No. 1”) is being
      filed for the purpose of amending Items 6, 7 and 8A of Part II of the Annual
      Report. Additionally, pursuant to the rules of the SEC, Item 13 of Part III
      of
      the Annual Report has been amended to contain currently dated certifications
      of
      the Company’s chief executive officer and chief financial officer. As required
      by Section 302 and 906 of the Sarbanes-Oxley Act of 2002, the certifications
      of
      our chief executive officer and chief financial officer are attached to this
      Amendment No. 1 as Exhibits 31.1, 31.2, 32.1 and 32.2.





Except
      as
      described above, no other amendments are being made to the Annual Report. All
      other Items of the original filing on Form 10-KSB for the period ending June
      30,
      2006 and filed on September 29, 2006 are unaffected by this Amendment No. 1
      and
      such Items have not been included in this Amendment No. 1. This Amendment No.
      1
      does not reflect events occurring after the June 30, 2006 date of the Annual
      Report or modify or update the disclosure contained in the Annual Report in
      any
      way other than as required to reflect the amendments discussed above and
      reflected below. This Amendment No. 1 should be read in conjunction with the
      Company’s filings made with the SEC subsequent to the original filing of the
      Annual Report, as information in such filings may update or supersede certain
      information contained in this Amendment No. 1.









**PART
      I**





**Item
      6. Management’s Discussion and Analysis.**





The
      Company’s earnings and growth in earnings are directly affected by the size of
      its portfolio of student loans, the interest rate characteristics of our student
      loan portfolio, and the costs associated with originating, financing, and
      managing our student loan portfolio.





The
      Company’s interest income, or net interest earned on its student loan portfolio,
      is the primary source of the Company’s income and is primarily impacted by the
      size of the portfolio and the Company’s management of its portfolio for default
      and delinquencies. The alternative private student loans that the Company
      originated through the Webbank-MRU Lending, Inc. loan program bear variable
      rates of interest that are adjusted monthly with the changes in the London
      Interbank Offered Rate (LIBOR). The alternative student loans that the Company
      currently originates through the Doral Bank-MRU Lending, Inc. and Doral Bank-MRU
      Funding SPV, Inc. loan programs bear variable rates of interest that are
      adjusted quarterly with LIBOR. Since the Company has outsourced the servicing
      of
      its alternative private student loan portfolios to a third party, who is
      responsible for sending monthly statements and collecting payments from our
      borrowers, remitting those payments to the Company, and generating reporting
      on
      its activities to the Company, this third party is also responsible for
      adjusting the interest rates on all alternative student loans based on the
      applicable LIBOR term.





Since
      the
      Company’s alternative student loan portfolio floats with LIBOR either monthly or
      quarterly, the Company feels it has very limited interest rate exposure on
      this
      asset. Post-origination, the Company’s alternative student loan portfolio is
      most affected by rates of default, delinquencies, recoveries, and prepayments.
      The Company originated its first alternative student loan in June 2005, so
      our
      portfolio is not highly seasoned.





In
      determining the adequacy of the allowance for the loan losses on our alternative
      private student loan portfolio, the Company considers several factors including:
      loans in repayment versus those in deferred status, delinquency or default
      status, and recoveries.





The
      Company plans to either sell or securitize its alternative student loan
      portfolio, which will generate a gain on sale for the Company for this asset.
      The timing of this event is dependent on several factors, including but not
      limited to the following: the size of the Company’s alternative private student
      loan portfolio, the financial ability of the Company to hold this asset, the
      market at the time of the transaction for this asset class, and the ability
      of
      the Company to support the requirements for a sale or securitization
      transaction.





Operating
      expenses include the indirect costs to generate and acquire student loans and
      other general and administrative expenses. Operating expenses also include
      the
      depreciation of capital assets and amortization of intangible
      assets.





The
      Company does not believe inflation has a significant effect on its
      operations.





**RESULTS
      OF OPERATIONS**





**FOR
      THE FISCAL YEAR ENDED JUNE 30, 2006 (AUDITED) COMPARED TO THE SIX MONTHS ENDED
      JUNE 30, 2005 (AUDITED) AND THE YEAR ENDED DECEMBER 31, 2004
      (AUDITED).**





**Loan
      Portfolio Interest Income** - Total
      loan portfolio interest increased from $297 for the six months ended June 30,
      2005 to $1,206,160 for the year ended June 30, 2006 as a result of the growth
      of
      the alternative private student loan portfolio, from $158,000 as of June 30,
      2005 to $38.7 million as of June 30, 2006. The Company had no interest income
      for the year ended December 31, 2004 as the Company had no loan portfolio at
      that time.





**Facility
      interest and origination bank costs** - Total
      facility interest and origination bank costs also increased as a result of
      the
      growth of the alternative private student loan portfolio. As of June 30, 2005,
      the Company had not yet made an advance against the credit facility with Nomura
      Credit and Capital (Nomura). As of June 30, 2006, the Company had outstanding
      advance balances with Nomura of approximately $18,730,000 and with the new
      credit facility with Merrill Lynch Bank USA of approximately $17,860,000. The
      Company incurred approximately $947,000 in facility interest costs for the
      year
      ended June 30, 2006.





1




The
      Company incurred approximately $131,000 in originating bank fees and accrued
      interest paid to originating banks (Webbank and Doral Bank FSB NY) during the
      year ending June 30, 2006. For the six months ending June 30, 2005, the Company
      had incurred approximately $10,000 in originating bank fees and accrued interest
      paid to Webbank.





The
      Company did not have a credit facility or loan program agreement (originating
      bank) for the year ended December 31, 2004, when facility interest and
      origination bank costs were $0 for the year.





**Valuation
      Reserve - Student Loans Receivables** - As of
      June 30, 2006, the Company established a valuation reserve of approximately
      $815,000 based upon a review of the Company’s alternative private student loans
      that are in repayment and extrapolating those default, delinquency, and recovery
      experiences to both currently serviced and deferred loans in its alternative
      private student loan portfolio. As of June 30, 2005, the Company had no
      experience with defaults, delinquencies, or recoveries that would support a
      valuation reserve on its $158,000 alternative private student loan
      portfolio.





**Referral
      Marketing Costs** - As of
      June 30, 2006, the Company had incurred approximately $372,000 in referral
      marketing costs paid to third parties for referring student loan borrowers
      to
      the Company to fund in alternative private student loans or to refer to other
      lenders for other student loan product funding. This increased from
      approximately $190,000 in referral marketing costs paid to third parties in
      the
      six months ending June 30, 2005, which were exclusively for student loan
      borrowers that the Company referred to other lenders for consolidation student
      loan funding.





**Operating
      expenses** -
      Operating expenses increased to approximately $24.2 million for the year ending
      June 30, 2006 from approximately $4.1 million for the six months ending June
      30,
      2005.




Stock-based
      compensation accounted for $7.8 million of the approximately $22.8 million
      in
      total operating expenses that the Company incurred for the year ending June
      30,
      2006. This resulted from the Company’s compliance with FAS 123R.




Salaries
      and benefits increased approximately $3.6 million for the year ending June
      30,
      2006 from the six months ending June 30, 2005 as a result of the Company’s
      increased student loan originations.




Advertising
      costs increased approximately $4.3 million for the year ending June 30, 2006
      from the six months ending June 30, 2005 as a result of the Company’s expanding
      presence in the marketplace.




Amortization
      of deferred financing fees accounted for $1.8 million in total operating
      expenses for the year ending June 30, 2006. These costs resulted from the
      Company’s student loan credit facilities with Nomura Credit and Capital and
      Merrill Lynch Bank USA.





Operating
      expense increased to approximately $4.1 million for the six months ending June
      30, 2005 from approximately $1.9 million for the year ended December 31,
      2004.




Salaries
      and benefits increased approximately $1.4 million for the six months ending
      June
      30, 2005 from the year ending December 31, 2004 as a result of the Company’s
      initial hiring.




Legal
      fees increased approximately $315,000 for the six months ending June 30, 2005
      from the year ending December 31, 2004 resulting from the increased legal fees
      to close the Nomura credit facility.





2




**Financial
      Condition, Liquidity and Capital Resources**





Our
      liquidity requirements have consisted, and we expect that they will continue
      to
      consist, of capital expenditures, working capital, facility interest expenses,
      sales and marketing expenses, and general corporate expenses.





We
      expect
      to continue to leverage our credit facilities with Merrill Lynch and Nomura
      to
      provide the Company the funding required to originate future alternative private
      student loans.





**Cash
      and Cash Equivalents**


As
      of
      June 30, 2006, the Company had cash and cash equivalents of $17,899,504,
      restricted cash of $2,975,430 and accounts receivable of $4,167. As of June
      30,
      2005, the Company had cash and cash equivalents of $6,894,522 and accounts
      receivable of $20,246. The increase in cash and cash equivalents is primarily
      due to our Series B Preferred Convertible Stock Offering in February and May
      2006. The Company maintains cash and cash equivalent balances at financial
      institutions that are insured by the Federal Deposit Insurance Corporation
      up to
      $100,000. The Company’s uninsured cash balances were approximately $19.8 million
      and $6.8 million respectively for the year ended June 30, 2006 and the six
      months ended June 30, 2005.





**Property
      and Equipment, Net**


As
      of
      June 30, 2006, the Company had net property and equipment of $537,131. As of
      June 30, 2005, the Company had net property and equipment of $273,073. The
      increase of $264,058 in net equipment was related to our increase in general
      and
      corporate staff, sales and marketing staff, and operations staff.





**Other
      Prepaid Expenses**


We
      had
      other prepaid expense of $388,477 at June 30, 2006 compared to $133,540 at
      June
      30, 2005. The increase in other prepaid expense was primarily due prepaid
      expenses for the Achiever Fund I LLC affiliate - $86,500.





**Other
      Assets**


We
      had
      other assets of $686,321 at June 30, 2006 and $570,783 at June 30, 2005. The
      increase in other assets is primarily due to $259,293 in net deferred financing
      fees, $120,000 in investment in Achiever Fund I LLC, $98,960 in net intangible
      assets, reduced by decrease in security deposits of $362,715.





**Accounts
      Payable and Accrued Expenses**


We
      had
      accounts payable of $1,410,865, accrued expenses of $870,571, and accrued
      payroll of $161,609 at June 30, 2006 and $577,478 in accounts payable, accrued
      expenses of $170,775, and accrued payroll of $225,644 at June 30, 2005. The
      increase in accounts payable is due to approximately $600,000 in increased
      marketing payables. The increase in accrued expenses from June 30, 2005 to
      June
      30, 2006 is due to approximately $600,000 in accrued Series B Convertible
      Preferred dividends, which are payable in additional shares of Series B
      Convertible Preferred stock.





**Contractual
      Obligations and Commercial Commitments**





Contractual
      Obligations




TOTAL
            
            Current
            
            1-3yrs
            
            >3YrsLong
                Term Debt
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            0Capital
                Lease Obligations
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            0Operating
                Leases
            
            $
            1,500,000
            
            $
            557,000
            
            $
            996,000
            
            $
            0Unconditional
                Purchase Obligations
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            0Other
                Long-Term Obligations
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            0TOTAL
                Contractual Cash Obligations
            
            $
            1,500,000
            
            $
            557,000
            
            $
            996,000
            
            $
            0




3




The
      Company leases office and other corporate space under leases with terms between
      one and four years. Monthly payments under the current leases range between
      $1,525 and $31,860. The Company is required to pay its pro rata share of costs
      relating to certain of the leased facilities. Amounts listed above include
      only
      the contractually obligated portions of these operating leases.





**Commercial
      Commitments**





TOTAL
            
            Current
            
            1-3yrs
            
            >3yrsLines
                of Credit
            
            $
            36,600,000
            
            $
            0
            
            $
            36,600,000
            
            $
            0Standby
                Letters of Credit
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            0Guarantees
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            0Standby
                Repurchase Obligations
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            0Other
                Commercial Commitments
            
            $
            806,000
            
            $
            806,000
            
            $
            0
            
            $
            0TOTAL
                Commercial Commitments
            
            $
            37,400,000
            
            $
            806,000
            
            $
            36,600,000
            
            $
            0




The
      Company has a $165 million three-year credit facility to collateralize its
      alternative private student loans with Nomura Credit and Capital (Nomura) and
      a
      $175 million one-year credit facility with Merrill Lynch Bank USA (Merrill),
      terms of both facilities are described in Part I, Item 1 of this annual report
      10-KSB. At June 30, 2006, the Company has approximately $18,730,000 advanced
      on
      the Nomura Credit and Capital credit facility and approximately $17,864,000
      advanced on the Merrill Lynch Bank US credit facility.





The
      Company’s subsidiaries MRU Lending, Inc. and MRU Funding SPV, Inc. have loan
      sale agreements with Doral Bank Federal Savings Bank New York (Doral Bank).
      At
      June 30, 2006, the Company had total commitments to Doral Bank of approximately
      $806,000.





**Our
      Plan Of Operations For The Next Twelve Months**





In
      the
      near term, we intend to use our cash on hand to support the ongoing operating
      and financing requirements of implementing our business plan. We believe that
      our current liquidity should be sufficient to meet our cash needs for working
      capital through the next twelve months. However, if cash generated from
      operations and cash on hand are not sufficient to satisfy liquidity
      requirements, we will seek to obtain additional debt or equity financing.
      Additional funding may not be available when needed or not available at terms
      acceptable to the Company. If the Company is required to raise additional
      financing and if adequate funds are not available or not available on acceptable
      terms, the ability to fund expansion, develop and enhance products and services,
      or otherwise respond to competitive pressures may be severely limited. Such
      a
      limitation could have a material adverse effect on our business, financial
      conditions, results of operations, and cash flow.





