OMB APPROVALOMB Number:   3235-0420Expires:   March 31, 2007Estimated average burdenHours per response       1646   SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-KSB  (Mark One)  SANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2006  £TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to________________  Commission file number 000-51906  SILICON SOUTH, INC. (Name of small business issuer in its charter)  NEVADA77-0458478(State or other jurisdiction of
incorporation or organization)(I.R.S. Employer Identification No.)   251 Jeanell Dr., Suite 3, Carson City, NV 89703 (Address of principal executive offices)       (Zip Code)  Issuers telephone number 702-234-4148 Securities registered under Section 12(b) of the Exchange Act: None  Securities registered under Section 12(g) of the Exchange Act: Common Stock, $.001 par Value  Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.  £  Note Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.  SEC 2337 (12-05) Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.   Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes S  No £  Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.      S  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes  S     No £  State issuers revenues for its most recent fiscal year: $-0-  State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange Act.)  On March 3, 2007 the aggregate market value of the voting stock of Silicon South, Inc., Inc. held by non-affiliates of the registrant was $-0-.  Note: If determining whether a person is an affiliate will involve an unreasonable effort and expense, the issuer may calculate the aggregate market value of the common equity held by non-affiliates on the basis of reasonable assumptions, if the assumptions are stated.  (ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)  Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.                Yes £   No £  (APPLICABLE ONLY TO CORPORATE REGISTRANTS)  State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date.   7,315,500 shares of common stock, $.001 par value issued and outstanding as of March 3, 2007.  DOCUMENTS INCORPORATED BY REFERENCE  If the following documents are incorporated by reference, briefly describe them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 (Securities Act). The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1990).  Transitional Small Business Disclosure Format (Check one): Yes  £   No  S  2   PART I  Item 1. Description of Business.  Description of Business.  We were formed as a Nevada corporation on June 20, 1997 originally under the name California Seasons Franchise Corporation.  In September 1998 we changed our name to Silicon South, Inc. and began pursuing our current business.  We developed three proprietary electronic components that we attempted to manufacture and market.  In April 2002, we ceased operations and have focused our efforts on seeking a business opportunity.  The Company will attempt to locate and negotiate with a business entity for the merger of that target company into the Company. In certain instances, a target company may wish to become a subsidiary of the Company or may wish to contribute assets to the Company rather than merge. No assurances can be given that the Company will be successful in locating or negotiating with any target company. The Company will provide a method for a foreign or domestic private company to become a reporting (public) company whose securities are qualified for trading in the United States secondary market.  The Company intends to seek, investigate, and if warranted, acquire an interest in a business opportunity.  We are not restricting our search to any particular industry or geographical area.  We may therefore engage in essentially any business in any industry.  Our management has unrestricted discretion in seeking and participating in a business opportunity, subject to the availability of such opportunities, economic conditions and other factors.  The selection of a business opportunity in which to participate is complex and extremely risky and will be made by management in the exercise of its business judgment.  There is no assurance that we will be able to identify and acquire any business opportunity which will ultimately prove to be beneficial to our company and shareholders.  Because we have no specific business plan or expertise, our activities are subject to several significant risks.  In particular, any business acquisition or participation we pursue will likely be based on the decision of management without the consent, vote, or approval of our shareholders.  Sources of Opportunities  We anticipate that business opportunities may arise from various sources, including officers and directors, professional advisers, securities broker-dealers, venture capitalists, members of the financial community, and others who may present unsolicited proposals.  We will seek potential business opportunities from all known sources, but will rely principally on the personal contacts of our officers and directors as well as indirect associations between them and other business and professional people.  Although we do not anticipate engaging professional firms specializing in business acquisitions or reorganizations, we may retain such firms if management deems it in our best interests.  In some instances, we may publish notices or advertisements seeking a potential business opportunity in financial or trade publications.   3   Criteria  We will not restrict our search to any particular business, industry or geographical location.  We may acquire a business opportunity in any stage of development.  This includes opportunities involving start up or new companies.  In seeking a business venture, management will base their decisions on the business objective of seeking long-term capital appreciation in the real value of our company.  We will not be controlled by an attempt to take advantage of an anticipated or perceived appeal of a specific industry, management group, or product.  