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**Securities and Exchange Commission									Washington, D.C.****FORM 10QSB**

							(Mark One)								[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934       For the quarterly period ended June 30, 2006							[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934							       For the transition period from                            to                            

000-07693							(Commission file number)**SoftNet Technology Corporation**							(Exact name of small business issuer as specified in its charter)Nevada                                                                                74-3035831							              (State or other jurisdiction                                                            (IRS Employer                     							       of incorporation or organization)                                                  Identification No.)              							 11 Commerce Drive, 2nd FloorCranford, New Jersey  07016							(Address of principal executive offices) (Zip Code)(908) 204-9911							(Issuer's telephone number)							________________________________________							(Former name, former address and former fiscal year,							if changed since last report)

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**PART I. FINANCIAL INFORMATIONItem 1. Financial Statements**

**SOFTNET TECHNOLOGY CORP.									CONDENSED FINANCIAL STATEMENTS									JUNE 30, 2006 AND 2005**

2

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**SOFTNET TECHNOLOGY CORP.									INDEX TO CONDENSED FINANCIAL STATEMENTS**

Condensed Balance Sheet as of June 30, 2006 (Unaudited)                                             4								Condensed Statements of Operations for the Six and Three Months								   Ended June 30, 2006 and 2005 (Unaudited)                                                                5								Condensed Statement of Comprehensive Income (Loss) for the								    Six Months Ended June 30, 2006 and 2005 (Unaudited)                                             6								Condensed Statements of Cash Flows for the Six Months								    Ended June 30, 2006 and 2005 (Unaudited)                                                            7-8								Notes to Consolidated Financial Statements                                                               9-34

3

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| **SOFTNET TECHNOLOGY CORP.**                                                     |
|----------------------------------------------------------------------------------|
| **CONDENSED BALANCE SHEET**                                                      |
| **JUNE 30, 2006 (UNAUDITED)**                                                    |
|                                                                        |  |
| **ASSETS**                                                                       |
|                                                                        |  |
| Current Assets:                                                                  |  |
|   Cash and cash equivalents                                                 |  $         33,192 |
|   Accounts receivable                                                       |           333,037 |
|   Current portion of notes receivable                                       |           148,000 |
|   Prepaid expenses and other current assets                                 |             49,895 |
|                                                                                  |  |
|                                                                        |  |
|     Total Current Assets                                          |           564,124 |
|                                                                                  |  |
|                                                                        |  |
|   Fixed assets, net of depreciation                                         |           119,534 |
|   Deposits                                                                  |               6,171 |
|   Goodwill, net of impairment                                               |        3,171,250 |
|                                                                                  |  |
|                                                                        |  |
| **TOTAL ASSETS**                                                                 |  $    3,861,079 |
|                                                                                  | =========== |
|                                                                        |  |
| **LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)**                               |
|                                                                        |  |
| **LIABILITIES**                                                                  |  |
| Current Liabilities:                                                             |  |
|   Accounts payable and accrued expenses                                     |  $       372,460 |
|   Due to related parties                                                    |           545,375 |
|   Notes payable                                                             |           530,000 |
|                                                                                  |  |
|                                                                        |  |
|       Total Current Liabilities                         |        1,447,835 |
|                                                                                  |  |
|                                                                        |  |
| **      Total Liabilities**                             |        1,447,835 |
|                                                                                  |  |
|                                                                        |  |
| **STOCKHOLDERS' EQUITY (DEFICIT)**                                               |  |
|   Preferred Stock, Series A, $1.00 Par Value; 5,000,000 shares    |  |
|      authorized, 0 shares issued and outstanding        |                    -   |
|   Preferred Stock, Series B, $.001 Par Value; 5,000,000 shares    |  |
|      authorized, and 0 shares issued and outstanding    |                    -   |
|   Common Stock, Class A, $.001  Par Value; 500,000,000                 |  |
|       shares authorized, 400,893,447 shares issued ,    |  |
|       150,000,000 and 0 shares held in escrow and  |  |
|       and 250,893,447 shares outstanding                |           400,893 |
|   Common Stock, Class B, $.001  5,000,000 shares authorized            |  |
|      and 4,000,000 shares issued and outstanding        |               4,000 |
|   Warrants                                                                  |           618,059 |
|   Stock issued as collateral for note payable                               |         (900,000) |
|   Additional paid-in capital                                                |      28,075,734 |
|   Accumulated other comprehensive income (loss)                             |             65,498 |
|   Deficit                                                                   |    (25,850,940) |
|                                                                                  |  |
|                                                                        |  |
| **      Total Stockholders' Equity (Deficit)**          |        2,413,244 |
|                                                                                  |  |
|                                                                        |  |
| **TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)**                         |  $    3,861,079 |
|                                                                                  | =========== |

The accompanying notes are an integral part of the condensed consolidated financial statements.								4

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| **SOFTNET TECHNOLOGY CORP. **                                    |
|-----------------------------------------------------------------------|
| **CONDENSED STATEMENTS OF OPERATIONS**                                |
| **FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2006 AND 2005**         |
| **(UNAUDITED)**                                                       |
|                                                             |  |  |  |  |  |  |  |
|                                                                       | **SIX MONTHS ENDED** |  | **THREE MONTHS ENDED** |
|                                                                       | **JUNE 30,** |  | **JUNE 30,** |
|                                                                       | **2006** |  | **2005** |  | **2006** |  | **2005** |
|                                                             |  |  |  |  |  |  |  |
| **OPERATING REVENUES**                                                |  |  |  |  |  |  |  |
|   Revenue                                                        |  $        2,612,427 |  |  $       229,170 |  |  $      1,518,904 |  |  $     150,551 |
|                                                             |  |  |  |  |  |  |  |
| **COST OF SALES**                                                     |            1,879,516 |  |             51,093 |  |          1,145,543 |  |           31,329 |
|                                                                       |  |  |  |  |  |  |  |
|                                                             |  |  |  |  |  |  |  |
| **GROSS PROFIT **                                                |               732,911 |  |           178,077 |  |             373,361 |  |         119,222 |
|                                                             |  |  |  |  |  |  |  |
| **OPERATING EXPENSES**                                                |  |  |  |  |  |  |  |
|    Professional fees and compensation expenses              |            1,188,705 |  |           700,274 |  |             505,906 |  |         358,975 |
|    Advertising and marketing expenses                       |                 21,474 |  |             61,910 |  |                 2,461 |  |         138,409 |
|    General and administrative expenses                      |               430,264 |  |           200,155 |  |               60,383 |  |           82,038 |
|    Depreciation, amortization and impairment                |            1,165,841 |  |        1,279,275 |  |             203,932 |  |                501 |
|                                                                       |  |  |  |  |  |  |  |
| **       Total Operating Expenses**     |            2,806,284 |  |        2,241,614 |  |             772,682 |  |         579,923 |
|                                                                       |  |  |  |  |  |  |  |
|                                                             |  |  |  |  |  |  |  |
| **LOSS BEFORE OTHER (EXPENSE)**                                       |          (2,073,373) |  |       (2,063,537) |  |            (399,321) |  |        (460,701) |
|                                                             |  |  |  |  |  |  |  |
| **OTHER INCOME (EXPENSE)**                                            |  |  |  |  |  |  |  |
|    Legal settlement                                         |                        -   |  |          (200,000) |  |                       -   |  |                   -   |
|    Loss on conversion of debt to warrants                   |               (49,374) |  |                       - |  |              (49,374) |  |                     - |
|    Interest expense, net                                    |               (31,819) |  |              (3,144) |  |              (26,267) |  |             4,545 |
|                                                                       |  |  |  |  |  |  |  |
| **       Total Other Income (Expense)** |               (81,193) |  |          (203,144) |  |              (75,641) |  |             4,545 |
|                                                        |  |  |  |  |  |  |  |
| **NET LOSS FROM CONTINUING OPERATIONS**                               |          (2,154,566) |  |       (2,266,681) |  |            (474,962) |  |        (456,156) |
|                                                             |  |  |  |  |  |  |  |
| **DISCONTINUED OPERATIONS**                                           |  |  |  |  |  |  |  |
|    Gain (loss) from disposal, net of income taxes           |               513,903 |  |          (299,717) |  |                       -   |  |        (237,558) |
|                                                                       |  |  |  |  |  |  |  |
|                                                             |  |  |  |  |  |  |  |
| **      Total Discontinued Operations**      |               513,903 |  |          (299,717) |  |                       -   |  |        (237,558) |
|                                                                       |  |  |  |  |  |  |  |
|                                                             |  |  |  |  |  |  |  |
| **NET LOSS BEFORE PROVISION FOR INCOME TAXES**                        |          (1,640,663) |  |       (2,566,398) |  |            (474,962) |  |        (693,714) |
|                                                             |  |  |  |  |  |  |  |
| **Provision for Income Taxes**                                        |                 (6,997) |  |                     -   |  |                   (482) |  |                   -   |
|                                                                       |  |  |  |  |  |  |  |
| **  **                                                      |  |  |  |  |  |  |  |
| **NET LOSS APPLICABLE TO COMMON SHARES**                              |  $      (1,647,660) |  |  $   (2,566,398) |  |  $        (475,444) |  |  $    (693,714) |
|                                                                       | ========== |  | ========== |  | ========== |  | ========== |
| **  **                                                      |  |  |  |  |  |  |  |
| **NET LOSS PER BASIC AND DILUTED SHARES**                             |  $               (0.00) |  |  $            (0.01) |  |  $              (0.00) |  |  $          (0.00) |
|                                                                       | ========== |  | ========== |  | ========== |  | ========== |
|    From continuing operations                               |  $               (0.01) |  |  $            (0.01) |  |  $              (0.00) |  |  $          (0.00) |
|                                                                       |  |  |  |  |  |  |  |
|    From discontinued operations                             |  $                  0.00 |  |  $            (0.00) |  |  $                    -   |  |  $          (0.00) |
|                                                                       |  |  |  |  |  |  |  |
|    From sale of subsidiary                                  |  $                     -   |  |  $                  -   |  |  $                    -   |  |  $                -   |
|                                                                       |  |  |  |  |  |  |  |
|                                                             |  |  |  |  |  |  |  |
| **WEIGHTED AVERAGE NUMBER OF COMMON **                           |  |  |  |  |  |  |  |
| **    SHARES OUTSTANDING**                             |        381,079,111 |  |    276,769,172 |  |      394,610,405 |  |  288,236,295 |
|                                                                       | ========== |  | ========== |  | ========== |  | ========== |