Our
      long-term liquidity will depend on the Company’s ability to execute on our
      business plan and to commercialize our financial products and
      services.





The
      Company is focused on generating private student loan volume from its two
      primary volume channels: direct to consumer and third-party referral marketing
      partners. In the direct to consumer channel, the Company is actively focusing
      on
      leveraging its marketing message and evaluating the mediums in which it
      communicates its message. In the third-party referral marketing partner channel,
      the Company is working with existing referral marketing partners to train
      partner staffs and implement processes and systems to enable referral marketing
      partners’ customers to easily connect to the Company’s products.





Operationally,
      the Company is seeking continuous improvements in its internal processes and
      systems to shorten the time frame from when a customer initiates a credit
      request to when the Company disburses the approved loan. The Company continues
      to attempt to better understand the Company’s customer service experience so
      that prospective and current borrowers can more easily understand the terms
      and
      conditions of the Company’s products versus the Company’s competitors and easily
      comply with the Company’s information requests required to underwrite their
      credit requested.





4




**OFF-BALANCE
      SHEET ARRANGEMENTS**





As
      of
      June 30, 2006, the Company’s MRU Universal Guarantee Agency, Inc. (MRUG)
      subsidiary has no outstanding commitments under the credit line provided by
      the
      commitment letter MRUG received from Universal Finanz Holding AG on October
      25,
      2004.





**CRITICAL
      ACCOUNTING POLICY AND ESTIMATES**





The
      Company’s Management Discussion and Analysis of Financial Condition and Results
      of Operations section discusses our consolidated financial statements, which
      have been prepared in accordance with accounting principles generally accepted
      in the United States of America. The preparation of these financial statements
      requires management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities at the date of the financial statements and
      the reported amounts of revenues and expenses during the reporting period.
      On an
      on-going basis, management evaluates its estimates and judgments, including
      those related to revenue recognition, accrued expenses, financing operations,
      and contingencies and litigation. Management bases its estimates and judgments
      on historical experience and on various other factors that are believed to
      be
      reasonable under the circumstances, the results of which form the basis for
      making judgments about the carrying value of assets and liabilities that are
      not
      readily apparent from other sources. Actual results may differ from these
      estimates under different assumptions or conditions. The most significant
      accounting estimates inherent in the preparation of our financial statements
      include estimates as to the appropriate carrying value of certain assets and
      liabilities which are not readily apparent from other sources. These accounting
      policies are described at relevant sections in this discussion and analysis
      and
      in the notes to the consolidated financial statements included in this annual
      report.





**PART
      II**





**Item
      7. Financial Statements.**





The
      financial statements and related financial statement schedule are included
      herein and filed as a part of this report. See Index on page F-1.





**Item
      8A. Controls and Procedures.**





Our
      Chief
      Executive Officer and our Chief Financial Officer had previously evaluated
      the
      effectiveness of our disclosure controls and procedures as of June 30, 2006.
      Based on this evaluation, they had previously concluded that our disclosure
      controls and procedures were effective, as of that date, in providing a
      reasonable level of assurance that information we are required to disclose
      in
      reports we file or furnish under the Securities Exchange Act of 1934, as
      amended, is disclosed on a timely basis.





In
      connection with this filing on Form 10-KSB/A, our Chief Executive Officer and
      Chief Financial Officer reevaluated our disclosure controls and procedures
      and
      concluded that they were effective as of June 30, 2006 as described above.
      In
      reaching this conclusion, they considered the impact of the restatement of
      our
      financial results set forth herein.




5




**PART
        III**
 
 **Item
        13. Exhibits.**
 
 (a)  The
        following exhibits are to be filed as part of this report:


**Exhibit
                No.**
            **Description**
            
            **Incorporated
                by Reference to**
              **Filings
                Indicated**3.1
            Amended
                and Restated Certificate of Incorporation.
            
            Appendix
                A to the Definitive Information Statement on Form 14C, filed with
                the SEC
                on January 23, 2006, File No. 000-33487.3.2
            By-laws.
            
            Exhibit
                3.4 to the Registration Statement on Form SB-2, filed with the SEC
                on
                August 10, 2001, File No. 333-67222.10.1
            Credit
                Agreement between MRU Lending, Inc. and Nomura Credit & Capital, Inc.,
                dated February 4, 2005.
            
            Exhibit
                10.1 to Company’s Registration Statement on Form SB-2 filed with the SEC
                on March 22, 2005, File No. 333-123503.10.2
            Employment
                Agreement dated November 17, 2004 between the Company and Edwin J.
                McGuinn, Jr.
            
            Exhibit
                10 to Company’s Pre-Effective Amendment No. 1 to Form SB-2 filed with the
                SEC on November 18, 2004, File No. 333-118518.10.3
            Loan
                Program Agreement dated July 25, 2005 between MRU Lending, Inc. and
                Doral
                Bank NY FSB.
            
            Exhibit
                10.1 to Company’s Current Report on Form 8-K filed on July 29, 2005, File
                No. 000-33487.10.4
            Loan
                Sale Agreement dated July 25, 2005 between MRU Lending, Inc. and
                Doral
                Bank NY.
            
            Exhibit
                10.2 to Company’s Current Report on Form 8-K filed on July 29, 2005, File
                No. 000-33487.10.5
            Sublease
                between ISID Finance of America, Inc. and MRU Holdings, Inc. dated
                April
                26, 2005.
            
            Exhibit
                10.1 to Company’s Current Report on From 8-K filed on May 18, 2005, File
                No. 000-33487.10.6
            Guaranty
                of Edwin McGuinn in favor of ISID Finance of America, Inc. dated
                April 26,
                2005.
            
            Exhibit
                10.2 to Company’s Current Report on Form 8-K filed on May 18, 2005, File
                No. 000-33487.10.7
            Securities
                Purchase Agreement by and among MRU Holdings, Inc. and the purchasers
                of
                Series B Convertible Preferred Stock.
            
            Exhibit
                10.1 to the Company’s Current Report on Form 8-K filed with the SEC on
                January 6, 2006, File No. 000-33487.10.8
            Consent
                to Sublease of 1114 Trizechahn-Swig, L.L.C.
            
            Exhibit
                10.3 to Company’s Current Report on Form 8-K filed on May 18, 2005, File
                No. 000-33487.10.9
            Amended
                and Restated 2004 Ominibus Incentive Plan.
            
            Appendix
                C to the Definitive Proxy Statement on Form 14A, filed with the SEC
                on
                September 7, 2005, File No. 000-33487.10.10
            2005
                Consultant Incentive Plan.
            
            Appendix
                B to the Definitive Proxy Statement on Form 14A, filed with the SEC
                on
                September 7, 2005, File No. 000-33487.14.1
            Code
                of Ethics.
            
            Exhibit
                14 to Company’s Annual Report on Form 10-KSB filed on March 22, 2005 (File
                No. 000-33487)21.1
            Subsidiaries
                of the Company
            
            Exhibit
                21 to Company’s Annual Report on Form 10-KSB filed on March 22, 2005 (File
                No. 000-33487)23.1
            Consent
                of Bagell, Josephs & Company, LLC
            
            Exhibit
                23(a) to Company’s Annual Report on Form 10-KSB filed on March 22, 2005
                (File No. 000-33487)31.1
            Certification
                of the Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a),
                as adopted pursuant to Section 302 of the Sarbanes Oxley Act of
                2002.*31.2
            Certification
                of the Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a),
                as adopted pursuant to Section 302 of the Sarbanes Oxley Act of
                2002.*32.1
            Certification
                of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes Oxley Act of
                2002.*32.2
            Certification
                of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes Oxley Act of
                2002.*





________________


*
      filed
      herewith





6




**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, as amended, the Company has duly caused this report to be signed on its
      behalf by the undersigned, thereby duly authorized on February 9, 2007.





MRU
              HOLDINGS,
              INC./s/
              Edwin J. McGuinn, Jr.By:
              Edwin J. McGuinn, Jr.Its:
              Chief Executive Officer




Pursuant
      to the requirements of the Securities Exchange Act of 1934, as amended, this
      report has been signed by the following persons on behalf of the Company and
      in
      the capacities and on the dates indicated.  Date:
              February 9, 2007
            
            /s/
              Edwin J. McGuinn, Jr.By:
              Edwin J. McGuinn, Jr.Its:
              Chief Executive Officer and
              Director


Date:
              February 9, 2007
            
            /s/
              Vishal GargBy:
              Vishal GargIts:
              Chief Financial Officer and Director Date:
              February 9, 2007
            
            /s/
              Raza
              KhanBy:
              Raza KhanIts:
              President and Director




7




**EXHIBIT
      INDEX**





31.1
            Certification
                of the Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a),
                as adopted pursuant to Section 302 of the Sarbanes Oxley Act of
                2002.31.2
            Certification
                of the Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a),
                as adopted pursuant to Section 302 of the Sarbanes Oxley Act of
                2002.32.1
            Certification
                of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes Oxley Act of
                2002.32.2
            Certification
                of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes Oxley Act of
                2002.





8


**MRU
        HOLDINGS, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        FINANCIAL STATEMENTS**
 **FOR
        THE YEAR ENDED**
 **JUNE
        30, 2006 (AUDITED), THE SIX MONTHS ENDED JUNE 30, 2005 (AUDITED), AND THE
        YEAR
        ENDED DECEMBER 31, 2004 (AUDITED)**
  F-1
 
 **MRU
        HOLDINGS, INC. AND SUBSIDIARIES**
 **JUNE
        30, 2006 AND 2005, AND DECEMBER 31, 2004**
 
 
 **INDEX
        TO CONSOLIDATED FINANCIAL STATEMENTS (AUDITED)**
 **FOR
        THE YEAR ENDED JUNE 30, 2006, SIX MONTHS ENDED JUNE 30, 2005, AND YEAR ENDED
        DECEMBER 31, 2004**
 
 
 Report
                  of Independent Registered Accounting Firm
              
              F-3Consolidated
                  Balance Sheets as of June 30, 2006 and 2005(Audited)
              
              F-4Consolidated
                  Statements of Operations for the Year Ended June 30, 2006 (Audited),
                  Six
                  Months Ended June 30, 2005 (Audited), and Year Ended December 31,
                  2004
                  (Audited)
              
              F-5Consolidated
                  Statements of Cash Flows for the Year Ended June 30, 2006 (Audited),
                  Six
                  Months Ended June 30, 2005 (Audited), and Year Ended December 31,
                  2004
                  (Audited)
              
              F-6Consolidated
                  Statement of Changes in Stockholders Equity/(Deficit) from January
                  1, 2004
                  through June 30, 2006 (Audited)
              
              F-7Notes
                  to Consolidated Financial Statements
              
              F-8
 
 
 F-2
  **BAGELL,
        JOSEPHS, LEVINE & COMPANY, L.L.C.**
 Certified
        Public Accountants
 
 High
        Ridge Commons
 Suites
        400-403
 200
        Haddonfield Berlin Road
 Gibbsboro,
        New Jersey 08026
 (856)
        346-2828 Fax (856) 346-2882
 
 **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 Board
        of
        Directors
 MRU
        Holdings, Inc.
 New
        York,
        New York
 
 We
        have
        audited the accompanying consolidated balance sheets of MRU Holdings, Inc.
        and
        Subsidiaries (the “Company) as of June 30, 2006 and 2005 and the related
        consolidated statements of operations, consolidated changes in stockholders’
equity (deficit), and consolidated cash flows for the year ended June 30,
        2006,
        the six months ended June 30, 2005 and the year ended December 31, 2004.
        These
        consolidated financial statements are the responsibility of the Company’s
        management. Our responsibility is to express an opinion on these consolidated
        financial statements based on our audits.
 
 We
        have
        conducted our audits in accordance with standards established by the Public
        Company Accounting Oversight Board (United States). Those standards require
        that
        we plan and perform the audits to obtain reasonable assurance about whether
        the
        financial statements are free of material misstatement. An audit includes
        examining, on a test basis, evidence supporting the amounts and disclosures
        in
        the consolidated financial statements. An audit also includes assessing the
        accounting principles used and significant estimates made by management,
        as well
        as evaluating the overall consolidated financial statement presentation.
        We
        believe that our audits provide a reasonable basis for our opinion.
 
 In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the consolidated financial position of MRU Holdings,
        Inc. and Subsidiaries as of June 30, 2006 and 2005 and the results of their
        consolidated operations, changes in stockholders’ equity (deficit) and cash
        flows for the year ended June 30, 2006, the six months ended June 30, 2005
        and
        the year ended December 31, 2004 in conformity with accounting principles
        generally accepted in the United States of America.
 
 As
        discussed in Note 15 to the financial statements, the accompanying financial
        statements have been restated.
 