In analyzing prospective business opportunities, management will consider the following factors:  · available technical, financial and managerial resources; · working capital and other financial requirements; · the history of operations, if any; · prospects for the future; · the nature of present and expected competition; · the quality and experience of management services which may be available and the depth of the management; · the potential for further research, development or exploration; · the potential for growth and expansion; · the potential for profit; · the perceived public recognition or acceptance of products, services, trade or service marks, name identification; and other relevant factors.  Generally, our management will analyze all available factors and make a determination based upon a composite of available facts, without relying on any single factor.  Methods of Participation of Acquisition  Management will review specific businesses and then select the most suitable opportunities based on legal structure or method of participation.  Such structures and methods may include, but are not limited to, leases, purchase and sale agreements, licenses, joint ventures, other contractual arrangements, and may involve a reorganization, merger or consolidation transaction.  Management may act directly or indirectly through an interest in a partnership, corporation, or other form of organization.  Procedures  As part of the our investigation of business opportunities, officers and directors may meet personally with management and key personnel of the firm sponsoring the business opportunity.  We may visit and inspect material facilities, obtain independent analysis or verification of certain information provided, check references of management and key personnel, and conduct other reasonable measures.   4   We will generally ask to be provided with written materials regarding the business opportunity.  These materials may include the following:  · descriptions of product, service and company history; management resumes; · financial information; · available projections with related assumptions upon which they are based; · an explanation of proprietary products and services; · evidence of existing patents, trademarks or service marks or rights thereto; · present and proposed forms of compensation to management; · a description of transactions between the prospective entity and its affiliates; · relevant analysis of risks and competitive conditions; · a financial plan of operation and estimated capital requirements; · and other information deemed relevant.  Competition  We expect to encounter substantial competition in our efforts to acquire a business opportunity.  The primary competition is from other companies organized and funded for similar purposes, small venture capital partnerships and corporations, small business investment companies and wealthy individuals. Employees  We do not currently have any employees but rely upon the efforts of our officer and director to conduct our business.  We do not have any employment or compensation agreements in place with our officers and directors although they are reimbursed for expenditures advanced on our behalf. Item 2. Description of Property.  We do not currently own any property.  We utilize office space in the residence of our President at no cost.  We will not seek independent office space until we pursue a viable business opportunity and recognize income.  Item 3. Legal Proceedings.  None.  Item 4. Submission of Matters to a Vote of Security Holders.  None.  PART II  Item 5. Market for Common Equity and Related Stockholder Matters.  We are not currently listed or traded on any market.  At December 31, 2006, the number of record holders of our Common Stock was 57. Total shares issued and outstanding were 7,315,500.  We have not paid, nor declared, any dividends since our inception and do not intend to declare any such dividends in the foreseeable future. Our ability to pay dividends is subject to limitations imposed by Nevada law. Under Nevada law, dividends may be paid to the extent that a corporations assets exceed its liabilities and it is able to pay its debts as they become due in the usual course of business.   5   Item 6. Managements Discussion and Analysis or Plan of Operation.  Forward Looking Statements  This report contains certain forward-looking statements as defined by the Securities Act of 1933 and the Securities Exchange Act of 1934.  Ventures-United, Inc. cautions readers that expressions of future goals and similar expressions reflecting something other than historical fact are intended to identify forward-looking statements.  Words such as May, Will, Expect, Believe, Anticipate, Intend, and comparable terminology are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.  These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those currently anticipated or discussed in this report.  Factors that may affect our results include, but are not limited to, market acceptance of our products and technologies, our ability to secure financing, potential competition from other companies with greater technical and marketing resources, and other factors described in our filings with the Securities and Exchange Commission.  Plan of Operation  The Company had no operations and generated no revenue for the years ended December 31, 2005 and 2006. The Companys plan is to seek a business venture in which to participate. The selection of a business opportunity in which to participate is complex and extremely risky and will be made by management in the exercise of its business judgment. There is no assurance that the Company will be able to identify and acquire any business opportunity that will ultimately prove to be beneficial to the Company and its shareholders.  The Company is pursuing its search for a business opportunity primarily through its officers and directors, although other sources, such as professional advisors, securities broker-dealers, venture capitalists, members of the financial community, and others, may present unsolicited proposals.  