The accompanying notes are an integral part of the condensed consolidated financial statements.								5

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| **SOFTNET TECHNOLOGY CORP. **                                 |
|--------------------------------------------------------------------|
| **CONDENSED STATEMENT OF COMPREHENSIVE INCOME (LOSS)**             |
| **FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005**                |
| **(UNAUDITED)**                                                    |
|                                                          |  |
|                                                          |  |
|                                                          |  |
|                                                          |  |
|                                                          |  |
| Deficit, December 31, 2005                                         |  $ (24,203,280) |
|                                                          |  |
|                                                          |  |
| Net loss for the six months ended June 30, 2006                    |       (1,647,660) |
|                                                                    |  |
|                                                     |  |
| **TOTAL DEFICIT JUNE 30, 2006**                                    |  $ (25,850,940) |
|                                                                    | ============== |
|                                                          |  |
|                                                          |  |
| Comprehensive income, December 31, 2005, net of tax                |  $          65,498 |
|                                                          |  |
| **Other comprehensive income, net of tax:**                        |  |
|                                                          |  |
|  Foreign currency gain for six months ended June 30, 2006     |                       - |
|                                                                    |  |
| **  **                                                   |  |
| **Accumulated other comprehensive income**                         |  $          65,498 |
|                                                                    | ============== |
|                                                          |  |
|                                                          |  |
| Deficit, December 31, 2004                                         |  $ (20,403,696) |
|                                                          |  |
|                                                          |  |
| Net loss for the six months ended June 30, 2005                    |       (2,566,398) |
|                                                                    |  |
|                                                     |  |
| **TOTAL DEFICIT JUNE 30, 2005**                                    |  $ (22,970,094) |
|                                                                    | ============== |
|                                                          |  |
|                                                          |  |
| Comprehensive (loss), December 31, 2004, net of tax                |  $          (6,691) |
|                                                          |  |
| **Other comprehensive income, net of tax:**                        |  |
|                                                          |  |
|  Foreign currency gain for the six months ended June 30, 2005 |             56,115 |
|                                                                    |  |
|                                                          |  |
| **Accumulated other comprehensive income**                         |  $         49,424 |
|                                                                    | ============== |

The accompanying notes are an integral part of the condensed consolidated financial statements.								6

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| **SOFTNET TECHNOLOGY CORP. **                                                     |
|----------------------------------------------------------------------------------------|
| **CONDENSED STATEMENTS OF CASH FLOWS**                                                 |
| **FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005**                                    |
| **(UNAUDITED)**                                                                        |
|                                                                              |  |  |  |
|                                                                              |  |  |  |
|                                                                                        | **2006** |  | **2005** |
|                                                                              |  |  |  |
| **CASH FLOW FROM OPERATING ACTIVITIES**                                                |  |  |  |
| **Continuing Operations:**                                                             |  |  |  |
|    Net loss                                                                  |  $   (1,647,660) |  |  $  (2,566,398) |
|                                                                                        |  |  |  |
| **   Adjustments to Reconcile Net (Loss) to Net Cash**                       |  |  |  |
| **     (used in) operating activities:**                           |  |  |  |
|      Depreciation                                             |             16,331 |  |              1,680 |
|      Impairment of goodwill                                        |        1,149,510 |  |       1,277,595 |
|      Common stock issued for consulting services and compensation  |           579,803 |  |          189,211 |
|      Loss on conversion from debt to warrants                      |             49,374 |  |                    -   |
|      Foreign currency change                                       |                     -   |  |            56,115 |
|      Net cash provided received in acquisition of subsidiary       |             37,568 |  |            58,235 |
|                                                                              |  |  |  |
| **  Changes in assets and liabilities**                                           |  |  |  |
|      Decrease in accounts receivable                               |           114,945 |  |            52,528 |
|      Decrease in prepaid expenses                                  |                       - |  |            12,287 |
|      (Increase) in deposits                                        |              (1,245) |  |                      - |
|      (Increase) in inventory                                       |                       - |  |           (28,517) |
|      (Decrease) in accounts payable and                            |  |  |  |
|        and accrued expenses                              |          (452,917) |  |           (38,637) |
|                                                                                        |  |  |  |
|      Total adjustments                                             |        1,493,369 |  |       1,580,497 |
|                                                                                        |  |  |  |
|                                                                              |  |  |  |
| **     Net cash (used in) operating activities - **           |  |  |  |
| **     continuing operations**                                     |          (154,291) |  |         (985,901) |
|                                                                                        |  |  |  |
|                                                                              |  |  |  |
| **Discontinued Operations:**                                                           |  |  |  |
|      Gain (loss) from discontinued operations                      |                     -   |  |          167,432 |
|      Adjustments to Reconcile Net Cash provided by (used in)       |  |  |  |
|      discontinuing operations                                      |            (65,499) |  |            36,858 |
|                                                                                        |  |  |  |
|                                                                                        |  |  |  |
| **     Net cash (used in) operating activities - **           |  |  |  |
| **     discontinued operations**                                   |            (65,499) |  |          204,290 |
|                                                                                        |  |  |  |
|                                                                                        |  |  |  |
| **     Net cash (used in) Operating Activities  **       |          (219,790) |  |         (781,611) |
|                                                                                        |  |  |  |
|                                                                                        |  |  |  |
| **CASH FLOWS FROM INVESTING ACTIVITIES:**                                              |  |  |  |
| **Continuing Operations:**                                                             |  |  |  |
|    (Increase) decrease in amounts due to related parties                     |           217,947 |  |          182,261 |
|    (Increase) decrease in notes receivable                                   |             17,000 |  |         (165,000) |
|    Acquisition of fixed assets                                               |              (2,506) |  |           (10,664) |
|                                                                                        |  |  |  |
|                                                                                        |  |  |  |
| **      Net cash provided by (used in) investing activities** |           232,441 |  |              6,597 |
|                                                                                        |  |  |  |

