FTS 424B3 Prospectus supplement

This prospectus relates to the resale of up to 212,848,288 shares of our common stock by selling shareholders. We are not selling any securities in this offering and therefore will not receive any proceeds from this offering. We may, however, receive proceeds from the exercise of warrants. All costs associated with this registration will be borne by us.

Our common stock is traded on the Over-The-Counter Bulletin Board under the trading symbol "FLIP.OB." On July 3, 2007, the last reported sale price for our common stock on the OTCBB was $0.03 per share.

INVESTING IN OUR COMMON STOCK INVOLVES RISKS.

SEE "RISK FACTORS" BEGINNING ON PAGE 4

You should rely only on the information provided in this prospectus or any supplement to this prospectus and information incorporated by reference. We have not authorized anyone else to provide you with different information. Neither the delivery of this prospectus nor any distribution of the shares of common stock pursuant to this prospectus shall, under any circumstances, create any implication that there has been no change in our affairs since the date of this prospectus.

Neither the Securities and Exchange Commission nor any state securities regulator has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. It is a criminal offense to make any representation to the contrary.

The date of this prospectus is July 20, 2007.

Table of Contents

PROSPECTUS SUMMARY	3
RISK FACTORS	4
USE OF PROCEEDS	6
DETERMINATION OF OFFERING PRICE	6
SELLING SECURITY HOLDERS	7
PLAN OF DISTRIBUTION	8
LEGAL PROCEEDINGS	8
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS	8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	9
DESCRIPTION OF SECURITIES	10
INTEREST OF NAMED EXPERTS AND COUNSEL	10
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES	10
DESCRIPTION OF BUSINESS	11
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION	12
DESCRIPTION OF PROPERTY	16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	16
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	17
EXECUTIVE COMPENSATION	17
FINANCIAL STATEMENTS	F-1
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	18

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed information and financial statements, including the notes thereto, appearing elsewhere in this prospectus. Because it is a summary, it does not contain all of the information you should consider before making an investment decision. You should read the entire prospectus carefully, including the financial statements and the notes relating to the financial statements.

THE COMPANY

We are engaged in the acquisition and development of a chain of full service retail wireless stores in the Florida Gulf Coast region and the Philadelphia suburban market. Our primary business is the marketing, sale and activation of cellular and satellite handsets, cellular accessories and other related wireless products such as Wi-Fi service and related access equipment for residential or business purposes. We also market and sell products worldwide through our web sites. On October 5, 2005, we announced a proposal to spin off our subsidiary FTS Wireless following the acquisition of a profitable company. We acquired See World in January 2006. We are still evaluating the feasibility, appropriateness and timing of a potential spin-off.

THE OFFERING

This prospectus relates to the resale of up to 212,848,288 shares of our common stock by several selling stockholders who obtained shares of our common stock and warrants in a private placement transaction. This prospectus covers the resale of our stock by the selling stockholders either in the open market or to other investors through negotiated transactions.

Common stock offered	212,848,288 shares
Use of proceeds	We will not receive any proceeds from the sale by the selling stockholder of our common stock. However, we may receive proceeds from the exercise of warrants. See "Use of Proceeds."
Symbol for our common stock	Our common stock trades on The OTCBB Market under the symbol "FLIP.OB:

HOW TO CONTACT US

Our business address is 7610 West Hillsborough Ave., Tampa, Florida, 33615. Our telephone number is (813) 868-3600.

OUR CAPITAL STRUCTURE AND SHARES ELIGIBLE FOR FUTURE SALE

Shares of common stock outstanding as of May 1, 2007 (1)	153,324,114
Shares of common stock potentially issuable pursuant to warrants registered in this prospectus	84,396,864
Shares of common stock potentially issuable pursuant to convertible notes registered in this prospectus	92,931,100
Total	330,652,078

(1) Assumes:

- No exercise of outstanding warrants to purchase an aggregate of 1,036,000 shares of our common stock at an exercise price of $1.50 per share. The warrants expire in 2010.

- No exercise of warrants outstanding to purchase 3,000,000 shares of our common stock at an exercise price of $0.25 per share. The warrants expire August 7, 2007.

-No conversion of the 1,000,000 shares of Series B Preferred Stock. The shares can be converted at the option of either the Company or the holder at any time after January 3, 2008. The 1,000,000 shares of Series B Preferred Stock convert into 25,000,000 shares of common stock.

RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the following risk factors and information in our periodic reports filed with the SEC. If any of the following risks actually occur, our business, financial condition or results of operations could be materially and adversely affected and you may lose some or all of your investment.

WE HAVE A HISTORY OF GENERATING LOSSES AND WE MAY NOT BE ABLE TO REMAIN PROFITABLE.

We had an operating profit of $223,419 for the year ended December 31, 2006, and an operating loss of $1,567,477 for the year ended December 31, 2005. Our future operations may not be profitable if we are unable to develop and expand our wireless business and our Internet operations. Revenues and profits, if any, will depend upon various factors, including whether we will be able to receive funding to advertise our products or find additional businesses to operate and/or acquire. We may not achieve our business objectives and the failure to achieve such goals would have an adverse impact on us.

THERE IS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN DUE TO RECURRING LOSSES AND WORKING CAPITAL SHORTAGES, WHICH MEANS THAT WE MAY NOT BE ABLE TO CONTINUE OPERATIONS UNLESS WE OBTAIN ADDITIONAL FUNDING.

Our audited financial statements for the fiscal year ended December 31, 2006, reflect an operating profit of $223,419 and stockholders' equity of $1,654,217 as of December 31, 2006. Based on our outstanding debt levels these conditions raise substantial doubt about our ability to continue as a going concern if sufficient additional funding is not acquired or alternative sources of capital are not developed to meet our working capital needs. If we can not obtain additional funding as needed, our business may fail.

WE MAY, IN THE FUTURE, ISSUE ADDITIONAL SHARES OF OUR COMMON STOCK WHICH WOULD REDUCE INVESTORS PERCENT OF OWNERSHIP AND MAY DILUTE OUR SHARE VALUE.

Our Articles of Incorporation authorize the issuance of 855,000,000 shares of common stock. As of July 6, 2007 we have 159,854,944 shares of our common stock issued and outstanding. We are also authorized to issue 150,000 shares of our Series A 10% Convertible Preferred Stock of which no shares are issued or outstanding, 1,000,000 shares of Series B Convertible Preferred Stock which are all issued and outstanding and 3,850,000 undesignated preferred shares of which no shares are issued or outstanding. The future issuance of all or part of our remaining authorized common stock may result in substantial dilution in the percentage of our common stock held by our then existing shareholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions will have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock.

WE ONLY RECENTLY ACQUIRED OUR OPERATING UNITS AND HAVE BEEN SELLING WIRELESS COMMUNICATIONS AND SATELLITE TELEVISION PRODUCTS AND SERVICES FOR A SHORT PERIOD OF TIME AND WE MAY NOT BE ABLE TO SUCCESSFULLY MANAGE OUR BUSINESS.

We began our retail wireless operations in February 2003 with our acquisition of selected assets of Simply Cellular, Inc. Since we have just begun operations in this industry, we may not find commercial acceptance of our products and services. We have no way of predicting whether our marketing efforts will be successful in attracting new customers and acquiring market share. We may not be able to acquire products and technologies that will attract customers without which we cannot operate profitably. At December 31, 2006 our wholly-owned subsidiary FTS Wireless generated approximately 28% of total revenue. The remaining 72% came from our wholly-owned subsidiary See World Satellites, Inc. acquired on January 3, 2006.

OUR OPERATING RESULTS HAVE FLUCTUATED SIGNIFICANTLY IN THE PAST AND WE BELIEVE THEY WILL FLUCTUATE SIGNIFICANTLY FOR THE FORSEEABLE FUTURE. INVESTORS MAY PREFER STABLE AND PREDICTABLE OPERATING RESULTS AND MAY SELL OUR STOCK IF OUR OPERATING RESULTS CONTINUE TO FLUCTUATE OR DO NOT MEET THEIR EXPECTATIONS FOR GROWTH. AS A RESULT, YOUR INVESTMENT IN OUR STOCK MAY LOSE VALUE.

Our quarterly results of operations have varied in the past and are likely to continue to vary significantly from quarter to quarter. Our operating expenses are based on expected future revenues and are relatively fixed in the short term. If our revenues are lower than expected, our results of operations could be lower than expected. Additionally, we are unable to forecast our future revenues with certainty because our business plan contemplates the acquisition of new enterprises, which may not occur. Many factors can cause our financial results to fluctuate, some of which are outside of our control.

Quarter-to-quarter comparisons of our operating results may not be meaningful and you should not rely upon them as an indication of our future performance. In addition, during certain future periods our operating results likely will fall below the expectations of public market analysts and investors. In this event, the market price of our common stock likely would decline.

WE NEED ADDITIONAL CAPITAL TO GROW OUR BUSINESS AND IF WE DO NOT FIND SUCH CAPITAL ON ACCEPTABLE TERMS, WE WILL NOT BE ABLE TO FULLY IMPLEMENT OUR BUSINESS PLAN.

We believe we must grow our operations to generate enough revenue to cover our operating and overhead costs and pay down our debt. Therefore, our business plan contemplates the acquisition of new enterprises. The proceeds from our existing financial arrangement may not be sufficient to fully implement our business plan. Additionally, we may not be able to generate sufficient revenues from our existing operations to fund our capital requirements. Accordingly, we may require additional funds to enable us to operate profitably. Such financing may not be available on terms acceptable to us. We currently have no bank borrowings or credit facilities, and we may not be able to arrange any such debt financing. Additionally, we may not be able to successfully consummate additional offerings of stock or other securities in order to meet our future capital requirements. If we cannot raise additional capital through issuing stock or bank borrowings, we may not be able to sustain or grow our business.

TO REMAIN PROFITABLE AND GROW, WE MUST SUCCESSFULLY INTEGRATE NEW BUSINESSES.

Our success depends upon our ability to identify and acquire undervalued businesses. Although we have identified certain companies available for potential acquisition that are undervalued and might offer attractive business opportunities, we may not be able to negotiate profitable acquisitions. If we do make business acquisitions, we must continue to implement and improve our operational, financial and management information systems. We must also hire, train and retain additional qualified personnel, continue to expand and upgrade core technologies and effectively manage our relationships with customers, suppliers and other third parties. If we expand as anticipated, expansion could place a significant strain on our current services and support operations, sales and administrative personnel, capital resources and other company resources. If we fail to effectively manage our growth, our expenses may increase which could lower our earnings or prevent us from becoming profitable. Failure to effectively manage our growth could also result in us failing to generate sufficient revenues to become profitable.

WE DEPEND ON MR. SCOTT GALLAGHER, OUR CHIEF EXECUTIVE OFFICER, AND IF HE LEAVES US, WE MAY NOT BE ABLE TO IMPLEMENT OUR BUSINESS PLAN.

Our success in achieving our growth objectives depends upon the efforts of our top management team including the efforts of Mr. Scott Gallagher. The loss of Mr. Gallagher's services would negatively affect our ability to implement our business plan, and, as a result, our financial condition, including our cash position, ability to obtain funding and generate revenues would be harmed. Although we intend to apply for key-man life insurance, we do not currently maintain such an insurance policy for Mr. Gallagher.

OUR STOCK PRICE IS VOLATILE AND YOU MAY NOT BE ABLE TO SELL YOUR SHARES AT A PRICE HIGHER THAN WHAT YOU PAID.

The market for our common stock is highly volatile. Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations. During the fiscal year ended December 31, 2006, our share price has moved between $0.015 and $0.13, and the average daily trading volume has varied between 45,500 shares per day and 5,589,500 shares per day. As a result, the market price of our common stock could decrease without regard to our operating performance. In addition, we believe factors such as quarterly fluctuations in our financial results, announcements of technological innovations or new products by our competitors or us, changes in prices of our products and services or our competitors' products and services, changes in our product mix and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially. If our stock price fluctuates, you may not be able to sell your shares at a price higher than what you paid.

THE LIMITED TRADING VOLUME OF OUR STOCK MAY DEPRESS THE PRICE OF OUR STOCK ORCAUSE IT TO FLUCTUATE SIGNIFICANTLY.

There has been a limited public market for our common stock and an active trading market for our common stock may not develop. As a result, you may not be able to sell your common stock in short time periods, or possibly at all.

WE MUST COMPLY WITH PENNY STOCK REGULATIONS WHICH COULD EFFECT THE LIQUIDITY ANDPRICE OF OUR STOCK.

The Securities and Exchange Commission has adopted rules that regulate broker-dealer practices in connection with transactions in "penny stocks." Penny stocks generally are equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on NASDAQ, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. Prior to a transaction in a penny stock, a broker-dealer is required to: Deliver a standardized risk disclosure document prepared by the SEC; Provide the customer with current bid and offers quotations for the penny stock; Explain the compensation of the broker-dealer and its salesperson in the transaction; Provide monthly account statements showing the market value of each penny stock held in the customer's account; Make a special written determination that the penny stock is a suitable investment for the purchaser and receives the purchaser's; and Provide a written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity in the secondary market for our stock. Because our shares are subject to the penny stock rules, you may find it more difficult to sell your shares.

WE DEPEND ON THIRD PARTY VENDORS FOR 100% OF OUR BUSINESS AS WE DO NOT OWN ANY WIRELESS NETWORKS OR MANUFACTURING CAPABILITIES. IF WE ARE NOT ABLE TO SECURE COST-EFFECTIVE PRODUCTS WE MAY NOT BE ABLE TO REMAIN PROFITABLE OR SUSTAIN OUR REVENUES AND MAY LOSE MONEY.

Our performance depends on our ability to purchase products in sufficient quantities at competitive prices and on our vendors' ability to make and deliver high quality products in a cost effective, timely manner. Some of our smaller vendors have limited resources, production capacities, and limited operating histories. We have no long-term purchase contracts or other contracts that provide continued supply, pricing or access to new products and any vendor or distributor could discontinue selling to us at any time. We may not be able to acquire the products that we need in sufficient quantities or on terms that are acceptable to us in the future. As a result, we may not become profitable.

WE EARN REVENUE BASED ON AGREEMENTS WITH CELLULAR AND SATELLITE SERVICE PROVIDERS AND IF THE CONTRACTS ARE CANCELED WE WOULD LOSE 100% OF THE REVENUE GENERATED FROM THESE ACTIVITIES.

We earn revenues by providing cellular and satellite activations for major wireless carriers such as Metro PCS, Cingular, Sprint/Nextel, and GlobalStar. These agreements are partly based on geography and we signed contracts to earn revenues from activations in Florida. Our agreements may be cancelled at any time by either party. If any of our agreements are cancelled, we will not earn activations through that carrier which will cause our revenues to decrease. If we do not provide activations for a broad line of carriers, our stores will not be as competitive. As a result, our revenues may decrease and we may not become profitable.

WE MAY NOT BE ABLE TO SUCCESSFULLY COMPETE WITH OTHER COMPANIES WHICH WOULD NEGATIVELY AFFECT OUR EARNINGS AND POSSIBLY CAUSE A DECLINE IN OUR STOCK.

We operate in a highly competitive environment. We principally compete with other independent retailers, privately held chains that offer a broad range of products and carrier-owned and operated stores with more name recognition and brand identity than us. We believe that success in the industry is based on maintenance of product quality, competitive pricing, delivery efficiency, customer service and satisfaction levels, maintenance of satisfactory dealer relationships, and the ability to anticipate technological changes and changes in customer preferences. Additionally, we believe competition may become more intense over time due to an increasing percentage of customers that already own the products we sell. If we can not compete in our markets, we will not sell a sufficient number of products to generate enough revenues to become profitable. Additionally, our suppliers, whose products we distribute, or major cellular phone manufacturers, may acquire, startup, and/or expand their own distribution systems to sell directly to commercial and retail customers which would cause us to lose revenue which could ultimately cause a decline in the value of our stock.

THE TELECOMMUNICATIONS INDUSTRY IS CONSTANTLY EVOLVING AND IF THE INDUSTRY DOES NOT REMAIN AN ATTRACTIVE INVESTMENT OPPORTUNITY FOR US WE MAY HAVE TO SHIFT OUR BUSINESS PLAN WHICH COULD RESULT IN LOWER OR NO EARNINGS AND OUR STOCK PRICE COULD DECLINE.

The technology that our products rely on is constantly changing. The rapid change in technology may lead to the development of wireless telecommunications services or alternative services that consumers prefer over traditional cellular. As a result, we must continue to stay current with new technologies and offer products and services that meet customer demands. It is difficult to predict how our product line will evolve over time and what our profitability margins will be on future products. It is also difficult to predict whether consumers will purchase new products to take advantage of advancements in technology. There is uncertainty as to the extent to which airtime charges and monthly recurring charges may continue to decline. If the technology that our products rely on changes in a way that reduces customer demand for our products or reduces the profitability of our products, we may have to adjust our business plan. If we adjust our business plan, our revenues and earnings may decrease and our stock price may move lower.

WE SELL PRODUCTS THAT RELY ON THIRD PARTY NETWORKS TO OPERATE; IF A NETWORK DISRUPTION OCCURS WE WOULD NO LONGER BE ABLE TO SELL THESE PRODUCTS AND WOULD LOSE 100% OF THE RELATED REVENUE GENERATED FROM THE SALE OF WIRELESS HANDSETS WHILE THE NETWORK WAS DOWN.

The products we sell rely on the efficient and uninterrupted operation of cellular and satellite networks, which are built and maintained by third parties such as Cingular and Sprint. Any failure of these cellular or satellite systems could cause our products to work poorly or not at all. A failure by these third parties to maintain their cellular and satellite systems could result in lower sales of our products which could reduce our revenues and lower our earnings. Additionally, our customers may not understand that the failure of a cellular or satellite system is due to a third party rather than our products and our reputation could be harmed. If our reputation is harmed, we may have difficulty selling our products. We may have to increase our advertising costs to repair our reputation or educate consumers. As a result, a third party failure may result in us failing to become profitable or, if we become profitable, we may not be able to sustain profitability.

USE OF PROCEEDS

The 212,848,288 shares of common stock covered by this prospectus are to be sold by certain selling stockholders who will receive all of the proceeds from such sales. We will not receive any proceeds from the sale of our common shares. However, we may receive proceeds from the exercise of warrants. We can not predict when, or if, we will receive proceeds from the exercise of the warrants. It is possible the warrants will expire and will never be exercised. The proceeds from our exercise of warrants, if any, will be used for working capital and general corporate expenses, expansion of our internal operations and potential acquisition costs, although we do not currently have any agreements or arrangements for pending acquisitions. If all of the warrants from this offering are exercised, we will receive a total of $1,950,396.20. $1,332,632.60 if all of the Class A Warrants are exercised, $555,263.65 if all of the Class B Warrants are exercised and $62,500 if all of the warrants issued to Olympus Securities are exercised.

Proceeds of the offering which are not immediately required for the purposes described above will be invested in United States government securities, short-term certificates of deposit, money market funds and other high-grade, short-term interest-bearing investments.

DETERMINATION OF OFFERING PRICE

The selling stockholders may sell shares from time to time in negotiated transactions, broker transactions or a combination of such methods at market prices prevailing at the time of the sale or at negotiated prices.

SELLING SECURITY HOLDERS

Based upon information available to us as of April 21, 2006, the following table sets forth the name of the selling stockholders, the number of shares owned, the number of shares registered by this prospectus and the number of outstanding shares that the selling stockholders will own after the sale of the registered shares, assuming all of the shares are sold. The information provided in the table and discussions below has been obtained from the selling stockholders. The selling stockholders may have sold, transferred or otherwise disposed of, or may sell, transfer or otherwise dispose of, at any time or from time to time since the date on which it provided the information regarding the shares beneficially owned, all or a portion of the shares of common stock beneficially owned in transactions exempt from the registration requirements of the Securities Act of 1933. As used in this prospectus, "selling stockholder" includes donees, pledgees, transferees or other successors-in-interest selling shares received from the named selling stockholder as a gift, pledge, distribution or other non-sale related transfer.

Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated by the Commission under the Securities Exchange Act of 1934. Unless otherwise noted, each person or group identified possesses sole voting and investment power with respect to the shares, subject to community property laws where applicable.