 **BAGELL,
        JOSEPHS, LEVINE & COMPANY, L.L.C.**
 BAGELL,
        JOSEPHS, LEVINE & COMPANY, L.L.C.
 Certified
        Public Accountants
 Gibbsboro,
        New Jersey
 September
        28, 2006, except for Note 15 which is as of February 8,
        2007
 
  MEMBER
                  OF:
              AMERICAN
                  INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
                CENTER
                  FOR PUBLIC COMPANY AUDIT FIRMS (CPCAF)
                NEW
                  JERSEY SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
                PENNSYLVANIA
                  INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
                FLORIDA
                  STATE BOARD OF ACCOUNTANCY
  F-3
 
 **MRU
        HOLDINGS, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        AUDITED BALANCE SHEETS**
 **JUNE
        30, 2006 AND JUNE 30, 2005**
 
 **ASSETS****2006**
              
              **2005****(Restated)**
              
              **(Restated)****CURRENT
                  ASSETS:**Cash
                  and cash equivalents
              
              $
              17,899,504
              
              $
              6,894,522Restricted
                  cash
              
              
              2,975,430
              
              
              -Accounts
                  receivable
              
              
              4,167
              
              
              20,246Private
                  student loans receivable, held for sale, lower of cost of
                  market
              
              
              39,564,367
              
              
              158,479Valuation
                  reserve - private student loans receivable
              
              
              (814,631
              )
              
              -Collateral
                  deposit - student loans
              
              
              0
              
              
              250,000Prepaid
                  expenses and other current assets
              
              
              388,477
              
              
              133,540**Total
                  Current Assets**
              
              
              **60,017,314**
              
              
              **7,456,787**Fixed
                  assets, net of depreciation
              
              
              537,131
              
              
              273,073**OTHER
                  ASSETS:**Security
                  deposits
              
              
              30,248
              
              
              392,963Intangible
                  assets, net of amortization
              
              
              98,960
              
              
              0Investment
                  in Achiever Fund I, LLC
              
              
              120,000
              
              
              0Deferred
                  financing fees, net of amortization
              
              
              1,930,854
              
              
              177,820**Total
                  Other Assets**
              
              
              **2,180,062**
              
              
              **570,783****TOTAL
                  ASSETS**
              
              **$**
              **62,734,507**
              
              **$**
              **8,300,643****LIABILITIES
                  AND STOCKHOLDERS' EQUITY (DEFICIT)****CURRENT
                  LIABILITIES:**Accounts
                  payable
              
              $
              1,410,865
              
              $
              577,478Accrued
                  expenses
              
              
              870,571
              
              
              170,775Accrued
                  payroll
              
              
              161,609
              
              
              225,644Notes
                  payable - Doral Bank FSB NY
              
              
              806,182
              
              
              0Notes
                  payable - Merrill Lynch
              
              
              17,863,560
              
              
              0**Total
                  Current Liabilities**
              
              
              **21,112,787**
              
              
              **973,897****LONG-TERM
                  LIABILITIES:**Notes
                  payable - Nomura Credit & Capital
              
              
              18,732,264
              
              
              0
 Deferred
                  origination fee revenue
              
              
              1,327,273
              
              
              7,388**Total
                  Long-term Liabilities**
              
              
              **20,059,537**
              
              
              **7,388****Total
                  Liabilities**
              
              
              **41,172,324**
              
              
              **981,285****STOCKHOLDERS'
                  EQUITY (DEFICIT)**Preferred
                  Stock, Series A, $.001 par value; 25,000,000 shares
                  authorized0
                  and 3,250,006 shares issued and outstanding as of 06/30/2006 and
                06/30/2005
              
              
              0
              
              
              3,250Preferred
                  Stock, Series B, $.001 par value; 25,000,000 shares
                  authorized7,631,580
                  and 0 shares issued and outstanding as of 06/30/2006 and
                06/30/2005
              
              
              7,632
              
              
              0Common
                  Stock, $.001 par value; 200,000,000 shares authorized, 17,593,565and
                  13,664,502 issued and outstanding as of 06/30/2006 and
                  06/30/2005
              
              
              17,593
              
              
              13,664Additional
                  paid-in capital
              
              
              35,775,538
              
              
              6,426,066Additional
                  paid-in capital - options
              
              
              7,518,079
              
              
              0Additional
                  paid-in capital - Series A beneficial conversion feature
              
              
              6,334,174
              
              
              6,175,000Additional
                  paid-in capital - Series B beneficial conversion feature
              
              
              10,847,759
              
              
              0Additional
                  paid-in capital - warrants
              
              
              10,369,549
              
              
              7,382,068Accumulated
                  deficit
              
              
              (49,308,141
              )
              
              (12,680,690
              )**Total
                  Stockholders' Equity (Deficit)**
              
              
              **21,562,183**
              
              
              **7,319,358****TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT)**
              
              **$**
              **62,734,507**
              
              **$**
              **8,300,643**
  **The
        accompanying notes are an integral part of these consolidated financial
        statements.**
  F-4
 
 **MRU
        HOLDINGS, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 **FOR
        THE YEAR ENDED JUNE 30, 2006 (AUDITED), SIX MONTHS ENDED JUNE 30, 2005
        (AUDITED),AND YEAR ENDED DECEMBER 31, 2004 (AUDITED)**
 
 **Year**
              
              **Six
                  Months**
              
              **Year****Ended**
              
              **Ended**
              
              **Ended****June
                  30,**
              
              **June
                  30,**
              
              **December
                  31,****2006**
              
              **2005**
              
              **2004****(Audited)**
              
              **(Audited)**
              
              **(Audited)****(Restated)**
              
              **(Restated)****OPERATING
                  REVENUE:**Referral
                  income - consolidation student loans
              
              $
              0
              
              $
              238,175
              
              $
              0Referral
                  income - private student loans
              
              
              1,889
              
              
              881
              
              
              8,177Loan
                  portfolio interest income - private student loans
              
              
              1,206,160
              
              
              297
              
              
              0Origination
                  fee revenue - private student loans
              
              
              9,526
              
              
              0
              
              
              0Late
                  payment fee revenue - private student loans
              
              
              494
              
              
              0
              
              
              0License
                  income
              
              
              26,423
              
              
              0
              
              
              0**Total
                  Operating Revenue**
              
              
              **1,244,492**
              
              
              **239,353**
              
              
              **8,177****COST
                  OF REVENUES**Referral
                  marketing costs - consolidation student loans
              
              
              23,300
              
              
              189,725
              
              
              0Referral
                  marketing costs - private student loans
              
              
              348,822
              
              
              0
              
              
              0Facility
                  interest and origination bank costs
              
              
              1,078,202
              
              
              10,185
              
              
              0Valuation
                  reserve - private student loans
              
              
              814,631
              
              
              0
              
              
              0Consulting
                  and hosting
              
              
              53,775
              
              
              0
              
              
              0Servicing
                  and custodial costs
              
              
              82,625
              
              
              25,070
              
              
              0**Total
                  Cost of Revenues**
              
              
              **2,401,355**
              
              
              **224,980**
              
              
              **0****GROSS
                  PROFIT/(LOSS)**
              
              
              (1,156,863
              )
              
              14,373
              
              
              8,177**OPERATING
                  EXPENSES**Corporate
                  general and administrative expenses
              
              
              9,609,122
              
              
              1,104,701
              
              
              774,122Sales
                  and marketing expenses
              
              
              7,447,426
              
              
              791,261
              
              
              312,301Operations
                  expenses
              
              
              2,522,738
              
              
              257,307
              
              
              35,687Technology
                  development
              
              
              1,466,705
              
              
              855,132
              
              
              158,646Legal
                  expenses
              
              
              590,513
              
              
              791,011
              
              
              475,984Other
                  operating expenses
              
              
              661,255
              
              
              247,807
              
              
              98,894Depreciation
                  and amortization
              
              
              1,969,858
              
              
              70,595
              
              
              13,782**Total
                  Operating Expenses**
              
              
              24,267,617
              
              
              4,117,814
              
              
              1,869,416**OPERATING
                  (LOSS)**
              
              
              (25,424,480
              )
              
              (4,103,441
              )
              
              (1,861,239
              )
 **OTHER
                  INCOME/(EXPENSE)**Interest
                  income
              
              
              428,201
              
              
              83,398
              
              
              13,931Interest
                  expense
              
              
              (23,501
              )
              
              (67,905
              )
              
              (22,133
              )Other
                  non-operating income/(expense)
              
              
              30,868
              
              
              16,785
              
              
              (1,992
              )**Total
                  Other Income/(Expense)**
              
              
              **435,568**
              
              
              **32,278**
              
              
              **(10,194**
              **)****NET
                  (LOSS) BEFORE PROVISION FOR INCOME TAXES**
              
              
              **(24,988,912**
              **)**
              
              **(4,071,163**
              **)**
              
              **(1,871,433**
              **)**Provision
                  for income taxes
              
              
              0
              
              
              0
              
              
              0**NET
                  (LOSS)**
              
              **$**
              **(24,988,912**
              **)**
              **$**
              **(4,071,163**
              **)**
              **$**
              **(1,871,433**
              **)**LESS
                  PREFERRED STOCK DIVIDEND
              
              
              (11,606,683
              )
              
              (6,175,000
              )
              
              0**(LOSS)
                  APPLICABLE TO COMMON SHARES**
              
              **$**
              **(36,595,595**
              **)**
              **$**
              **(10,246,163**
              **)**
              **$**
              **(1,871,433**
              **)****NET
                  (LOSS) PER BASIC AND DILUTED SHARES**
              
              **$**
              **(2.42**
              **)**
              **$**
              **(0.75**
              **)**
              **$**
              **(0.14**
              **)**WEIGHTED
                  AVERAGE NUMBER OF COMMONSHARES
                  OUTSTANDING
              
              
              15,100,652
              
              
              13,608,511
              
              
              13,209,331
  **The
        accompanying notes are an integral part of these consolidated financial
        statements.**
  F-5
  **MRU
        HOLDINGS, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **FOR
        THE YEAR ENDED JUNE 30, 2006 (AUDITED), SIX MONTHS ENDED JUNE 30, 2005
        (AUDITED),AND THE YEAR ENDED DECEMBER 31, 2004
        (AUDITED)**
 
 
 **2006**
              
              **2005**
              
              **2004****CASH
                  FLOWS FROM OPERATING ACTIVITIES**Net
                  (loss)
              
              $
              (36,595,595
              )
              $
              (10,246,163
              )
              $
              (1,871,433
              )**Adjustments
                  to reconcile net loss to net cash****used
                  in operating activities:**Depreciation
                  and amortization
              
              
              1,969,858
              
              
              70,595
              
              
              13,782Series
                  A Preferred Stock Dividend
              
              
              758,924
              
              
              6,175,000
              
              
              -Series
                  B Preferred Stock Dividend
              
              
              10,847,759
              
              
              -
              
              
              -Increase
                  in stock options outstanding
              
              
              7,814,692
              
              
              0
              
              
              0(Increase)
                  in tax provision valuation stock options outstanding
              
              
              (2,656,995
              )
              
              0
              
              
              0Increase
                  in valuation reserve - private student loans
              
              
              814,631
              
              
              0
              
              
              0**Changes
                  in assets and liabilities**Decrease/(Increase)
                  in accounts receivable
              
              
              16,079
              
              
              (20,246
              )
              
              0(Increase)
                  in restricted cash
              
              
              (2,975,430
              )Decrease/(increase)
                  in collateral deposit - student loans
              
              
              250,000
              
              
              (250,000
              )
              
              0(Increase)
                  in prepaid expenses and other current assets
              
              
              (254,937
              )
              
              41,016
              
              
              (180,032
              )Decrease/(increase)
                  in security deposits
              
              
              362,715
              
              
              (386,938
              )
              
              0(Increase)
                  in student loans receivable, held for sale
              
              
              (39,405,888
              )
              
              (158,479
              )
              
              0Increase
                  in accounts payable and accrued expenses
              
              
              1,039,898
              
              
              165,584
              
              
              458,482(Decrease)/Increase
                  in accrued payroll
              
              
              (64,035
              )
              
              225,644
              
              
              0Increase
                  in deferred origination fee revenue
              
              
              1,319,885
              
              
              7,388
              
              
              0Total
                  adjustments
              
              
              (20,162,845
              )
              
              5,869,564
              
              
              292,232**Net
                  cash (used in) operating activities**
              
              
              (56,758,440
              )
              
              (4,376,599
              )
              
              (1,579,201
              )**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Acquisition
                  of fixed assets and intangible assets
              
              
              (573,977
              )
              
              (247,867
              )
              
              (70,409
              )(Increase)
                  in investment in Achiever Fund I LLC
              
              
              (120,000
              )
              
              0
              
              
              0**Net
                  cash (used in) investing activities**
              
              
              (693,977
              )
              
              (247,867
              )
              
              (70,409
              )**CASH
                  FLOWS FROM FINANCING ACTIVITES**Increase
                  in advances - originating loan program agreements
              
              
              37,624,454
              
              
              0
              
              
              0(Decrease)
                  due to repayments - originating loan program agreements
              
              
              (36,818,272
              )
              
              0
              
              
              0Increase
                  in advances - Nomura Credit and Capital credit facility
              
              
              19,286,667
              
              
              0
              
              
              0(Decrease)
                  due to repayments - Nomura Credit and Capital credit
                  facility
              
              
              (554,403
              )
              
              0
              
              
              0
 Increase
                  in advances - Merrill Lynch credit facility
              
              
              17,920,204
              
              
              0
              
              
              0(Decrease)
                  due to repayments - Merrill Lynch credit facility
              
              
              (56,644
              )
              
              0
              
              
              0Proceeds
                  from bridge loan
              
              
              0
              
              
              0
              
              
              750,000Proceeds
                  from sale of stock and equity, net of expenses
              
              
              0
              
              
              0
              
              
              2,548,438Proceeds
                  from conversion of warrants
              
              
              406,356
              
              
              107,760
              
              
              0Reduction
                  in stock options outstanding due to exercise
              
              
              (296,613
              )
              