The accompanying notes are an integral part of the condensed consolidated financial statements.								7

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| **SOFTNET TECHNOLOGY CORP.**                                                           |
|----------------------------------------------------------------------------------------|
| **CONDENSED STATEMENTS OF CASH FLOWS (CONTINUED)**                                     |
| **FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005**                                    |
| **(UNAUDTIED)**                                                                        |
|                                                                              |  |  |  |
|                                                                                        | **2006** |  | **2005** |
|                                                                              |  |  |  |
| **CASH FLOWS FROM FINANCING ACTIVITES**                                                |  |  |  |
| **Continuing Operations:**                                                             |  |  |  |
|     Proceeds from common stock issuances and stock subscriptions        |  $                 -   |  |  $      122,769 |
|     Net payments from issuance of notes payable - other                 |                     -   |  |          735,000 |
|                                                                                        |  |  |  |
| **       Net cash provided by financing activities**     |                     -   |  |          857,769 |
|                                                                                        |  |  |  |
|                                                                              |  |  |  |
| **NET INCREASE IN CASH**                                                               |  |  |  |
| **    AND CASH EQUIVALENTS**                                            |             12,651 |  |            82,755 |
| **  **                                                                       |  |  |  |
| **CASH AND CASH EQUIVALENTS -**                                                        |  |  |  |
| **    BEGINNING OF PERIOD**                                             |             20,541 |  |            50,272 |
|                                                                                        |  |  |  |
| **  **                                                                       |   |  |   |
| **CASH AND CASH EQUIVALENTS - END OF PERIOD**                                          |  $         33,192 |  |  $      133,027 |
|                                                                                        | =========== |  | =========== |
|                                                                              |  |  |  |
| **SUPPLEMENTAL DISCLOSURE OF CASH FLOW **                                         |  |  |  |
| **   INFORMATION:**                                                          |  |  |  |
| **  **                                                                       |  |  |  |
| **CASH PAID DURING THE PERIOD FOR:**                                                   |  |  |  |
|     Interest expense                                                    |  $                   - |  |  $        30,331 |
|                                                                                        | =========== |  | =========== |
|                                                                              |  |  |  |
| **SUPPLEMENTAL DISCLOSURE OF NONCASH**                                                 |  |  |  |
| **  ACTIVITIES:**                                                                 |  |  |  |
|     Issuance of common stock for:                                       |  |  |  |
|        Consulting services                               |  $       384,089 |  |  $      189,211 |
|        Accounts payable                                  |  $         60,648 |  |  $                  - |
|        Prepaid expenses                                  |  $         49,895 |  |  $                  - |
|        Legal settlement                                  |  $                   - |  |  $      200,000 |
|                                                                              |  |  |  |
|        Acquisition of InsPara:                           |  |  |  |
|          Accounts receivable                   |  $      (264,960) |  |  $                -   |
|          Fixed assets                          |          (120,000) |  |                    -   |
|          Deposit                               |              (3,426) |  |                    -   |
|          Accounts payable and accrued expenses |           246,714 |  |                    -   |
|          Goodwill                              |       (4,320,760) |  |                    -   |
|          Common stock issued                   |        4,500,000 |  |                    -   |
|                                                                                        |  |  |  |
|          Cash acquired in acquisiiton          |  $         37,568 |  |  $                  - |
|                                                                                        | =========== |  | =========== |
|                                                                              |  |  |  |
|    Impairment of goodwill                                                    |  $    1,345,224 |  |  $   1,277,595 |
|                                                                                        | =========== |  | =========== |

The accompanying notes are an integral part of the condensed consolidated financial statements.								8

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**SOFTNET TECHNOLOGY CORP. ARIES									NOTES TO CONDENSED FINANCIAL STATEMENTS									JUNE 30, 2006 AND 2005**

**NOTE 1 -    ORGANIZATION AND BASIS OF PRESENTATION**

> 
The unaudited condensed financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  The condensed financial statements and notes are presented as permitted on Form 10-QSB and do not contain information included in the Company’s annual financial statements and notes.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.  It is suggested that these condensed financial statements be read in conjunction with the December 31, 2005 audited financial statements and the accompanying notes thereto.  While management believes the procedures followed in preparing these condensed financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year.										These condensed unaudited financial statements reflect all adjustments, including normal recurring adjustments which, in the opinion of management, are necessary to present fairly the operations and cash flows for the periods presented.										On January 12, 2002, International Mercantile Corporation acquired Solutions Technology, Inc. (“STI”), formerly known as Clickese.com (“Clickese”) for 20,511,365 shares of the Class A common stock, and the former owners of STI acquired the 1,142,858 shares of the Class B common stock for $1. Upon this acquisition, STI became a wholly owned subsidiary of International Mercantile Corporation. STI designs, develops and manufactures biometrical time clocks for tracking employees’ time and attendance.										On February 14, 2002, International Mercantile Corporation changed its name to T & G2 (the “Company”). In addition, the Company changed its domicile to Nevada, which brought about a reverse 8 to 1 stock split, and a change in the par value of the stock to $0.001.										In addition to STI being a wholly owned subsidiary, the Company acquired Zingo Sales Ltd. (“Zingo”) in March 2002 in a 2,500,000 share Class A common stock acquisition. Zingo’s mission is to design, develop, manufacture and market easy to use complete solutions using the latest available technologies. Their first product was a fixed based bingo unit, for which sales had been generated late in 2002. The Company sold this segment in July 2004 for $300,000. This note was paid off during 2005.

9

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**SOFTNET TECHNOLOGY CORP.									NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)									JUNE 30, 2006 AND 2005**

**NOTE 1 -    ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)**

> 
The Company has reflected the results of this subsidiary in the discontinued operations section of the statements of operations, and has restated the 2005 numbers to show retroactive treatment for this disposal in accordance with SFAS 144.										In November 2002, the Company issued a board resolution authorizing an increase to the authorized capital to 100,000,000 Class A common shares and the Class B common shares to remain at the 2,000,000 share level. In February 2003, the Company issued another board resolution authorizing a further increase in its authorized capital. Under this resolution, the Company increased its Class A common shares and Class B common shares to 250,000,000 shares and 5,000,000 shares authorized, respectively. With this change, the Company issued a board resolution to cancel the 1,142,858 Class B common shares, and issue to its officers 2,500,000 Class B common shares each (5,000,000 total) at par value, increased to 500,000,000 in 2004 period.										On April 25, 2001, Secure Time, Inc. merged into Clickese.com at which time the resulting company changed its name to STI. The transaction was valued at $1 per share for 10,500,000 shares. This subsidiary was sold in January 2006.										On or about March 29, 2004, the Company entered into an acquisition agreement with Holtermann & Team, GmbH, a German Company (“Holtermann”), to acquire, effective April 1, 2004, 100% of the assets and equity interests of Holtermann in exchange for 10,000,000 restricted shares of the Company’s Class A Common Stock. Under the terms of the Acquisition Agreement, the Company is the successor in interest to a certain Loan Agreement under which Holtermann is to receive $950,000 by the end of 2004. The shares of common stock were issued in April 2004.										The Company in January 2005 changed the name of its German subsidiary to SoftNet International GmbH. The Company disposed of this subsidiary as of March 31, 2006. This subsidiary conducted no business during the quarter ended March 31, 2006.										The Company acquired WholesaleByUs (“WBU”) on July 9, 2004. WBU is a technology driven company that developed proprietary technology to sell products through the Internet. The Company acquired WBU for $112,000 and 20,000,000 restricted Class A Common Shares of stock. The Company issued 5,000,000 of these shares to WBU and the remaining 15,000,000 shares were to be issued based on sales criteria. This criterion was not reached, therefore these shares were returned to the Company. On November 4, 2005, the Company and WBU entered into a Termination Agreement.										The Company announced on July 22, 2004 a name change to Softnet Technology Corp.