Selling Stockholder	Number of shares beneficially owned before offering	Number of Shares that may be offered pursuant to this prospectus	Number of Shares Beneficially Owned After Offering (1)
Alpha Capital Aktiengesellschaft (2) Pradafant 7 9490 Furstentums Vaduz, Lichtenstein	54,119,663	54,119,663	0
Bristol Investment Fund, Ltd. (3) Caledonian House, Jennett Street George Town, Grand Cayman Cayman Islands	30,220,762	30,220,792	0
Whalehaven Capital Fund Limited (4) 3rd Floor, 14 Par-Laville Road Hamilton, Bermuda HM08	45,331,100	45,331,100	0
Ellis International Ltd. (5) 53rd Street Urbanizacion Obarrio Swiss Tower, 16th Floor, Panama Republic of Panama	27,059,825	27,059,825	0
Omega Capital Small Cap Fund (6) 1403 44th Street, Suite 214 Brooklyn, NY 11219	13,529,938	13,529,938	0
CMS Capital (7) 9612 Ventura Blvd., Suite 108 Panorama City, CA 91402	11,332,825	11,332,825	0
Iroquois Master Fund (8) 641 Lexington Avenue, 26th Floor New York, NY 10022	22,665,552	22,665,552	0
Asher Brand (9) 30 Olympia Lane Monsey, NY 10952	2,029,531	2,029,531	0
Momona Capital Corp. (10) 3 Martha Road Monsey, NY 10952	4,059,062	4,059,062	0
Olympus Securities (11) 170 Changebridge Road, Suite B-1 Montville, NJ 07045	2,500,000	2,500,000	0
(1) Assumes all shares are sold pursuant to this Prospectus. (2) Alpha Capital Aktiengesellschaft owns 9,866,800 shares of common stock, 25,287,350 shares that may issue upon conversion of a convertible note, 12,643,675 shares upon exercise of class A warrants and 6,321,838 shares upon exercise of class B warrants. The convertible note is convertible at a fixed price of $0.04 subject to adjustment. The exercise price of the class A warrants is $0.02868. The class A warrants shall be exercisable until the date that this registration statement has been effective for the unrestricted public resale of the warrant shares for 4 years. The exercise price of the class B warrants is $0.0239. The class B warrants are exercisable until the later of four months after the actual effective date of this registration statement, or ninety days after the actual effective date of a further registration statement. Konrad Ackerman and Rainer Posch, as directors, have voting and investment control over the securities held by Alpha Capital Aktiengesellschaft. Mr. Ackerman and Mr. Posch disclaim beneficial ownership of these securities. (3) Bristol Investment Fund, Ltd. owns 8,094,287 shares of common stock, 12,643,700 shares that may issue upon conversion of a convertible note, 6,321,850 shares upon exercise of class A warrants and 3,160,925 shares upon exercise of class B warrants. The convertible note is convertible at a fixed price of $0.04 subject to adjustment. The exercise price of the class A warrants is $0.02868. The class A warrants shall be exercisable until the date that this registration statement has been effective for the unrestricted public resale of the warrant shares for 4 years. The exercise price of the class B warrants is $0.0239. The class B warrants are exercisable until the later of four months after the actual effective date of this registration statement, or ninety days after the actual effective date of a further registration statement. Bristol Capital Advisors, LLC is the investment manager to Bristol Investment Fund, Ltd. Paul Kessler is the manager of Bristol Advisors, LLC, and as such has voting and investment control over the securities held by Bristol Investment Fund, Ltd. Mr. Kessler disclaims beneficial ownership of these securities. Under the subscription agreement dated December 25, 2005, the conversion of the note and exercise of the warrants limits the number of shares that can be beneficially owned by Bristol Investment Fund, Ltd. to 4.9%. (4) Whalehaven Capital Fund, Limited owns 12,141,475 shares of common stock, 18,965,500 shares that may issue upon conversion of a convertible note, 9,482,750 shares upon exercise of class A warrants and 4,741,375 shares upon exercise of class B warrants. The convertible note is convertible at a fixed price of $0.04 subject to adjustment. The exercise price of the class A warrants is $0.02868. The class A warrants shall be exercisable until the date that this registration statement has been effective for the unrestricted public resale of the warrant shares for 4 years. The exercise price of the class B warrants is $0.0239. The class B warrants are exercisable until the later of four months after the actual effective date of this registration statement, or ninety days after the actual effective date of a further registration statement. Arthur Jones, Jennifer Kelly, and Derek Wood, as directors, have voting and investment control over the securities held by Whalehaven Capital Fund. Mr. Jones, Ms. Kelly, and Mr. Wood disclaim beneficial ownership of these securities. Under the subscription agreement dated December 25, 2005, the conversion of the note and exercise of the warrants limits the number of shares that can be beneficially owned by Whalehaven Capital Fund, Ltd. to 4.9%.
(5) Ellis International Ltd. owns 4,933,400 shares of common stock, 12,643,650 shares that may issue upon conversion of a convertible note, 6,321,850 shares upon exercise of class A warrants and 3,160,925 shares upon exercise of class B warrants. The convertible note is convertible at a fixed price of $0.04 subject to adjustment. The exercise price of the class A warrants is $0.02868. The class A warrants shall be exercisable until the date that this registration statement has been effective for the unrestricted public resale of the warrant shares for 4 years. The exercise price of the class B warrants is $0.0239. The class B warrants are exercisable until the later of four months after the actual effective date of this registration statement, or ninety days after the actual effective date of a further registration statement. Wilhelm Unger, as director of Ellis International Ltd., has voting and investment control over the securities held by Ellis International Ltd. Mr. Unger disclaims beneficial ownership of these securities. Under the subscription agreement dated December 25, 2005, the conversion of the note and exercise of the warrants limits the number of shares that can be beneficially owned by Ellis International Ltd to 4.9%. (6) Omega Capital Small Cap Fund owns 2,466,700 shares of common stock, 6,321,850 shares that may issue upon conversion of a convertible note, 3,160,925 shares upon exercise of class A warrants and 1,580,463 shares upon exercise of class B warrants. The convertible note is convertible at a fixed price of $0.04 subject to adjustment. The exercise price of the class A warrants is $0.02868. The class A warrants shall be exercisable until the date that this registration statement has been effective for the unrestricted public resale of the warrant shares for 4 years. The exercise price of the class B warrants is $0.0239. The class B warrants are exercisable until the later of four months after the actual effective date of this registration statement, or ninety days after the actual effective date of a further registration statement. Herman Segal has voting and investment control over the securities held by Omega Capital Small Cap Fund. Mr. Segal disclaims beneficial ownership of these securities. Under the subscription agreement dated December 25, 2005, the conversion of the note and exercise of the warrants limits the number of shares that can be beneficially owned by Omega Capital Small Cap Fund to 4.9%. (7) CMS Capital owns 3,035,375 shares of common stock, 4,741,400 shares that may issue upon conversion of a convertible note, 2,370,700 shares upon exercise of class A warrants and 1,185,350 shares upon exercise of class B warrants. The convertible note is convertible at a fixed price of $0.04 subject to adjustment. The exercise price of the class A warrants is $0.02868. The class A warrants shall be exercisable until the date that this registration statement has been effective for the unrestricted public resale of the warrant shares for 4 years. The exercise price of the class B warrants is $0.0239. The class B warrants are exercisable until the later of four months after the actual effective date of this registration statement, or ninety days after the actual effective date of a further registration statement. Menachem Lipskier, as manager, has voting and investment control over the securities held by CMS Capital. Mr. Lipskier disclaims beneficial ownership of these securities. Under the subscription agreement dated December 25, 2005, the conversion of the note and exercise of the warrants limits the number of shares that can be beneficially owned by CMS Capital to 4.9%. (8) Iroquois Master Fund owns 6,070,739 shares of common stock, 9,482,750 shares that may issue upon conversion of a convertible note, 4,741,375 shares upon exercise of class A warrants and 2,370,688 shares upon exercise of class B warrants. The convertible note is convertible at a fixed price of $0.04 subject to adjustment. The exercise price of the class A warrants is $0.02868. The class A warrants shall be exercisable until the date that this registration statement has been effective for the unrestricted public resale of the warrant shares for 4 years. The exercise price of the class B warrants is $0.0239. The class B warrants are exercisable until the later of four months after the actual effective date of this registration statement, or ninety days after the actual effective date of a further registration statement. Joshua Silverman has voting and investment control over the shares held by Iroquois Master Fund Ltd. Mr. Silverman disclaims beneficial ownership of these shares. Under the subscription agreement dated December 25, 2005, the conversion of the note and exercise of the warrants limits the number of shares that can be beneficially owned by Iroquois Master Fund to 4.9%. (9) Mr. Asher Brand owns 370,006 shares of common stock, 948,300 shares that may issue upon conversion of a convertible note, 474,150 shares upon exercise of class A warrants and 237,075 shares upon exercise of class B warrants. The convertible note is convertible at a fixed price of $0.04 subject to adjustment. The exercise price of the class A warrants is $0.02868. The class A warrants shall be exercisable until the date that this registration statement has been effective for the unrestricted public resale of the warrant shares for 4 years. The exercise price of the class B warrants is $0.0239. The class B warrants are exercisable until the later of four months after the actual effective date of this registration statement, or ninety days after the actual effective date of a further registration statement. Mr. Brand has sole voting and dispositive power of these shares. Under the subscription agreement dated December 25, 2005, the conversion of the note and exercise of the warrants limits the number of shares that can be beneficially owned by Mr. Asher Brand to 4.9%. (10) Momona Capital Corp. owns 740,012 shares of common stock, 1,896,600 shares that may issue upon conversion of a convertible note, 948,300 shares upon exercise of class A warrants and 474,150 shares upon exercise of class B warrants. The convertible note is convertible at a fixed price of $0.04 subject to adjustment. The exercise price of the class A warrants is $0.02868. The class A warrants shall be exercisable until the date that this registration statement has been effective for the unrestricted public resale of the warrant shares for 4 years. The exercise price of the class B warrants is $0.0239. The class B warrants are exercisable until the later of four months after the actual effective date of this registration statement, or ninety days after the actual effective date of a further registration statement. Arie Rabinowitz, as manager, has voting and investment control over the securities held by Momona Capital Corporation. Under the subscription agreement dated December 25, 2005, the conversion of the note and exercise of the warrants limits the number of shares that can be beneficially owned by Momona Capital Corp. to 4.9%. (11) Olympus Securities owns 2,500,000 shares of common stock upon exercise of warrants. The warrants shall be exercisable until the close of business on December 31, 2006. The exercise price of the warrants is $0.025. Olympus Securities is a broker dealer and an underwriter. James Carrazza has voting and investment control over the securities held by Olympus Securities. Mr. Carrazza disclaims beneficial ownership of these securities. The shares were acquired as a finders fee to a financing transaction. Olympus Securities received the shares in the ordinary course of business. At the time Olympus received the securities it had no agreements or understandings, directly or indirectly, with any person to distribute them.

PLAN OF DISTRIBUTION

The selling stockholders will act independently of us in making decisions with respect to the timing, manner and size of each sale. The selling stockholders may sell the shares from time to time:

- in transactions on the Over-the-Counter Bulletin Board or on any national securities exchange or U.S. inter-dealer system of a registered national securities association on which our common stock may be listed or quoted at the time of sale; or

- in private transactions and transactions otherwise than on these exchanges or systems or in the over-the-counter market; or

- at prices related to such prevailing market prices; or

- in negotiated transactions; or

- in a combination of such methods of sale; or

- any other method permitted by law.

The selling stockholders may effect such transactions by offering and selling the shares directly to or through securities broker-dealers, and such broker-dealers may receive compensation in the form of discounts, concessions or commissions from the selling stockholders and/or the purchasers of the shares for whom such broker-dealers may act as agent or to whom the selling stockholders may sell as principal, or both, which compensation as to a particular broker-dealer might be in excess of customary commissions.

The selling stockholders, Olympus Securities and any broker-dealers who act in connection with the sale of their shares may be deemed to be "underwriters" within the meaning of the Securities Act, and any discounts, concessions or commissions received by them and profit on any resale of the shares as principal may be deemed to be underwriting discounts, concessions and commissions under the Securities Act.

On or prior to the effectiveness of the registration statement to which this prospectus is a part, we will advise the selling stockholders that they and any securities broker-dealers or others who may be deemed to be statutory underwriters will be governed by the prospectus delivery requirements under the Securities Act. Under applicable rules and regulations under the Securities Exchange Act, any person engaged in a distribution of any of the shares may not simultaneously engage in market activities with respect to the common stock for the applicable period under Regulation M prior to the commencement of such distribution. In addition and without limiting the foregoing, the selling security owners will be governed by the applicable provisions of the Securities and Exchange Act, and the rules and regulations thereunder, including without limitation Rules 10b-5 and Regulation M, which provisions may limit the timing of purchases and sales of any of the shares by the selling stockholders. All of the foregoing may affect the marketability of our securities.

On or prior to the effectiveness of the registration statement to which this prospectus is a part, we will advise the selling stockholders that the anti-manipulation rules under the Securities Exchange Act may apply to sales of shares in the market and to the activities of the selling security owners and any of their affiliates. We have informed the selling stockholders that they may not:

- engage in any stabilization activity in connection with any of the shares;

- bid for or purchase any of the shares or any rights to acquire the shares;

- attempt to induce any person to purchase any of the shares or rights to acquire the shares other than as permitted under the Securities Exchange Act; or

- effect any sale or distribution of the shares until after the prospectus shall have been appropriately amended or supplemented, if required, to describe the terms of the sale or distribution.

We have informed the selling stockholders that they must affect all sales of shares in broker's transactions, through broker-dealers acting as agents, in transactions directly with market makers, or in privately negotiated transactions where no broker or other third party, other than the purchaser, is involved.

The selling stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act. Any commissions paid or any discounts or concessions allowed to any broker-dealers, and any profits received on the resale of shares, may be deemed to be underwriting discounts and commissions under the Securities Act if the broker-dealers purchase shares as principal. In the absence of the registration statement to which this prospectus is a part, certain of the selling stockholders would be able to sell their shares only pursuant to the limitations of Rule 144 promulgated under the Securities Act.

LEGAL PROCEEDINGS

We are not aware of any litigation or potential litigation that could have a material impact on our business.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

The following individuals presently serve as officers and directors of the Company:

Name	Age	Position
Scott Gallagher	40	Chairman of the Board of Directors, Chief Executive Officer and President
David R. Rasmussen	40	Director, Chief Operating Officer

All directors hold office until the next annual meeting of stockholders and until their successors are elected. Officers are elected to serve, subject to the discretion of the Board of Directors, until their successors are appointed.

SCOTT GALLAGHER. Mr. Gallagher has been Chairman of the Board of Directors and our Chief Executive Office since January of 2002. Prior to joining us, Mr. Gallagher was the founder and President of About-Face Communications, LLC, a privately-held business consulting firm located in Yardley, Pennsylvania. Prior to founding About-Face Communications, LLC, Mr. Gallagher was the Chief Investment Officer and a general partner with the Avalon Investment Fund, a private hedge fund based in New York City and Philadelphia.

DAVID R. RASMUSSEN. Mr. Rasmussen has served on our board of directors since February 10, 2002. On February 1, 2006, Mr. Rasmussen became our Chief Operation Officer and the Chief Executive Officer of our wholly-owned subsidiary, See World Satellites, Inc. Prior to joining us, Mr. Rasmussen was employed with ERC, Inc., a subsidiary of General Electric as an IT project Manager. In that position, he was charged with providing IT solutions that enable business to drive core processes and grow profitable relationships. Mr. Rasmussen received a Bachelor's degree in Computer Technology from Rockhurst University in Kansas City Missouri. He was in the United Sates Air Force and Reserves for eight years as a communications specialist.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, to our knowledge, certain information concerning the beneficial ownership of our common stock as of July 6, 2007 by each stockholder known by us to be (i) the beneficial owner of more than 5% of the outstanding shares of common stock, (ii) each current director, (iii) each of the executive officers named in the Summary Compensation Table who were serving as executive officers at the end of the 2005 fiscal year and (iv) all of our directors and current executive officers as a group:

The stockholders listed below have sole voting and investment power. The address of each of the beneficial owners is 7610 West Hillsborough Ave. Tampa, Florida 33615, unless otherwise indicated.

	AMOUNT AND
	NATURE OF
	BENEFICIAL		PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER(1)	OWNERSHIP		OF CLASS(2)

Scott Gallagher		11,736,451		7.3	%

David R. Rasmussen		1,727,500		1.1	%

Whalehaven Capital Fund Limited (3)		12,141,475		7.6	%
3 ^rd Floor, 14 Par-Laville Rd., Hamilton, Bermuda HM08

Bristol Investment Fund, LTD. (4)		8,094,317		5.1	%
Caledonian Fund Services Limited,69 Dr. Roy’s Dr.
George Town, Grand Cayman, Cayman Islands

All directors and current executive officers as a group (2 persons)		13,413,951		8.4	%

* Less than 1% of outstanding shares of Common Stock.

(1) The address of all individual directors and executive officers is c/o FTS Group, Inc., 7610 West Hillsborough Ave., Tampa, Florida 33615.

(2) The number of shares of common stock issued and outstanding as of July 6, 2007 was 159,854,944 shares. The calculation of percentage ownership for each listed beneficial owner is based upon the number of shares of common stock issued and outstanding on as of March 31, 2007, plus shares of common stock subject to options and warrants held by such person on March 31, 2007 and exercisable within 60 days thereafter.

(3) This information was based on a 13G filed on May 4, 2006 by Whalehaven Capital Fund Limited.

(4) This information is based on a 13G filed on May 4, 2006 by Bristol Investment Fund LTD.

DESCRIPTION OF SECURITIES

AUTHORIZED CAPITAL

Our total number of our Authorized shares of common stock is 855,000,000 with a par value of $0.001 per share. Additionally, we are authorized to issue 5,000,000 shares of Preferred Stock. Of this 5,000,000, we have authorized up to 150,000 shares of our 10% Convertible preferred stock, Series A, $0.01 par value and 1,000,000 shares as Series B Convertible Preferred Stock. As of July 6, 2007, we had no Series A shares issued and outstanding, 1,000,000 shares of Series B stock outstanding and 3,850,000 undesignated shares of preferred stock, par value $0.01 per share, of which no shares are issued or outstanding.

COMMON STOCK

Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of common stock do not have cumulative voting rights. Holders of common stock are entitled to share ratably in dividends, if any, as may be declared from time to time by our Board of Directors in its discretion from funds legally available therefore, subject to the rights of Preferred Stockholders. Please refer to our discussion below under "Preferred Stock." In the event of our liquidation, dissolution or winding up, the holders of common stock are entitled to share pro rata all assets remaining after payment in full of all liabilities, subject to the rights of Preferred Stockholders. Please refer to our discussion below under "Preferred Stock." Holders of common stock have no preemptive rights to purchase our common stock. There are no conversion or redemption rights or sinking fund provisions with respect to the common stock.

NONCUMULATIVE VOTING

Each holder of common stock is entitled to one vote per share on all matters on which such stockholders are entitled to vote. Shares of common stock do not have cumulative voting rights.

PREFERRED STOCK

Our Articles of Incorporation, as amended, vest our Board of Directors with authority to divide our Preferred Stock into series and to fix and determine the relative rights and preferences of the shares of any such series so established to the full extent permitted by the laws of the State of Nevada and the Articles of Incorporation in respect to, among other things, (i) the number of shares to constitute such series and the distinctive designations thereof, (ii) the rate and preference of dividends, if any, the time of payment of dividends, whether dividends are cumulative and the date from which any dividend shall accrue, (iii) whether preferred stock may be redeemed and, if so, the redemption price and the terms and conditions of redemption, (iv) the liquidation preferences payable on Preferred Stock in the event of involuntary or voluntary liquidation, (v) sinking fund or other provisions, if any, for redemption or purchase of Preferred Stock, (vi) the terms and conditions by which Preferred Stock may be converted, if the Preferred Stock of any series are issued with the privilege of conversion and (vii) voting rights, if any.

A total of 150,000 shares were designated Series A Preferred Stock, however, none are outstanding. All Series A shares have an issue price and preference on liquidation equal to $1.00 per share. The Series A Preferred Shares accrue dividends at the rate of 10% per annum during the first two years following issuance, which dividend is payable in cash and is cumulative. During the third through fifth year in which the Series A Preferred Shares are outstanding, the holders are entitled to 3.75% of our net profits, also payable in cash. We may redeem this Preferred Stock at any time following notice to the holder for an amount equal to the issue price, plus any accrued but unpaid dividends. The Series A Preferred Shares are convertible into shares of our common stock at the option of the holder on a one for one basis at any time up to the fifth anniversary of the issuance. On the fifth anniversary, the Series A Preferred Shares automatically convert into shares of our common stock. The conversion rate is subject to adjustment in certain events, including stock splits and dividends. Holders of our preferred stock are entitled to one vote for each share held of record. Holders of the preferred stock vote with holders of the common stock as one class.