              0
              
              
              0Proceeds
                  from conversion of options
              
              
              646,500
              
              
              0
              
              
              0Increase
                  in deferred tax due to stock options outstanding
              
              
              2,656,995
              
              
              0
              
              
              0Costs
                  associated with Series A convertible preferred issuance
              
              
              0
              
              
              (534,899
              )
              
              0Gross
                  proceeds from sale of Series A convertible preferred
                  issuance
              
              
              0
              
              
              10,503,750
              
              
              0(Increase)
                  in deferred financing fees
              
              
              (525,000
              )
              
              (206,500
              )
              
              0Costs
                  associated with Series B convertible preferred issuance
              
              
              (832,845
              )
              
              0
              
              
              0Gross
                  proceeds from sale of Series B convertible preferred
                  issuance
              
              
              29,000,000
              
              
              0
              
              
              0**Net
                  cash provided by financing activities**
              
              
              68,457,399
              
              
              9,870,111
              
              
              3,298,438**NET
                  INCREASE IN CASH AND CASH EQUIVALENTS**
              
              
              11,004,982
              
              
              5,245,645
              
              
              1,648,828**CASH
                  AND CASH EQUIVALENTS - BEGINNING OF PERIOD**
              
              
              6,894,522
              
              
              1,648,877
              
              
              49**CASH
                  AND CASH EQUIVALENTS - END OF PERIOD**
              
              $
              17,899,504
              
              $
              6,894,522
              
              $
              1,648,877**SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:****CASH
                  PAID DURING THE PERIOD FOR:**Interest
                  expense
              
              $
              23,501
              
              $
              67,786
              
              $
              67,786**SUPPLEMENTAL
                  DISCLOSURE OF NON-CASH ACTIVITIES:**Issuance
                  of common stock for conversion of bridge loan
              
              $
              0
              
              $
              0
              
              $
              750,000Issuance
                  of preferred stock in conversion of dividends payable
              
              $
              522,381
              
              $
              0
              
              $
              0Accrued
                  Series A and B stock dividends
              
              $
              599,750
              
              $
              121,086
              
              $
              0Issuance
                  of warrants
              
              $
              2,987,481
              
              $
              7,382,068
              
              $
              0Preferred
                  stock converted to common shares
              
              $
              3,448
              
              $
              0
              
              $
              0
 
 **The
        accompanying notes are an integral part of these consolidated financial
        statements.**
 
 F-6
  **MRU
        HOLDINGS, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)**
 **FOR
        THE YEAR ENDED JUNE 30, 2006 (AUDITED) AND SIX MONTHS ENDED JUNE 30, 2005
        (AUDITED)**
 **AND
        THE YEAR ENDED DECEMBER 31, 2004 (AUDITED)**
  **Additional**
                
                **Additional**
                
                **Additional**
                
                **Additional**
                
                **Additional****Series
                    A Preferred Stock**
                
                **Series
                    B Preferred Stock**
                
                **Common
                    Stock**
                
                **Paid-In**
                
                **Paid-In
                    Capital**
                
                **Paid-In
                    Capital**
                
                **Paid-In
                    Capital**
                
                **Paid-In
                    Capital**
                
                **Accumulated****Shares**
                
                **Amount**
                
                **Shares**
                
                **Amount**
                
                **Shares**
                
                **Amount**
                
                **Capital**
                
                **-
                    Options**
                
                **-
                    Warrants**
                
                **-
                    Series A Ben Conv**
                
                **-
                    Series B Ben Conv**
                
                **(Deficit)**
                
                **Total****(Restated)**
                
                **(Restated)**
                
                **(Restated)****Balance,
                    December 31, 2003**
                
                
                900,000
                
                $
                900
                
                
                0
                
                $
                0
                
                
                10,300,000
                
                $
                10,300
                
                $
                438,800
                
                $
                0
                
                $
                0
                
                
                
                
                
                
                
                
                ($442,008
                )
                $
                7,992Additional
                    capital contribution
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                30,450
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                30,450Net
                    (loss) for the six months endedJune
                    30, 2004 before effects of reverse merger
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (200,889
                )
                
                ($200,889
                )Subtotal-June
                    30, 2004
                
                
                900,000
                
                $
                900
                
                
                0
                
                $
                0
                
                
                10,300,000
                
                $
                10,300
                
                $
                469,250
                
                $
                0
                
                $
                0
                
                $
                0
                
                $
                0
                
                
                ($642,897
                )
                
                ($162,447
                )Effects
                    of Reverse MergerElimination
                    of Iempower equity
                
                
                (900,000
                )
                
                (900
                )
                
                
                
                
                
                
                
                (10,300,000
                )
                
                (10,300
                )
                
                (469,250
                )
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                ($480,450
                )Distribution
                    of Pacific Technology equity to Iempower holders
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                6,863,433
                
                
                6,863
                
                
                439,790
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                446,653Assumption
                    of Pacific Technology liabilities by Iempower holders
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                466,519
                
                
                466
                
                
                29,894
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                30,360Remaining
                    equity in Pacific Technology (now MRU Holdings, Inc.)
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                3,600,000
                
                
                3,600
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                3,600Issuance
                    of shares in conversionof
                    bridge loan and accrued interest
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                468,750
                
                
                469
                
                
                749,531
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                750,000Common
                    stock issued for cash, July 2004 - net of expenses
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                2,150,000
                
                
                2,150
                
                
                2,455,674
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                2,457,824Common
                    stock issued for cash, October 2004
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                37,500
                
                
                38
                
                
                59,962
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                60,000Net
                    (loss) for the period July 1, 2004 to December 31, 2004
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1,670,544
                )
                
                ($1,670,544
                )**Balance,
                    December 31, 2004**
                
                
                0
                
                $
                0
                
                
                0
                
                $
                0
                
                
                13,586,202
                
                $
                13,586
                
                $
                3,734,851
                
                $
                0
                
                $
                0
                
                $
                0
                
                $
                0
                
                
                ($2,313,441
                )
                $
                1,434,996Issuance
                    of Series A preferred stock, February 2005
                
                
                3,250,006
                
                $
                3,250
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                2,583,533
                
                
                
                
                
                7,382,068
                
                
                6,175,000
                
                
                
                
                
                ($6,175,000
                )
                $
                9,968,851Exercise
                    of warrants at $2.00 per share
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                40,000
                
                
                40
                
                
                79,960
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                80,000Exercise
                    of warrants at $1.60 per share
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                7,100
                
                
                7
                
                
                12,153
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                12,160Exercise
                    of warrants at $0.50 per share
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                31,200
                
                
                31
                
                
                15,569
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                15,600Net
                    (loss) for the six monthsended
                    June 30, 2005
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (4,192,249
                )
                
                ($4,192,249
                )**Balance,
                    June 30, 2005**
                
                
                3,250,006
                
                $
                3,250
                
                
                0
                
                $
                0
                
                
                13,664,502
                
                $
                13,664
                
                $
                6,426,066
                
                $
                0
                
                $
                7,382,068
                
                $
                6,175,000
                
                $
                0
                
                
                ($12,680,690
                )
                $
                7,319,358Exercise
                    of warrants at $2.00 per share
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                145,709
                
                
                146
                
                
                291,273
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                291,419Exercise
                    of warrants at $1.60 per share
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                46,050
                
                
                46
                
                
                73,634
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                73,680Exercise
                    of warrants at $0.99 per share
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                21,060
                
                
                21
                
                
                20,927
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                20,948Exercise
                    of warrants at $0.50 per share
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                37,021
                
                
                37
                
                
                18,473
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                18,510Exercise
                    of warrants at $0.02 per share
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                89,950
                
                
                90
                
                
                1,709
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                1,799Exercise
                    of options at $3.07 per share
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                16,250
                
                
                16
                
                
                83,984
                
                
                (34,113
                )
                
                
                
                
                
                
                
                
                
                
                
                
                $
                49,887Exercise
                    of options at $3.00 per share
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                50,000
                
                
                50
                
                
                224,950
                
                
                (75,000
                )
                
                
                
                
                
                
                
                
                
                
                
                
                $
                150,000Exercise
                    of options at $2.00 per share
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                75,000
                
                
                75
                
                
                337,425
                
                
                (187,500
                )
                
                
                
                
                
                
                
                
                
                
                
                
                $
                150,000Issuance
                    of Series A preferred stock dividend
                
                
                198,017
                
                
                198
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                137,573
                
                
                
                
                
                
                
                
                159,174
                
                
                
                
                
                (191,029
                )
                $
                105,916Conversion
                    of Series A preferred stock, January 2006
                
                
                (3,448,023
                )
                
                (3,448
                )
                
                
                
                
                
                
                
                3,448,023
                
                
                3,448
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                0Issuance
                    of Series B preferred stock, net of expenses, May 2006
                
                
                
                
                
                
                
                
                7,631,580
                
                
                7,632
                
                
                
                
                
                
                
                
                28,159,524
                
                
                
                
                
                
                
                
                
                
                
                10,516,318
                
                
                (10,516,318
                )
                $
                28,167,156Accrue
                    Series B preferred stock dividend
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                331,441
                
                
                (931,191
                )
                
                ($599,750
                )Accrue
                    warrants issued to Merrill Lynch
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                2,987,481
                
                
                
                
                
                
                
                
                
                
                $
                2,987,481Accrue
                    FAS123R stock option expense
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                7,814,692
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                7,814,692Net
                    (loss) for the year ended June 30, 2006(24,988,912
                )
                
                ($24,988,912
                )**Balance,
                    June 30, 2006**
                
                
                0
                
                $
                0
                
                
                7,631,580
                
                $
                7,632
                
                
                17,593,565
                
                $
                17,593
                
                $
                35,775,538
                
                $
                7,518,079
                
                $
                10,369,549
                
                $
                6,334,174
                
                $
                10,847,759
                
                
                ($49,308,140
                )
                $
                21,562,183
  **The
        accompanying notes are an integral part of these consolidated financial
        statements.**
 
 F-7
  **MRU
        HOLDINGS, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2006 AND 2005 AND DECEMBER 31, 2004**
 
 **NOTE
        1 -** **ORGANIZATION
        AND BASIS OF PRESENTATION**
 
 The
        Company was incorporated in Delaware on March 2, 2000 as Dr. Protein.Com,
        Inc.
        and on March 7, 2003 changed its name to Pacific Technology, Inc. On July
        6,
        2004 the Company changed its name to MRU Holdings, Inc. On May 20, 2005 the
        Board of Directors of the Company approved a change in the Company’s year end
        from December 31 st to June
        30 th .
 
 On
        September 20, 2005, the 2005 Annual Meeting of Stockholders was held at the
        principal offices of the Company. At the Annual Meeting the Company’s
        stockholders voted on, and approved by requisite stockholder vote, the following
        matters: 1) the election of six directors to the Company’s Board of Directors,
        2) Adoption of the 2005 Consultant Incentive Plan, 3) Adoption of an Amendment
        and Restatement to the 2004 Omnibus Incentive Plan, and 4) Approval of an
        Amendment to the Company’s Certificate of Incorporation to increase the number
        of authorized shares of common stock from 50,000,000 shares to 200,000,000
        shares and the number of authorized shares of preferred stock from 5,000,000
        shares to 25,000,000.
 
 **NOTE
        2 -** **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES**
 
 **Principles
        of Consolidation**
 
 The
        consolidated financial statements include the accounts of the Company and
        all
        its wholly owned subsidiaries. All intercompany accounts and transactions
        were
        eliminated in consolidation.
 
 **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 of 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.
 
 **Revenue
        Recognition**
 
 The
        Company records its revenue on the accrual basis, whereby revenue is recognized
        when earned and expenses recognized when incurred.
 
 The
        Company recognizes referral income from referring consolidation and private
        student loan requests to other lenders when payments are received from referral
        partners, since referral partners only remit payments for those borrowers
        after
        the referred borrowers have completed the loan process. As of June 30, 2006,
        the
        Company has terminated all referral agreements to consolidation and private
        lenders and will only be paid in the future for referral income from previously
        referred borrowers funded by other lenders.
 
 Interest
        income on student loans receivable is recognized in accordance with SFAS
        91, **“** *Accounting
        for Nonrefundable Fees and Costs Associated with Originating or Acquiring
        Loans
        and Initial Direct Costs of Leases”.*
  The
        Company follows SFAS 91for the revenue recognition of origination fee
        revenue *,* whereby
        loan origination fees are deferred and recognized over the life of the loan
        as
        an adjustment of yield (interest income).
  F-8
  Costs
        of Revenues
  The
        Company includes as costs of revenues all direct costs related to the production
        of the various revenue streams of the Company’s business.
 
 For
        the
        year ended June 30, 2006, the Company incurred $1,078,202 in credit facility
        interest costs related to the collateralization of its private student loan
        portfolios and originating bank costs, $348,822 in referral marketing costs
        related to the generation of the Company’s private student loans, $82,626 in
        student loan servicing and custodial costs, $53,775 in consulting and hosting
        costs for the scholarship search product, and $23,300 in referral marketing
        costs related to referring consolidation loan borrowers to other
        lenders.
 
 For
        the
        six months ended June 30, 2005, the Company incurred $189,725 in referral
        marketing costs related to referring consolidation loan borrowers to other
        lenders, $25,070 in student loan servicing and custodial costs, and $10,185
        in
        originating bank costs.
 
 For
        the
        year ended December 31, 2004, the Company incurred no costs of
        revenues.
 