10

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**SOFTNET TECHNOLOGY CORP.										NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)										JUNE 30, 2006 AND 2005**

**NOTE 1 -    ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)**

> 
The Company acquired Indigo Technology Services (Indigo), a technology company based in Atlanta, Georgia and Net Centric Solutions, Inc. in April 2005 for 9,000,000 shares of restricted Class A Common Shares of stock (6,000,000 for Indigo and 3,000,000 for Net Centric). The Company in this transaction acquired $14,170 of accounts receivable and $58,235 in cash. The shares were valued at $.15 per share at the time of the transaction for a value of $1,350,000. The remaining $1,277,595 was recognized as goodwill. Management has determined that the entire amount has been impaired as of December 31, 2005.											Indigo is a provider of business technology consulting and technology products and solutions designed to help companies integrate technology into everyday lives. Indigo is the creator of Guest Worx High Speed Internet Access. Net Centric provides similar services that Indigo provides. On October 17, 2005, Indigo entered into an Asset Purchase Agreement whereby they sold to Seamless Skyy-Fi, Inc. (“Seamless”) all of its right, title and interest in the “Guest Worx” business of Indigo, including without limitation, all assets, property (including the Guest Worx software) and contracts, in a cashless transaction where the consideration consisted of the delivery of the sufficient number of shares of Seamless’ Class C Preferred Stock with a market value of $100,000 as calculated in the Asset Purchase Agreement. These preferred shares have been converted to common shares totaling 2,500,000. The investment represents approximately 2% of Seamless.											On August 1, 2005, the Company acquired the customer lists of Cord Consulting for $200,000. In this acquisition, the Company issued to Cord Consulting a note in the amount of $25,000, and issued to the sole owner of Cord Consulting 727,620 shares of common stock with a value of $175,000. The customer lists were to be amortized over 3 years commencing August 1, 2005.  The Company determined on December 31, 2005 to impair the unamortized balance of  $172,222.											On January 18, 2006 and effective January 1, 2006, the Company and InsPara Networking Technologies, Inc. (“InsPara”) entered into an Agreement and Plan of Reorganization, pursuant to which InsPara would merge with and into the Company. Under this agreement, the stockholders of InsPara received, pro rata, after adjustments for fractional shares and rounding, a total of 49,999,998 shares of common stock of the Company. The Company recognized $4,320,760 of goodwill in this transaction and has impaired $1,149,510 of this goodwill as of June 30, 2006.

11

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**SOFTNET TECHNOLOGY CORP.									NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)									JUNE 30, 2006 AND 2005**

**NOTE 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

> 
**Principles of Consolidation**The condensed financial statements include the accounts of the Company and all of its wholly owned subsidiaries for 2005. In 2006, the Company no longer has any subsidiaries. All acquired companies have been merged into the parent to form one company.**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 condensed financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.**Revenue Recognition**Commencing in 2002, the Company started generating revenues. The Company recorded all its revenue as follows for each of its operating entities prior to 2006. As of 2006, all entities are merged together to form one entity.										Pursuant to SAB 104, the general criteria for recognition of revenue are:

1)       Persuasive evidence of an arrangement exists;											2)       Delivery has occurred or services have been rendered;											3)       The seller’s price to the buyer is fixed or determinable, and											4)       Collectibility is reasonably assured.

*A)      SoftNet Technology Corporation*

No revenue generated.

*B)      Solutions Technology, Inc. *

Prior to its sale in January 2006, the only revenue generated in this company was service revenue relating to consulting and maintenance services on the company’s time clocks.

1)      The company would have an arrangement in the form of a service agreement.													2)      Delivery of the services occurred when the services were rendered, hence revenue recorded at that time.													3)      Buyer knew the terms of the agreement which were a fixed price.													4)      Collectibility was reasonably assured at the time the revenue recorded and services performed.

12

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**SOFTNET TECHNOLOGY CORP.									NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)									JUNE 30, 2006 AND 2005**

**NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

> 
**Revenue Recognition (Continued)**

Solutions Technology’s basic agreements are driven off of the fact that this company will install and integrate the system, and then service that system with basic maintenance and support. In 2004, the company entered into contracts to install, with services rendered to maintain the system in 2005. This subsidiary did not generate significant revenue for these periods.

*C)      SoftNet International GmbH*

The only revenue generated in this company was service revenue relating to consulting services.

1)   The company would have an arrangement in the form of a service agreement.													2)   Delivery of the services occurred when the services were rendered, hence revenue recorded at that time.													3)   Buyer knew the terms of the agreement which were a fixed price.													4)   Collectibility was reasonably assured at the time the revenue recorded and services performed.

*D)      WholesaleByUS, LLC*

This company prior to its sale in 2005 recognized revenue upon the sales orders being placed. This company sold all of its goods over the Internet, and payment occurs at the time the product is ordered (prior to shipment, which usually occurs within two to three days depending on inventory levels).

1)      There is always evidence that an arrangement exists prior to recognition of revenue.														2)      The only service being rendered in this case is the ordering of the product. Delivery occurs within two to three days after ordering the product.														3)      Buyer and seller both know the terms of the arrangement and price is fixed or determinable.														4)      Collectibility is assured. Should a credit card be rejected for any purpose, the shipment is cancelled.

13

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**SOFTNET TECHNOLOGY CORP.										NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)										JUNE 30, 2006 AND 2005**

**NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

> 
**Revenue Recognition (Continued)**

Within general criteria number 2 of SAB No. 104 as noted above, it states, delivery has occurred or services have been rendered. To better clarify the arrangement that exists, WholesaleByUs (WBU), acts as a consignee, whereby WBU “purchases” the goods simultaneously with the sale of the goods to the customer. The service is rendered when the order is placed and it can take up to 3 to 5 days to ship that order. The service however is performed at placement, and therefore the revenue is recognized at that point. As far as when title and significant risks and rewards pass to the customer, this occurs upon shipment, i.e. FOB shipping point. If a customer were to order a product that falls above the 3 to 5 day shipment window, WBU classifies these as “special orders”. Again, WBU still recognizes revenue upon placement of that order, not shipping date.														WBU both sells a product and provides a service. They simultaneously, “purchase” the goods and sell the goods as a service over the Internet. They do, however, perform these services at a rate that reduces cost for the suppliers.														WBU considers themselves the primary obligor for their product sales. When a customer orders the goods, it is WBUs’ responsibility to ensure completion of that order. WBU additionally takes responsibility for that order and it is their obligation to either return the money to the customer, or replace the goods with goods acceptable to the customer. The terms that WBU has with its suppliers are that the suppliers must accept back the goods if for any reason, the goods were not acceptable to the customer.

*E)      Indigo Technology Services*

This company mainly provides consulting services as well. Their revenue recognition is much like Solutions Technology, Inc.

*F)      InsPara Networking Technologies, Inc.*

This company recognizes revenue when computer networking professional services are provided. Staffing revenue is recognized when the personnel provide the service.

14

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**SOFTNET TECHNOLOGY CORP.										NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)										JUNE 30, 2006 AND 2005**

**NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

> 
**Revenue Recognition (Continued)**

Although SOP 97-2 specifically deals with software revenue recognition, there are basic principles the Company follows contained in this pronouncement. They are 1) Licensing vs. Sales, meaning transfers of rights to software by licenses rather than by outright sales will have the same impact on revenue recognition; 2) Product may not equate with delivery of software, relating to specifically when the services do not entail significant production, modification or customization of the software, the services are accounted for as a separate element; 3) Delivery is the key threshold issue for revenue recognition, which is consistent with CON #5, Recognition and Measurement in Financial Statements of Business Enterprises; 4) Revenue must be allocated to all elements of the sales arrangement, with recognition dependent upon meeting the criteria on an element-by-element basis, this being vendor specific objective evidence (VSOE). This principle does not apply to the Company at this time; and 5) The earnings process is not complete if fees are subject to forfeiture.												EITF 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent, provides guidance on whether an entity is an agent for a vendor-manufacturer, and thus recognizes the net retainage (commission) for serving in that capacity, or whether that entity is a seller of goods (principal), and thus recognizes revenue for the gross amount billed to a customer and an expense for the amount paid to the vendor-manufacturer. The Company, considers this EITF when recognizing revenue for its WholesaleByUs subsidiary. The Company considers themselves the primary obligor in an arrangement, and establishes the selling price and assumes the credit risk, therefore recognizes revenue gross.

**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 several financial institutions that are insured by the Federal Deposit Insurance Corporation up to $100,000.