In April 2007, a total of 1,000,000 shares were designated Series B Preferred Stock and all 1,000,000 shares are outstanding. Upon liquidation (voluntary or otherwise), dissolution or winding up of the Company, holders of Series B Convertible Preferred Stock will receive their prorate share of the total value of the assets and funds of the Company to be distributed, assuming the conversion of Series B Convertible Preferred Stock to Common Stock. The holders of shares of Series B Convertible Preferred Stock shall not be entitled to receive dividends and shall have no voting rights. After June 1, 2006, the shares of Series B Convertible Preferred Stock are redeemable at $2.00 per share solely at our option.

Any shares of Series B Convertible Preferred Stock may, at any time after January 3, 2008, at the option of the holder or the Corporation, be converted into fully paid and nonassessable shares of common stock. The number of shares of common stock to which a holder of Series B Convertible Preferred Stock shall be entitled upon a conversion shall be the product obtained by multiplying the number the number of shares of Series B Convertible Preferred Stock being converted by 25.

INTEREST OF NAMED EXPERTS AND COUNSEL

No expert or counsel will receive a direct or indirect interest in the small business issuer or was a promoter, underwriter, voting trustee, director, officer, or employee of FTS Group, Inc. Nor does any such expert or counsel have any contingent based agreement with us or any other interest in or connection to us.

DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

Our Articles of Incorporation, as amended, provide that the Board of Directors has the power to:

- indemnify our directors, officers, employees and agents to the fullest extent permitted by the General Corporation Law of Nevada;

- authorize payment of expenses incurred in defending a civil or criminal action; and

- purchase and maintain insurance on behalf of any director, officer, employee or agent.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the "Securities Act"), may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the Commission, such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable.

DESCRIPTION OF BUSINESS

HISTORY

We organized as Full Tilt Sports, Inc. in 1997 as a Colorado corporation to develop and market a line of young men's casual apparel. We own several U.S. trademarks relating to that business. Effective August 23, 2000, we changed our name to FTS Apparel, Inc. Our attempts to build a profitable apparel business were unsuccessful and the prior management team was unable to raise the required funds to continue in the apparel business. As a result, we exited the apparel business. In January 2002, we experienced a change in management. Effective January 11, 2002, Scott Gallagher became our new Chairman and Chief Executive Officer and we appointed three new directors. The new Chairman agreed to purchase 1,861,618 shares of our common stock owned by two of the former officers and directors and other shareholders. The new management team initially developed a strategic plan to acquire and develop cash flow positive businesses. After an analysis of the market, management determined to primarily focus on building a diversified wireless business. FTS Wireless, Inc., a wholly-owned subsidiary, was organized as a Florida corporation in February 2003 to acquire and develop a chain of retail wireless locations in the Gulf Coast market of Florida. On January 26, 2004, we changed our name to FTS Group, Inc. to reflect the change in our operations. Additionally, on that date, we changed our state of incorporation from Colorado to Nevada. On January 3, 2006, we acquired See World Satellites, Inc., a regional service provider for Dish Networks, Inc., as a wholly-owned subsidiary.

BUSINESS

Our business model is to develop, invest in and acquire cash-flow positive businesses and viable business projects, primarily in the Wireless, Internet and Technology Industries for the benefit of our Company and our stockholders. Since changing our management and business model in 2002 from a pure apparel company, we have acquired a profitable business with significant cash-flow relative to our size in See World Satellites, Inc. Additionally, since 2003, we have acquired and developed a retail wireless business based in the Gulf Coast market of Florida through our wholly-owned subsidiary FTS Wireless, Inc.

Through our wholly-owned subsidiaries, See World Satellites, Inc. and FTS Wireless, Inc., we have created a diversified wireless distribution business. Our subsidiary, FTS Wireless, Inc., distributes wireless communications products such as cell phones, PDAs and related communication devices and accessories through our chain of retail locations to customers in the Gulf Coast region of Florida and nationally over the Internet. Our subsidiary See World Satellites, Inc. is a Regional Service Provider, or RSP, and retail distributor of satellite television systems and services for DISH Networks. On the RSP side of our business we install satellite television systems sold by DISH networks and are paid a commission for each installation completed. On the retail side of our business we market, sell and install satellite systems for DISH Networks through our retail location in Indiana, Pennsylvania.

We constantly re-evaluate our product portfolio to stay current with industry trends and meet the needs of our customers. We also continuously evaluate how new technologies such as Wi-Fi and Voice over Internet, or VoIP, will affect our business. We believe these new communication technologies will provide us and distributors like us with new opportunities as the technologies become more widely adopted and next generation products and services are developed and increase in demand.

THE MARKET FOR OUR PRODUCTS AND SERVICES

According to the semi-annual wireless industry survey released in June 2006 by the Cellular Telecommunications & Internet Association, or CTIA, 2006 was a very strong year for the industry as U.S. wireless users grew 25 million to 219 million. This increase comes after the record growth posted during the same period of 2005 when wireless users grew by 25.7 million to 194.5 million subscribers. In addition, the 2006 semi-annual survey found that wireless carriers reported a 72% jump in year over year text messaging for the month of June. Carriers reported delivering 12.5 billion text messages in the month of June 2006 versus 7.3 billion for June of 2005. Also noted in the survey was the increase in wireless minutes used. Wireless customers used more than 850 billion minutes during the first half of 2006, up 27% over the first half of 2005, the survey reported.

On the satellite side of our business, the overall industry had a very strong year. In its quarterly report for the third quarter of the 2006 fiscal year, our primary satellite television vendor, DISH Networks, reported more than 12.7 million subscribers as of September 30, 2006 for an 8.9% year over year increase from 11.7 million subscribers as of September 30, 2005. DISH later reported that its subscriber base as of the end of 2006 surpassed 13 million.

The market for both our retail wireless business and satellite installation business remains very strong as evidenced by the key metrics identified above. Both of our operating subsidiaries consistently rank as one of the top 3 operators in their respective markets. FTS Wireless is consistently ranked in the top 3 dealers for Metro PCS in the Tampa market and top 10 overall in the Gulf Coast market. Metro PCS is a regional wireless carrier with more than 2 million subscribers. See World Satellites, Inc. has been consistently ranked as the top RSP in terms of installation percentage by DISH Networks versus 21 to 23 total RSP’s in the nation. Over the last five years, DISH Networks has been the fastest growing US satellite television provider. We believe by effectively operating our business at high level in our key markets both vendors will offer us additional growth opportunities at some point in the future.

STRATEGIC PARTNERS AND CONTRACTS

METRO PCS

Since October of 2005, Metro PCS has become the leading vendor for FTS Wireless, Inc. accounting for 90% of all wireless handset sales completed during 2006. Metro PCS is a regional wireless carrier based in Dallas, Texas with more than 2 million subscribers in various markets around the U.S. including Miami, Tampa, Orlando, Atlanta and Sacramento. We have secured additional licenses for Los Angeles, New York, Philadelphia and other key markets around the US. We distribute Metro PCS wireless handsets and service plans at six of our Metro PCS approved retail wireless locations in the Tampa/ St. Petersburg market. Metro PCS owns its own network and is therefore not considered a Mobile Virtual Network Operator, or MVNO. Since Metro PCS owns its network it has the ability to offer its customers superior rate plans in its local market. Metro PCS markets unlimited anytime minute plans, unlimited long distance and unlimited text messaging plans beginning at $35 per month with no credit check or service contract required.

ECHOSTAR/DISH NETWORKS

DISH Networks is owned by EchoStar Communications, Inc. and is the primary vendor for our subsidiary See World Satellites, Inc. DISH Networks has more than 13 million subscribers and states that it is the fastest growing pay television provider since 2000 having added more than 7.74 million net new subscribers over the past six years. In June 2006, our subsidiary See World Satellites, Inc. signed a new five year agreement to continue providing RSP-related services in the western Pennsylvania market. See World also markets, sells and installs DISH systems and services to retail customers in the western Pennsylvania market.

COMPETITION

Both of our wholly-owned subsidiaries operate in a highly competitive environment. FTS Wireless principally competes with other independent retailers and privately held chains that offer a broad range of products, and carrier owned and operated stores with more name recognition and brand identity than it has. We believe that success in the industry is based on maintenance of product quality and inventory management, competitive pricing, delivery efficiency, customer service and satisfaction levels, maintenance of satisfactory vendor relationships, the ability to anticipate industry changes and changes in customer preferences.

The See World Satellites RSP side of our business operates in a less competitive environment due to the RSP relationship with DISH Networks. Since we perform installation and fulfillment functions for DISH, we are not as dependent on conducting our own marketing and advertising programs and generating business. However, on the retail side of our business, the environment is much more competitive because we must compete with other local and national retailers as well as marketers of Direct TV satellite services and the cable companies.

CARRIERS CORPORATE OWNED STORES

We compete against stores owned by wireless carriers and large national retailers that promote both wireless communication products as well as satellite television products including:

- Sprint/NEXTEL;

- Cingular;

- T-Mobile;

- Verizon Wireless and

- Metro PCS.

The carrier-owned corporate stores generally sell only their own wireless products and services. We believe our product offerings are superior to corporate stores because we offer customers service from multiple carriers and provide the best solution for each customer's individual needs. In addition, we offer wireless content, accessories, Wi-Fi access, satellite phones and service.

LARGE NATIONAL RETAILERS

We compete against large national retailers including:

- Radio Shack;

- Best Buy;

- Staples; and

- Office Depot.

These retailers promote wireless-boxed products with limited customer support. We believe we offer a higher level of customer service and product knowledge to our customers as compared to large national retailers. We also believe our customer service is superior because we focus only on wireless products and services, which are only a part of the business of the above-mentioned retailers. However, due to scale of purchasing power, number of locations and advertising budgets, large national retailers can sometimes offer discounts superior to ours.

LOCAL WIRELESS RETAILERS

FTS Wireless competes with a variety of smaller independent retailers. Our main competitors in the Gulf Coast market are:

- Wireless Toyz, which operates approximately 53 stores in the state of Florida and promotes several brands of wireless products.

- The Mobile Zone, which operates approximately 17 stores in the state of Florida and promotes several brands of wireless products and services.

- PCS Partners which operates approximately 21 stores in the state of Florida and primarily promotes products and services from only one wireless carrier.

We also compete with a variety of smaller, independent retailers operating less than three stores. We compete against these retailers by offering a broad product range and superior customer service.

MARKETING

Our wireless retail business depends on advertising and marketing to attract new customers. We currently advertise in local print publications, including daily newspapers and weekly publications, advertise on the Internet, radio and in flyers and mailers. Additionally, we run in-store product related promotions including a referral program geared at generating new business through our existing customer base. We currently spend between $15,000 and $25,000 per month on advertising depending on the placement of our ads and the time of year. During times of increased advertising, we spend approximately $20,000 to $35,000 or more per month on new product roll-outs and marketing campaigns including print, Internet and television media advertising. We believe our advertising campaigns have increased foot traffic in our stores and increased our overall name recognition.

SUPPLIERS

FTS Wireless, Inc. purchases Metro PCS wireless handsets from Bright Point. Bright Point is one of the largest handset distributors in the U.S. See World Satellites purchases satellite equipment directly from EchoStar. We also purchase related installation supplies from a variety of small manufacturers. We purchase the majority of our wireless accessories from Mega Cell, Inc. based out of Miami, Florida. For certain specialized products, we will purchase from other suppliers based on supply and demand.

INVESTMENTS

In March 2003, we acquired 30,000 shares of Preferred Stock in Vidyah, Inc., a private technology company, for $15,000 in cash. Holders of the Vidyah Preferred Stock have the same voting rights as holders of the common stock. The Preferred Stock has liquidation rights and is convertible, at the holder's option, into an equivalent number of shares of common stock, subject to certain adjustments. Vidyah provides comprehensive technology learning solutions, certification programs, and customized learning for a variety of Fortune 1000 companies, including, Disney, Sony, Microsoft, IBM, Cisco Systems and Harvard University. We purchased an interest in Vidyah.com because we believe Vidyah represents an attractive investment that will increase in value over time.

In November 2005, we acquired a 40% stake in Bucharest, a Romania-based mobile game developer of Maxim Software SRL for $5,000 in cash. Maxim creates, develops and markets mobile games in the Asian and European markets. As part of the agreement, we acquired exclusive U.S. distribution rights to Maxim’s portfolio of mobile games. Maxim will also develop a proprietary wireless content software product for us to be implemented on our web site www.CellChannel.com.

In December 2006, we acquired a 25% stake in an Internet Media venture, Elysium Internet. Elysium is a development stage emerging direct navigation Internet advertising, marketing and media venture. Elysium sells targeted advertising to business customers through its network of direct navigation webs sites and portals. Our total investment into Elysium as of June 30, 2007 was $109,582.

SEASONALITY

The wireless industry typically generates a higher number of subscriber additions and handset sales in the fourth quarter of each year, as compared to the remaining quarters. This is due to the use of retail distribution, which is dependent on the holiday shopping season, timing of new products and service introductions and aggressive marketing and sales promotions. To date, we have not experienced any seasonality in our sales, although we may in the future as we expand our retail operations.

EMPLOYEES

As of July 6, 2007, we had fifty-seven full-time employees and three part time employees working under our two wholly-owned subsidiaries. FTS Group employs three individuals at the corporate level, our Chairman, Chief Executive Officer and Interim Chief Financial Officer, Scott Gallagher and our Chief Operating Officer, Dave Rasmussen and a part-time HR/Sales and marketing employee.

We expect to hire additional employees over the next twelve months as our business grows. From time-to-time, we engage the services of outside consultants to assist in our business, including attorneys, accountants, and marketing and advertising personnel. We may engage the services of additional individuals in the future as our business needs dictate and our financial resources permit.

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

OVERVIEW

We own and operate two wholly-owned subsidiaries, FTS Wireless, Inc. and See World Satellites, Inc. FTS Wireless operates a retail wireless business in the Gulf Coast of Florida region. See World Satellites operates a satellite television business based out of Indiana, Pennsylvania. Although our business became profitable during 2006, as a result of our debt level and history of losses from operations, the independent registered public accountant that audited our financial statements for the year ended December 31, 2006 assessed that there was substantial doubt about our ability to continue as a going concern.

RESULTS OF OPERATIONS

FULL YEAR PERIOD ENDED DECEMBER 31, 2006 AS COMPARED TO THE FULL YEAR

ENDED DECEMBER 31, 2005 RESULTS OF OPERATIONS

SEGMENT RESULTS FOR THE FULL YEARS ENDED DECEMBER 31, 2006

	Year Ended December 31, 2006
	FTS			FTS			See
	Group			Wireless			World
	Inc.			Inc.			Satellites			Total
Revenues
External	$	-		$	1,841,839		$	4,836,237		$	6,678,076
Internal		1,500,000									1,500,000
Segment Revenues		1,500,000			1,841,839			4,836,237			8,178,076

Cost of Goods Sold		-			1,580,263			788,968			2,369,231

Gross Profit		1,500,000			261,576			4,047,269			5,808,845

Selling, General, & Administrative
External		727,792			452,485			2,780,779			3,961,056
Internal		-			300,000			1,200,000			1,500,000
Segment Selling, General & Administrative		727,792			752,485			3,980,779			5,461,056

Subtotal		772,208			(490,909	)		66,490			347,789

Change in fair value of derivative liabilities		1,400,902			-						1,400,902
Depreciation		(22,226	)		(40,857	)		(61,287	)		(124,370	)
Interest		(388,611	)		(3,184	)		(1,159	)		(392,954	)

Net Income (Loss)		1,762,273			(534,950	)		4,044			1,231,367

Intersegment Adjustments		(1,500,000	)		300,000			1,200,000			-

	$	262,273		$	(234,950	)	$	1,204,044		$	1,231,367

SALES REVENUE

CONSOLIDATED

Consolidated sales revenues for the year ended December 31, 2006 increased $5,367,345, or 409.5%, to $6,678,076, as compared to $1,310,731 for the year ended December 31, 2005. The increase in sales revenues was primarily related to the acquisition and development of new stores and opening of new retail outlets.

FTS WIRELESS, INC.

Sales revenue for the year ended December 31, 2006 increased $531,108 or 40.5% to $1,841,839 as compared to $1,310,731 for the year ended December 31, 2005. The increase in sales is primarily related to greater market acceptance of Metro PCS wireless phones and service and as a result of our expanded coverage to include the Orlando, Florida market as well as increased wireless accessory sales. During fiscal 2006 we generated 28% of our total sales from the operations of FTS Wireless, Inc.

SEE WORLD SATELLITES, INC.

Sales revenue for the year ended December 31, 2006 was $4,836,237. See World’s satellite television operations accounted for 72% of our total revenue during fiscal 2006. Our sales revenue for See World Satellites is primarily generated from the sales, service and installation of satellite television systems run by DISH Networks. Since See World was acquired in January of 2006 we do not have year over year comparisons.

COST OF GOODS SOLD

CONSOLIDATED

Consolidated Cost of Goods Sold totaled $2,369,231 for the year ended December 31, 2006. Since our largest subsidiary, See World Satellites generated 72% of our business and was acquired in January of 2006, we do not have accurate consolidated year over year results to be used for guidance. The segment results below discuss the year over year comparisons relating to businesses owned for more then twelve months as of December 31, 2006.

FTS WIRELESS, INC.

Cost of Goods Sold for the year ended December 31, 2006 increased $469,618 or 42.3% to $1,580,263 as compared to $1,110,645 for the year ended December 31, 2005.The increase in Cost of Goods Sold is primarily related to increased wireless handset sales as well as some one time charges during the year related to relocations as we restructured our retail operations.

SEE WORLD SATELLITES, INC.

Cost of Goods Sold for the year ended December 31, 2006 totaled $788,968. Our Cost of Goods Sold comes primarily from the purchase of satellite dishes and related installation products and materials. Since See World was acquired in January of 2006 we do not have year over year comparisons.

GROSS PROFITS

CONSOLIDATED

Consolidated Gross Profits totaled $4,308,845 for the year ended December 31, 2006. Since our largest subsidiary, See World Satellites generated 72% of our business and was acquired in January of 2006, we do not have accurate consolidated year over year results to be used for guidance. The segment results below discuss the year over year comparisons relating to businesses owned for more then twelve months as of December 31, 2006.

FTS WIRELESS, INC.

Gross Profits for the year ended December 31, 2006 increased $61,490 or 30.7% to $261,576 as compared to $200,086 for the year ended December 31, 2005.The increase in Gross Profits was primarily due to improved operations efficiencies as well as a 28% increase in top line sales. During 2007, we believe we will continue to improve margins and sales resulting in continued increases in Gross Profits.

SEE WORLD SATELLITES, INC.

Gross Profits for the year ended December 31, 2006 totaled $4,047,269. Gross Profits were generated from our satellite business. Since See World was acquired in January of 2006 we do not have year over year comparisons. During 2007 we believe Gross Profits will improve due to our efforts to improve operating efficiencies. We also plan to expand our territory during 2007 resulting in increased sales and further increases in Gross Profits.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, General and Administrative expense for the year ended December 31, 2006 increased by $2,317,863 or 131.1% to $4,085,426 as compared to $1,767,563 for the year December 31, 2005. The increase in Selling, General and Administrative expenses was primarily related to the acquisition of See World Satellites, Inc. closed during 2006 and the viral growth of our subsidiary FTS Wireless, Inc.

INTEREST EXPENSE

Interest expense decreased to $392,954 for the year ended December 31, 2006 from $422,259 for the year ended December 31, 2005. The decrease was due mainly to reduced borrowing via short term notes as part of the capital raised during the year ended December 31, 2006 versus 2005.

INCOME

We had net income of $1,231,367 for the fiscal year ended December 31, 2006, as compared to net loss of $3,627,067 for the fiscal year ended December 31, 2005. The increase in net income was primarily due to increased sales at FTS Wireless and improved overall operating conditions at FTS Wireless during the year ended December 31, 2006. The addition of the operations of See World Satellites, Inc. not included in the prior years’ operating results and an income benefit from the valuation of outstanding derivatives of $1,400,902 also contributed to the increase in net income.