The activities of the Company are subject to several significant risks that arise primarily as a result of the fact that the Company has no specific business and may acquire or participate in a business opportunity based on the decision of management which will, in all probability, act without the consent, vote, or approval of the Companys shareholders. A description of the manner in which the Company will pursue the search for and participation in a business venture is described above.  Although the Company has no operations, it does incur expenses in connection with complying with reporting requirements under the Securities Exchange Act of 1934. General and administrative expenses for the fiscal years ended December 31, 2006 and 2005 were $26,711 and $-0- respectively. Interest expense to related party was $6,870 for the fiscal year ended December 31, 2006 and $5,816 for the fiscal year ended December 31, 2005.  The Company owed $800 for state corporate tax expense in 2006 and 2005.  Net loss for the fiscal year ended December 31, 2006 was $34,381 compared to $15,306 for the same period in 2005.  Expenses consisted of professional fees and expenses incurred to prepare financial statements and periodic reports filed by the Company with the Securities and Exchange Commission. Funds required to pay these expenses were obtained through loans from various sources.  The Company does not expect to generate any meaningful revenue unless and until it acquires an interest in an operating business.   6   Liquidity and Capital Resources  As of December 31, 2006, the Company had $114 in cash and no other assets.  Liabilities were $100,782 as of December 31, 2006 and consisted of $5,120 in accounts payable, $26,656 in accrued interest, $4,000 in state corporate tax payable and $65,006 in notes payable to related parties.  Further, management will attempt to raise capital for its current operational needs through loans from related parties, debt financing, equity financing or a combination of financing options. However, there are no existing understandings, commitments or agreements for extension of outstanding notes or an infusion of capital, and there are no assurances to that effect. Moreover, the Companys need for capital may change dramatically if and during that period, it acquires an interest in a business opportunity. Unless the Company can obtain additional financing, its ability to continue as a going concern is doubtful.  Recent Changes in Securities  None.  Item 7. Financial Statements  The financial statements of the Company appear at the end of this report beginning with the Index to Financial Statements on page 13.  Item 8.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  None.  Item 8A.  Controls and Procedures  (a) Evaluation of Disclosure Controls and Procedures.  The Company's management, with the participation of the chief executive officer and the chief financial officer, carried out an evaluation of the effectiveness of the Company's "disclosure, controls and procedures" (as defined in the Securities Exchange Act of 1934 (the "Exchange Act") Rules 13a-15(e) and 15-d-15(e) as of the end of the period covered by this annual report (the "Evaluation Date").  Based upon that evaluation, the chief executive officer and the chief financial officer concluded that, as of the Evaluation Date, the Company's disclosure, controls and procedures are effective, providing them with material information relating to the Company as required to be disclosed in the reports the Company files or submits under the Exchange Act on a timely basis.  (b) Changes in Internal Control over Financial Reporting.  There were no changes in the Company's internal controls over financial reporting, known to the chief executive officer or the chief financial officer, that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. Item 8B.  Other Information There are no further disclosures. No information was required to be disclosed in a Form 8-K during the fourth quarter, 2006.  7   PART III  Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section  16(a) of the Exchange Act.  The following table sets forth the name, age, and position of each officer and director of the Company.  All directors hold office until the next annual meeting of stockholders or until their successors are duly elected and qualified. Officers serve at the discretion of the Board of Directors.  The Company has no audit committee financial expert, as defined under Section 228.401, serving on its audit committee because it has no audit committee and is not required to have an audit committee because it is not a listed security as defined in Section 240.10A-3.  The following table sets forth as of March 3, 2007, the name, age, and position of each executive officer and director and the term of office of each director of the Corporation.  NameAgePositionDirector or Officer SinceZagros Shahvaran32Sole officer and DirectorNovember, 2005  All officers hold their positions at the will of the Board of Directors.  All directors hold their positions for one year or until their successors are elected and qualified.  Set forth below is certain biographical information regarding the Companys executive officer and director:  Zagros Shahvaran. Mr. Shahvaran  has served as an officer and director of Lucy's Cafe, Inc., a public company, from  inception in 2000 till March of 2005.  Mr. Shahvaran attended MTI Business College in Sacramento, California, where  he majored computer science.  From May 1997 to April 2001, he worked as a business advisor and consultant with Monterey Ventures, Inc.  From April of 1996 to the present Mr.  Shahvaran  has  provided  consulting  services  for small businesses  focusing  on  business  plan  development,  computer  technology and account  management. Section 16(a) Filing Compliance Section 16(a) of the Securities Exchange Act of 1934 requires officers and directors of the Company and persons who own more than ten percent of a registered class of its equity securities to file reports of ownership and changes in their ownership on Forms 3, 4, and 5 with the Securities and Exchange Commission, and forward copies of such filings to the Company. Based on the copies of filings received by the Company during the most recent fiscal year the directors, officers, and beneficial owners of more than ten percent of the equity securities of the Company registered pursuant to Section 12 of the Exchange Act have filed on a timely basis all required Forms 3, 4, and 5 and any amendments thereto.  