 **Valuation
        Reserve - Student Loan Receivables**
  The
          Company’s private student loans receivable portfolios are held for sale, valued
          at the lower of cost or market. The valuation reserve represents management’s
          estimate of possible losses on the Company’s analysis of its portfolio. This
          evaluation process is subject to numerous estimates and judgments.
 
 In
          determining the adequacy of the valuation reserve for the private student
          loans
          receivable portfolio, the Company considers several factors including:
          2003
          United States Department of Education’s cohort default rates for Title IV
          post-secondary educational institutions (adjusted for particular characteristics
          of individual borrowers including the university attended, program of study,
          academic progress in the current or prior program of study, and current
          or prior
          employment history), portfolio loan performance of those loans in repayment
          versus those in nonpayment status, and portfolio delinquency and default
          performance. Should any of these factors change, the estimates made by
          management would also change, which in turn would impact the level of the
          Company’s future valuation reserve process.
  The
          valuation reserve is maintained at a level management believes is adequate
          to
          provide for estimated possible credit losses inherent in the student loans
          receivable portfolio. This evaluation is inherently subjective because
          it
          requires estimates that may be susceptible to significant changes.
 
 For
          the
          fiscal year ended June 30, 2006, the Company recorded $814,631 as a valuation
          reserve for its private student loans receivable. There was no valuation
          reserve
          established for the fiscal year ended June 30, 2005 as the Company  had
          no
          expectation of a valuation reserve using our valuation reserve process
          at that
          time.
 
 The
          Company places a private student loan receivable on nonaccrual status and
          charges off the loan when the collection of principal and/or interest is
          180
          days past due or if the Company learns of an event or circumstance, which
          in the
          Company’s judgment causes the loan to have a high probability of nonpayment,
          even before the collection of principal and/or interest is 180 days past
          due.
          The Company’s third party servicer works with borrowers who have temporarily
          ceased making full payments due to hardship of other factors, according
          to a
          schedule approved by the third party servicer that is consistent with
          established loan program servicing procedures and policies. Loan granted
          deferment or forbearance will move off principal and/or interest repayment,
          although these loans will continue to accrue interest. The Company is motivated
          to work with the servicer in identifying borrowers who may be delinquent
          on
          their loans due to misinformation (students frequently change addresses)
          or
          availing the student borrower deferment or forbearance. The Company wishes
          to
          actively manage its servicing and collection process for two principal
          reasons:
          to assist student borrowers maintain their credit ratings and to keep the
          Company’s valuation reserve as low as possible.
 
 An
          analysis of the Company’s valuation reserve is presented in the following table
          for the three months and fiscal year ended June 30, 2006:
 F-9
  Three
                  Months
              
              Fiscal
                  YearEnding
                  6/30/06
              
              Ending
                  6/30/06Balance
                  at beginning of period
              
              $
              0
              
              $
              0Valuation
                  reserve increase/(decrease)Federally
                  insured loans
              
              
              0
              
              
              0Private
                  student loans
              
              
              814,631
              
              
              814,631Total
                  valuation reserve change
              
              
              814,631
              
              
              814,631Charge-offs,
                  net of recoveriesFederally
                  insured loans
              
              
              0
              
              
              0Private
                  student loans
              
              
              0
              
              
              0Net
                  charge-offs
              
              
              0
              
              
              0Balance
                  at end of period
              
              $
              814,631
              
              $
              814,631Private
                  student loan valuation reserve as apercentage
                  of the private student loansreceivable
                  portfolio
              
              
              
              
              
              2.06
              %
 
 The
        Company has no loans on nonaccrual status through June 30, 2006.
 
 **Cash
        and Cash Equivalents**
 
 The
        Company considers all highly liquid debt instruments and other short-term
        investments with an initial maturity of three months or less to be cash
        equivalents. The Company maintains cash and cash equivalent balances at
        financial institutions that are insured by the Federal Deposit Insurance
        Corporation up to $100,000. At June 30, 2006 and 2005, the Company’s uninsured
        cash balances were $19,782,730 and $6,805,965, respectively.
 
 Included
        in cash and cash equivalents are restricted cash deposits that are not available
        to the Company for working capital purposes. At June 30, 2006 and 2005, the
        Company’s restricted cash balances were $2,975,430 and $0,
        respectively.
 
 **Collateral
        Deposit - Student Loans**
 
 On
        May 5,
        2005, the Company entered into a loan purchase and sale agreement with Webbank,
        a Utah state chartered financial institution, which required the Company
        to post
        $250,000 as a collateral deposit in an interest-bearing account with Webbank.
        The deposit was returned to the Company as part of the termination of the
        loan
        purchase and sale agreement with Webbank in November 2005.
 
 **Security
        Deposits**
 
 As
        of
        June 30, 2006 and June 30, 2005, the Company had $30,248 and $392,963
        respectively in security deposits held and controlled by other parties to
        secure
        lease agreements the Company has for office space and facilities in New York
        City.
 
 **Fixed
        Assets**
 
 Fixed
        assets are stated at cost. Depreciation is computed primarily using the
        straight-line method over the estimated useful life of the assets.
  Computer
                  network equipment
              3
                  YearsLeasehold
                  improvements
              3
                  YearsFurniture
                  and fixtures
              3
                  Years
  F-10
  **Investment
        in Achiever Fund I, LLC**
 
 On
        April
        18, 2006, the Company entered into a definitive agreement with a consortium
        of
        European financial institutions with significant experience in consumer lending
        and specialty financial products to support the launch and origination of
        PreprimeTM student loans. These private student loans address the market of
        post-secondary school borrowers who are currently unable to meet traditional
        private student loan underwriting criteria, e.g. thin or no credit history,
        insufficient earnings history, etc. The Company will be both the managing
        member
        (through its Achiever Funding LLC affiliate) and a minority investor in the
        Achiever Fund I LLC. As of December 31, 2006, the Company’s investment
        percentage in these affiliates was less than five (5%) percent.
 
 The
        Company has not consolidated these affiliates within its financial statements
        per FASB Interpretation 46, *Consolidation
        of Variable Interest Entities* (FIN
        46). FIN 46 requires consolidation by business entities of variable interest
        entities, which have one or more of the following characteristics (the Company’s
        application of the facts of the agreement to FIN 46 requirements are noted
        after
        each):
 
 1. The
        equity investment at risk is not sufficient to permit the entity to finance
        its
        activities without additional subordinated financial support provided by
        any
        parties, including the equity holders. (The agreement anticipated the need
        for
        more than the initial funding for each member up to a limit of $26M. The
        Company
        is limited to $1M in potential equity investment in this
        agreement.)
 2. The
        equity investors lack one or more of the following essential characteristics
        of
        a controlling financial interest:
 a. The
        direct or indirect ability to make decisions about the entity’s activities
        through voting rights or similar rights. (Achiever Fund I, LLC is controlled
        by
        a board of directors with voting rights held by the equity
        investors).
 b. The
        obligation to absorb the expected losses of the entity (Gains and losses
        are
        allocated to members based on their respective investments).
 c. The
        right
        to receive the expected residual return of the entity (Residual interests
        are
        returned to the members in a pro rata distribution based on their respective
        percentage interests)
 3. The
        equity investors have voting rights that are not proportionate to their economic
        interests, and the activities of the entity involve or are conducted on behalf
        of an investor with a disproportionately small voting interest. (Voting Rights:
        The agreement requires the unanimous vote of the members; under Delaware
        law,
        managers who are also members have the same rights and powers of other members
        unless the operating agreement provides otherwise. Entity Activities: Achiever
        Fund I, LLC provide student loans to unrelated third parties and thereby
        generates profits which are allocated to the members in proportion to their
        respective percentage interests.)
 
 The
        Company accounts for this investment at the lower of cost or fair value,
        which
        is the Company’s investment basis (cost), per EITF 03-16, *Accounting
        for Investments in Limited Liability Companies* .
 
 **Income
        Taxes**
 
 The
        income tax benefit is computed on the pretax income (loss) based on the current
        tax law. Deferred income taxes are recognized for the tax consequences in
        future
        years of differences between the tax basis of assets and liabilities and
        their
        financial reporting amounts at each year-end based on enacted tax laws and
        statutory tax rates.
 
 **Advertising**
 
 The
        Company expenses the costs associated with advertising and marketing as
        incurred. Advertising and marketing expenses, included in the statements
        of
        operations for the year ended June 30, 2006, the six months ended June 30,
        2005,
        and the year ended December 31, 2004 were $7,447,426,  $124,504,
        and $16,030, respectively.
 
 **Reclassification**
 
 Certain
        amounts in the June 30, 2005 and December 31, 2004 financial statements have
        been reclassified to conform to the June 30, 2006 presentation. There was
        no
        effect on net loss for the periods
 
 F-11
  Note
        that
        the Company revised its Statement of Changes in Stockholders’ Equity through
        June 30, 2005 to delete all references to the former public company (Pacific
        Technology, Inc.), the accounting acquiree, and to present only the equity
        of
        the former private company (Iempower, Inc.), the accounting acquirer in the
        reverse merger that transpired.
 
 **(Loss)
        Per Share of Common Stock**
 
 Historical
        net (loss) per common share is computed using the weighted average number
        of
        shares of common stock outstanding. Diluted earnings per share (EPS) include
        additional dilution from common stock equivalents, such as stock issuable
        pursuant to the exercise of stock options and warrants.
 
 The
        following is a reconciliation of the computation for basic and diluted EPS
        for
        the year ended June 30, 2006, the six months ended June 30, 2005, and the
        year
        ended December 31, 2004:
  Net
                  (loss)
              
              $
              (36,595,595
              )
              $
              (10,246,163
              )
              $
              (1,871,433
              )Weighted-average
                  common stockOutstanding
                  (Basic)
              
              
              15,100,652
              
              
              13,608,511
              
              
              13,209,331Weighted-average
                  common stockequivalents:Stock
                  options
              
              
              -
              
              
              -
              
              
              -Warrants
              
              
              -
              
              
              -
              
              
              -Weighted-average
                  common stockoutstanding
                  (Diluted)
              
              
              15,100,652
              
              
              13,608,511
              
              
              13,209,331
 
 For
        June
        30, 2006 and 2005 and for December 31, 2004, warrants (15,604,968, and
        11,357,856, and 3,214,727, respectively) were not included in the computation
        of
        diluted EPS because their inclusion would have been antidilutive. For June
        30,
        2006 and 2005 and for December 31, 2004, options (4,320,485, and 1,500,000,
        and
        478,750, respectively) were not included in the computation of diluted EPS
        because their inclusion would have been antidilutive.
 
 **Financial
        Instruments Disclosures of Fair Value**
 
 Statement
          of Financial Accounting Standard 107, *Disclosures
          about Fair Value of Financial Instruments* ,
          (FAS
          107), requires entities to disclose the fair value of all (recognized and
          unrecognized) financial instruments that is practicable to estimate, including
          liabilities. The estimates of fair value of financial instruments are summarized
          as follows:
 
 Carrying
          amounts approximate fair value
 June
              
              June30,
                  2006
              
              30,
                  2005Cash
              
              $
              17,899,504
              
              $
              6,894,522Restricted
                  cash
              
              
              2,975,430
              
              
              0Accounts
                  Receivable
              
              
              4,167
              
              
              20,246Collateral
                  deposit - student loans
              
              
              0
              
              
              250,000Investment
                  in Achiever Fund I, LLC
              
              
              120,000
              
              
              0Accounts
                  Payable
              
              
              1,410,865
              
              
              577,478Notes
                  Payable - Doral Bank
              
              
              806,182
              
              
              0Notes
                  Payable - Merrill Lynch
              
              
              17,863,560
              
              
              0Notes
                  Payable - Nomura
              
              
              18,732,264
              
              
              0
  F-12
 
 Fair
          values approximate carrying values because of the short time until realization.
          The fair value of the Investment in Achiever Fund I, LLC was valued at
          cost
          since this entity only began to originate student loans during June,
          2006.
  Assets
        with fair values exceeding carrying amounts
 
 June
                  30, 2006Carrying
                  Value
              
              Fair
                  ValuePrivate
                  student loans receivable, held for sale
              
              $
              39,564,367
              
              $
              42,869,602
  June
                  30, 2005Carrying
                  Value
              
              Fair
                  ValuePrivate
                  student loan receivable, held for sale
              
              $
              158,479
              
              $
              176,014
 
 The
          Company determined the fair value of its student loans receivable through
          a net
          present value analysis. The Company collates data from a variety of public
          and
          private sources, including the United States Department of Education, individual
          colleges and universities, academic research studies, the Company’s internal
          research and survey efforts as well as the data from credit bureaus and
          other
          credit grantors. This Company’s net present value analysis considered the
          following: the 2003 United States Department of Education’s cohort default rates
          for Title IV post-secondary educational institutions (adjusted for particular
          characteristics of individual borrowers including the university attended,
          program of study, academic progress in the current or prior program of
          study,
          and current or prior employment history), and individual loan basis of
          valuation, and estimated prepayment assumptions. As of June 30, 2006, the
          approximate 8% increase in fair value over the carrying value, which is
          the
          Company’s cost, results from this net present value modeling of future cash
          flows from the borrowers servicing these loans tempered by all of the above
          factors.
 **Stock
        Based Compensation**
 
 At
        June
        30, 2006, the Company had two stock-based compensation plans, the revised
        2004
        Omnibus Incentive Plan and the 2005 Consultant Incentive Plan, both of which
        were registered with the Securities and Exchange Commission in November,
        2005.
        During the quarter ended December 31, 2005, the Company adopted the Financial
        Accounting Standards Board (FASB) Statement 123(R), *Share-Based
        Payments* (FAS
        123R). FAS 123R requires compensation expense, measured as the fair value
        at the
        grant date, related to share-based payment transactions to be recognized
        in the
        financial statements over the period that an employee provides service in
        exchange for the award.
 