15

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**SOFTNET TECHNOLOGY CORP.										NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)										JUNE 30, 2006 AND 2005**

**NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

> 
**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.											Furniture and fixtures                                        5 to7 Years											Computer equipment                                       3 to 5 Years											Software                                                             5    Years**Income Taxes**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.**Comprehensive Income**The Company adopted Statement of Financial Accounting Standards No, 130, “Reporting Comprehensive Income,” (SFAS No. 130). SFAS No. 130 requires the reporting of comprehensive income in addition to net income from operations. 											Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of information that historically has not been recognized in the calculation of net income.**Segment Information**The Company follows the provisions of SFAS No. 131, “*Disclosures about Segments of an Enterprise and Related Information”*. This standard requires that companies disclose operating segments based on the manner in which management disaggregates the Company in making internal operating decisions.**Advertising**Costs of advertising and marketing are expensed as incurred. Advertising and marketing costs were $21,474 and $61,910 for the six months ended June 30, 2006 and 2005, respectively.

16

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**SOFTNET TECHNOLOGY CORP.									NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)									JUNE 30, 2006 AND 2005**

**NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

> 
**Goodwill and Other Intangible Assets**In June 2001, the FASB issued Statement No. 142 “Goodwill and Other Intangible Assets”. This statement addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB Opinion No. 17, Intangible Assets. It addresses how intangible assets that are acquired individually or with a group of other assets (but not those acquired in a business combination) should be accounted for in financial statements upon their acquisition. This Statement also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. The Company tests for impairment of the goodwill at least annually, if not more depending upon substantial changes in the Company that may lead to a change in the goodwill during interim periods.										The following represents the changes in the carrying amount of goodwill for the six months ended June 30, 2006 and 2005:
**Indigo****Technology****InsPara****Total**Balance, January 1, 2005													 $              -  													 $            -  													 $           -    Goodwill acquired during the period													     1,277,595													               -  													  1,277,595  Impairment losses													(1,277,595)													-  													 (1,277,595)  Balance, June 30, 2005													 $              -  													 $            -  													 $           -  ================================  Balance, January 1, 2006 													 $              -  													 $            -  													 $           -    Goodwill acquired during the period													                -  													    4,320,760													  4,320,760  Impairment losses													                -  													   (1,149,510)													 (1,149,510)  Balance, June 30, 2006													 $              -  													 $ 3,171,250													 $3,171,250													===========													===========													==========									The impairment of goodwill was determined based on managements assessments of the budgets of the acquired entities.

17

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**SOFTNET TECHNOLOGY CORP.									NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)									JUNE 30, 2006 AND 2005**

**NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

> 
**Software Development Costs**

Internal use software costs are recorded in accordance with Statement of Position (SOP) No. 98-1, *"Accounting for the Costs of Computer Software Developed or Obtained for Internal Use"*.  Qualifying costs incurred during the application development stage, which consist primarily of outside services are capitalized and amortized over the estimated useful life of the asset. All other costs are expensed as incurred. The Company has determined that all costs for the six months ended June 30, 2006 and 2005 do not relate to the application development stage and therefore have expensed these costs as they were incurred.**Reclassifications**Certain amounts for the six months ended June 30, 2005 have been reclassified to conform to the presentation of the June 30, 2006 amounts. The reclassifications have no effect on net income for the six months ended June 30, 2005.**Inventory**Inventory is valued at the lower of cost or market determined on a first-in-first-out basis.  Inventory consisted only of finished goods.**Earnings (Loss) Per Share of Common Stock**Historical net income (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) includes additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be antidilutive for the periods presented.

18

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**SOFTNET TECHNOLOGY CORP.										NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)										JUNE 30, 2006 AND 2005**

**NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

> 
**Earnings (Loss) Per Share of Common Stock (Continued)**The following is a reconciliation of the computation for basic and diluted EPS:											                                                                          June 30,                  June 30,											                                                                           2006                         2005Net Loss                                                      ($1,647,660)           ($2,566,398)Weighted-average common shares											  outstanding (Basic)                                     381,079,111           276,769,172											Weighted-average common stock											   equivalents:											      Stock options                                                           -                             -											      Warrants                                                  20,000,000                             -Weighted-average common shares											    outstanding (Diluted)                                 401,079,111           276,769,172											                                                                     =========          =========											Options and warrants outstanding to purchase stock were not included in the computation of diluted EPS because inclusion would have been antidilutive.**Fair Value of Financial Instruments**The carrying amount reported in the condensed balance sheet for cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and notes payable approximate fair value because of the immediate or short-term maturity of these financial instruments.**Stock-Based Compensation**The Company as of January 1, 2006, has elected to follow the Financial Accounting Standards Board (“FASB”) published Statement of Financial Accounting Standards No. 123 (Revised 2004), “*Share-Based Payment*” (“SFAS 123R”).  SFAS 123R requires that compensation cost related to share-based payment transactions be recognized in the financial statements. Share-based payment transactions within the scope of SFAS 123R include stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employee share purchase plans.  The provisions of SFAS 123R, as amended, are effective for small business issuers beginning as of the next fiscal year after December 15, 2005.  The change in accounting principle had no effect on the financial statements.

19

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**SOFTNET TECHNOLOGY CORP.									NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)									JUNE 30, 2006 AND 2005**

**NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

> 
**Customer Concentrations**As of June 30, 2006, the Company’s subsidiary, InsPara, had three customers that accounted for approximately 70% of its accounts receivable. For the six months ended June 30, 2006, these three customers accounted for approximately 81.5% of its revenues. InsPara does not require collateral on accounts receivable or other financial instruments.

**NOTE 3-     ACCOUNTS RECEIVABLE**
> 
The Company extends unsecured credit to its customers in the ordinary course of business but mitigates the associated credit risk by performing credit checks and actively pursuing past due accounts. An allowance for doubtful accounts has not been established at June 30, 2006.

**NOTE 4-     FIXED ASSETS**
> 
Fixed assets consist of the following at June 30, 2006:										Computer equipment                                 $   81,031 										Furniture and fixtures                                      30,397										Software                                                        30,000                                                                    141,428										                                                                    ( 21,894)										                                 Total                         $ 119,534                                                                  =======										Depreciation expense was $16,331 and $5,970 for the six months ended June 30, 2006 and 2005. Upon the sale of Solution Technology, the Company sold $98,983 of fully depreciated fixed assets. The Company acquired $120,000 of fixed assets in the acquisition of InsPara.                                                                                                                                   

20

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**SOFTNET TECHNOLOGY CORP.									NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)									JUNE 30, 2006 AND 2005**

**NOTE 5-     NOTES PAYABLE - BANK**

> 
On April 3, 2001, the Company entered into a line of credit agreement with a bank. The note, which is due on demand bears interest at prime plus 2.25% and provides for maximum borrowings up to $63,100. The line of credit is guaranteed by an office of the Company. The outstanding balance at June 30, 2006 was $0. The line of credit was STI’s, and was assigned over to the Company upon the acquisition. There was no interest expense charged to operations for the six months ended June 30, 2006 and 2005, respectively.

**NOTE 6-     NOTES PAYABLE**
> 
In April 2005, the Company entered into an agreement with a company to borrow money. The amount funded by this company at June 30, 2006 was $530,000. There is no interest being charged on this note, the note is due on demand, and has been classified by the Company as a current liability. This amount has been agreed to by the lender to be converted into 5,000,000 shares of Class A Common Stock. The Company is anticipating the share issuance to occur in its third quarter of 2006 (see Note 16).										In February 2005, the Company entered into a loan agreement with a foreign company in the amount not to exceed $500,000. This foreign company funded the entire $500,000 to the Company in February 2005. The term of the agreement is for three years, and the Company is obligated to make quarterly payments of interest at 10% only, with a balloon payment due on the maturity date. Interest for the six months ended June 30, 2006 and 2005 was $24,795 and $18,685, and accrued interest at June 30, 2006 is $68,685. On June 30, 2006, the Company agreed to convert this debt as of June 30, 2006 (both the note and all accrued interest) into 20,000,000 warrants to purchase Class A Common Shares at an exercise price of $0.035 per share. The warrants expire April 30, 2007 (see Note 9).										The Company in June 2005 entered into a loan agreement whereby 100,000,000 Class A common shares were issued as security. During 2005, no amounts had been loaned to the Company and a precautionary stop was put on the shares issued as security. 										On November 28, 2005, the Loan Agreement was terminated due to the Lender’s failure to fund the loan. By letter dated November 28, 2005, the Company returned the share certificates to the Company’s transfer agent for cancellation. There are no further obligations outstanding with respect to the Loan Agreement.										The Company entered into a $25,000 note agreement with the owner of Cord Consulting per the acquisition of his company dated August 1, 2005. The Company agreed to pay the note in three installments of $8,333 on the 30th day after acquisition, $8,333 on the 60th day after acquisition; and the remaining $8,334 on the 90th day after the acquisition. 