Item 10. Executive Compensation Discussion and Analysis  Our sole officer and director does not receive any compensation for services rendered, have not received such compensation in the past, and are not accruing any compensation pursuant to any agreement with our Company.  Our officer and director is reimbursed for expenses incurred on our behalf.  Our officer and director will not receive any finders fee as a result of their efforts to implement the business plan outlined herein.  However, our officer and director anticipates receiving benefits as beneficial shareholders of our common stock.   8   We have not adopted any retirement, pension, profit sharing, stock option or insurance programs or other similar programs for the benefit of our employees.  Compensation of Directors  None.  Employment Contracts and Termination of Employment and Change in Control Arrangement  There are no employment contracts between the Company and any of its officers or directors.  There are no compensatory plans or arrangements, including payments to be received from the Company, with respect to any person named in Cash Compensation set out above which would in any way result in payments to any such persons employment with the Company or any change in control of the Company, or a change in the persons responsibilities following a change in control of the Company.  The officer and director of the Company will not receive any finder's fee from the Company as a result of his efforts to implement the Company's business plan outlined herein. However, the officer and director of the Company anticipates receiving benefits as a beneficial shareholder of the Company.  No retirement, pension, profit sharing, or insurance programs or other similar programs have been adopted by the Company for the benefit of its employees.  Item 11.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.  The following table sets forth as of March 3, 2006, the name and the number of shares of the Registrants Common Stock, par value, $0.001 per share, held of record or beneficially by each person who held of record, or was known by the Registrant to own beneficially, more than 5% of the 7,315,500 issued and outstanding shares of the Registrants Common Stock, and the name and shareholdings of each director and of all officers and directors as a group.  Title ofName and Address ofAmount and Nature ofPercentage of ClassClassBeneficial OwnerBeneficial OwnershipCommonZagros Shahvaran(1)5,600,00076.5%4302 Hollow RoadLogan, UT  84321Total Officers and DirectorsAs a Group (1 Person)5,600,00076.5%  (1) Officer and/or director.  There are no contracts or other arrangements that could result in a change of control of the Company.   9   Item 12.  Certain Relationships and Related Transactions.  Our policy is that a contract or transaction either between the Company and a director, or between a director and another company in which he is financially interested is not necessarily void or voidable if the relationship or interest is disclosed or known to the board of directors and the stockholders are entitled to vote on the issue, or if it is fair and reasonable to our company.  At various times during the previous years, the Company had found it necessary to borrow funds from its shareholders to fund the Company.  These notes are due and payable on December 31, 2007 and carry an interest rate of 12%.  The total outstanding as of December 31, 2006 and 2005 was $48,901 and $65,006 respectively. Item 13.  Exhibits  Exhibit #TitleLocation3.1Articles of Incorporation*3.1aAmendment to Articles of Incorporation*3.2Bylaws*31Certification of the Principal Executive Officer andAttachedPrincipal Financial Officer pursuant toSection 302 of the Sarbanes-Oxley Act of 200232Certification of the Principal Executive Officer andAttachedPrincipal Financial Officer pursuant toU.S.C. Section 1350 as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002**  * Incorporated by reference. Filed as exhibit to Form 10-KSB filed April 7, 2006 ** The Exhibit attached to this Form 10-KSB shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to liability under that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.  Item 14.  Principal Accountant Fees and Services.  Audit Fee The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the Companys annual financial statement and review of financial statements included in the Companys 10-QSB reports and services normally provided by the accountant in connection with statutory and regulatory filings or engagements were $4,140 for fiscal year ended 2005 and $6,360 for fiscal year ended 2006.  Audit-Related Fees There were no fees for other audit related services for fiscal years ended 2005 and 2006.  10   Tax Fees Fees for tax compliance, tax advice and tax planning for the fiscal year 2005 was $250 and $250 for 2006. All Other Fees There were no other aggregate fees billed in either of the last two fiscal years for products and services provided by the principal accountant, other than the services reported above. We do not have an audit committee currently serving and as a result our board of directors performs the duties of an audit committee.  Our board of directors will evaluate and approve in advance, the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services.  We do not rely on pre-approval policies and procedures. SIGNATURES  In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.  SILICON SOUTH, INC.  Date: March 6, 2007 /s/ Zagros Shahvaran Zagros Shahvaran Princiapl Executive Officer    Date: March 6, 2007 /s/ Zagros Shahvaran Zagros Shahvaran Principal Financial Officer  In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.   By:/s/ Zagros Shahvaran Zagros Shahvaran Date: March 6, 2007   11