As of December 31, 2006, we had an accumulated deficit of $10,704,226.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2006, total current assets decreased to $866,501 versus $1,323,143 as of December 31, 2005. Current assets consisted of $115,056 of cash, $130,025 of accounts receivable, $373,734 of inventories and $247,686 of prepaid expenses and current assets. Total assets increased to $6,719,323 versus $1,974,495 as of December 31, 2005. Total assets consisted of $5,177,696 of Goodwill, Unamortized discount on convertible debt of $232,925, Property and equipment, net of accumulated depreciation of $303,641, Deposits of $16,482, Unamortized debt issuance costs of $29,573, and Investments of $92,505.

As of December 31, 2006, total current liabilities increased to $3,612,067 from $1,331,996 as of December 31, 2005. Current liabilities consisted of $1,820,215 current portion of notes payable to related parties, net of discount, $1,238,321 of convertible debentures-current portion, $548,707 of accounts payable and accrued expenses and $4,824 of current installment of long term debt-equipment loans.

We will require additional capital to support strategic acquisitions, reduce our debt and to facilitate our current expansion plans. We raised funds from institutional investors during 2006 through the issuance of equity securities and the issuance of warrants. Additionally, we raise funds through private placements of our equity securities that may involve dilution to our existing shareholders.

Our currently anticipated levels of revenues and cash flow are subject to many uncertainties beyond our control. Even though we have recently become profitable, our cash flow from operations is not adequate to satisfy our cash requirements related to our outstanding debt schedule and we believe we will be able to generate enough funds from the exercise of outstanding warrants to make our scheduled debt payments. However, we cannot guarantee the funds generated from warrants will be sufficient to meet our requirements. We will continue to seek alternative means for financing our debt repayments and control capital expenditures and/or postpone or eliminate certain investments or expenditures.

The inability to obtain additional financing or generate sufficient cash from operations could require us to reduce or eliminate expenditures for acquiring or developing new retail locations or marketing our products, or otherwise curtail or discontinue our operations, which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, if we raise funds through the sale of additional equity securities, the common stock currently outstanding will be diluted.

FINANCINGS

During January of 2004, we filed a Registration Statement with the Securities and Exchange Commission to register 15,000,000 shares of our common stock. In conjunction with this registration statement we incurred legal and accounting costs of approximately $25,000. The Registration statement was declared effective by the Securities and Exchange Commission in February of 2004.

On June 15, 2004, we borrowed $61,200 from our Chief Financial Officer, Linda Ehlen. On September 25, 2004, we borrowed $133,800 from our Chairman and Chief Executive Officer, Scott Gallagher. The loans bear an interest rate of 8% per annum and were due in June and September of 2005. Two of the notes carried a 20% premium in the aggregate amount of $37,240. The funds were primarily used to fund acquisitions and to repay loans from Dutchess Private Equities Fund II, LP. These two notes received from related parties, Mr. Gallagher and Mrs. Ehlen required us to issue 932,000 shares of common stock comprised of 625,000 restricted common shares to Mr. Gallagher and 307,000 restricted shares to Mrs. Ehlen, as an inducement to provide the financing. On March 3, 2005 we issued 932,000 restricted common shares. Proceeds in the amount of $186,200 borrowed from two of our officers have been allocated as follows: $131,435 to notes payable and $54,765 to the value of the common stock to be issued to the individuals based on their relative fair values. The difference between the amount to be repaid aggregating $223,440 and the $131,435 represents a debt discount in the amount of $92,005 which we recorded. This amount is being amortized over the life of the loans. For the year ended December 31, 2004, we have amortized $42,073 leaving an unamortized debt discount of $49,931 at December 31, 2004.

During June 2005, we filed a Registration Statement with the Securities and Exchange Commission to register 47,501,563 shares of our common stock. In conjunction with this registration statement we incurred legal and accounting costs of approximately $25,000. The Registration statement was declared effective by the Securities and Exchange Commission in August 2005.

On March 4, 2005, we closed a private placement and agreed to issue 14,493,750 shares of common stock to a group of accredited investors in private placements at an average price of $0.08 per share for gross proceeds of $769,460 after 10% commission and 3% expense fee. In accordance with the subscription agreement, the investors will receive two classes of warrants, called Class A and Class B warrants, for each share of common stock purchased. The A warrants have an exercise price of $0.08 and B warrants have an exercise price of $0.12. We filed the terms and conditions of the financing and registration rights in March 24, 2005 on Form 8-K. The funds raised in the private placement were primarily used for working capital, costs related to the opening of new locations and to reduce outstanding liabilities.

During the three months ended March 31, 2005, $51,017 worth of debentures were converted into 1,004,930 shares of common stock relating to our convertible debenture with Dutchess Private Equities Fund. The convertible debenture was fully extinguished during the period.

During the three months ended March 31, 2005, 2,085,426 shares of common stock were issued relating to our equity line of credit for proceeds of $270,994. Funds were used to repay outstanding notes.

We signed a short-term note payable to Dutchess Equities Fund, II, L.P. in the amount of $500,000 plus a $100,000 premium. The note, dated January 10, 2005 matured on August 10, 2005. The note bore interest at 12% per annum. The note carried certain restrictions relating to additional financing and registration rights to certain shares issued to Dutchess. As of May 5, 2005, the note and interest have been paid in full.

The note contained a stipulation that we would deliver 500,000 shares of common stock with "Piggy-Back" registration rights. In addition, we issued 250,000 shares of restricted common stock in March 2005 relating to loan inducements for a loan in 2004.

During the quarter ended December 31, 2005, warrants were exercised at $0.03 per share by eight accredited investors for the purchase of 762,500 shares of common stock.

During the quarter ended December 31, 2005, we issued 5,474,880 shares to Dutchess Private Equities Fund II, LP, under our equity line of credit for proceeds of $134,575 after fees.

On December 29, 2005, we entered into a transaction with 10 accredited investors in which we agreed to issue up to $1,896,551 of secured, convertible promissory notes with an original discount of 21%. We actually raised $1,820,690 in the transaction. The Notes can convert into shares of our common stock, subject to certain conditions, at a per share conversion price set forth in the Notes. On December 29, 2005, we received proceeds of $1,000,000 after the 21% discount but before expenses. On January 4, 2006 we received an additional $440,000 after the 21% discount but before expenses.

We also agreed to issue warrants to purchase shares of our common stock. We agreed to issue 100 Class A Warrants for each 100 shares which would be issued on the closing date assuming the complete conversion of the Notes on the closing date at the conversion price then in effect. The exercise price of the Class A Warrants is $0.02868. The Class A Warrants shall be exercisable until the date that the Registration Statement (as defined in the Subscription Agreement filed as Exhibit 10.2 to the Form 8-K dated January 5, 2006) has been effective for the unrestricted public resale of the Warrant Shares for 4 years.

We agreed to issue 50 Class B Warrants for each 100 shares which would be issued on the closing date assuming the complete conversion of the Notes on the closing date at the conversion price then in effect. The exercise price of the Class B Warrants is $0.0239. The Class B Warrants are exercisable until the later of four months after the actual effective date of Registration Statement (as defined in the Subscription Agreement filed as Exhibit 10.2 to the Form 8-K dated January 5, 2006), or ninety days after the actual effective date of a Second Registration Statement (as defined in the Subscription Agreement filed as Exhibit 10.2 to the Form 8-K dated January 5, 2006).

We also agreed to issue the 10 accredited investors 35,520,424 shares of our common stock to be distributed pro rata among the purchasers of the Notes. As part of our acquisition of See World Satellites, Inc., we issued to Richard Miller 1,000,000 shares of our Series B Convertible Preferred Stock. On April 28, 2006, we issued warrants to purchase 14,619,263 shares of our common stock to 5 accredited investors. The exercise price of the warrants is $0.04 and they are exercisable until the later of four months after the actual effective date of Registration Statement (as defined in the Subscription Agreement filed as Exhibit 10.2 to the Form 8-K dated January 5, 2006), or ninety days after the actual effective date of a Second Registration Statement (as defined in the Subscription Agreement filed as Exhibit 10.2 to the Form 8-K dated January 5, 2006).

On June 10, 2006 we issued warrants to purchase 2,500,000 shares of our common stock to Olympus Securities as payment for a finder’s fee relating to the financing closed on December 29, 2005.

During the three months ending March 31, 2006, we issued 2,250,000 restricted shares of common stock valued at $0.02 per share to one of our officers to reduce an outstanding debt obligation of $45,000.

During the three months ending March 31, 2006, we issued 2,500,000 restricted shares of common stock valued at $0.02 per share to one of our officers as a success bonus for 2005.

During the three months ending March 31, 2006, we issued 920,000 restricted shares of common stock valued at $0.02 per share to one of our consultants to reduce the $18,400 owed for consulting services relating to services rendered during 2005.

During the three months ending March 31, 2006, we issued 1,000,000 shares of our Series B Convertible Preferred stock, valued at $1,000,000, to Mr. Richard Miller, the former owner and current President of See World Satellites, Inc. The conversion rate for the Series B stock is 25 shares of common stock for each share of Series B Convertible Preferred Stock. The shares of Series B Convertible Preferred Stock may be converted into common stock at any time after January 3, 2008, at our option or at the option of the holder. The Series B stock has no voting rights. Each share is worth $1.00.

During the three months ended June 30, 2006, we agreed to issue 11,458,338 restricted common shares relating to warrants with an excercise price of $0.0239 per share that were exercised by four accredited investors for total proceeds of $273,854.28. 11,458,338 new warrants were issued to the investors under the same terms other than the exercise price which was increased to $0.04.

During the three months ended September 30, 2006, relating to the exercise of warrants, we issued 5,600,000 shares of common stock at an exercise price of $0.045 for total proceeds of $252,000.

At September 30, 2006, 1,185,350 restricted shares due to one of the investors remained unissued.

On October 6, 2006, two investors exercised 1,750,000 warrants with an exercise price of $0.045 per share for proceeds of $78,750.

On October 6, 2006, we issued 250,000 shares as an inducement to enter into a short term loan in the amount of $75,000.

On October 16, 2006, two investors exercised 1,250,000 warrants with an exercise price of $0.045 per share for proceeds of $56,250.

On October 17, 2006, an investor exercised 312,500 warrants with an exercise price of $0.045 per share for proceeds of $14,062.50.

On November 8, 2006, we issued 788,000 shares for proceeds of $32,179.00.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make judgments and estimates.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

·	Estimating the fair value of the Company's complex derivative financial instruments that are required to be carried as liabilities at fair value pursuant to Statements on Financial Accounting Standards No. 133 Accounting for Derivative Financial Instruments and Hedging Activities (FAS 133)

DERIVATIVE FINANCIAL INSTRUMENTS

We do not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, we frequently enter into certain other financial instruments and contracts, such as debt financing arrangements, preferred stock arrangements and freestanding warrants with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts or (iii) may be net-cash settled by the counterparty to a financing transaction. As required by FAS 133, these instruments are required to be carried as derivative liabilities, at fair value, in our financial statements.

We estimate fair values of derivative financial instruments using various techniques, and combinations thereof, that are considered to be consistent with the objective measuring of fair values. In selecting the appropriate technique(s), we consider, among other factors, the nature of the instrument, the market risks that such instruments embody and the expected means of settlement. For less complex derivative instruments, such as free-standing warrants, we generally use the Black Scholes option valuation technique, since it embodies all of the requisite assumptions, including trading volatility, estimated terms and risk free rates, necessary to fair value these instruments. For complex derivative instruments, such as embedded conversion options, we generally use the Flexible Monte Carlo valuation technique since it embodies all of the requisite assumptions, including credit risk, interest-rate risk and exercise/conversion behaviors, that are necessary to fair value these more complex instruments. For forward contracts that contingently require net-cash settlement as the principal means of settlement, we project and discount future cash flows applying probability-weightage to multiple possible outcomes. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are highly volatile and sensitive to changes in our trading market price which has high-historical volatility. Since derivative financial instruments are initially and subsequently carried at fair values, our income will reflect the volatility in these estimate and assumption changes.

REVENUE RECOGNITION

Our wholly-owned subsidiary, FTS Wireless, recognizes revenue from the activation of new wireless customers and the sale of wireless handsets, airtime and accessories at the time of activation or sale. Net revenues from wireless activations are recognized during the month the activation is performed. Allowances for charge-backs, returns, discounts and doubtful accounts are provided when sales are recorded. Shipping and handling costs are included in cost of sales.

Our wholly-owned subsidiary, See World Satellites, Inc. recognizes revenue when it makes a sale within the store, completes a retail satellite receiver installation at the customer's home and the customer signs a contract, or completes a retail service provider satellite receiver installation at the customer's home and the customer signs a contract.

Although our post-paid activations both at wireless and the retail side of See World’s business are subject to possible charge-back of commissions if a customer deactivates service within the allowable 180-day period after signing the contract, they still recognize the activation in the period of the activation. We have set up a reserve for possible activation charge-backs. Based on SFAS No. 48, this is permitted if reliable estimates of the expected refunds can be made on a timely basis, the refunds are being made for a large pool of homogeneous terms, there is sufficient company-specific historical basis upon which to estimate the refunds, and the amount of the commission specified in the agreement at the outset of the arrangement is fixed, other than the customer's right to request a refund.

ACCOUNTS RECEIVABLE

Accounts receivable consist primarily of trade receivables, net of a valuation allowance for doubtful accounts.

CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, we consider all short-term debt securities with maturity of three months or less to be cash equivalents.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost less accumulated depreciation. Upon retirement or sale, the cost of the assets disposed of and the related accumulated depreciation are removed from the accounts, with any resultant gain or loss included in the results of operations. Depreciation is computed over the estimated useful lives of the assets (3-20 years) using the straight-line method for financial reporting purposes and accelerated methods for income tax purposes. Maintenance and repairs are charged to operations as incurred.

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 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 vary from those estimates.

GOODWILL AND INTANGIBLE ASSET IMPAIRMENT

Realization of long-lived assets, including goodwill, is periodically assessed by our management. Accordingly, in the event that facts and circumstances indicate that property and equipment, and intangible or other assets may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the asset's carrying amount to determine if a write-down to market value is necessary. In management's opinion, there was no impairment of such assets at December 31, 2006.

INVENTORIES

Inventories are valued at the lower of cost determined on a first-in, first-out method, or market value.

GOING CONCERN

Our financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Our ability to continue as a going concern is contingent upon our ability to expand our operations and secure additional financing. Failure to secure financing or expand operations may result in our Company not being able to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects of the recoverability and classification of assets or the amounts and classification of liabilities that may result from our possible inability to continue as a going concern.

SUBSIDIARIES

As of December 31, 2006, we had two wholly-owned subsidiaries, FTS Wireless, Inc. and See World Satellites, Inc.

THREE-MONTHS ENDED MARCH 31, 2007 AS COMPARED TO THREE-MONTHS ENDED MARCH 31, 2006

RESULTS OF OPERATIONS

SEGMENT RESULTS FOR THE THREE-MONTHS ENDED MARCH 31, 2007

	Three Months Ended March 31, 2007
		FTS			FTS			See
		Group			Wireless			World
		Inc.			Inc.			Satellites			Total
Revenues
External	$	-		$	702,962		$	1,098,458		$	1,801,420
Internal		375,000									375,000
Segment Revenues		375,000			702,962			1,098,458			2,176,420

Cost of Goods Sold		-			550,623			176,708			727,331

Gross Profit		375,000			152,339			921,750			1,449,089

Selling, General, and Administrative
External		229,490			114,686			711,215			1,055,391
Internal		-			75,000			300,000			375,000
Segment Selling, General, and Administrative		229,490			189,686			1,011,215			1,430,391

Subtotal		145,510			(37,347	)		(89,465	)		18,698

Change in fair value of derivative liabilities		60,254									60,254
Depreciation		(6,923	)		(10,137	)		(9,233	)		(26,293	)
Interest		(169,016	)		-			(508	)		(169,524	)

Net Income (Loss)		29,825			(47,484	)		(99,206	)		(116,865	)

Intersegment Adjustments		(375,000	)		75,000			300,000			-

	$	(345,175	)	$	27,516		$	200,794		$	(116,865	)

SALES REVENUE

CONSOLIDATED

For the three months ended March 31, 2007, consolidated sales increased $167,806 or 10.2% to $1,801,420, as compared to $1,633,614 for the three months ended March 31, 2006. The increase in year to date consolidated sales is primarily related to a $207,384 year-over-year sales increase at FTS Wireless, Inc.

FTS WIRELESS, INC.

For the three months ended March 31, 2007, FTS Wireless sales increased by $207,384 or 41.8% to $702,962 when compared to sales of $495,578 for the three months ended March 31, 2006. FTS Wireless generated 39% of our consolidated sales during the period ended March 31, 2007 compared to 25% of our consolidated sales during the three months ended March 31, 2006. Our sales revenue for FTS Wireless is primarily generated from the sale of wireless handsets, wireless accessories and related products. The increase in sales revenue at FTS Wireless is primarily related to the expanded network footprint of our primary wireless carrier vendor Metro PCS through the opening of the Orlando, Florida market.

SEE WORLD SATELLITES, INC.

For the three months ended March 31, 2007, See World sales decreased by $39,578 or 3.5% to $1,098,458 compared to sales of $1,138,036 for the period ended March 31, 2006. See World Satellites generated 61% of our consolidated sales during the period ended March 31, 2007 as compared to 75% during the period ended March 31, 2006. Our sales revenue for See World Satellites, Inc. is primarily generated from the sale, service and installation of DISH Network satellite television systems. The decrease in year-over-year sales is primarily related to bad weather conditions experienced in the western Pennsylvania area during the quarter ended March 31, 2007.

COST OF GOODS SOLD

CONSOLIDATED

For the three months ended March 31, 2007, consolidated cost of goods sold increased by $143,849 or 24.7% to $727,331, as compared to $583,482 for the three months ended March 31, 2006. The increase in cost of goods sold is primarily related to increased wireless handset buying and the increase in year over year sales at FTS Wireless.

FTS WIRELESS, INC.

For the three months ended March 31, 2007, FTS Wireless reported an increase in cost of goods sold of $176,349 or 47.1% to $550,623 when compared to cost of goods sold of $374,274 for the three months ended March 31, 2006. The increase in cost of goods sold is primarily related to increased purchases of wireless handsets and related products as sales have increased.

SEE WORLD SATELLITES, INC.

For the three months ended March 31, 2007 See World Satellites reported a decrease in cost of goods sold of $32,500 or 15.5% to $176,708 for the three months ended March 31, 2006 when compared to cost of goods sold of $209,208 for the three months ended March 31, 2006. The decrease in cost of goods sold is related to a decrease in product purchasing as sales dropped slightly during the quarter.

GROSS PROFITS

CONSOLIDATED

For the three months ended March 31, 2007, gross profits increased by $23,957 or 2.3% to $1,074,089 from $1,050,132 during the three months ended March 31, 2006. The increase in gross profits is attributed to the increase in sales revenue at FTS Wireless as described above. Gross profits as a percentage of sales decreased 4.7% to 59.6% for the three months ended March 31, 2007 as compared to 64.3% gross profit as a percentage of sales during the three months ended March 31, 2006. The decrease in gross profits as a percentage of sales is related to the decrease in sales at the higher margin business of See World Satellites for the year-over-year period.

FTS WIRELESS, INC.

For the three months ended March 31, 2007, gross profits increased by $31,035 or 25.6% to $152,339 when compared to gross profit of $121,304 for the three months ended March 31, 2006. The increase in gross profits is primarily related to increased sales of Metro PCS wireless handsets and related increased sales of wireless accessories during the year-over-year period.

SEE WORLD SATELLITES, INC.

For the three months ended March 31, 2007, See World Satellites’ gross profit decreased by $7,078 or 0.8%, to $921,750 as compared to gross profits of $928,828 during the three months ended March 31, 2006. The slight decrease in gross profit is related to the decrease in sales at See World during the year-over-year period.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, General and Administrative Expenses for the three months ended March 31, 2007, increased $73,498 or 7.3% to $1,081,684 as compared to $1,008,186 for the three months ended March 31, 2006. The increase in Selling, General and Administrative Expenses for the three months ended March 31, 2007 was primarily related to increased funding costs and legal and accounting expenses relating to the acquisition of See World Satellites.