21

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**SOFTNET TECHNOLOGY CORP.									NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)									JUNE 30, 2006 AND 2005**

**NOTE 7-     RELATED PARTY TRANSACTIONS**

> 
Amounts due to related parties at June 30, 2006 were $547,375 and consists of the following:										Note payable to a company through common ownership in the amount of $536,175 at June 30, 2006, at 5.5% interest, payable monthly, due on demand. At June 30, 2006, the Company has approximately $42,918 in accrued interest to this company. Interest expense for this note for the six months ended June 30, 2006 and 2005 was $12,787 and $0, respectively.										The Company has a note payable to a related company that bears interest at 5.25% at June 30, 2006 in the amount of $9,200. Accrued interest at June 30, 2006 is $1,528. Interest expense for the six months ended June 30, 2006 and 2005 was $240 and $243, respectively.

**NOTE 8-     ACQUISITIONS**
> 
On January 12, 2002, the Company acquired STI as a wholly owned subsidiary for 20,511,365 shares of common stock. At the time of the acquisition, STI’s book value of their net assets was approximately $0. The acquisition of the 20,511,365 shares were valued at the Company’s fair value at the time of the issuance which approximated $.15 per share, $3,177,556. In accordance with FASB 142, the Company impaired the goodwill for that amount.										In March, 2002, Zingo was acquired as a wholly owned subsidiary by the Company for 2,500,000 shares of common stock. Zingo Sales, Ltd., a relatively new company had very little activity and also had a net book value of approximately $0. The shares issued were valued at $1.95, the fair value of the stock at the time of issuance. The $4,875,000, was recorded as goodwill and subsequently impaired to $0. The impairment is included in the consolidated statements of operations for the year ended December 31, 2002. The Company sold Zingo in July 2004, and has accounted for this disposal in accordance with SFAS 144.										On or about March 29, 2004, the Company entered into an acquisition agreement with Holtermann & Team, GmbH, a German Company (“Holtermann”), to acquire, effective April 1, 2004, 100% of the assets and equity interests of Holtermann in exchange for 10,000,000 restricted shares of the Company’s Class A Common Stock.

22

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**SOFTNET TECHNOLOGY CORP.										NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)										JUNE 30, 2006 AND 2005**

**NOTE 8-     ACQUISITIONS (CONTINUED)**

> 
Under the terms of the Acquisition Agreement, the Company is the successor in interest to a certain Loan Agreement under which Holtermann was to receive $950,000 by the end of 2004. The shares of common stock were issued in April 2004. The Company disposed of this subsidiary as of March 31, 2006. This subsidiary conducted no business during the quarter ended March 31, 2006.											The Company acquired WholesaleByUs (“WBU”) on July 9, 2004. WBU is a technology driven company that developed proprietary technology to sell products through the Internet. The Company acquired WBU for $112,000 and 5,000,000 restricted Class A Common Shares of stock. On November 4, 2005, the Company and WBU entered into a Termination Agreement. On November 4, 2005, the Company entered into an Agreement to Terminate Business Relationship (the “Termination Agreement”) with its wholly-owned subsidiary, WholesaleByUs and five individuals. The individuals were the former members of the limited liability company that the Company acquired on July 1, 2004. The Company acquired WholesaleByUs for $112,000, plus 20,000,000 shares of the Company’s common stock of which 5,000,000 shares of common stock were issued and the remaining 15,000,000 were to be issued upon achievement of certain incentives in the contract which never occurred. Pursuant to the terms of the Termination Agreement, the former members of the limited liability company who received these shares, returned 17,416,666 of these previously issued shares. In exchange, the Company has returned all ownership interests in WholesaleByUs back to the five individuals and has agreed to remit $10,000 to the five individuals. Each party to the transaction have provided mutual releases for any claims, except for intentional fraud and misrepresentation arising under the Acquisition Agreement of July 1, 2004. This divestiture was effective as of October 1, 2005. With the sale of WholesaleByUs, the Company has no significant online retail sales operations at this time.											The Company acquired Indigo Technology Services (Indigo), a technology company based in Atlanta, Georgia and Net Centric Solutions, Inc. in April 2005 for 9,000,000 shares of restricted Class A Common Shares of stock (6,000,000 for Indigo and 3,000,000 for Net Centric). The Company in this transaction acquired $14,170 of accounts receivable and $58,235 in cash. The shares were valued at $.15 per share at the time of the transaction for a value of $1,350,000. The remaining $1,277,595 was recognized as goodwill. Management has determined that the entire amount has been impaired as of June 30, 2006.

23

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**SOFTNET TECHNOLOGY CORP.										NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)										JUNE 30, 2006 AND 2005**

**NOTE 8-     ACQUISITIONS (CONTINUED)**

> 
Indigo is a provider of business technology consulting and technology products and solutions designed to help companies integrate technology into everyday lives. Indigo is the creator of Guest Worx High Speed Internet Access. Net Centric provides similar services that Indigo provides. On October 17, 2005, Indigo entered into an Asset Purchase Agreement whereby they sold to Seamless Skyy-Fi, Inc. (“Seamless”) all of its right, title and interest in the “Guest Worx” business of Indigo, including without limitation, all assets, property (including the Guest Worx software) and contracts, in a cashless transaction where the consideration consisted of the delivery of the sufficient number of shares of Seamless’ Class C Preferred Stock with a market value of $100,000 as calculated in the Asset Purchase Agreement.											These preferred shares have been converted to common shares totaling 2,500,000. The investment represents approximately 2% of Seamless.											On August 1, 2005, the Company acquired the customer lists of Cord Consulting for $200,000. In this acquisition, the Company issued to Cord Consulting a note in the amount of $25,000, and issued to the sole owner of Cord Consulting 727,620 shares of common stock with a value of $175,000. The customer lists were being amortized over 3 years commencing August 1, 2005. On December 31, 2005, management determined that the customer lists had a fair value of $0 and impaired the remaining unamortized balance of $172,222.											On January 18, 2006 and effective January 1, 2006, the Company and InsPara Networking Technologies, Inc. (“InsPara”) entered into an Agreement and Plan of Reorganization, pursuant to which InsPara would merge with and into the Company. Under this agreement, the stockholders of InsPara received, pro rata, after adjustments for fractional shares and rounding, a total of 49,999,998 shares of common stock of the Company. In the acquisition, the Company incurred $4,320,760 of goodwill. The Company has impaired $1,149,510 of this goodwill as of June 30, 2006.											The summarized unaudited pro forma financial information for the six months ended June 30, 2006 and 2005 that follows assumes the acquisition of Indigo Technology, Net Centric Solutions, Inc., Cord Consulting and InsPara was consummated on January 1, 2005:

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**SOFTNET TECHNOLOGY CORP.									NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)									JUNE 30, 2006 AND 2005**

**NOTE 8-     ACQUISITIONS (CONTINUED)**

> **Six Months Ended****June 30,****2005**  Sales												 $      2,411,687Cost of sales												        1,712,908  Gross profit (loss)												           698,779  Operating expenses												        3,473,924  Loss before other (expense)												       (2,775,145)  Other (income) expense												           201,857  Net loss before provision for income taxes												       (2,977,002)  Provision for income taxes												               1,745  Net loss 												 $    (2,978,747)===============  Net loss per basic and diluted shares												 $             (0.01)===============  Weighted average number of common shares    outstanding												     276,769,172												===============								The unaudited pro forma results of operations for the six months ended June 30, 2006, are not necessarily indicative of what the actual results of operations of the Company would have been had the acquisition been consummated on January 1, 2005.