 The
        Company recognized $7,814,692 in stock based compensation expense for the
        year
        ended June 30, 2006.
 
 **Recent
        Accounting Pronouncements**
 
 In
        July
        2006, the FASB issued FASB Interpretation 48, *Accounting
        for Uncertainty in Income Taxes* - an
        interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting
        for uncertainty in income taxes recognized in an entity’s financial statements
        in accordance with SFAS 109, *Accounting
        for Income Taxes* .
        FIN 48
        prescribes a recognition threshold and measurement attribute for financial
        statement disclosure of tax positions taken or expected to be taken on a
        tax
        return. This interpretation is effective for fiscal years beginning after
        December 15, 2006. Consistent with the requirements of FIN 48, the Company
        will
        adopt this pronouncement on July 1, 2007. The Company is currently evaluating
        the provisions of FIN 48 and has not yet determined the impact, if any, on
        the
        Company’s consolidated financial statements.
 
 In
        March
        2006, the FASB issued SFAS 156, *Accounting
        for the Servicing of Financial Assets* ,
        an
        amendment of FASB Statement 140 *Accounting
        for Transfers and Servicing of Financial Assets and Extinguishments of
        Liabilities* (SFAS
        156). SFAS 140 requires that all separately recognized servicing assets and
        liabilities be initially measured at fair value, if practicable, and requires
        entities to elect either fair value measurement with changes in fair value
        reflected in earnings or the amortization and impairment requirements of
        SFAS
        140 for subsequent measurement. SFAS 156 will be effective for the Company
        beginning in the first quarter of fiscal 2007. The adoption of SFAS 156 is
        not
        expected to have any material impact on the Company’s consolidated financial
        condition or results of operations.
 
 F-13
  In
        February 2006, the FASB issued SFAS 155, *Accounting
        for Certain Hybrid Financial Instruments* ,
        an
        amendment of FASB Statement 133 *Accounting
        for Derivative Instruments and Hedging Activities* and FASB
        Statement 140 *Accounting
        for Transfers and Servicing of Financial Assets and Extinguishments of
        Liabilities* (SFAS
        155). SFAS 155 will be effective for the Company beginning in the first quarter
        of fiscal 2007. SFAS 155 permits interests in hybrid financial instruments
        that
        contain an embedded derivative, which would otherwise require bifurcation,
        to be
        accounted for as a single financial instrument at fair value, with changes
        in
        fair value to be recognized in earnings. This election is permitted on an
        instrument-by-instrument basis for all hybrid financial instruments held,
        obtained, or issued as of the adoption date. The adoption of SFAS 155 is
        not
        expected to have any material impact on the Company’s consolidated financial
        condition or results of operations.
  **NOTE
        3 -** **STUDENT
        LOAN RECEIVABLES, HELD FOR SALE**
 
 Student
          loan receivables are private student loans made to post-secondary and/or
          graduate students pursuing degree programs from selective colleges and
          universities in the United States of America and abroad. Private student
          loans
          are not guaranteed by any governmental entity and are unsecured consumer
          debt.
          Interest accrues on these loans from date of advance, with the interest
          rate
          dependent on the student borrower’s choice of repayment option (deferred,
          interest payment only, and principal and interest payment). Once these
          loans
          begin to service, borrower payments are applied to interest and principal
          consistent with the effective interest rate method per SFAS 91, *Accounting
          for Nonrefundable Fees and Costs Associated with Originating or Acquiring
          Loans
          and Initial Direct Costs of Leases* .
          Origination fee revenue is recognized, if applicable, over the principal
          servicing life of the loan, also per SFAS 91.
  The
          Company values its student loan receivables at the lower of cost or market.
          The
          Company determines the fair market value of its student loans receivable
          through
          a net present value analysis of its student loan portfolios on an individual
          loan basis. This process is described in Note 2, Financial Instruments
          Disclosures of Fair Value for private student loans receivable. The Company
          intends to sell or securitize student loans receivable at a time indefinite,
          such action is largely dependent on the Company’s ability to originate and/or
          hold similar student loans receivable to bundle for sale or
          securitization.
 
 MRU
          Lending, Inc. and MRU Funding SPV, Inc. have loan purchase agreements with
          Doral
          Bank Federal Savings Bank New York, an affiliate of the Doral Financial
          Corporation. Through November 30, 2005, MRU Lending, Inc. had a loan purchase
          agreement with Webbank, a Utah state chartered financial institution and
          a
          wholly owned subsidiary of WebFinancial Corporation.
  The
          Doral-MRU Lending loan program is secured by a $1 million ninety-day certificate
          of deposit held by MRU Lending at Doral Bank, with assignment rights to
          Doral
          Bank.  The Doral-MRU Funding SPV loan program is secured by a $1 million
          ninety-day certificate of deposit held by MRU Funding SPV at Doral Bank,
          with
          assignment rights to Doral Bank.
 
 Through
          June 30, 2006, the Company purchased the following private student loan
          volumes
          through its various subsidiary loan programs:
 o
            The
                Doral-MRU Lending loan program purchased approximately $18.3 million
                in
                private student loans. 
 o
            The
                Doral-MRU Funding SPV loan program purchased approximately $18.4
                million
                in private student loans. 
 o
            The
                Webbank-MRU Lending loan program purchased approximately $1.5 million
                in
                private student loans.  F-14
 
 The
          Company has retained servicing rights on the loans purchased under its
          various
          subsidiary loan programs and has outsourced the servicing function to a
          third
          party, who remits funds collected to us along with monthly activity
          reports.
 **NOTE
        4 -** **FIXED
        ASSETS**
 
 Fixed
        assets consisted of the following at June 30, 2006 and 2005:
  2006
              
              2005Computer
                  network equipment
              
              $
              691,872
              
              $
              302,803Furniture
                  and fixtures
              
              
              57,912
              
              
              21,994Leasehold
                  improvements
              
              
              5,884
              
              
              5,884755,668
              
              
              330,681Less:
                  accumulated depreciation
              
              
              (218,537
              )
              
              (57,608
              )Total
                  fixed assets
              
              $
              537,131
              
              $
              273,073
  Depreciation
        expense for the year ended June 30, 2006 and the six months ended June 30,
        2005
        was $160,930 and $41,915, respectively.
 
 **NOTE
        5 -** **INTANGIBLE
        ASSETS**
 
 The
        Company acquired a scholarship resource database in July, 2005. After
        identification of tangible assets in this asset purchase, the Company paid
        and
        assigned a valuation of $148,440 to this intangible asset. The Company is
        amortizing this asset over a three year useful life. As of June 30, 2006,
        the
        book value of this intangible asset, net of $49,480 accumulated amortization,
        was $98,960.
 
 **NOTE
        6 -** **PROVISION
        FOR INCOME TAXES**
 
 Income
        taxes are provided for the tax effects of transactions reported in the financial
        statements and consist of taxes currently due. Deferred taxes related to
        differences between the basis of assets and liabilities for financial and
        income
        tax reporting will either be taxable or deductible when the assets or
        liabilities are recovered or settled. The difference between the basis of
        assets
        and liabilities for financial and income tax reporting are not material;
        therefore, the provision for income taxes from operations consist of income
        taxes currently payable.
 
 The
        nature of the timing differences generating the deferred tax asset is the
        accumulated net operating loss carry forwards that can be applied towards
        mitigating future tax liabilities of the Company. The Company has established
        a
        valuation account at the full value of the tax deferred asset.
 
 There
        was
        no provision for income taxes for the year ended June 30, 2006, for the six
        months ended June 30, 2005, and the year ended December 31, 2004
 
 Deferred
        income taxes are determined using the liability method for the temporary
        differences between the financial reporting basis and income tax basis of
        the
        Company’s assets and liabilities. Deferred income taxes will be measured based
        on the tax rates expected to be in effect when the temporary differences
        are
        included in the Company’s consolidated tax return. Deferred tax assets and
        liabilities are recognized based on anticipated future tax consequences
        attributable to differences between financial statements carrying amounts
        of
        assets and liabilities and their respective tax bases.
 
 F-15
  The
        Company’s deferred tax asset, for which the Company has set aside a valuation
        allowance at an equal amount, is due to the expected tax benefit of the
        Company’s net operating losses. To date, the Company’s operations have not
        generated any federal, state, or local taxes beyond the minimum filing
        requirements, which cannot and have not been mitigated by operating loss
        carryforwards. The Company does not have an effective tax rate due to the
        Company’s lack of taxable profits to date.
  2006
              
              2005
              
              2004Deferred
                  tax assets
              
              $
              8,496,230
              
              $
              1,951,707
              
              $
              192,629Less:
                  valuation allowance
              
              
              (8,496,230
              )
              
              (1,951,707
              )
              
              (192,629
              )Totals
              
              $
              -
              
              $
              -
              
              $
              -
 
 At
        June
        30, 2006 and 2005 and December 31, 2004, the Company had accumulated net
        operating loss deficits of $32,561,269, $7,572,357, and $3,501,194,
        respectively, available to offset future taxable income through 2026. The
        Company established valuation allowances equal to the full amount of the
        deferred tax assets due to the uncertainty of the operating losses in future
        periods. The Company’s beneficial conversion features for the Series A and B
        Convertible Preferred Stock increase the Company’s accumulated deficit but does
        not contribute to net operating losses that can be used to offset future
        taxable
        income.
 
 Following
        is the Company’s approximated schedule of net operating loss carry
        forwards:
  December
                  31, 2000
              
              $
              1,495,761December
                  31, 2003
              
              $
              134,000December
                  31, 2004
              
              $
              1,871,433June
                  30, 2005
              
              $
              4,071,163June
                  30, 2006
              
              $
              24,988,912
  **NOTE
        7 -** **STOCKHOLDERS’
        EQUITY**
 
 **Common
        Stock**
 
 There
        were 200,000,000 and 50,000,000 shares of common stock authorized, with
        17,593,565 and 13,664,502 shares issued and outstanding at June 30, 2006
        and
        2005, respectively. The par value for the common stock is $.001 per
        share.
 
 The
        following details the common stock transactions for the year ended June 30,
        2006:
 
 ○
              145,709
                  warrants were exercised at a price of $2.00/warrant○
              46,050
                  warrants were exercised at a price of
                  $1.60/warrant
 ○
              21,060
                  warrants were exercised at a price of $0.99/warrant○
              37,021
                  warrants were exercised at a price of
                  $0.50/warrant
 ○
              89,950
                  warrants were exercised at a price of $0.02/warrant○
              16,250
                  employee options were exercised at a price of
                  $3.07/option
 ○
              50,000
                  employee options were exercised at a price of
                  $3.00/option○
              75,000
                  employee options were exercised at a price of
                  $2.00/option
 ○
              765,479
                  and 2,682,544 shares of Preferred Series A were voluntarily and
                  manditorily converted to common,
                  respectively
  F-16
  The
        following details the common stock transactions for the six months ended
        June
        30, 2005:
 
 ○
              40,000
                  warrants were exercised at a price of $2.00/warrant○
              7,100
                  warrants were exercised at a price of
                  $1.60/warrant
 ○
              31,200
                  warrants were exercised at a price of
                  $0.50/warrant
 
 **Series
        A Convertible Preferred Stock**
 
 There
        were 25,000,000 and 5,000,000 shares of Series A Convertible Preferred Stock
        authorized, with 0 and 3,250,006 issued and outstanding as of June 30, 2006
        and
        2005, respectively. The par value for the preferred shares is $0.001 per
        share.
  On
        January 27, 2005, the Company filed a Designation of Powers, Preferences
        and
        Rights of Series A Convertible Preferred Stock, par value $0.001 per share
        (the
        Certificate of Designation) with the Secretary of State of the State of
        Delaware. Pursuant thereto, the Company authorized 4,500,000 shares of its
        preferred stock to be designated as Series A Convertible Preferred Stock
        and
        issued or offered at a purchase price equal to $3.50 per share. A total of
        3,250,006 shares of the Series A Convertible Preferred Stock have been sold
        by
        the Company in the private placement transaction
 
 The
        Series A Convertible Preferred Stock was convertible at any time into common
        stock of the Company at a price of $3.50 per share subject to adjustment
        for
        future stock issuances, splits, dividends, and recapitalizations. For the
        first
        year of issuance, cumulative dividends of 7% per annum were payable quarterly
        in
        additional shares of Series A Convertible Preferred Stock. The Series A
        Convertible Preferred Stock has no voting rights except on certain defaults
        in
        the Company’s payment of dividends and as otherwise required by law.
 
 The
        Company issued 198,017 shares of Series A Convertible Preferred Stock as
        a
        dividend.
 
 On
        January 12, 2006, the Board of the Directors of the Company approved and
        authorized the mandatory conversion of the Series A Convertible Preferred
        Stock
        into the Company’s Common Stock whereas the market price of the Company’s Common
        Stock had exceeded $4.025 (115% of the $3.50 conversion price, as required
        by
        the Certificate of Designation of Powers, Preferences, and Rights of the
        Series
        A Convertible Preferred Stock) for twenty of the thirty most recent consecutive
        trading days, with the thirtieth day period concluding on January 12, 2006.
        There were 3,448,023 shares of Series A Convertible Preferred Stock converted
        to
        common stock.
 