HAWKINS ACCOUNTINGCertified Public Accountant Audit  .  tax  .  consulting  To the Board of Directors and Shareholders Silicon South, Inc. San Diego, California  Report of Independent Registered Public Accounting Firm  I have audited the balance sheet of Silicon South, Inc. as of December 31, 2006 and 2005 and the related statements of operations, stockholders equity and cash flows for the years ended December 31, 2006 and 2005.  These financial statements are the responsibility of the Companys management. My responsibility is to express an opinion on these financial statements based on my audit.  I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  I believe that my audit provides reasonable basis for my opinion.  In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Silicon South, Inc as of December 31, 2005 and 2004, the results of operations and its cash flows for the year then ended in conformity with generally accepted accounting principles in the United States of America.    /s/ Hawkins Accounting Hawkins Accounting Los Angeles, CA    January 5, 2007


12


SILICON SOUTH, INCORPORATED BALANCE SHEET December 31, 2006 and 2005  ASSETS20062005Current assetsCash in bank$114$0Deposits on hand5,600Inventory0Total current assets1145,600Total assets$228$5,600LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilitiesAccounts payable$5,120$0Accrued interest26,65619,786State corporate tax payable4,0003,200Total current liabilities35,77622,986Notes payable related parties65,00648,901Total liabilities100,78271,887Shareholders' deficitCommon stock, 50,000,000 sharesauthorized, 7,315,500 outstanding7,3157,315Paid in capital140,785140,785Retained deficit(248,768)(214,387)Total shareholders' equity(100,668)(66,287)Total liabilities and shareholders' equity$114$5,600  The accompanying notes are an integral part of these financial statements


13


SILICON SOUTH, INCORPORATED STATEMENT OF OPERATIONS For the year ending December 31, 2006 and 2005  20062005Sales$0$0Cost of Goods00Gross profit00ExpensesBank charges1380Professional fees26,5730Total expenses26,7110Net loss from operations(26,711)0Other income (expense)Loss on sale0(8,690)Interest expense(6,870)(5,816)State corporate tax expense(800)(800)Total other income (expense)(7,670)(15,306)Net income (loss)$(34,381)$(15,306)Loss per common share$(0.01)$(0.01)Weighted average ofshares outstanding7,315,5004,583,233  The accompanying notes are an integral part of these financial statements


14


SILICON SOUTH, INCORPORATED STATEMENT OF CASH FLOWS-INDIRECT METHOD For the year ending December 31, 2006 and 2005  20062005CASH FLOWS FROMOPERATING ACTIVITIESNet income (loss)$(34,381)$(15,306)Adjustment to reconcile net to net cashprovided by operating activitiesIncrease in accrued interest6,8705,816Increase in state franchise tax800800Loss on transfer of assets8,690Increase in accounts payable5,120Increase (Decrease)of deposits on hand5,6005,600NET CASH PROVIDEDBY OPERATING ACTIVITIES(15,991)5,600INVESTING ACTIVITIESAssets transferred012,098NET CASH USED ININVESTING ACTIVITIES0FINANCING ACTIVITIESSale of common stock5,600Borrowings from shareholder16,105813NET CASH REALIZEDFROM FINANCING ACTIVITIES16,1056,413INCREASE IN CASHAND CASH EQUIVALENTS114(85)Cash and cash equivalentsat the beginning of the year085CASH AND CASH EQUIVALENTSAT YEAR END$114$0  The accompanying notes are an integral part of these financial statements


15


SILICON SOUTH, INCORPORATED STATEMENT OF SHAREHOLDERS' DEFICIT December 31, 2006 and 2005  Common stockPaidInRetainedSharesAmountCapitalDeficitTotalDecember 31, 20044,115,500$4,115$140,785$(199,081)$(54,181)Return of stock for assets(2,400,000)(2,400)00(2,400)Net effect of asset swap00000Net loss for period000(15,306)(15,306)December5,600,0005,600005,600December 31, 20057,315,500$7,315$140,785$(214,387)$(66,287)December 31, 20057,315,500$7,315$140,785$(214,387)$(66,287)Net loss for period000(34,381)(34,381)7,315,500$7,315$140,785$(248,768)$(100,668)  The accompanying notes are an integral part of these financial statements