**NOTE 9-     STOCKHOLDERS’ EQUITY (DEFICIT)**
> 
***Preferred Stock***At June 30, 2006, there are 5,000,000 shares of Class A Preferred Stock, par value $1.00 authorized and 0 shares issued and outstanding. In April, 2003, the Company passed a board resolution to re-instate the Series A Preferred Stock changing its par value to $.001.

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**SOFTNET TECHNOLOGY CORP.										NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)										JUNE 30, 2006 AND 2005**

**NOTE 9-     STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)**

> 
***Preferred Stock (Continued)***Additionally, the Company passed a board resolution to authorize 5,000,000 shares of Class B Preferred Stock, par value $.001. As of December 31, 2005, the Company has 0 shares issued and outstanding. 282,703 shares were issued to Mercatus Partners, Ltd. in connection with an amended loan agreement. These shares were issued when the Company cancelled the 66,666,667 shares of Class A Common Stock that were issued as collateral to the original loan agreement. The amended loan agreement was terminated by the Company and all 282,703 shares have been cancelled of record. As of June 30, 2006 certificates representing 117,885 have been surrendered to the Company. 											An additional 668,000 shares were issued to a Bermuda company as collateral for a promissory note. These shares were valued at the par value and recorded against additional paid in capital as the preferred shares have no readily determinable market value. Effective April 9, 2004, the Company terminated this agreement due to this company’s failure to make loan advances as set forth in the agreement.  All shares have been surrendered to the Company.The Company had issued 2,000,000 shares of the Class B Preferred Stock in accordance with a March 24, 2004 Investment Exchange Agreement (the “Agreement”) with Cross Capital Fund, LLC. (“Cross Capital”). The Company entered into the Agreement that provides for Cross Capital to make an equity investment in the Company and the Company will receive from Cross Capital an Investor Membership Interest in an aggregate amount equal to $2,000,000 over the next twelve months (March 2005). The 2,000,000 shares were issued in exchange for the Investor Membership Interest. The Company had originally recorded the $2,000,000 as a subscription receivable on the consolidated balance sheet at December 31, 2004. The Preferred shares convert to the Company’s Class A Common Shares as set forth in the agreement. Cross Capital never funded the Company in accordance with the terms of the agreement, The Company’s legal counsel and Cross Capital had several discussions regarding this agreement and the Company made several attempts to receive the 2,000,000 shares of Class B Preferred Stock back from Cross Capital and terminate their agreement. Since the agreement was terminated, the Company cancelled those certificates and reversed the transaction.***Common Stock***As of June 30, 2006, there were 500,000,000 shares authorized, and 400,893,447 shares issued and outstanding respectively, of the Company’s Class A common stock with a par value of $.001. In February 2003, the Company upon an approved board resolution increased the authorized limit of the Class A common shares to 250,000,000 and increased it to 500,000,000 in 2004.

26

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**SOFTNET TECHNOLOGY CORP.									NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)									JUNE 30, 2006 AND 2005**

**NOTE 9-     STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)**

> 
***Common Stock (Continued)***

As of June 30, 2006, there were 5,000,000 shares authorized, and 4,000,000 shares issued and outstanding of the Company’s common stock B with a par value of $.001, respectively. In February 2003, the Company upon an approved board resolution increased the authorized limit of the Class B common shares to 5,000,000. Subsequent to this board resolution, the Company cancelled the outstanding 1,142,858 shares and issued the entire 5,000,000 shares to two of its officers. Of this amount, 200,000 were converted to Class A common shares in June 2005 and 800,000 were converted in December 2005.										The following shares of common stock Class A were issued during the six months ended June 30, 2006:										The Company issued 49,999,998 shares of common stock in the acquisition of InsPara. The value of this transaction was $4,500,000.										The Company issued 4,892,857 shares of common stock for executive compensation valued at $195,714.										The Company issued 3,955,188 shares of common stock issued to the broker for the InsPara and pending Pickering & Associates transaction as consulting expenses. The value of these transactions were $289,089.										The Company issued 1,583,334 shares of common stock as consulting expenses. The value of these transactions were $95,000.										The Company issued 1,842,378 shares of common stock to pay certain vendors for consulting services performed and to prepay certain of these expenses. The value of these transactions were $110,543.										The following shares of common stock Class A were issued for the years ended December 31, 2005 and 2004:										The Company in the quarter ended December 31, 2005 converted 800,000 Class B Common shares into 40,000,000 Class A shares for services valued at $39,200.										The Company cancelled the 100,000,000 shares it had issued earlier in June 2005 as security under a loan agreement. 										The Company in the quarter ended September 30, 2005 issued 200,000 shares of common stock for services valued at $44,000 ($.22 per share average).

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**SOFTNET TECHNOLOGY CORP.										NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)										JUNE 30, 2006 AND 2005**

**NOTE 9-     STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)**

> 
***Common Stock (Continued)***The Company in the quarter ended September 30, 2005 issued 727,620 shares of common stock in the acquisition of Cord Consulting valued at $175,000 ($.2405 per share average).											The Company in the quarter ended September 30, 2005 issued 10,000,000 shares of common stock in escrow as part of a Reg S offering. These shares are in escrow in a financial institution. The Company has not placed a net value on these shares due to the fact that they will be canceling the Reg S offering, and these shares will be cancelled.											The Company in the quarter ended September 30, 2005 issued the 9,000,000 shares of common stock in the acquisition of Indigo valued at $1,375,000 ($.1527 per share average).											The Company in the quarter ended June 30, 2005 issued 898,000 shares of common stock for services valued at $151,160 ($.168 per share average).											The Company in the quarter ended June 30, 2005 issued 10,000,000 shares of common stock in conversion of Class B common shares. This transaction resulted in $9,800 of consulting expenses.											The Company in the quarter ended June 30, 2005 issued 1,003,000 shares of common stock in settlement of a legal matter ($.20 per share).											The Company in the quarter ended June 30, 2005 issued 100,000,000 shares of common stock for a stock as security regarding a loan agreement (See Note 6).											The Company retired the 281,400 shares they held in treasury during the quarter ended June 30, 2005.											The Company in the quarter ended March 31, 2005 issued 3,375,000 shares of common stock for cash in the amount of $67,500. Additionally, the Company received $55,269 in cash from prior share issuances.											The Company in the quarter ended March 31, 2005 issued 550,000 shares of common stock for services valued at $90,750 ($.165 per share).

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**SOFTNET TECHNOLOGY CORP.										NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)										JUNE 30, 2006 AND 2005**

**NOTE 9-     STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)**

> 
***Treasury Stock***In January 2003, the Company instituted a buy back program of its own stock. For the six months ended June 30, 2005 and year ended December 31, 2004, the Company bought back no additional shares of its common stock and placed it in its treasury. For the year ended December 31, 2003, the Company bought back 281,400 shares of its common stock and placed it in its treasury. The Company has accounted for its treasury stock utilizing the cost method, and such, the $37,338 at March 31, 2005 represented the cost value of the treasury shares acquired by the Company. These shares during the quarter ended June 30, 2005 have been retired.***Stock Options***As of January 1, 2000, STI adopted a stock option plan under which 20,000,000 shares of common stock are available for issuance with respect to awards granted to officers, management, consultants, and any other key employees of STI.  The options were to be exercised at not less than 85% of the fair market value of the shares on the date of grant.  The options were to expire after 10 years from the date of grant.  The options were to be exercisable immediately when granted and are were subject to restrictions on transfer, repurchase and right of first refusal. When in 2002, STI was acquired by the Company, these options were cancelled and replaced with identical options of the Company.											The Company did not record any compensation expense for the granting of options in the six months ended June 30, 2006 and 2005.***Warrants***Effective June 30, 2006, the Company converted the $500,000 debt (see Note 6) in exchange for 20,000,000 warrants to purchase Class A Common Stock at an exercise price of $0.035 per share. The warrants expire April 30, 2007. The value of the warrants using the Black-Scholes method is $618,059 and is reflected on the condensed consolidated balance sheet. The difference of $49,374 represents a loss on conversion of the debt to warrants and is reflected in the condensed consolidated statements of operations of the six months ended June 30, 2006. The Black-Scholes assumptions utilized were as follows: expected life in years – 2 years; annualized volatility – 125%; and discount rate – 5%.