 For
        the
        fiscal year ended June 30, 2006 and June 30, 2005, the additional paid-in
        capital account for the beneficial conversion feature for the Series A
        Convertible Preferred Stock was $6,334,174 and $6,175,000, respectively.
        Since
        the Company has no issued and outstanding shares of Series A Convertible
        Preferred Stock as of June 30, 2006, there will be no additional beneficial
        conversion feature to record for this issuance.
 
 **Series
        B Convertible Preferred Private Placement**
 
 On
        December 30, 2005, the controlling Series A Convertible Preferred Stockholders
        approved an amendment and restatement of the Company’s Certificate of
        Incorporation, to be effective on or about February 13, 2006, creating
        12,000,000 shares of Series B Convertible Preferred Stock with a $0.001 par
        value and a $3.80 purchase price. The power, preferences, and rights of the
        Series B Convertible Preferred Stock set forth in the Amended and Restated
        Certificate of Incorporation include voting rights, dividends, liquidation
        preference, conversion rights, protective provisions, redemption, election
        of
        board of directors, and right of first refusal in any offerings of Series
        A
        Convertible Preferred Stock or Common Stock.
 
 On
        January 5, 2006, the Company agreed to issue 6,578,948 shares of the Series
        B
        Convertible Preferred Stock at $3.80 per share to various funds of Battery
        Ventures and Merrill Lynch Institutional Management Equity Partners. The
        transaction closed on February 13, 2006. Proceeds of the financing will be
        used
        to advance the Company’s growth in the private student loan market.
 
 F-17
  On
        January 20, 2006, the Company received $5 million in proceeds from bridge
        promissory notes due to various funds of Battery Ventures and Merrill Lynch
        Institutional Management Equity Partners, bearing interest at six (6%) percent
        per annum based on a 365 day year. The outstanding balance of these notes,
        together with accrued and unpaid interest thereon, shall be due and payable
        no
        later than the earlier of (a) April 15, 2006 or (b) the closing date of the
        private placement of Series B Convertible Preferred Stock to which the Company
        receives gross proceeds of at least $25 million. These notes were retired
        with
        accrued interest on February 13, 2006.
 
 On
        May 8,
        2006, the Company agreed to issue an additional 1,052,632 shares of the Series
        B
        Convertible Preferred Stock at $3.80 per share to LBI Group, Inc. and Keane
        Capital V, LLC. Proceeds of the financing will be used to continue the Company’s
        growth in the private student loan market.
 
 All
        Series B Convertible Preferred Stock certificates were issued as of May 8,
        2006.
 
 As
        of
        June 30, 2006, the Series B Convertible Preferred Stock issued has not been
        registered with the Securities and Exchange Commission.
 
 For
        the
        fiscal year ended June 30, 2006, the additional paid-in capital account for
        the
        beneficial conversion feature for the Series B Convertible Preferred Stock
        was
        $10,847,759. The Company will continue to recognize additional beneficial
        conversion feature to record for this issuance if dividends and/or additional
        issuances are recorded or issued.
 
 **Stock
        Options**
 
 Under
        the
        amended 2004 Omnibus Incentive Plan (OIP), the Company may grant incentive
        stock
        options pursuant to Section 422 of the Internal Revenue Code (ISOs),
        non-qualified stock options (NQOs), restricted common stock, restricted common
        stock units, performance grants, unrestricted common stock, or stock
        appreciation rights grants to its officers, directors, and employees and
        NQOs,
        restricted common stock, restricted common stock units, unrestricted common
        stock, or stock appreciation rights to its consultants or third party service
        providers.
 
 The
        Compensation Committee administers the OIP. The Compensation Committee has
        the
        complete authority and discretion to determine the terms of OIP
        grants.
 
 The
        weighted-average fair value of these grants, calculated using the Black-Scholes
        valuation method under the assumptions indicated below, was $2.34 in 2006,
        $2.30
        in 2005, and $3.34 in 2004.
 
 The
        key
        assumptions for the Black-Scholes valuation method include the expected term
        of
        the option, stock price volatility, risk-free interest rate, dividend yield,
        forfeiture rate, and exercise price. Many of these assumptions are judgmental
        and highly sensitive. Following is a table of the key weighted average
        assumptions used in the valuation calculations for the options granted in
        the
        years ended December 31, 2004, June 30, 2005, and June 30, 2006, and a
        discussion of our methodology for developing each of the assumption used
        in the
        valuation model.
 
 Jun-2006
              
              Jun-2005
              
              Dec-2004Expected
                  term
              
              
              6.5
                  yrs
              
              
              6.5
                  yrs
              
              
              6.5
                  yrsExpected
                  volatility
              
              
              26
              %
              
              73
              %
              
              39
              %Risk-free
                  interest rate
              
              
              4.698
              %
              
              4.211
              %
              
              4.360
              %Dividend
                  yield
              
              
              0
              %
              
              0
              %
              
              0
              %
 
 *Expected
        Term* .
        This is
        the period of time over which the options granted are expected to remain
        outstanding. Options granted have a maximum term of ten years. The Company
        lacks
        sufficient historical exercise data that it may rely on to determine expected
        term for the grants issued through June 30, 2006. Therefore the Company relied
        on the simplified method for expected term as defined by the SEC Staff
        Accounting Bulletin 107 (SAB 107), where expected term equals the sum of
        the
        vesting term and the original contractual term, which is then divided by
        two.
        The Company has noted that the simplified method for estimating expected
        term is
        only available for option grants through December 31, 2007, when the SEC
        anticipates more detailed information should be available to the Company.
        An
        increase in the expected term will increase share-based compensation
        expense.
 
 F-18
  *Expected
        Volatility* .
        Actual
        changes in the market value of our stock are used to calculate the volatility
        assumption. The Company calculated daily market value changes during the
        period
        that the grant was issued to determine volatility, which was then annualized.
        An
        increase in the expected volatility will increase share-based compensation
        expense.
 
 *Risk-Free
        Interest Rate* .
        This is
        the ten-year US Treasury zero coupon bond interest rate posted at the date
        of
        grant having a term equal to the expected term of the option. An increase
        in the
        risk-free interest rate will increase share-based compensation
        expense.
 
 *Dividend
        Yield* .
        This is
        the annual rate of dividends per share over the exercise price of the option.
        The Company has no history of paying a dividend, so this has been 0%. An
        increase in the dividend yield will increase share-based compensation
        expense.
 
 *Forfeiture
        Rate* .
        This is
        the estimated percentage of options granted that are expected to be forfeited
        before becoming fully vested, i.e. service-based awards where the full award
        does not vest due non-completion of the service by the employee, director,
        or
        consultant. This percentage is derived from historical experience. An increase
        in the forfeiture rate will decrease compensation expense.
 
 The
        following table summarizes the stock option activity for OIP the years ended
        June 30, 2006 and 2005:
  2006
              
              2005Options
                  outstanding at beginning of year
              
              
              1,500,000
              
              
              1,430,000Options
                  granted
              
              
              2,733,498
              
              
              70,000Options
                  exercised
              
              
              (141,250
              )
              
              0Options
                  forfeited or expired
              
              
              (8,750
              )
              
              0Options
                  outstanding at year end
              
              
              4,083,498
              
              
              1,500,000Exercisable
                  options at year end
              
              
              2,355,845
              
              
              711,249
  The
        following table summarizes the stock option activity for consultant NQO plan
        for
        the years ended June 30, 2006:
  2006Options
                  outstanding at beginning of year
              
              
              0Options
                  granted
              
              
              236,987Options
                  exercised
              
              
              0Options
                  forfeited or expired
              
              
              0Options
                  outstanding at year end
              
              
              236,987Exercisable
                  options at year end
              
              
              207,820
 
 The
        following table summarizes information about stock options outstanding for
        the
        OIP at June 30, 2006:
  F-19
  Exercise
              
              
              
              Weighted
              
              
              
              WeightedPrice
              
              Number
              
              Average
              
              Number
              
              AverageRange
              
              Outstanding
              
              Remain.
                  Life
              
              Exercisable
              
              Exer.
                  Price$0.01-$1.00
              
              
              600,000
              
              
              8.02
              
              
              600,000
              
              $
              1.00$1.01-$2.00
              
              
              570,000
              
              
              8.27
              
              
              514,581
              
              $
              1.61$2.01-$3.00
              
              
              393,250
              
              
              9.13
              
              
              216,192
              
              $
              2.94$3.01-$4.00
              
              
              2,124,748
              
              
              9.25
              
              
              875,904
              
              $
              3.23$4.01-$7.00
              
              
              395,500
              
              
              9.76
              
              
              149,168
              
              $
              5.11TOTAL
              
              
              4,083,498
              
              
              
              
              
              2,355,845
              
              $
              2.40
 
 The
        following table summarizes information about stock options outstanding for
        the
        consultant NQO plan at June 30, 2006:
  Exercise
              
              
              
              Weighted
              
              
              
              WeightedPrice
              
              Number
              
              Average
              
              Number
              
              AverageRange
              
              Outstanding
              
              Remain.
                  Life
              
              Exercisable
              
              Exer.
                  Price$0.01-$1.00
              
              
              0
              
              
              0.00
              
              
              0
              
              $
              0.00$1.01-$2.00
              
              
              25,000
              
              
              8.08
              
              
              8,333
              
              $
              2.00$2.01-$3.00
              
              
              0
              
              
              0.00
              
              
              0
              
              $
              0.00$3.01-$4.00
              
              
              108,500
              
              
              9.30
              
              
              96,000
              
              $
              3.64$4.01-$7.00
              
              
              103,487
              
              
              8.84
              
              
              103,847
              
              $
              4.67TOTAL
              
              
              236,987
              
              
              
              
              
              207,820
              
              $
              4.09
  **Warrants**
 
 During
        2004, the Company issued 3,079,447 common stock warrants related to the issuance
        of shares in the Company after the reverse merger of Iempower and Pacific
        Technology. The warrants vest upon grant date and expire three years from
        grant
        date. These warrants may be called by the Company if the Company’s common stock
        trades at or above $3.00 per share for twenty consecutive days before the
        Company exercises this call option. For warrant holders that do not elect
        to
        participate at the call, the Company will buy back their warrants at the
        par
        value of the underlying security, which for the Company’s common stock is $0.001
        per share.
 
 During
        2004, no warrants were exercised.
 
 In
        2005,
        through June 30, 2005, the Company issued 227,500 common stock warrants to
        promoters of the Company’s offering of Series A Convertible Preferred Stock. The
        warrants vest upon grant date and expire five years from grant
        date.
 
 In
        2005,
        through June 30, 2005, the Company issued 7,999,449 common stock warrants
        to
        Nomura Credit and Capital, Inc. (Nomura). 6,545,004 warrants vested on February
        4, 2005. 1,454,445 warrants vest on February 4, 2007. The warrants expire
        in ten
        (10) years or thirty (30) days after condition of uncured lender default.
        The
        exercise price for the warrants issued to Nomura is $3.50. The 1,454,445
        warrant
        vesting can be accelerated due to the following events: a merger or
        consolidation of the Company with or into any Person in connection with which
        the holders of the Company’s Common Stock receive any consideration or
        distributions in respect to their holdings of the Company’s Common Stock; or a
        sale by the Company of all or substantially all of its assets; or the
        acquisition by any person or group of Persons of shares of the Company’s Common
        Stock from either the Company or one or more Common Stock holders of the
        Company
        in connection with the acquisition of the beneficial ownership of voting
        capital
        stock of the Company representing more than 40% of the total voting power
        of all
        outstanding shares of capital stock of the Company entitled to vote generally
        in
        elections of the board of directors. The number of shares and the exercise
        price
        for which these warrants are exercisable have anti-dilution protection for
        the
        following: issuance of common stock dividends payable in additional shares
        of
        common stock; or issuance of additional shares of common stock at a price
        that
        is less than the common stock warrant exercise price of $3.50; or any event
        that
        would have the effect of not fairly protecting the purchase rights represented
        by these warrants.
 
 F-20
  In
        2005,
        through June 30, 2005, there were 40,000 warrants exercised at $2.00, 7,100
        warrants exercised at $1.60, and 31,200 warrants exercised at
        $0.50.
 
 In
        2006,
        through June 30, 2006, 2,395,842 common stock warrants were issued to promoters
        and investors related to the private offering of the Company’s Series B
        Convertible Preferred Stock offering. The warrants vest on the grant date
        and
        have a term of five years.
 
 In
        2006,
        through June 30, 2006, the Company issued 1,895,188 common stock warrants
        to
        Merrill Lynch Bank USA (MLBUSA). The exercise price for 1,482,751 warrants
        is
        $3.50. These warrants have the following vesting schedule: 889,651 warrants
        were
        vested upon grant. 296,550 vest upon the first anniversary of the original
        issue
        date, and 296,550 vest upon the second anniversary of the original issue
        date.
        The exercise price for the remaining 412,437 warrants is $3.80. Both warrants
        have ten year terms. These warrants vest in full upon the second anniversary
        of
        the original issue date, assuming that MLBUSA has renewed its credit facility
        with MRU Funding SPV and that MRU Funding SPV is not in default of the credit
        facility. Both warrants contain anti-dilution provisions protecting the holder
        of these warrants from the Company issuing common stock dividends in kind,
        issuance of additional shares of common stock, issuances of stock purchase
        rights and convertible securities, or otherwise reorganize, reclassify, merge,
        consolidate or dispose of the assets of the Company.
 