16


NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Nature of the business  The Company was incorporated under the laws of the State of Nevada on June 20, 1997. The Company for the past several years has had no activity.  Silicon South, Inc (the Company) is a shell entity that is in the market for a merger with an appropriate company.  Pervasiveness of estimates  The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from these estimates.  Cash and cash equivalents  For financial statement presentation purposes, the Company considers all short term investments with a maturity date of three months or less to be cash equivalents.  Inventories  Inventory, which includes parts and the packaging materials for those parts, is valued at the lower of cost or market on a first in first out method.  Property and equipment  Property and equipment are recorded at cost.  Maintenance and repairs are expensed as incurred; major renewals and betterments are capitalized.  When items of property or equipment are sold or retired, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is included in income.  Depreciation is provided using the straight-line method, over the useful lives of the assets.  Since the company has yet to commence operations, no depreciation has been taken.  Equipment consists of moldings being developed.  Income taxes  Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the recorded book basis and the tax basis of assets and liabilities for financial and income tax reporting.  The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled.  Deferred taxes are also recognized for operating losses that are available to offset future taxable income.


17


Recent Accounting Pronouncements - The following accounting pronouncements if implemented would have no effect on the financial statements of the Company. In June 2006, the Financial Accounting Standards Board issued FASB Interpretation No. 48,Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109  (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in accordance with FASB Statement No. 109,Accounting for Income Taxes.  FIN 48 describes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 will be effective for the Company in fiscal 2008.  The Company has not yet determined the impact of this new accounting interpretation on its financial statements.  In September 2006, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 108 (SAB 108). Due to diversity in practice among registrants, SAB 108 expresses SEC staff views regarding the process by which misstatements in financial statements are evaluated for purposes of determining whether financial statement restatement is necessary. SAB 108 requires registrants to quantify misstatements using both the balance sheet and income statement approaches and to evaluate whether either approach results in quantifying an error that is material in light of relative quantitative and qualitative factors. SAB 108 is effective for fiscal years ending after November 15, 2006, and early application is encouraged. The Company does not believe SAB 108 will have a material impact on the Companys results from operations or financial position. In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS No. 157). SFAS No. 157 provides guidance for using fair value to measure assets and liabilities. This standard also responds to investors requests for expanded information about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value and the effect of fair value measurements on earnings. SFAS No. 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. The standard does not expand the use of fair value in any new circumstances. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years; therefore, the Company expects to adopt SFAS No. 157 at the beginning of fiscal 2009. The Company does not believe SFAS No. 157 will have a material impact on the Companys results from operations or financial position.


18


FASB 154 issued in May 2005 pertains accounting changes and error corrections.  None exist for the Company.  NOTE 2: COMMON STOCK  The Company in November 2005  sold its inventory and assets to the majority shareholder in exchange for his surrendering 2,400,000 shares of the Companys stock.  This transaction resulted in a loss on the exchange of the assets of $2,651. The shareholder was the only officer of the Company and he resigned from the board and vacated his office.  In November 2005, the Company sold 5,600,000 shares of stock for $5,600 to the new office of the corporation.  As of the end of the year the funds had not been deposited into the Companys bank account that had yet to be opened at year end.  There were no equity or stock transactions for the period ending December 31, 2006.  NOTE 3: NOTES PAYABLE RELATED PARTIES  At various times during the previous years, the Company had found it necessary to borrow funds from its shareholders to fund the Company.  These notes are due and payable on December 31, 2007 and carry an interest rate of 12%.  The total outstanding as of December 31, 2006 and 2005 was $65,006 and $48,901.  NOTE 4: INCOME TAXES  The benefit for income taxes from operations consisted of the following components: current tax benefit of $80,000 resulting from a net loss before income taxes, and a deferred tax expense of $70,000 resulting from a valuation allowance recorded against the deferred tax asset resulting from net operating losses.  Net operating loss carryforward will expire in 2014 2024 and 2025.  The valuation allowance will be evaluated at the end of each year, considering positive and negative evidence about whether the asset will be realized.  At that time, the allowance will either be increased or reduced; reduction would result in the complete elimination of the allowance if positive evidence indicates that the value of the deferred tax asset is no longer required.


19