OPERATING INCOME/LOSS

Operating income decreased $49,541 to a loss of $7,595 as compared to operating income of $41,946 during the three months ended March 31, 2006. The decrease in operating income was directly related to increased financing costs and the sales decline at See World Satellites.

NET LOSS

Net loss decreased by $7,358,882 to $116,865 as compared to a net loss of $7,475,747 during the three months ended March 31, 2006. The primary change to the net loss is related to the accounting change in fair value of derivative liabilities associated with outstanding warrants. During the three months ended March 31, 2007, fair value derivative liability was a positive $60,254 as compared to a loss of $7,478,664 during the three months ended March 31, 2006.

INTEREST EXPENSE

Interest expense increased by $130,495 to $169,524 for the three months ended March 31, 2007, as compared to $39,029 for the three months ended March 31, 2006. The year-over-year increase in interest expenses is related to increased financing costs incurred during the year-over-year period.

LIQUIDITY AND CAPITAL RESOURCES

Our requirements for capital are to:

o pay down debt,

o fund possible acquisitions, and

o provide working capital and funds to expand our current business.

Our primary source of financing during the three months ended March 31, 2007 includes cash received from the issuance of common stock and cash generated from operations.

As of March 31, 2007, our Current Assets were $747,854 consisting of $57,617 in cash, $328,729 in inventories, net, $18,374 of accounts receivables and $343,134 of prepaid expenses and current assets. Current Liabilities were $3,675,386, consisting of $1,165,474 of convertible debentures, current portion, $1,925,111 of notes payable to related parties, $581,807 in accounts payable and accrued expenses and $2,994 of long-term debt, equipment loans.

At March 31, 2007, we had total assets of $6,676,153 consisting of, in addition to the assets described above, Goodwill of $5,177,696, property and equipment, net of accumulated depreciation of $277,351, unamortized discount of convertible debt of $342,036, Investments of $114,734 and Deposits of $16,482.

GOING CONCERN OPINION

We believe that our continued existence is dependent upon our ability to grow the profits of our satellite television operations and make our retail wireless operations profitable, and our ability to raise additional capital to reduce debt. Accordingly, the notes to our un-audited, interim financial statements express substantial doubt about our ability to continue as a going concern.

FINANCING ACTIVITIES

On January 22, 2007, we issued 15,000,000 unregistered shares of common stock to a group of institutional investors relating to a $1,000,000 financing.

On January 5, 2007, we issued 1,000,000 restricted shares of common stock relating to the conversion of $40,000 of debt at a price of $0.04 per share.

On February 14, 2007, we issued 188,857 restricted shares of common stock relating to the conversion of $4,627.70 of debt at a price of $0.025 per share.

On February 13, 2007, we issued 160,177 restricted shares of common stock relating to the conversion of $4,627.70 of debt at a price of $0.029 per share.

On March 1, 2007, we issued 263,911 restricted shares of common stock to two investors relating to the conversion of $6,940.85 of debt at a price of $0.026 per share.

On March 16, 2007, we issued 246,050 restricted shares of common stock relating to the conversion of $9,710.60 of debt at a price of $0.039 per share.

On March 30, 2007, we issued 275,430 restricted shares of common stock to two investors relating to the conversion of $6,940.85 of debt at a price of $0.025 per share.

SUBSIDIARIES

As of March 31, 2007, we had two wholly-owned subsidiaries, FTS Wireless, Inc. and See World Satellites, Inc.

DESCRIPTION OF PROPERTY

As of March 1, 2007, we have seven leases for FTS Wireless retail stores and our FTS Group corporate facilities in Tampa, Florida. We have one lease for our See World Satellites satellite installation business in Indiana, Pennsylvania. Our retail stores for FTS Wireless are located in the counties of Hillsborough and Pinellas, generally within 30 miles of Tampa, Florida. The retail stores vary in size from 500 to 2,000 square feet. Our principal office is located in approximately 1,500 square feet of the leased facilities in Tampa, Florida. Our location in Indiana, Pennsylvania for See World Satellites, Inc. is approximately 5,000 square feet. The minimum aggregate monthly rental commitment for the retail stores is $12,582. The terms of the leases vary from month-to-month to three years with a three-year option.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

At September 30, 2006, we had the following debt obligations and made the following payments to Mr. Richard Miller, a director and President of our wholly-owned subsidiary See World. We paid Mr. Miller $500,000 on January 3, 2006 relating to the acquisition of See World. We carried a short term note obligation in the amount of $500,000 due to Mr. Miller. This note was due within 30 days of the effective date of a new five year contract between Echo Star Satellites, L.L.C., DISH Network Services, L.L.C. and See World. During the twelve months ended December 31, 2006 we paid this note in full. Additionally, we issued 1,000,000 shares of our Series B Convertible Preferred stock to Mr. Miller during the three months ended March 31, 2006. The conversion rate for the Series B stock is 25 shares of common stock for each share of Series B Convertible Preferred Stock. The shares of Series B Convertible Preferred Stock may be converted into common stock at any time after January 3, 2008, at our option or that of the holder. The Series B stock has no voting rights. Each share is worth $1.00. On April 3, 2006, we made a $250,000 payment to Mr. Miller reducing the outstanding note amount to $3.25 million as of June 30, 2006. On July 5, 2006, we made a $250,000 payment to Mr. Miller reducing the outstanding note amount to $3 million. In October 2006 we made a $250,000 payment to Mr. Miller reducing the outstanding note amount due to $2.75 million as of November 15, 2006. We filed an 8-K with the terms and conditions of this note on January 5, 2006. Mr. Miller also extended to us a short-term note in the amount of $551,073, of which $375,000 was paid back January 13, 2006. During the three months ended September 30, 2006 we repaid $58,691 of the outstanding note leaving an unpaid balance of $117,382 at September 30, 2006. Also during the period ended December 31, 2006 we paid an additional $117,382 to Mr. Miller to extinguish an existing note due January 3, 2007.

During the third quarter ended September 30, 2005, our Chief Executive Officer advanced additional funds totaling $70,661 to us. During the fourth quarter ended December 31, 2006, these advances were converted to a note with an interest rate of 20% per annum. The note must be repaid by August 2007. Mr. Gallagher was issued 1,000,000 shares of restricted stock as inducement for providing this financing.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock has traded over the counter and has been quoted in the OTC Bulletin Board since March 18, 1999. The stock currently trades under the symbol "FLIP."

The following table sets forth the range of high and low bid quotations as reported by the National Association of Securities Dealers for our common stock for the last two fiscal years. Quotations represent prices between dealers, do not include retail markups, markdowns or commissions and do not necessarily represent prices at which actual transactions were effected.

Year Ended	High		Low
2005
March 31	$	0.23	$	0.10
June 30	$	0.13	$	0.075
September 30	$	0.095	$	0.046
December 31	$	0.05	$	0.021

2006
March 31	$	0.065	$	0.035
June 30	$	0.13	$	0.075
September 30	$	0.075	$	0.045
December 31	$	0.07	$	0.049

2007
March 31	$	0.055	$	0.021
June 30*	$	0.034	$	0.014

* Through June 30, 2007.

HOLDERS OF RECORD

We had approximately 2,557 holders of record of our common stock as of May 1, 2007.

DIVIDEND POLICY

Holders of common stock are entitled to receive such dividends as may be declared by the Board of Directors. In July 2004, our Board of Directors approved a 10% warrant dividend to stockholders of record on August 28, 2004. The warrant allows stockholders of record to purchase one new share of common stock at $0.25 for each ten common shares owned. The warrant expires in three years. No cash dividends on the common stock have been paid or declared by the Board to date. We expect to retain our future earnings, if any, to invest in our Company. We do not anticipate any cash dividends being paid out in the foreseeable future.

TRANSFER AGENT

Our transfer agent is Securities Transfer Corporation, located at 2591 Dallas Parkway Suite 102, Frisco, Texas 75034. Their phone number is (469) 633-0101.

EXECUTIVE COMPENSATION

The following table shows the compensation paid or accrued during the fiscal years ended December 31, 2006 and 2005 to (1) our Chief Executive Officer and (2) our Chief Operating Officer.

Summary Compensation Table

Name and Principal Position (a)	Year Ended December 31, (b	)		Base Salary $ (c	)		Bonus $ (d	)		Stock Awards (7) $ (e	)		All Other Compensation $ (i	)		Dollar Value of total compensation for the covered fiscal year $ (j	)
Scott Gallagher, Principal Executive Officer	2006		$	200,000		$	50,000 (2	)							$	250,000
	2005		$	100,000		$	50,000 (1	)	$	50,000 (5	)	$	8,000 (4	)	$	208,000

David Rasmussen, Chief Operating Officer	2006		$	150,000		$	25,000 (3	)	$	30,000 (6	)				$	205,000
	2005											$	8,000 (4	)	$	8,000

(1)	In 2005, Mr. Gallagher was granted an annual bonus of $50,000.

(2)	In 2006, Mr. Gallagher was granted an annual bonus of $50,000.

(3)	In 2006, Mr. Rasmussen was granted an annual bonus of $25,000.

(4)	In 2005, both Mr. Gallagher and Mr. Rasmussen received $8,000 as board compensation.

(5)	In 2005, Mr. Gallagher received 1,500,000 restricted shares as part of his employment contract.

(6)	In 2006, Mr. Rasmussen received 1,500,000 restricted shares as part of his employment contract.

(7) A discussion of the assumptions used to value these awards are included in Note 1, Notes to Consolidated Financial Statements.

NARRATIVE TO SUMMARY COMPENSATION TABLE

EMPLOYMENT AGREEMENTS FOR EACH NAMED EXECUTIVE OFFICER

We have two-year consulting agreements with our Chief Executive Officer and our Chief Operating Officer as follows:

Consulting Agreement with Mr. Scott Gallagher

On November 15, 2005 we entered into a two-year employment agreement with Mr. Scott Gallagher to serve as our Chief Executive Officer and as Chairman of the Board of Directors. On February 1, 2006 the employment agreement was modified to two-year consulting agreement under the same terms beginning February 1, 2006. Under the terms of such agreement, Mr. Gallagher received an initial grant of 1,500,000 restricted shares of our common stock per his contract. For an initial term of 2 years, Mr. Gallagher is to receive a base salary of $200,000 per year. Mr. Gallagher will also be eligible for cash and stock bonuses annually depending upon the performance of our Company, as set forth below:

Year	EBITDA Target	Cash Bonus	Revenue Target	Stock Bonus
2006	$2 Million	$100,000	$9 Million	750,000 Shares
2007	$3 Million	$150,000	$12 Million	1,000,000 Shares
2008	$4 Million	$200,000	$15 Million	1,500,000 Shares

Employment Agreement with Mr. David R, Rasmussen

On February 1, 2006, we entered into an employment agreement with Mr. David R. Rasmussen to act as our Chief Operating Officer and as Chief Executive Officer of our wholly-owned subsidiary, See World Satellites, Inc. Under the terms of such agreement, Mr. Rasmussen will received an initial grant of 1,500,000 restricted shares of our common stock per his contract. For an initial term of 2 years, Mr. Rasmussen is to receive a base salary of $150,000 per year. We will review Mr. Rasmussen’s salary annually to for the purpose of determining a reasonable increase based on his service and performance, taking into consideration a good-faith assessment of any other incentive and/or bonus plans to which Mr. Rasmussen may be a party. Mr. Rasmussen will also be eligible for cash and stock bonuses annually depending upon the performance of our Company as set forth below:

Year	EBITDA Target	Cash Bonus	Revenue Target	Stock Bonus
2006	$2 Million	$100,000	$9 Million	500,000 Shares
2007	$3 Million	$150,000	$12 Million	750,000 Shares
2008	$4 Million	$200,000	$15 Million	1,000,000 Shares

Our overall policy is to award cash and stock bonuses and pay increases based on certain objective factors that include our operating results per the respective employment agreements with our executives, as well as subjective factors such as the overall quality of performance the executive exhibited in executing the requirements of his job during the year based on the specific circumstances experienced during the underlying period. Overall, the process of reviewing the executive's performance is essentially subjective because there is no required payout or increase in compensation based on objective perfomance metrics or milestones unless such compensation is set out in an employment agreement.

During fiscal year 2006, we considered Mr. Gallagher and Mr. Rasmussen for bonuses based on their agreements as detailed in the chart above. However, because we did not hit the EBITDA target, Mr. Gallagher and Mr. Rasmussen did not earn bonuses for fiscal year 2006 pursuant to their employment agreements. We did award bonus compensation in fiscal year 2006 based on the one subjective factor of the executives' ability to execute the requirements of his job in a year when we grew year over year sales by 409%. Cash bonuses can be accrued if we do not have sufficient cash liquidity. All non-contract bonuses can be paid out in either cash or stock at our option.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

We did not grant stock options in 2005 or 2006. Additionally, no stock options were exercised by any of the named executive officers in 2005 or 2006.

DIRECTOR COMPENSATION

We do not currently have any outside directors. In 2005, we paid our directors, who are also our employees, $2,000 per quarter. In February 2006, we eliminated board compensation for 2006. During 2007 our directors will receive a grant of 250,000 shares of restricted stock.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None of our directors or executive officer serves as a member of the Board of Directors or Compensation Committee of any entity that has one or more executive officers serving as a member of our Board of Directors.

FTS Group, Inc. and Subsidiaries

Index to Consolidated Financial Statements

Index to Consolidated financials Statements	Page

Report of Independent Registered Public Accounting Firm	F-2

Consolidated Balance Sheets as of December 31, 2006 and 2005	F-3

Consolidated Statements of Operations for the years ended December 31, 2006 and 2005	F-4

Consolidated Statements of Cash Flows for the years ended December 31, 2006 and 2005	F-5

Consolidated Statements of Stockholders’ Equity (Deficiency) for the Years ended December 31, 2006 and 2005	F-6

Notes to the Consolidated Financial Statements	F-7

F-1

R. E. Bassie & Co.

Certified Public Accountants

6671 Southwest Freeway, Suite 550

Houston, Texas 77074-2221

Tel: (713) 272-8500 Fax: (832) 202-0536

E-Mail: Rebassie@aol.com

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

FTS Group, Inc.:

We have audited the accompanying consolidated balance sheet of FTS Group, Inc. and subsidiaries as of December 31, 2006 and 2005, and the related consolidated statements of operations, stockholders' equity and cash flows for the two-year period ended December 31, 2006. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform 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. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of FTS Group, Inc. and subsidiaries as of December 31, 2006 and 2005, and the results of their operations and their cash flows for the two-year period ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 4 to the financial statements, the Company has suffered recurring losses from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to this matter are also discussed in Note 4. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

/s/ R. E. Bassie & Co.

Houston, Texas

April 11, 2007

F-2

FTS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2006 AND 2005

Assets		2006			2005
Current assets:					(restated	)
Cash and cash equivalents	$	115,056		$	243,079
Restricted cash		-			560,000
Accounts receivable		130,025			12,201
Inventories, net		373,734			33,180
Prepaid expenses and current assets		247,686			474,683
Total current assets		866,501			1,323,143

Property and equipment, net of accumulated depreciation		303,641			208,210
Unamortized discount on convertible debt		232,925			380,690
Unamortized debt issuance costs		29,573			46,313
Investments		92,505			-
Goodwill		5,177,696			-
Deposits		16,482			16,139
Total assets	$	6,719,323		$	1,974,495

Liabilities and Stockholders' Equity (Deficiency)

Current liabilities:
Accounts payable and accrued expenses	$	548,707		$	468,185
Current portion of notes payable to related parties, net of discount		1,820,215			80,850
Convertible debentures-current portion		1,238,321			782,961
Current installments of long-term debt-equipment loans		4,824			-
Total current liabilities		3,612,067			1,331,996

Fair value of derivative liabilities		453,039			1,849,366
Convertible debentures		-			430,088
Long-term debt to related parties, less current installments		1,000,000			-
Total liabilities		5,065,106			3,611,450

Stockholders' equity (deficiency):
10% Convertible Cumulative Preferred Stock, Series A, $0.01 par value:
150,000 shares authorized; 0 shares issued and outstanding		-			-
Preferred stock, $0.01 par value, 4,850,000 undesignated
shares authorized, none issued		-			-
Convertible Preferred Stock, Series B, $0.01 par value:
1,000,000 Shares authorized, issued and outstanding at December 31 , 2006		10,000			-
Common stock, $.001 par value. Authorized 855,000,000 shares:
137,650,469 shares issued and outstanding at December 31, 2006,
102,098,756 shares issued and outstanding at December 31, 2005.		137,650			102,099
Additional paid-in capital		12,231,626			10,196,539
Accumulated deficit		(10,704,226	)		(11,935,593	)
		1,675,050			(1,636,955	)
Deferred stock compensation		(20,833	)		-

Total stockholders' equity (deficiency)		1,654,217			(1,636,955	)

Total liabilities and stockholders' equity (deficiency)	$	6,719,323		$	1,974,495

See accompanying notes to consolidated financial statements.

F-3

FTS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005

		2006			2005
					(restated)
REVENUES
Service Revenue-See World Satellites, Inc.	$	4,836,237		$	-
Product Retail Sales-FTS Wireless, Inc.		1,841,839			1,310,731
		6,678,076			1,310,731

COST OF GOODS SOLD
Service-See World Satellites, Inc.		788,968			-
Product-FTS Wireless, Inc.		1,580,263			1,110,645
		2,369,231			1,110,645


GROSS PROFIT
Service-See World Satellites, Inc.		4,047,269			-
Product-FTS Wireless, Inc.		261,576			200,086
		4,308,845			200,086

GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses		4,085,426			1,767,563
		4,085,426			1,767,563

INCOME (LOSS) FROM OPERATIONS		223,419			(1,567,477	)

OTHER INCOME (EXPENSE)
Change in fair value of Derivative Liabilities		1,400,902			(1,629,831	)
Unrealized loss on investments		-			(7,500	)
Interest		(392,954	)		(422,259	)
		1,007,948			(2,059,590	)


NET INCOME (LOSS)	$	1,231,367		$	(3,627,067	)


PER SHARE INFORMATION:
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		124,851,085			55,986,790

Diluted		241,014,960			55,986,790


NET LOSS PER COMMON SHARE:
Basic	$	0.01			($0.06	)

Diluted	$	0.01			($0.06	)

See accompanying notes to consolidated financial statements.

F-4

FTS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005

		2006			2005
					(restated)
Cash flows from operating activities:
Net income (loss)	$	1,231,367		$	(3,627,067	)
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization		399,592			35,974
Common shares issued for services		68,400			630,850
Gain on equipment disposal		(7,612	)		-
Unrealized loss on investment in private entity		-			7,500
Amortization of debt discount		2,679			180,893
Change in fair value of derivative liabilities		(1,400,902	)		1,629,831
(Increase) decrease in operating assets:
Accounts receivable		(32,066	)		75,284
Inventories		(196,010	)		11,818
Prepaid expenses		268,303			747
Other assets		(343	)		10,850
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses		(25,809	)		322,011
Net cash provided by (used in) operating activities		307,599			(721,309	)

Cash flows from investing activities:
Net assets 100% acquisition of See World Satellites, Inc.		(206,100	)		-
Capital expenditures for property and equipment		(88,592	)		(119,629	)
Insurance proceeds involuntary conversion of assets		12,855			-
Proceeds from funding restricted for investment in acquisition		(440,000	)		(560,000	)
Release of restriction on funding proceeds for investment in acquisition		1,060,000			-
Payment to See World Satellites, Inc. acquisition from escrowed amounts		(1,000,000	)		-
Payments for investment in Elysium		(92,505	)		-
Net cash used in investing activities		(754,342	)		(679,629	)

Cash flows from financing activities:
Proceeds from issuance of stock		862,829			882,298
Proceeds from convertible debentures		30,000			-
Proceeds from stock issued under equity line		33,110			1,263,000
Proceeds from note payable to Dutchess Advisors		-			560,000
Proceeds from notes payable related parties		710,002			84,000
Repayments of notes payable-truck loans		(15,823	)		-
Repayments of note payable to Dutchess Advisors		-			(921,022	)
Repayments of debenture loan		-			(26,876	)
Repayments of notes payable to individuals		-			(37,250	)
Repayment of loans from related parties		(1,301,398	)		(168,082	)
Net cash provided by financing activities		318,720			1,636,068

Net increase (decrease) in cash		(128,023	)		235,130

Cash at beginning of year		243,079			7,949
Cash at end of year	$	115,056		$	243,079

Supplemental schedule of cash flow information:
Interest paid	$	10,770		$	93,133

Supplemental disclosure of non-cash investing and financing activities:
Stock issued in exchange for convertible debentures	$	8,085		$	51,016

Stock issued as loan inducements	$	10,714		$	38,462

Stock issued in payment of accounts payable and accrued expenses	$	-		$	77,365

Acquisition of See World Satellites, Inc.
Final negotiated purchase price of 100% of See World Satellites, Inc. stock	$	5,500,000
Amount financed through formal promissory note to Richard Miller		(3,500,000	)
Paid in preferred stock of FTS Group, Inc.		(1,000,000	)
Cash down payment for See World Satellites, Inc.	$	1,000,000


See accompanying notes to consolidated financial statements.