 In
        2006,
        through June 30, 2006, there were 145,709 warrants exercised at $2.00, 46,050
        warrants exercised at $1.60, 21,060 warrants exercised at $0.99, 37,021 warrants
        exercised at $0.50, and 89,950 warrants exercised at $0.02.
 
 The
        Company has the following warrants outstanding for the purchase of its common
        stock:
  Exercise
              
              Expiration
              
              June
                  30
              
              June
                  30Price
              
              Date
              
              2006
              
              2005$0.02
              
              
              April
                  2009
              
              
              0
              
              
              89,950$0.50
              
              
              September
                  2006
              
              
              0
              
              
              37,021$0.99
              
              
              September
                  2006
              
              
              64,747
              
              
              75,800$0.99
              
              
              December
                  2006
              
              
              808,539
              
              
              818,646$0.99
              
              
              December
                  2007
              
              
              530,603
              
              
              530,603$0.99
              
              
              December
                  2008
              
              
              530,607
              
              
              530,607$0.99
              
              
              April
                  2009
              
              
              22,740
              
              
              22,740$1.60
              
              
              July
                  2007
              
              
              100,000
              
              
              101,000$1.60
              
              
              July
                  2009
              
              
              361,850
              
              
              405,350$2.00
              
              
              July
                  2007
              
              
              374,481
              
              
              512,115$2.00
              
              
              October
                  2007
              
              
              0
              
              
              7,075$3.50
              
              
              February
                  2007
              
              
              7,999,449
              
              
              7,999,449$3.50
              
              
              February
                  2010
              
              
              227,500
              
              
              227,500$3.50
              
              
              February
                  2016
              
              
              1,482,751
              
              
              0$3.80
              
              
              December
                  2010
              
              
              159,000
              
              
              0$3.80
              
              
              February
                  2011
              
              
              2,480,264
              
              
              0$3.80
              
              
              December
                  2016
              
              
              412,437
              
              
              0$4.00
              
              
              April
                  2010
              
              
              50,000
              
              
              0TOTAL
              
              
              
              
              
              15,604,968
              
              
              11,357,856Exercisable
                  warrants
              
              
              
              
              
              13,738,086
              
              
              9,903,411Weighted
                  average exercise price
              
              
              
              
              $
              2.83
              
              $
              2.80
  F-21
 
 **NOTE
        8 -** **CREDIT
        LINE WITH UNIVERSAL FINANZ HOLDING AG**
 
 On,
        October 25, 2004 the Company entered into a commitment letter with Universal
        Finanz Holding AG (“Universal”) under which Universal offered to provide up to
        $50 million of credit support to be used as collateral security for the
        obligations of MRU Universal Guarantee Agency, Inc. (the “Guarantor”), a wholly
        owned subsidiary of the Company, as a guarantor of student loans and lines
        of
        credit arranged by the Company or banks and other financial institutions.
        Universal’s commitment is conditioned on the satisfaction of certain conditions
        including the execution of an agreement providing Universal the right to
        purchase up to 65% ownership interest in the Guarantor and pay the purchase
        price for such ownership interest by releasing the Guarantor from its obligation
        to repay an equal amount of its outstanding obligations to
        Universal.
 
 As
        of
        June 30, 2006, June 30, 2005, and December 31, 2004, there were no amounts
        outstanding on the credit line with Universal Finanz Holding AG to any Company
        subsidiary or affiliate.
 
 **NOTE
        9 -** **CREDIT
        LINE WITH NOMURA CREDIT & CAPITAL, INC.**
 
 On
        February 4, 2005, MRU Lending, Inc. (“MRU Lending”), a wholly-owned subsidiary
        of MRU Holdings, Inc. (“the Company”) entered into a credit agreement (the
“Credit Agreement”), by and among Nomura Credit & Capital, Inc. as Agent
        (“Nomura”), a subsidiary of Nomura Holdings, Inc., and the institutions from
        time to time party thereto as lenders, pursuant to which the lenders have
        agreed
        to provide MRU Lending with a $165 million secured revolving credit facility
        for
        the origination and warehousing of private student loans. The loans under
        the
        Credit Agreement are secured by, among other things, a lien on all of the
        student loans financed under the Credit Agreement and any other student loans
        owned by MRU Lending and not otherwise released, together with a pledge of
        100%
        of the capital stock of MRU Lending. The Credit Agreement contains terms
        and
        provisions (including representations, covenants and conditions) customary
        for
        transactions of this type. The Company paid $206,500 in deferred financing
        fees
        in association with the Credit Agreement. The Company recognized amortization
        expense associated with the financing fees of $68,832 for the year ended
        June
        30, 2006 and $28,680 for the year ended June 30, 2005.
 
 The
        Credit Agreement also provides for customary events of default, including
        failure to pay principal, interest or fees when due, failure to comply with
        covenants, breaches of certain representations and warranties, the bankruptcy
        of
        MRU Lending or MRU Lending Holdco LLC (MRU Lending’s direct parent and
        wholly-owned subsidiary of the Company), failure to maintain certain net
        worth
        ratios, a material adverse change in MRU Lending’s ability to originate student
        loans, and failure of the Company to indirectly own 100% of the outstanding
        capital stock of MRU Lending. The facility has a three year term. As a result
        of
        this transaction, Nomura was granted a warrant, subject to certain terms
        and
        conditions, to purchase common stock of the Company equal to 27.5% ownership
        interest in the Company on a diluted basis.
 
 As
        of
        June 30, 2006, MRU Lending obtained approximately $19 million in financing
        against the Nomura line of credit by collateralization of loans originated
        through the loan programs with Doral Bank FSB New York and Webbank. Through
        purchases of defaulted loans by MRU Lending and repayment by MRU Lending
        to
        Nomura for prepayments and payments of scheduled principal loan payments
        by the
        borrowers to MRU Lending, the June 30, 2006 outstanding balance due Nomura
        by
        MRU Lending is approximately $18.7 million, which is due by February,
        2008.
 
 **NOTE
        10 -** **CREDIT
        LINE WITH MERRILL LYNCH BANK USA (MLBU)**
 
 On
        January 23, 2006, the Company’s private student lending subsidiary, MRU Funding
        SPV, Inc. (MRUF) entered into a definitive agreement with MLBU pursuant to
        which
        MLBU will provide MRUF with a $175 million revolving credit facility for
        the
        origination and warehousing of private student loans. This credit facility
        will
        enable the Company to expand the scope of its school lending program to over
        3,700 programs of higher education. The facility has a one year term. As
        a
        result of this transaction, MLBU was granted a warrant, subject to certain
        terms
        and conditions, to purchase up to 4.9% of the Company’s Common Stock. This
        transaction closed in February 2006. The Company paid $525,000 in deferred
        financing fees in association with the Credit Agreement. The Company recognized
        amortization expense associated with the financing fees of $198,875 for the
        year
        ended June 30, 2006.
 
 F-22
  As
        of
        June 30, 2006, the MRUF obtained approximately $17.9 million in financing
        through the MLBU line of credit by collateralization of loans originated
        through
        the Doral Bank FSB New York-MRUF loan program.
  **NOTE
        11 -** **LOAN
        PROGRAM AGREEMENTS**
 
 On
        July
        25, 2005, MRU Lending, Inc. (“MRUL”), a wholly-owned subsidiary of the Company
        entered into a definitive agreement with Doral Bank NY, FSB (“the Bank”). The
        agreement provides for the Bank’s origination of private student loans to
        qualified applicants participating in MRUL’s private student loan program, the
        marketing of such program and solicitation and qualification of such applicants
        by MRUL or its affiliates and the sale by the Bank and purchase by MRUL of
        such
        student loans at par, i.e. no discount, and without recourse. The business
        purpose of the Loan Program and Loan Sale Agreements between MRUL and the
        Bank
        allow MRUL to purchase student loans originated by a Federal Savings Bank.
        There
        are legal and regulatory advantages to MRUL for purchasing loans originated
        by a
        Federal Savings Bank that are not otherwise available to MRUL. The agreement
        between MRUL and the Bank is evidenced by a Loan Program Agreement and a
        Loan
        Sale Agreement both dated July 25, 2005. The Agreements have a thirty-six
        (36)
        month term and are automatically renewable for up to two (2) successive terms
        of
        twelve (12) months.
 
 The
        balance due to the Bank for origination of MRUL private student loans was
        $44,266 as of June 30, 2006.
 
 On
        January 10, 2006, MRU Originations, Inc. (“MRUO”) and MRU Funding SPV, Inc.
        (“MRUF”), wholly-owned subsidiaries of the Company entered into definitive
        agreements with Doral Bank NY, FSB (“the Bank”). The agreement provides for the
        Bank’s origination of private student loans to qualified applicants
        participating in MRUO’s private student loan program, the marketing of such
        program and solicitation and qualification of such applicants by MRUO and
        the
        sale by the Bank and purchase by MRUF of such student loans at par, i.e.
        no
        discount, and without recourse. The business purpose of the Loan Program
        and
        Loan Sale Agreements between MRUO, MRUF, and the Bank allow MRUF to purchase
        student loans originated by a Federal Savings Bank. There are legal and
        regulatory advantages to MRUF for purchasing loans originated by a Federal
        Savings Bank that are not otherwise available to MRUF. The agreement between
        MRUO and the Bank is evidenced by a Loan Program Agreement dated January
        10,
        2006. The agreement between MRUF and the Bank is evidenced by a Loan Sale
        Agreement dated January 10, 2006. The Agreements have a thirty-six (36) month
        term and are automatically renewable for up to two (2) successive terms of
        twelve (12) months.
 
 The
        balance due to the Bank for origination of MRUO private student loans was
        $761,916 as of June 30, 2006.
 
 On
        May 5,
        2005, MRU Lending, Inc. (“MRUL”), a wholly-owned subsidiary of the Company
        entered into a Loan Program agreement and a Loan Sale agreement with Webbank,
        a
        Utah state chartered financial institution. The agreements provide for Webbank’s
        origination of private student loans to qualified applicants participating
        in
        MRU Lending’s private student loan program, the marketing of such program and
        solicitation and qualification of such applicants by MRUL and the sale by
        Webbank and purchase by MRUL of such student loans at par, i.e. no discount,
        and
        without recourse. The agreements have thirty-six (36) month terms and each
        automatically renew for up to two (2) successive terms of twelve (12) months.
        MRUL and Webbank mutually agreed to terminate both the Loan Program agreement
        and the Loan Sale agreement effective November 30, 2005.
 
 The
        Company has no balance due to Webbank for origination of loans as of June
        30,
        2006 and June 30, 2005.
  F-23
  NOTE
        12 - **PATENTS**
  The
        Company has a patent pending for a business method. This business method
        enables
        the company to provide customized financial products to consumers.
 
 **NOTE
        13 -** **COMMITMENTS
        AND CONTINGENCIES**
 
 **Employment
        Agreements**
 
 The
        Company has three employment agreements with key management personnel. The
        following table summarizes the terms of the employee agreements the Company
        has
        with key management personnel:
  NAME
              
              TITLE
              
              EXPIRATION
                  DATEEdwin
                  J. McGuinn, Jr.
              
              CEO
              
              November
                  11, 2007Raza
                  Khan
              
              President
              
              April
                  1, 2009Vishal
                  Garg
              
              CFO
              
              April
                  1, 2009
  **Operating
        Leases**
 
 The
        Company leases office and other corporate space under leases with terms between
        one and four years. Monthly payments under the current leases range between
        $1,525 and $31,860. The Company is required to pay its pro-rata share of
        costs
        relating to certain of the leased facilities.
 
 The
        following is a schedule by years of future minimum rental payments required
        under the operating leases which have an initial or remaining non-cancelable
        lease term in excess of one year as of December 31, 2006:
 
 For
        the
        year ending June 30, 2006:
  2007
              
              
              539,0152008
              
              
              382,3192009
              
              
              159,2992010
              
              
              0$
              1,080,633
  **NOTE
        14 -** **RELATED
        PARTY TRANSACTIONS**
 
 The
        obligations of the Company under the ISID Finance of America, Inc. sub-lease
        are
        guaranteed by Edwin J. McGuinn, the Company’s Chief Executive Officer, in
        accordance with a Guaranty dated April 26, 2005 executed by Mr. McGuinn in
        favor
        of the Sub-landlord.
 
 **NOTE
        15 -** **RESTATEMENT**
  The
        June
        30, 2006 financial statements have been restated to give effect to the impact
        of
        EITF 98 - 5 *,
        Accounting for Convertible Securities with Beneficial Conversion
        Features*  *or
        Contingently Adjustable Conversion Ratios* ,
        for the
        issuance of its Series A and Series B Convertible Preferred Stock.
  The
        June
        30, 2006 financial statements have been restated to recognize an additional
        preferred stock dividend of $17,181,933 for the effect of the beneficial
        conversion feature contained in its Series A and B Convertible Preferred
        Stock
        resulting from the difference in the issue price per share and the market
        price
        per share of the Company’s common stock on the commitment day for the issuance
        of this Preferred Stock. This change has increased the accumulated deficit
        for
        the period ended June 30, 2006 from $32,126,208 to $49,308,141, increased
        Additional Paid in Capital - Series A and B Beneficial Conversion Feature
        from
        $0 to $17,181,933, and increased net loss per basic and diluted share to
        $2.42
        per share. The effect on total Stockholders’ Equity is zero.
 
 F-24