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**SOFTNET TECHNOLOGY CORP.									NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)									JUNE 30, 2006 AND 2005**

**NOTE 10-   NOTES RECEIVABLE**

> 
The Company sold a business segment in July 2004 for $300,000. This amount is currently a note receivable on the condensed balance sheet. The Company has received $100,000 of this balance in the quarter ended September 30, 2005 and the remaining $200,000 in the quarter ended December 31, 2005.										Indigo entered into a loan agreement with Pearlnet LLC, an Atlanta, Georgia based limited liability company on March 1, 2005. Indigo lent Pearlnet LLC, $165,000, which was to be repaid in two annual installments of $25,000, and the remaining $115,000 in the third year. Interest was payable to Indigo at the rate of .007 percent compounded daily. In May 2006, the Company renegotiated this note with Pearlnet after receiving a payment of $2,000 to bring the total of the note to $163,000. The $163,000 will be paid in monthly installments ranging between $3,000 and $20,000 through March 2007. In addition, interest will be paid at the rate of $1,000 per month through March 2007. The amount outstanding as of June 30, 2006 is $148,000.

**NOTE 11-   GOING CONCERN**
> 
As shown in the accompanying condensed financial statements the Company has incurred significant recurring losses of $1,647,660 and $2,356,398 for the six months ended June 30, 2006 and 2005, and has a working capital deficiency of $883,711 as of June 30, 2006.  The Company in January 2006 acquired InsPara, and the full impact of this acquisition will impact operations later on this year. There is no guarantee that the Company will be able to raise enough capital or generate revenues to sustain its operations.  These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period.										Management believes that the Company’s capital requirements will depend on many factors including the success of the Company’s January 2006 acquisition of InsPara. The Company’s ability to continue as a going concern for a reasonable period following its merger with InsPara is also dependent upon management’s ability to raise additional interim capital and, ultimately, achieve profitable operations.  There can be no assurance that management will be able to raise sufficient capital, under terms satisfactory to the Company, if at all.										The condensed financial statements do not include any adjustments relating to the carrying amounts of recorded assets or the carrying amounts and classification of recorded liabilities that may be required should the Company be unable to continue as a going concern.

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**SOFTNET TECHNOLOGY CORP.									NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)									JUNE 30, 2006 AND 2005**

**NOTE 12-   PROVISION FOR INCOME TAXES**

> 
Deferred income taxes will be 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 statement carrying amounts of assets and liabilities and their respective tax bases.										At June 30, 2006, deferred tax assets approximated the following:										Net operating loss carryforwards          $8,789,320										Less:  valuation allowance                     (8,789,320)                                                            $          -0- 										                                                            ========										At June 30, 2006, the Company had accumulated deficits approximating $25,850,940 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 utilization of the operating losses in future periods.										A reconciliation of the Company’s effective tax rate as a percentage of income before taxes and federal statutory rate for the six months ended June 30, 2006 and 2005 is summarized as follows:

   

   

  

        2006       
  											
        2005       

Federal statutory rate

(34.0)%

  

(34.0)%

State income taxes, net of federal benefits

4.0

  

4.0

Valuation allowance

        30.0        

   

        30.0        

  

0%												==========

  

0%												==========

**NOTE 13–   DISPOSAL OF BUSINESS**
> 
In January 2006, the Company sold Solution Technology. The Company’s condensed consolidated financial statements have been reclassified to reflect these sales as discontinued operations for all periods presented. Summarized operating results of discontinued operations for the six months ended June 30, 2005 are as follows:

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**SOFTNET TECHNOLOGY CORP.										NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)										JUNE 30, 2006 AND 2005**

**NOTE 13–  DISPOSAL OF BUSINESS (CONTINUED)**

> 
Revenues

$        2,922

Loss before income taxes

($   132,463)

Provision for taxes

                 -  

Net loss

($   132,463)													=========

Net loss per share

$          (.00)													=========

Diluted loss per share

$           (.00)
								In October 2005, the Company sold WholesaleByUs. The Company’s consolidated financial statements have been reclassified to reflect these sales as discontinued operations for all periods presented. Summarized operating results of discontinued operations for the six months ended June 30, 2005 are as follows:
**2005**

  

 

Revenues

$     353,862

Loss before income taxes

($    129,100)

Provision for taxes

                -   

Net loss

($   129,100)													=========

Net loss per share

$          (.00)													=========

Diluted loss per share

$           (.00)

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**SOFTNET TECHNOLOGY CORP.										NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)										JUNE 30, 2006 AND 2005**

**NOTE 14-   SEGMENT INFORMATION**

> 
The Company’s reportable operating segments include Internet Sales, Consulting and Services - General and Corporate. The Company allocates cost of revenues and direct operating expenses to these segments.											Operating segment data for the six months ended June 30, 2006 and 2005 are as follows:											For the six months ended June 30, 2006:

**Consulting and**

**Corporate**

**Services**

**Total**

Revenues

$        -

$2,612,427

$2,612,427

Direct costs of revenues

-

1,879,516

      1,879,516

Gross profit (loss)

-

732,911

732,911

Operating expenses

421,527

1,218,916

1,640,443

Depreciation, amortization and impairment

2,226

1,163,615

1,165,841

Other income

467,527

-

467,527

Interest (net)

(37,548)

5,729

(31,819)

Net income (loss)

6,226

(1,653,886)

(1,647,660)

Segment assets

12,594

3,848,485

3,861,079

Fixed Assets, net of depreciation

11,133

108,401

119,534
									For the six months ended June 30, 2005:
**Consulting and**

**Corporate**

**Services**

**Total**

Revenues

$        -

$229,170

$229,170

Direct costs of revenues

               -

               51,093

           51,093

Gross profit (loss)

-

178,077

178,077

Operating expenses

938,715

23,624

962,339

Depreciation, amortization and impairment

1,001

1,278,274

1,279,275

Other income

(200,000)

-

(200,000)

Interest (net)

7,779

(4,635)

3,144

Net income (loss)

(1,147,495)

(1,119,186)

(2,266,681)

Segment assets

130,191

271,782

401,973

Fixed Assets, net of depreciation

15,251

             -

         15,251

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**SOFTNET TECHNOLOGY CORP.									NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)									JUNE 30, 2006 AND 2005**

**NOTE 15-   PENDING BUSINESS COMBINATION**

> 
The Company and Pickering & Associates entered into a Letter of Intent regarding the acquisition of 100% of the outstanding stock of Pickering & Associates to the Company. In consideration of the stock of Pickering & Associates, the Company is anticipated to pay $155,000 in cash and issue unregistered common stock in the amount of $575,000. The Company anticipates entering into and closing the Definitive Purchase Agreement in the next 90 days.

**NOTE 16-   COMMITMENTS**
> 
Effective June 30, 2006 (see Note 6), the Company entered into an agreement to convert $530,000 in notes payable in exchange for 5,000,000 shares of Class A Common Stock. The Company has not issued these shares yet, and the liability remains as of June 30, 2006. The Company anticipates issuance of these shares to occur in its third fiscal quarter of 2006.									As noted in these condensed consolidated financial statements, the Company has divested itself from SoftNet International. In accordance with the agreement, the Company is to be returned 5,000,000 shares of its common stock. The Company has already reflected this as discontinued operations.

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> 
31.1 Certification of the Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					31.2 Certification of the Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					32.1 Certification of Principal Executive Officer and Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

			          (b) Reports on Form 8-K.

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**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.				Dated:  August 14, 2006				                                                                                              SoftNet Technology Corp.				                                                                                              (Registrant)				                                                                                              /s/  ***James M. Farinella                             ***                                                                                                James M. Farinella				                                                                                                Chairman of the Board, CEO				                                                                                              /s/  ***Kevin Holt                                          ***                                                                                                Kevin Holt				                                                                                                President, COO, Director				                                                                                               /s/  ***Karen Musialowicz                           ***                                                                                                Karen Musialowicz				                                                                                                Controller				                                                                                                (Principal Financial and Accounting Officer)

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