F-5

FTS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (restated)


			Preferred			Common		Additional								Total
	Preferred		Stock	Common		Stock		Paid-In		Deferred			Accumulated			Stockholders'
	Shares		Amount	Shares		Amount		Capital		Compensation			Deficit			Equity
Beginning balance January 1, 2005	-	$	-	37,882,183	$	37,882	$	7,848,833	$	-		$	(8,308,526	)	$	(421,811	)

Issuance of common
shares for cash	-		-	13,461,300		13,461		868,837		-			-			882,298

Issuance of common
shares for services	-		-	6,572,500		6,573		624,277		-			-			630,850

Conversion of debentures into
shares of common stock	-		-	522,086		522		50,494		-			-			51,016

Issuance of common shares
through equity line	-		-	8,140,263		8,141		451,513		-			-			459,654

Proceeds for stock and warrants
from subscription agreement	-		-	35,520,424		35,520		352,585		-			-			388,105

Net loss	-		-	-		-		-		-			(3,627,067	)		(3,627,067	)

Balance December 31, 2005	-		-	102,098,756		102,099		10,196,539		-			(11,935,593	)		(1,636,955	)

Issuance of common
shares for cash	-		-	26,603,651		26,603		858,726		-			-			885,329

Issuance of common
shares for services	-		-	4,920,000		4,920		93,480		-			-			98,400

Issuance of preferred stock
for repayment of debt	1,000,000		10,000	-		-		990,000		-			-			1,000,000

Issuance of common stock
for repayment of debt	-		-	2,250,000		2,250		42,750		-			-			45,000

Issuance of common shares
through equity line	-		-	788,000		788		32,322		-			-			33,110

Issuance of common shares
as loan inducements	-		-	250,000		250		10,464		-			-			10,714

Proceeds for stock and warrants
from subscription agreement	-		-	740,062		740		7,345		-			-			8,085

Deferred compensation	-		-	-		-		-		(30,000	)		-			(30,000	)

Amortization of
deferred compensation	-		-	-		-		-		9,167			-			9,167

Net income	-		-	-		-		-		-			1,231,367			1,231,367

Balance December 31, 2006	1,000,000	$	10,000	137,650,469	$	137,650	$	12,231,626	$	(20,833	)	$	(10,704,226	)	$	1,654,217

F-6

FTS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2006

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION, OWNERSHIP AND BUSINESS

FTS Group, Inc. (the "Company") is a holding company incorporated under the laws of the State of Nevada. The Company is focused on developing, acquiring and investing-in cash-flow positive businesses and viable business ventures primarily those in the Internet, Wireless and Technology industries. Through its two wholly-owned subsidiaries See World Satellites, Inc. and FTS Wireless, Inc., the Company has acquired and developed a diversified wireless business engaged in the distribution of next generation wireless communications and entertainment products and services for businesses and consumers alike. The Company's wholly-owned subsidiary See World Satellites, Inc. is a leading distributor of satellite television systems and related products and services for DISH Networks in the western Pennsylvania marketplace. The Company's wholly-owned subsidiary FTS Wireless, Inc. is an emerging retail wireless distributor operating in the gulf coast market of Florida.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: FTS Wireless, Inc. and See World Satellites, Inc. All significant intercompany transactions and balances have been eliminated in consolidation.

MANAGEMENT'S ESTIMATES AND ASSUMPTIONS

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 and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses. Actual results could differ from these estimates.

CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, the Company considers all short-term debt securities with maturity of three months or less to be cash equivalents.

ACCOUNTS RECEIVABLE

Accounts receivable consist primarily of trade receivables, net of a valuation allowance for doubtful accounts.

INVENTORIES

Inventories are valued at the lower-of-cost or market on a first-in, first-out basis.

INVESTMENT SECURITIES

The Company accounts for its investments in accordance with Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Management determines the appropriate classification of its investments in marketable securities at the time of purchase and reevaluates such determination at each balance sheet date. Securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities. Debt securities for which the Company does not have the intent or ability to hold to maturity and equity securities not classified as trading securities are classified as available-for-sale. The cost of investments sold is determined on the specific identification or the first-in, first-out method. Trading securities are reported at fair value with unrealized gains and losses recognized in earnings, and available-for-sale securities are also reported at fair value but unrealized gains and losses are shown in the caption "unrealized gains (losses) on shares available-for-sale" included in stockholders' equity. Management determines fair value of its investments based on quoted market prices at each balance sheet date.

PROPERTY, EQUIPMENT AND DEPRECIATION

INTANGIBLE ASSETS

SFAS No. 142 eliminates the amortization of goodwill, and requires annual impairment testing of goodwill and introduces the concept of indefinite life intangible assets. The Company adopted SFAS No. 142 effective January 1, 2002. Goodwill and indefinite-lived intangible asset impairment is always assessed based upon a comparison of carrying value with fair value.

IMPAIRMENT OF LONG-LIVED ASSETS

Realization of long-lived assets, including goodwill, is periodically assessed by the management of the Company. Accordingly, in the event that facts and circumstances indicate that property and equipment, and intangible or other assets may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the asset's carrying amount to determine if a write-down to market value is necessary. In management's opinion, there was no impairment of such assets at December 31, 2006.

REVENUE RECOGNITION

The Company's wholly-owned subsidiary, FTS Wireless, recognizes revenue from the activation of new wireless customers and the sale of wireless handsets, airtime and accessories at the time of activation or sale. Net revenues from wireless activations are recognized during the month the activation is performed. Allowances for charge-backs, returns, discounts and doubtful accounts are provided when sales are recorded. Shipping and handling costs are included in cost of sales.

The Company's wholly-owned subsidiary, See World Satellites, Inc. recognizes revenue when it makes a sale within the store, completes a retail satellite receiver installation at the customer's home and the customer signs a contract, or completes a retail service provider satellite receiver installation at the customer's home and signs a contract.

Although the Company's post-paid activations both at wireless and the retail side of See World’s business are subject to possible charge-back of commissions if a customer deactivates service within the allowable 180-day period after signing the contract, they still recognize the activation in the period of the activation. The Company has set up a reserve for possible activation charge-backs. Based on SFAS No. 48, this is permitted if reliable estimates of the expected refunds can be made on a timely basis, the refunds are being made for a large pool of homogeneous terms, there is sufficient company-specific historical basis upon which to estimate the refunds, and the amount of the commission specified in the agreement at the outset of the arrangement is fixed, other than the customer's right to request a refund.

INCOME TAXES

The Company is a taxable entity and recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be in effect when the temporary differences reverse. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the enactment date of the rate change. A valuation allowance is used to reduce deferred tax assets to the amount that is more likely than not to be realized.

EARNINGS PER SHARE

The basic net earnings (loss) per common share is computed by dividing the net earnings (loss) by the weighted average number of shares outstanding during a period. Diluted net earnings (loss) per common share is computed by dividing the net earnings, adjusted on an as if converted basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the years ended December 31, 2006 and 2005, potential dilutive securities that had an anti-dilutive effect were not included in the calculation of diluted net earnings (loss) per common share. These securities include options to purchase shares of common stock.

ADVERTISING COSTS

The cost of advertising is expensed as incurred. Advertising expense was $116,455 and $23,631 for the years ended December 31, 2006 and 2005 respectively.

STOCK-BASED COMPENSATION

Effective the first quarter of fiscal 2006, the Company adopted SFAS 123(R) which establishes accounting for stock-based awards exchanged for employee services. Accordingly, stock-based compensation cost is measured at grant date, based on the fair value of the award, over the requisite service period. The Company previously applied APB 25 and related interpretations, as permitted by SFAS 123.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make judgments and estimates.

The Company believes the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

·	Estimating the fair value of the Company's complex derivative financial instruments that are required to be carried as liabilities at fair value pursuant to Statements on Financial Accounting Standards No. 133 Accounting for Derivative Financial Instruments and Hedging Activities (FAS 133)

FAIR VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS

The Company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, they frequently enter into certain other financial instruments and contracts, such as debt financing arrangements, preferred stock arrangements and freestanding warrants with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts or (iii) may be net-cash settled by the counterparty to a financing transaction. As required by FAS 133, these instruments are required to be carried as derivative liabilities, at fair value, in the Company’s financial statements.

The Company estimates fair values of derivative financial instruments using various techniques, and combinations thereof, that are considered to be consistent with the objective measuring of fair values. In selecting the appropriate technique(s), the Company considers, among other factors, the nature of the instrument, the market risks that such instruments embody and the expected means of settlement. For less complex derivative instruments, such as free-standing warrants, the Company generally uses the Black Scholes option valuation technique, since it embodies all of the requisite assumptions, including trading volatility, estimated terms and risk free rates, necessary to fair value these instruments. For complex derivative instruments, such as embedded conversion options, the Company generally uses the Flexible Monte Carlo valuation technique since it embodies all of the requisite assumptions, including credit risk, interest-rate risk and exercise/conversion behaviors, that are necessary to fair value these more complex instruments. For forward contracts that contingently require net-cash settlement as the principal means of settlement, the Company projects and discounts future cash flows applying probability-weightage to multiple possible outcomes. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are highly volatile and sensitive to changes in the Company’s trading market price which has high-historical volatility. Since derivative financial instruments are initially and subsequently carried at fair values, the Company’s income will reflect the volatility in these estimate and assumption changes.

NEW ACCOUNTING STANDARDS

In May 2005, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 154, Accounting Changes and Error Corrections. SFAS No. 154 replaces Accounting Principles Board Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Internal Financial Statements, and changes the requirements for the accounting for and reporting of a change in accounting principle. SFAS No. 154 requires retrospective application of changes in accounting principle to prior periods' financial statements, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company adopted SFAS No. 154 on January 1, 2006. Any impact on the Company's consolidated results of operations and earnings per share will be dependent on the amount of any accounting changes or corrections of errors whenever recognized.

In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 153. This statement addresses the measurement of exchanges of nonmonetary assets. The guidance in APB Opinion No. 29, "Accounting for Nonmonetary Transactions," is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged.

The guidance in that opinion; however, included certain exceptions to that principle. This statement amends Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. This statement is effective for financial statements for fiscal years beginning after June 15, 2005. Earlier application is permitted for nonmonetary asset exchanges incurred during fiscal years beginning after the date this statement was issued. Management believes the adoption of this statement will have no impact on the financial statements of the Company.

In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 152, which amends FASB statement No. 66, "Accounting for Sales of Real Estate," to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position (SOP) 04-2, "Accounting for Real Estate Time-Sharing Transactions." This statement also amends FASB Statement No. 67, "Accounting for Costs and Initial Rental Operations of Real Estate Projects," to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects does not apply to real estate time-sharing transactions. The accounting for those operations and costs is subject to the guidance in SOP 04-2. This statement is effective for financial statements for fiscal years beginning after June 15, 2005. Management believes the adoption of this statement will have no impact on the financial statements of the Company.

In November 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 151, "Inventory Costs—an amendment of ARB No. 43, Chapter 4." This statement amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that "under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges." This statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal." In addition, this statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Management does not believe the adoption of this statement will have any immediate material impact on the Company.

F-7

(2) RESTRICTED CASH

At June 30, 2006, Restricted Cash of $500,000 represented a short term note obligation due Richard Miller as part of the financing of the acquisition of See World Satellites, Inc. ("See World"). Per the purchase agreement, Mr. Miller was to receive $500,000 within 30 days of the ratification of new five year renewal contracts with Echo Star Satellites, LLC and DISH Network Services, LLC, both of which were signed in June 2006. The $500,000 payment was made to Mr. Miller during the third quarter 2006. Therefore, restricted cash is zero at December 31, 2006.

At December 31, 2005, Restricted Cash of $560,000 represents funds held in escrow by Grushko & Mittman to be utilized at the closing of acquisition of See World in January 2006. The source of the funds was from the December 2005 issuance of promissory notes designed for the purpose of raising funds for this acquisition. The funds were contractually restricted to be remitted directly towards settlement of the acquisition January 3, 2006.

(3) PROPERTY AND EQUIPMENT

Major classes of property and equipment together with their estimated useful lives, consisted of the following:

		December 31
	Years		2006		2005
Leasehold improvements	5	$	282,462	$	180,937
Furniture and fixtures	5		54,350		54,208
Equipment	3-5		37,684		20,890
Vehicles	3		113,264		11,927
Total property and equipment			487,763		267,962
Less accumulated depreciation and amortization			(184,122)		(59,752)
Net property and equipment		$	303,641	$	208,210

Depreciation expense for the years ended December 31, 2006 and 2005 was $ 124,370 and $35,974, respectively.

There was a significant increase in the Vehicles component of Property and Equipment in 2006 from that reported for the comparable period in 2005. This increase resulted from acquiring a fleet of trucks in the acquisition of See World Satellites, Inc. The trucks are utilized for delivery of equipment and service related activities consistent with that of the Company's established business purpose.

(4) GOING CONCERN

(5) CONVERTIBLE DEBT

During 2005 the Company raised a total of $1,820,690 from the issuance of $1,896,551 Secured Convertible Promissory Notes with selected subscribers. The Notes were issued at an original discount of 21%. On December 29, 2005, the Company received $1,000,000 of the proceeds and a further $470,000 in January 2006. Both amounts were after discount, but before expenses. The Company agreed to issue 100 class A, and 50 class B warrants for each 100 shares on the closing date of the issuance of the Notes, assuming complete conversion. The Company also agreed to issue 35,520,424 shares of common stock to be distributed pro rata to purchasers of the Notes (the common stock was issued effective December 29, 2005 and is included in the number of shares issued and outstanding at December 31, 2005). The Conversion prices of the Notes, class A warrants, and class B warrants as stated on the Notes are $0.04, $0.02868 and $0.0239 respectively.

The Company accounted for the issuance of stocks and warrants under the Convertible Notes in line with the provisions of EITR 00-27 which states that when a debt instrument includes detachable instruments such as warrants, the proceeds of the issuance should be allocated to the convertible instrument and the detachable instruments in proportion to their relative fair market values. Accordingly, the Company calculated fair value of the stock based on current market price and fair value of the warrants using the Black-Scholes pricing model. Total proceeds from the funding were then allocated among debt and equity based on their relative fair values.

As discussed in footnote #19, a restatement was necessary as the $219,535 allocated to warrants was initially classified as equity. Due to an insufficient number of authorized and unissued shares available to cover complete conversion, the warrant portion of the allocation is being reclassified to liability, with an adjustment at each reporting date to mark the liability to market.

F-8

(6) INCOME TAXES

The Company accounts for income taxes under SFAS 109, "Accounting for Income Taxes", which requires use of the liability method. SFAS 109 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates and liabilities are expected to be settled or realized.


		2006			2005

Net income (losses) before taxes	$	1,231,367		$	(3,627,067	)

Times the statutory tax rates		34.00	%		34.00	%

		418,665			(1,233,203	)

Temporary differences
Derivative (income) expense		(476,309	)		554,143
Goodwill amortization		(117,361	)		-
Net operating losses		175,005			679,060
	$	-		$	-


Deferred Tax Assets	$	3,029,942		$	3,448,607

Less valuation allowance		(3,029,942	)		(3,448,607	)

	$	-		$	-

The net operating loss carryforward of approximately $9,000,000 will expire through 2024.

At December 31, 2006, the Company provided a 100% valuation allowance for the deferred tax asset because given the volatility of the current economic climate, it could not be determined whether it was more likely than not that the deferred tax asset/(liability) would be realized.

(7) OPERATING LEASES

The Company leases real property for its retail locations. At December 31, 2006, there were seven actively operating retail locations. Four locations have lease terms ranging from six months to three years while three locations are on a month-to-month basis.

Future minimum payments due on the non-cancelable leases are as follows:

Year		Annual
Ending		Payments
2007		63,890
2008		30,000
	$	93,890

Rent expense was $176,638 and $165,392 for the years ended December 31, 2006 and 2005, respectively .

(8) CONCENTRATION OF CREDIT RISK

The Company's concentrations of credit risk consist principally of Accounts Receivable and Accounts Payable. The Company purchases approximately 90% of its wireless phones and satellite television supplies from two vendors, Echo Star and Bright Point. See World Satellites, Inc.'s satellite television business purchases approximately 90% of its satellite dish receivers, tuners and related products from Echo Star. FTS Wireless, Inc. purchases approximately 90% of its wireless handsets from Bright Point, Inc. The Company does not carry material lines of credit with either vendor. If access to the respective products offered by these two vendors were to be compromised in any way it would have a negative impact on the sales of the Company. The Company would have to purchase products from new vendors. However, at this point we have no reason to believe that any interruption in the product supply chain is to be expected in the foreseeable future.

(9) STOCK

During June of 2005, the Company filed Form SB-2 Registration Statement with the Securities and Exchange Commission to register 47,501,563 shares of common stock. In conjunction with this registration statement, the Company incurred legal and accounting costs of approximately $25,000. The SB-2 Registration statement was declared effective by the Securities and Exchange Commission in August of 2005.

On January 17, 2005, the Company closed a private placement and agreed to issue 14,493,750 shares of common stock to a group of accredited investors in private placements at an average price of $0.08 per share for gross proceeds of $769,460 after 10% commission and 3% expense fee. In accordance with the subscription agreement, the investors will receive two classes of warrants, called Class A and Class B warrants, for each share of common stock purchased. The A warrants have an exercise price of $0.08 and B warrants have an exercise price of $0.12. The Company filed the terms and conditions of the financing and registration rights on March 24, 2005 on Form 8-K. The funds raised in the private placement were primarily used for working capital, costs related to the opening of new locations and to reduce outstanding liabilities.

During the three months ended March 31, 2005, $51,017 worth of debentures was converted into 1,004,930 shares of stock relating to the Company's convertible debenture with Dutchess Private Equities Fund. The convertible debenture was fully extinguished during the period.

During the three months ended March 31, 2005, 2,085,426 shares of stock were issued relating to the Company's equity line of credit for proceeds of $270,994. Funds were used to repay outstanding Notes.

The Company signed a short-term Note payable to Dutchess Equities Fund, II, LP in the amount of $500,000 plus a $100,000 premium. The Note, dated January 10, 2005, matured on August 10, 2005. The Note bore interest at 12% per annum. The Note carried certain restrictions relating to additional financing and registration rights to certain shares issued to Dutchess. As of May 5, 2005, the Note and interest have been paid in full.

The note contained a stipulation that the Company would deliver 500,000 shares of common stock with "Piggy-Back" registration rights. In addition, the Company issued 250,000 shares of restricted common stock in March 2005 relating to loan inducements for a loan in 2004.

During January 2005, the Company issued 2,030,000 shares of common stock for services pursuant to a Form S-8 registration. The shares were valued at fair market on the date it was agreed that the shares would be issued. The non-stock compensation expense of $294,350 has been charged to operations during the period and reported under Selling, General and Administrative Expenses.

On January 15, 2006, the Company issued 1,500,000 restricted common shares to Scott Gallagher relating to a two year employment agreement entered into on November 15, 2005.

During the quarter ended December 31, 2005, warrants were exercised at $0.03 per share by eight accredited investors for the purchase of 762,500 shares of common stock.

During the quarter ended December 31, 2005, the Company issued 5,474,880 shares to Dutchess Private Equities Fund II, LP, under its equity line of credit for proceeds of $134,575 after fees.

During the quarter ended December 31, 2005, the Company issued 35,520,424 shares of common stock to a group of ten accredited investors relating to a financing closed on December 29, 2005. An 8-K detailing this issuance was filed with the Securities and Exchange Commission on January 5, 2006.

During the three months ending March 31, 2006, the Company issued 1,500,000 restricted shares of common stock to an officer of the Company relating to a two year employment agreement dated February 1, 2006.

During the three months ending March 31, 2006, the Company issued 2,250,000 restricted shares of common stock valued at $0.02 per share to an officer of the Company to reduce an outstanding debt obligation of $45,000.

During the three months ending March 31, 2006, the Company issued 2,500,000 restricted shares of common stock valued at $0.02 per share to an officer of the Company as a success bonus for 2005.

During the three months ending March 31, 2006, the Company issued 920,000 restricted shares of common stock valued at $0.02 per share to a consultant of the Company to reduce the $18,400 owed for consulting services relating to services rendered during 2005.

During the three months ending March 31, 2006, the Company issued 1,000,000 shares of its Series B Convertible Preferred stock to Mr. Richard Miller, the former owner and current President of See World Satellites, Inc. The conversion rate for the Series B stock is 25 shares of common stock for each share of Series B Convertible Preferred Stock. The shares of Series B Convertible Preferred Stock may be converted into common stock at any time after January 3, 2008, at the option of the Company or that of the holder. The Series B stock has no voting rights. Each share is worth $1.00.

During the three months ended June 30, 2006, the Company agreed to issue 11,458,338 restricted common shares relating to warrants priced at $0.0239 that were exercised by four accredited investors for total proceeds of $273,854.28. 11,458,338 new warrants were issued to the investors under the same terms other than the strike price which was increased to $0.04.

During the three months ended September 30, 2006, relating to the exercise of warrants, the Company issued 5,600,000 shares at an exercise price of $0.045 per share for proceeds of $252,000.

At September 30, 2006, 1,185,350 restricted shares due to one of the investors included in the financing closed on December 29, 2005 remained unissued.

On October 6, 2006 two investors exercised warrants to purchase 1,750,000 shares of common stock at an exercise price of $0.045 per share for proceeds of $78,750.

On October 6, 2006, the Company issued 250,000 shares as an inducement to enter into a short term loan in the amount of $75,000.

On October 16, 2006, two investors exercised warrants to purchase 1,250,000 shares of common stock at an exercise price of $0.045 per share for proceeds of $56,250.

On October 16, 2006, an investor exercised warrants to purchase 1,562,500 shares of common stock at an exercise price of $0.045 per share for proceeds of $70.312.50.

On October 17, 2006, an investor exercised warrants to purchase 312,500 shares of common stock at an exercise price of $0.045 per share for proceeds of $14,062.50.

On November 8, 2006, the Company issued 788,000 shares to an investor at $0.04 for proceeds of $32,179.

F-9

COMMON STOCK

Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of common stock do not have cumulative voting rights. Holders of common stock have no preemptive rights to purchase the Company’s common stock. There are no conversion or redemption rights or sinking fund provisions with respect to the common stock. Holders of common stock are entitled to share ratably in dividends, if any, as may be declared from time to time by the Company's Board of Directors in its discretion from funds legally available therefore, subject to the rights of Preferred stockholders. Please refer to the discussion below under "Preferred Stock." In the event of the Company's liquidation, dissolution or winding up, the holders of common stock are entitled to share pro rata all assets remaining after payment in full of all liabilities, subject to the rights of Preferred Stockholders.

PREFERRED STOCK

The Company's Articles of Incorporation, as amended, vest its Board of Directors with authority to divide its preferred stock into series and to fix and determine the relative rights and preferences of the shares of any such series so established to the full extent permitted by the laws of the State of Nevada and the Articles of Incorporation in respect to, among other things, (i)the number of shares to constitute such series and the distinctive designations thereof, (ii)the rate and preference of dividends, if any, the time of payment of dividends, whether dividends are cumulative and the date from which any dividend shall accrue, (iii) whether Preferred Stock may be redeemed and, if so, the redemption price and the terms and conditions of redemption, (iv) the liquidation preferences payable on Preferred Stock in the event of involuntary or voluntary liquidation, (v) sinking fund or other provisions, if any, for redemption or purchase of Preferred Stock, (vi) the terms and conditions by which Preferred Stock may be converted, if the preferred stock of any series are issued with the privilege of conversion and (vii) voting rights, if any. A total of 150,000 shares were designated Series A Preferred Stock, however, none are outstanding. All Series A shares have an issue price and preference on liquidation equal to $1.00 per share. The Series A Preferred Shares accrue dividends at the rate of 10% per annum during the first two years following issuance, which dividend is payable in cash and is cumulative. During the third through fifth year in which the Series A Preferred Shares are outstanding, the holders are entitled to 3.75% of the Company's net profits, also payable in cash. The Company may redeem this preferred stock at any time following notice to the holder for an amount equal to the issue price, plus any accrued but unpaid dividends.

The Series A Preferred Shares are convertible into shares of the Company's common stock at the option of the holder on a one for one basis at any time up to the fifth anniversary of the issuance. On the fifth anniversary, the Series A Preferred Shares automatically convert into shares of the Company's common stock. The conversion rate is subject to adjustment in certain events, including stock splits and dividends. Holders of our Preferred Stock are entitled to one vote for each share held of record. Holders of the Preferred Stock vote with holders of the common stock as one class.

In April 2006, a total of 1,000,000 shares were designated Series B Preferred Stock and all 1,000,000 shares are outstanding. Upon liquidation (voluntary or otherwise), dissolution or winding up of the Company, holders of Series B Convertible Preferred Stock will receive their prorate share of the total value of the assets and funds of the Company to be distributed, assuming the conversion of Series B Convertible Preferred Stock to Common Stock. The holders of shares of Series B Convertible Preferred Stock shall not be entitled to receive dividends and shall have no voting rights. After June 1, 2006, the shares of Series B Convertible Preferred Stock shall be redeemable at $2.00 per share solely at the Company's option.

Any shares of Series B Convertible Preferred Stock may, at any time after January 3, 2008, at the option of the holder or the Company, be converted into fully paid and nonassessable shares of common stock. The number of shares of common stock to which a holder of Series B Convertible Preferred Stock shall be entitled upon a conversion shall be the product obtained by multiplying the number the number of shares of Series B Convertible Preferred Stock being

converted by 25.

F-10

(10) OPTIONS AND WARRANTS

OPTIONS

The Company had a Non-Qualified Stock Option and Stock Grant Plan (the “Plan”) adopted in July 1997. For the year ended December 31, 2005 the Company had not granted any options. Under the company's Plan, the Company's board of directors had reserved 2,500,000 shares that may have been granted at the board of directors' discretion. No option was to be granted after July 27, 2007 and the maximum term of the options under the Plan was ten years. In accordance with SFAS 123R, the Company reviewed the provisions of the plan and its related outstanding options to comply with the required fair value analysis component to SFAS 123R that took effect January 1, 2006. During this analysis the Company determined that the 598,000 options previously issued had expired and are no longer outstanding as of January 1, 2006 per plan provisions.

WARRANTS

The following details warrants outstanding as of December 31, 2006:

The Company had 3,000,000 warrants outstanding relating to a dividend declared to stockholders of record on August 27, 2004. The warrants have an exercise price of $0.25 and expire on August 7, 2007. The Company does not expect these warrants to be exercised in the near future because the exercise price exceeds the current stock price.

In accordance with the subscription agreement relating to the private placement the Company closed during the period ending March 31, 2005, the Company issued the following warrants. Investors received two classes of warrants, Class A and Class B warrants, for each share of common stock purchased. The B warrants had an initial exercise price of $0.08 and A warrants had an initial exercise price of $0.12. The Company filed the terms and conditions of the financing and registration rights on March 24, 2005 on Form 8-K. The funds raised in the private placement were primarily used for working capital, costs related to the opening of new locations and to reduce outstanding liabilities.

	2006		2006
	Underlying		Exercise
	Shares		Price

Warrants issued during 2000		1,036,000	$	1.50
Warrants issued during 2004
(10% Warrant Div)		3,000,000	$	0.25

Warrants issued during 2004 and 2005
A Warrants		4,956,250	$	0.045

On September 28, 2005, the Company reduced the exercise price of the A warrants from $0.12 to $0.10. Additionally, the Company reduced the exercise price of the B warrants from $0.08 to $0.03. On July 17, 2006 the Company lowered the exercise price on the "A" Warrants from $0.10 to $0.045.

During the three months ending March 31, 2006, 4,670,313 "B" warrants priced at $0.03 were exercised for gross proceeds of $140,109. Expenses relating to warrant exercises were $14,048. Additionally, during the three months ended March 31, 2006, 9,499,937 "B" warrants expired.

During the three months ending September 30, 2006, 5,600,000 "A" warrants priced at $0.045 were exercised for gross proceeds of $252,000.

During the three months ended December 31, 2006, 4,875,000 “A” warrants priced at $0.045 were exercised for gross proceeds of $219,375.

In accordance with the subscription agreement relating to the private placement closed on December 29, 2005, the Company issued the following warrants. Investors received two classes of warrants, called Class A and Class B warrants, for each share of common stock purchased. The A warrants have an exercise price of $0.02868 and the B warrants have an exercise price of $0.0239.

The Company filed the terms and conditions of the financing and registration rights in January 2006 on Form 8-K. The funds raised in the private placement were primarily used for the acquisition of the Company's wholly-owned subsidiary See World Satellites, Inc.

As discussed in footnote #19, a restatement was necessary as the $219,535 allocated to warrants was initially classified as equity. Due to an insufficient number of authorized and unissued shares available at the date of the issue to cover complete conversion, the warrant portion of the allocation is being reclassified to liability with an adjustment at each reporting date to mark the liability to market.

As discussed in footnote #5, the warrants associated with this Issue, along with the related stock, were allocated based on their relative fair values, with the fair value of the warrant component determined using the Black-Scholes pricing model considering market factors at December 29, 2005. The fair value calculation for this grouping of warrants was performed independently of any other issue. Therefore, the reduction to the exercise prices for Class A and B warrants on September 28, 2005 and July 7, 2006 did not impact the fair value measurement of the warrants associated with the December 29, 2005 financing.

The table below summarizes the A and B warrants outstanding as of December 31, 2006 relating to the financing closed on December 29, 2005.

	2005		2005
	Underlying		Exercise
	Shares		Price
Warrants issued in December 2005
A Warrants	46,465,550	$	0.02868
B Warrants	11,774,437	$	0.0239
New B Warrants	11,458,338	$	0.04

During the year ended December 31, 2006, the Company agreed to issue 11,458,338 restricted common shares relating to warrants priced at $0.0239 that were exercised by four accredited investors for total proceeds of $273,854.28. 1,185,350 restricted shares due to one of the investors remained unissued. New warrants totaling 11,458,338 were issued to the investors under the same terms other than the strike price which was increased to $0.04.

Based on the table of A and B Warrants related to the December 31, 2005 financing, the following summarizes the settlement alternatives at each balance sheet date assuming net settlement in shares:

	December 31, 2006			December 31, 2005
	Shares		Fair Value	Shares		Fair Value
A Warrants	46,465,550	$	302,026	45,517,250	$	1,305,435
B Warrants	23,232,775	$	151,013	22,758,650	$	543,932
	69,698,325	$	453,039	68,275,900	$	1,849,367

Fair value amounts were determined using the Black-Scholes pricing model which considers as factors the price of the Company's common shares, the time until expiration, the current risk-free interest rate and the stock's volatility. Rises in stock price generally increase the fair value of a warrant, while length of time until expiration generally decreases the fair value the closer a warrant gets to maturity.

Although, the shareholders did authorize an increase in shares from 150,000,000 to 855,000,000 in October 2006, the warrants are still classified as a derivative in total. Per EITF-0019, the reset provision in the Subscription Agreement prevents the warrants from being reclassified into equity while they are outstanding. Warrants will be classified into equity upon effectiveness of the SB-2 and exercise of the warrants into shares.

(11) SEE WORLD SATELLITES, INC. ACQUISITION

Effective January 3, 2006, the Company acquired 100% of the capital stock of See World Satellites, Inc. ("See World"), for consideration, providing for (i) $1,000,000 in cash to the stockholder of See World, (ii) a promissory note in the amount of $3,500,000, and (iii) $1,000,000 in convertible preferred stock of the Company.

As required by SFAS No. 141, the Company has recorded the acquisition using the purchase method of accounting with the purchase price allocated to the acquired assets and liabilities based on their respective estimated fair values at the acquisition date. The purchase price of $5,500,000 had been allocated at follows:

Current assets	$	185,850
Property and equipment, net		136,454
Goodwill		5,177,696
	$	5,500,000

Goodwill recorded as a result of the acquisition is assignable to the See World Satellites, Inc. segment and is tax deductible over a period of fifteen years. Revenues and expenses are included in the Company's statement of operations from January 3, 2006 through December 31, 2006.

The following unaudited pro forma data summarizes the results of operations of the Company for the year ended December 31, 2005, as if the acquisition of See World had occurred on January 1, 2005. The pro forma data gives effect of the actual operating results prior to the acquisition. The unaudited pro forma consolidated data are not necessarily indicative of the results of operations that would actually have occurred if the transactions had been consummated as of January 1, 2005 or may be achieved in the future.

		2006		2005
Revenues	$	6,678,076	$	6,349,407
Net Income (loss)	$	1,231,367	$	(2,704,986)
Basic net income (loss) per share	$	0.01	$	(0.05)
Diluted net income (loss) per share	$	0.01	$	(0.05)

SFAS 141 also requires in the year of the acquisition, proforma information displaying the results of operations for the current period as if the combination had been completed at the beginning of the period, unless the acquisition was at or near the beginning of the period. Since See World Satellites, Inc. was acquired on January 3, 2006, the first business day of the year, and the Company determined that transactions between January 1, 2006 through January 2, 2006 to be immaterial, proforma presentation is deemed unnecessary. Therefore, the 2006 financial information listed above reflects actual audited results.

F-11

(12) RELATED PARTY TRANSACTIONS (SEE WORLD ACQUISITION)

At September 30, 2006, the Company had the following debt obligations and made the following payments to Mr. Richard Miller, a director and President of the Company's wholly-owned subsidiary See World. The Company paid Mr. Miller $500,000 on January 3, 2006 relating to the acquisition of See World. The Company carried a short term Note obligation in the amount of $500,000 due to Mr. Miller. This Note was due within 30 days of the effective date of a new five year contract between Echo Star Satellites, L.L.C., DISH Network Services, L.L.C. and See World. During the twelve months ended December 31, 2006, the Company paid this Note in full. Additionally, the Company issued 1,000,000 shares of its Series B Convertible Preferred stock to Mr. Miller during the three months ended March 31, 2006. The conversion rate for the Series B stock is 25 shares of common stock for each share of Series B Convertible Preferred Stock. The shares of Series B Convertible Preferred Stock may be converted into common stock at any time after January 3, 2008, at the Company's option or that of the holder. The Series B stock has no voting rights. Each share is worth $1.00. On April 3, 2006, the Company made a $250,000 payment to Mr. Miller reducing the outstanding note amount to $3.25 million as of June 30, 2006. On July 5, 2006, the Company made a $250,000 payment to Mr. Miller reducing the outstanding note amount to $3 million. In October 2006, the Company made a $250,000 payment to Mr. Miller reducing the outstanding Note amount due to $2.75 million as of November 15, 2006. The Company filed an 8-K with the terms and conditions of this Note on January 5, 2006. Mr. Miller also extended a short-term Note in the amount of $551,073 to the Company, of which $375,000 was paid back January 13, 2006. During the three months ended September 30, 2006 the Company repaid $58,691 of the outstanding Note leaving an unpaid balance of $117,382 at September 30, 2006. Also during the period ended December 31, 2006, the Company paid an additional $117,382 to Mr. Miller to extinguish an existing note due January 3, 2007.

(13) STOCK-BASED COMPENSATION

The disclosures required by paragraph 84 of SFAS 123 (R) are stated below, although the Company had not granted any options since 2001 to September 30, 2006, and options to purchase 598,000 shares of the Company have not been exercised:

		2006		2005
Net Income (Loss) as reported	$	1,271,367	$	(3,627,067)

Basic and diluted earnings per share as reported	$	.01	$	(.06)

Share-based employee compensation cost net of related tax effects included in net income as reported		-		-

Share-based employee compensation cost, net of related tax effects that would have been included in net income if the fair-value based method had been applied to all awards		-		-

Pro-forma net income as if the fair-value method had been applied to all awards	$	1,271,367	$	(3,627,067)

Pro-forma basic and diluted earnings per share as if the fair-value based method had been applied to all awards	$	.01	$	(.06)

(14) NOTES PAYABLE TO RELATED PARTIES

At December 31, 2006, the Company had an outstanding note payable to the President of one of its wholly-owned subsidiaries in the amount of $2,750,000 relating to the acquisition of See World Satellites, Inc.

(15) EQUITY LINE OF CREDIT

In 2004, the Company entered into an equity line of credit with Dutchess Private Equities Fund. The agreement provided for a maximum of $6,000,000 with 15,000,000 shares of common stock registered and available to repay credit line advances. Shares were convertible based on 93% of the three-day average of the lowest three out of five days subsequent to a put for funds. At December 31, 2006, the equity line of credit with Dutchess Private Equities Fund has been canceled.

(16) SUBSEQUENT EVENTS

On January 3, 2006, the Company acquired See World Satellites, Inc., a Pennsylvania corporation. As part of the purchase price for See World, currently a wholly-owned subsidiary of the Company, the Company agreed to issue a promissory note in the amount of $3,500,000. On January 22, 2007, the Company assigned a $1,000,000 portion of this Note to four investors (the "Assignees"). The Company issued a Note to each Assignee with a combined principle amount of $1,000,000. The Notes bear interest at a rate of 20% which was paid in the form of an original issue discount to the Note. Payments are due to each Assignee in accordance with their pro rata share.

As consideration for the assignment, the Company agreed to issue 15,000,000 shares of common stock to be distributed pro rata among the Assignees of the Notes. The shares were issued in accordance with Rule 506 of Regulation D under the Securities Act of 1933 (as amended) in that:

- the sales were made to an accredited investor, as defined in Rule 501;

The Company filed a form 8-K regarding this transaction on January 26, 2007.

On March 12, 2007, the Company acquired a ring-tone network including 161 domain names and operating web sites for $17,000 in cash.

(17) EARNINGS PER SHARE

Basic earnings (loss) per share are calculated on the basis of the weighted average number of common shares outstanding. Diluted earnings per share, in addition to the weighted average determined for basic earning (loss) per share, include common stock equivalents, which would arise from the conversion of the Preferred Stock, convertible notes payable and warrants to purchase common shares. Diluted earnings per common share assume that any dilutive convertible notes and Preferred Stock that were outstanding at the beginning of each year were converted at those dates. It also assumes that outstanding common shares were increased by shares issuable upon exercise of those warrants for which market price exceeds exercise price.

	For the Years Ended December 31
		2006		2005
Basic income (loss) per share:
Net income (loss)	$	1,231,367	$	(3,627,067	)
Weighted average common shares outstanding		124,851,085		55,986,790

Diluted income per share:
Weighted average common shares outstanding		124,851,085		N/A
Convertible notes payable		46,465,550		N/A
Warrants A		46,465,550		N/A
Warrants B		23,232,775		N/A
Weighted average common shares outstanding for diluted net earning per share		241,014,960		55,986,790
Net income (loss) per share - basic	$	0.01	$	(0.06	)
Net income (loss) per share - diluted	$	0.01	$	(0.06	)

(18) SEGMENT INFORMATION

The Company has two reportable segments and corporate overhead: (1) Product sales for wireless products segment include sales of wireless handsets and accessories; (2) Service revenues for installments of satellites segment includes sales of satellite dish equipment and installations; and (3) a holding company for future commercial ventures. The corporate overhead includes the Company's investment holdings including financing current operations and expansion of its current holdings as well as evaluating the feasibility of entering into additional businesses.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates performances based on profit or loss from operations before income taxes, not including nonrecurring gains and losses and foreign exchange gains and losses.

The Company's reportable segments are strategic business units that offer different technology and marketing strategies.

The Company's areas of operations are principally in the United States. No single foreign country or geographic area is significant to the consolidated financial statements.

Consolidated revenues, operating income/(losses), and identifiable assets were as follows:

		December 31
		2006		2005
Revenues:
Service revenue - See World Satellites, Inc.	$	4,836,237	$	1,310,731
Product sales - FTS Wireless, Inc.		1,841,839		-
Corporate		-		-
	$	6,678,076	$	1,310,731

Income (loss) from operations:
Service revenue - See World Satellites, Inc.	$	1,196,206	$	-
Product sales - FTS Wireless, Inc.		(234,950)		(408,915)
Corporate		(737,837)		(1,158,562)
	$	223,419	$	(1,567,477)

Identifiable assets:
Service revenue - See World Satellites, Inc.	$	5,960,762	$	-
Product sales - FTS Wireless, Inc.		213,507		234,801
Corporate		545,054		1,739,694
	$	6,719,323	$	1,974,495

F-12

(19) RESTATEMENT

The Company has restated its financial statements for the year ended December 31, 2005 to amend and restate the accounting for warrants issued in connection with a financing closed December 29, 2005. These security components were originally treated as equity transactions associated with the issuance of secured, convertible promissory notes. However, at the time of the issuance, the Company had an insufficient number of authorized shares to settle the contract after considering all other commitments that may require the issuance of stock during the maximum period the contract could remain outstanding. Based on this shortage, EITF-0019 requires initial balance sheet classification of the warrants as a liability until such time that an increase in authorized shares sufficient to cover the shortage, is approved by the stockholders. If the classification required under this Issue changes as a result of events during the period, the contract should be reclassified as of the date of the event that caused the reclassification. EITF-0019 requires the treatment of these warrants as derivative liabilities, with an adjustment at each reporting date to mark the liability to market.

The restatement also reclassified the restricted portion of cash to a separate line item on the Balance Sheet with a corresponding correction to the Statement of Cash Flows to reflect the restriction. Although the restriction amount was indicated on the face of the balance sheet in the original filing, a further review of accounting guidance during the registration process indicates restricted cash should be clearly segregated from unrestricted amounts. Consequently, the cash flow statement was also corrected to apply the restriction and agree to the unrestricted balance sheet amount. Footnote #2 was added to clarify the restriction.

The effect of the restatement on specific amounts provided in the consolidated financial statements is as follows:

Consolidated Balance Sheet December 31, 2005	Previously Reported			Increase (Decrease)			Restated
Cash,$560,000 restricted at 12/31/05	$	803,079		$	(560,000	)	$	243,079
Restricted Cash	$	-		$	560,000		$	560,000
Convertible debentures-current portion	$	-		$	782,961		$	782,961
Convertible debentures	$	1,213,049		$	(782,961	)	$	430,088
Fair value of derivative liabilities	$	-		$	1,849,366		$	1,849,366
Additional paid in capital	$	10,416,074		$	(219,535	)	$	10,196,539
Total stockholder's equity (deficit)	$	212,411		$	(1,849,366	)	$	(1,636,955	)


Consolidated Income Statement For the Year Ended December 31, 2005
Change in fair value of derivative liabilities	$	-		$	1,629,831		$	1,629,831
Net Income (loss)	$	(1,997,236	)	$	(1,629,831	)	$	(3,627,067	)
Earnings Per Share - Basic and Diluted	$	(0.04	)	$	(0.02	)	$	(0.06	)

The Company also restated its financial statements for the three interim quarters previously reported in 2006 to amend and restate the accounting for these warrants.

In addition, two reclassifications were required for previously reported activity. Firstly, the Company invested funds into Elysium Internet. This investment was initially treated as prepaid expense; however, a reclassification to Investment is appropriate in each of the first three quarters. Secondly, David Rasmussen was given 1,500,000 shares of Company Stock as part of his employment contract. The value of this stock was entered as a prepaid item, and is being amortized over the term of his employment contract. However, a reclassification to Deferred Compensation is appropriate for this item. These two items have balance sheet impact only.

The effect of the restatement on specific amounts provided in the consolidated financial statements is as follows:

Restatement of previously Issued Quarterly Data (Unaudited)


			As
			previously					Restatement							As
			reported					adjustments							restated
Three months ended March 31, 2006
Interest income (expense)	$		(36,695		)		$	(2,334			)		$		(39,029		)
Change in fair value of derivative liabilities	$		0				$	(7,478,664			)		$		(7,478,664		)
Total other income (expenses)	$		(36,695		)		$	(7,480,998			)		$		(7,517,693		)
Net income (loss)	$		5,251				$	(7,480,998			)		$		(7,475,747		)
Earnings Per Share - Basic	$		0.00				$	(0.07			)		$		(0.07		)
Earnings Per Share - Diluted	$		0.00				$	(0.06			)		$		(0.06		)


Six months ended June 30, 2006
Interest income (expense)	$		(74,068		)		$	(35,524			)		$		(109,592		)
Change in fair value of derivative liabilities	$		-				$	(652,875			)		$		(652,875		)
Total other income (expenses)	$		(74,068		)		$	(688,399			)		$		(762,467		)
Net income (loss)	$		62,118				$	(688,399			)		$		(626,281		)
Earnings Per Share - Basic	$		0.00				$	(0.01			)		$		(0.01		)
Earnings Per Share - Diluted	$		0.00				$	(0.00			)		$		(0.00		)


Nine months ended September 30, 2006
Interest income (expense)	$		(110,980		)		$	(73,440			)		$		(184,420		)
Change in fair value of derivative liabilities	$		-				$	(336,909			)		$		(336,909		)
Total other income (expenses)	$		(110,980		)		$	(410,349			)		$		(521,329		)
Net income (loss)	$		131,669				$	(410,349			)		$		(278,680		)
Earnings Per Share - Basic	$		0.00				$	0.00					$		(0.00		)
Earnings Per Share - Diluted	$		0.00				$	0.00					$		(0.00		)




				As
				Previously						Increase						As
				Reported						(Decrease		)				restated
March 31, 2006
Cash and cash equivalents		$		624,801					$	(500,000		)		$		124,801
Restricted cash		$		-					$	500,000				$		500,000
Property and equipment, net		$		319,762					$	70,000				$		389,762
Investment in private entity		$		70,000					$	(70,000		)		$		-
Investments		$		-					$	15,000				$		15,000
Prepaid expenses		$		122,512					$	(43,333		)		$		79,179
Accounts payable and accrued expenses		$		236,552					$	2,334				$		238,886
Fair value of derivative liabilities		$		-					$	9,332,605				$		9,332,605
Convertible preferred stock		$		1,000,000					$	(990,000		)		$		10,000
Additional paid-in capital		$		10,699,663					$	765,890				$		11,465,553
Accumulated deficit		$		(10,300,511		)			$	(9,110,829		)		$		(19,411,340		)
Deferred Compensation		$		-					$	(28,333		)		$		(28,333		)



				As
				Previously						Increase						As
				Reported						(Decrease		)				restated

June 30, 2006
Investments		$		-					$	26,179				$		26,179
Prepaid expenses		$		154,319					$	(52,012		)		$		102,307
Accounts payable and accrued expenses		$		212,946					$	35,524				$		248,470
Fair value of derivative liabilities		$		-					$	2,506,816				$		2,506,816
Additional paid-in capital		$		11,952,059					$	(224,110		)		$		11,727,949
Accumulated deficit		$		(10,243,644		)			$	(2,318,230		)		$		(12,561,874		)
Deferred Compensation		$		-					$	(25,833		)		$		(25,833		)



				As
				Previously						Increase						As
				Reported						(Decrease		)				restated

September 30, 2006
Investments		$		-					$	59,339				$		59,339
Prepaid expenses		$		199,714					$	(82,672		)		$		117,042
Accounts payable and accrued expenses		$		145,483					$	73,440				$		218,923
Fair value of derivative liabilities		$		-					$	2,190,851				$		2,190,851
Accumulated deficit		$		(10,174,095		)			$	(2,040,180		)		$		(12,214,275		)
Deferred Compensation		$		-					$	(23,333		)		$		(23,333		)

F-13

FTS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2007 AND DECEMBER 31, 2006

Assets		2007			2006
Current assets:
Cash and cash equivalents	$	57,617		$	115,056
Restricted cash		-			-
Accounts receivable		18,374			130,025
Inventories, net		328,729			373,734
Prepaid expenses and current assets		343,134			247,686
Total current assets		747,854			866,501

Property and equipment, net of accumulated depreciation		277,351			303,641
Unamortized discount on convertible debt		342,036			232,925
Unamortized debt issuance costs		-			29,573
Investments		114,734			92,505
Goodwill		5,177,696			5,177,696
Deposits		16,482			16,482
Total assets	$	6,676,153		$	6,719,323

Liabilities and Stockholders' Equity

Current liabilities:
Accounts payable and accrued expenses	$	$581,807		$	548,707
Current portion of notes payable to related parties, net of discount		1,925,111			1,820,215
Convertible debentures-current portion		1,165,474			1,238,321
Current installments of long-term debt-equipment loans		2,994			4,824
Total current liabilities	$	3,675,386			3,612,067

Fair value of derivative liabilities		392,785			453,039
Convertible debentures					-
Long-term debt to related parties, less current installments		750,000			1,000,000
Total liabilities	$	4,818,171			5,065,106

Stockholders' equity:
10% Convertible Cumulative preferred stock, Series A, $0.01 par value:
150,000 shares authorized; 0 shares issued and outstanding		-			-
Preferred stock, $0.01 par value, 4,850,000 undesignated
shares authorized, none issued		-			-
Convertible preferred stock, Series B, $0.01 par value:
1,000,000 Shares authorized, issued and outstanding at March 31, 2007.		10,000			10,000
Common stock, $.001 par value. Authorized 855,000,000 shares:
154,784,894 shares issued and outstanding at March 31, 2007.
137,650,469 shares issued and outstanding at December 31, 2006.		154,785			137,650
Additional paid-in capital		12,532,621			12,231,626
Accumulated deficit		(10,821,091	)		(10,704,226	)
Total stockholders' equity		1,876,315			1,675,050

Commitments and contingent liabilities		(18,333	)		(20,833	)

Total liabilities and stockholders' equity	$	6,676,153		$	6,719,323



See accompanying notes to consolidated financial statements.

F-14

FTS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006

		2007			2006
					(Restated )

REVENUES
Service Revenue-See World Satellites, Inc.	$	1,098,458		$	1,138,036
Product Retail Sales-FTS Wireless, Inc.		702,962			495,578
		1,801,420			1,633,614

COST OF GOODS SOLD
Service-See World Satellites, Inc.		176,708			209,208
Product-FTS Wireless, Inc.		550,623			374,274
		727,331			583,482

GROSS PROFIT
Service-See World Satellites, Inc.		921,750			928,828
Product-FTS Wireless, Inc.		152,339			121,304
		1,074,089			1,050,132

GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses		1,081,684			1,008,186
		1,081,684			1,008,186

INCOME (LOSS) FROM OPERATIONS		(7,595	)		41,946

OTHER INCOME (EXPENSE)
Change in fair value of Derivative Liabilities		60,254			(7,478,664	)
Interest		(169,524	)		(39,029	)
		(109,270	)		(7,517,693	)


NET INCOME (LOSS)	$	(116,865	)	$	(7,475,747	)

PER SHARE INFORMATION:
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		137,868,401			107,195,939

Diluted		251,897,851			120,862,553

NET LOSS PER COMMON SHARE:
Basic		($0.00	)		($0.07	)

Diluted		($0.00	)		($0.06	)


See accompanying notes to consolidated financial statements.

F-15

FTS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006


		2007			2006
					(Restated)
Cash flows from operating activities:
Net income (loss)	$	(116,865	)		(7,475,747	)
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization		146,753			95,169
Common shares issued for services		-			98,400
Amortization of debt discount		2,679			-
Amortization of deferred stock compensation		2,500			1,167
Change in fair value of derivative liabilities		(60,254	)		7,478,664
(Increase) decrease in operating assets:
Accounts receivable		111,651			(38,754	)
Inventories		45,005			(35,083	)
Prepaid expenses		(95,448	)		437,310
Other assets		-			(1,043	)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses		38,099			(336,064	)
Net cash provided by operating activities		74,120			224,019

Cash flows from investing activities:
Net assets 100% acquisition of See World Satellites, Inc.		-			(206,100	)
Capital expenditures for property and equipment		-			(74,000	)
Release of restriction on funding proceeds for investment in acquisition		-			60,000
Payment to See World Satellites, Inc. acquisition from escrowed amounts		-			(500,000	)
Payments for investment in Elysium		(22,229	)		(15,000	)
Net cash used in investing activities		(22,229	)		(735,100	)

Cash flows from financing activities:
Proceeds from issuance of stock		-			140,109
Proceeds from convertible debentures		-			30,000
Proceeds from notes payable individuals		-			635,002
Proceeds from loans related parties		20,000			-
Repayments of notes payable-truck loans		(1,830	)		(4,708	)
Repayments of notes payable to individuals		(125,000	)		(375,000	)
Repayment of loans from related parties		(2,500	)		(32,600	)
Net cash provided by (used in) financing activities		(109,330	)		392,803

Net increase (decrease) in cash		(57,439	)		(118,278	)

Cash at beginning of year		115,056			243,079
Cash at end of year	$	57,617			124,801

Supplemental schedule of cash flow information:
Interest paid	$	1,911		$	389

Supplemental disclosure of non-cash investing and financing activities:
Stock issued in exchange for convertible debentures	$	72,847		$	8,085

Stock issued as loan inducements	$	245,283		$	-

Reassignment of note payable from Richard Miller to Funds	$	1,000,000



See accompanying notes to consolidated financial statements.

F-16

FTS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2007

(UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION, OWNERSHIP AND BUSINESS

FTS Group, Inc. (the "Company"), is a holding company incorporated under the laws of the State of Nevada. The Company is focused on developing, acquiring and investing in cash-flow positive businesses and viable business ventures primarily in the Internet, Wireless and Technology industries. Through its two wholly-owned subsidiaries, See World Satellites, Inc. and FTS Wireless, Inc., the Company has acquired and developed a diversified wireless business engaged in the distribution of next generation wireless communications and entertainment products and services for businesses and consumers alike. The Company's wholly-owned subsidiary, See World Satellites, Inc., is a leading distributor of satellite television systems and relating products and services for DISH Networks in the western Pennsylvania marketplace. The Company's wholly-owned subsidiary, FTS Wireless, Inc., is an emerging retail wireless distributor operating in the gulf coast market of Florida.

PRINCIPLES OF CONSOLIDATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-QSB. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2007 are not indicative of the results that may be expected for the year ending December 31, 2007.

As contemplated by the Securities and Exchange Commission (SEC) under the Rules of Regulation S-B, the accompanying financial statements and related footnotes have been condensed and do not contain certain information that will be included in the Company's annual financial statements and footnotes thereto. For further information, refer to the Company's audited consolidated financial statements and related footnotes thereto included in the Company's annual report on Form 10-KSB, as amended, for the year ended December 31, 2006.

CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, the Company considers all short-term debt securities with maturity of three months or less to be cash equivalents.

ACCOUNTS RECEIVABLE

Accounts receivable consist primarily of trade receivables, net of a valuation allowance for doubtful accounts.

INVENTORIES

Inventories are valued at the lower-of-cost or market on a first-in, first-out basis.

INVESTMENT SECURITIES

PROPERTY, EQUIPMENT AND DEPRECIATION

INTANGIBLE ASSETS

IMPAIRMENT OF LONG-LIVED ASSETS

REVENUE RECOGNITION

The Company recognizes revenue from the activation of new wireless customers and the sale of wireless handsets, airtime and accessories at the time of activation or sale.

Net revenues from wireless activations are recognized during the month the activation is performed. Allowances for charge-backs, returns, discounts and doubtful accounts are provided when sales are recorded. Shipping and handling costs are included in cost of sales.

Although the Company's post-paid activations are subject to possible charge-back of commissions if a customer deactivates service within the allowable 180-day period after signing the contract, they still recognize the activation in the period of the activation. The Company has set up a reserve for possible activation charge-backs. Based on SFAS No. 48, this is permitted if reliable estimates of the expected refunds can be made on a timely basis, the refunds are being made for a large pool of homogeneous items, there is sufficient company-specific historical basis upon which to estimate the refunds, and the amount of the commission specified in the agreement at the outset of the arrangement is fixed, other than the customer's right to request a refund.

The Company's wholly-owned subsidiary, See World Satellites, Inc., recognizes revenue when it makes a sale within the store, completes a retail satellite receiver installation at the customer's home and the customer signs a contract, or completes a retail service provider satellite receiver installation at the customer's home and signs a contract.

INCOME TAXES

EARNINGS PER SHARE

The basic net earnings (loss) per common share is computed by dividing the net earnings (loss) by the weighted average number of shares outstanding during a period. Diluted net earnings (loss) per common share is computed by dividing the net earnings, adjusted on an as if converted basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the three months ended March 31, 2007 and 2006, potential dilutive securities that had an anti-dilutive effect were not included in the calculation of diluted net earnings (loss) per common share. These securities include options to purchase shares of common stock.

ADVERTISING COSTS

The cost of advertising is expensed as incurred. Advertising expense was $21,705 and $31,001 for the three months ended March 31, 2007 and 2006, respectively.

MANAGEMENT’S ESTIMATES AND ASSUMPTIONS

STOCK-BASED COMPENSATION

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make judgments and estimates.

The Company believes the following critical accounting policies affect the Company’s more significant judgments and estimates used in the preparation of its consolidated financial statements.

·	Estimating the fair value of the Company’s complex derivative financial instruments that are required to be carried as liabilities at fair value pursuant to Statements on Financial Accounting Standards No. 133 Accounting for Derivative Financial Instruments and Hedging Activities (FAS 133).

FAIR VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS

The Company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company frequently enters into certain other financial instruments and contracts, such as debt financing arrangements, preferred stock arrangements and freestanding warrants with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts or (iii) may be net-cash settled by the counterparty to a financing transaction. As required by FAS 133, these instruments are required to be carried as derivative liabilities, at fair value, in the Company’s financial statements.

NEW ACCOUNTING STANDARDS

The guidance in that opinion, however, included certain exceptions to that principle. This statement amends Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. This statement is effective for financial statements for fiscal years beginning after June 15, 2005. Earlier application is permitted for nonmonetary asset exchanges incurred during fiscal years beginning after the date this statement was issued. Management believes the adoption of this statement will have no impact on the financial statements of the Company.

In November 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 151, "Inventory Costs--an amendment of ARB No. 43, Chapter 4." This statement amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that "under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges." This statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal." In addition, this statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Management does not believe the adoption of this statement will have any immediate material impact on the Company.

F-17

(2) PROPERTY AND EQUIPMENT

Major classes of property and equipment together with their estimated useful lives, consisted of the following at March 31, 2007 and December 31, 2006:

	Years	2007		2006
Leasehold Improvements	5	142,822		142,822
Furniture and Fixtures	5	194,340		194,340
Equipment	3-5	120,583		120,583
Vehicles	3	25,777		25,777
Total property and equipment		483,522		483,522
Less: accumulated depreciation		(206,171	)	(179,881	)

Net property and equipment		277,351		303,641

Depreciation expense for the three months ended March 31, 2007 and 2006 was $26 ,291 and $28,902.

(3) GOING CONCERN

The Company's financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company's ability to continue as a going concern is contingent upon its ability to expand its operations and secure additional financing. The Company has warrants outstanding that if exercised will provide for additional operating capital, however there is no guarantee that the warrants will be exercised. The Company is pursuing additional financing options in order to raise funds required to reduce outstanding debt obligations and execute its operating and expansion plans. Failure to secure financing or expand operations may result in the Company not being able to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects of the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

(4) CONVERTIBLE DEBT

In December 2005 and January 2006 the Company raised a total of $1,470,000 from the issuance of $1,858,622 Secured Convertible Promissory Notes with selected subscribers. The Notes were issued at an original discount of 21%. On December 29, 2005, the Company received $1,000,000 of the proceeds and a further $470,000 in January 2006. Both amounts were after discount, but before expenses. The Company agreed to issue 100 class A, and 50 class B warrants for each 100 shares on the closing date of the issuance of the Notes, assuming complete conversion. The Company also agreed to issue 36,260,486 shares of common stock to be distributed pro rata to purchasers of the Notes (the common stock was issued effective December 29, 2005 and is included in the number of shares issued and outstanding at December 31, 2005). The conversion prices of the Notes, Class A Warrants, and Class B Warrants as stated on the Notes are $0.04, $0.02868 and $0.0239 respectively.

On January 3, 2005, the Company acquired See World Satellites, Inc., a Pennsylvania corporation. As part of the purchase price for See World, currently a wholly-owned subsidiary of the Company, the Company agreed to issue a promissory note in the amount of $3,500,000. On January 22, 2007, the Company assigned a $1,000,000 portion of this Note to four investors (the "Assignees"). The Company issued a Note to each Assignee with a combined principle amount of $1,000,000. The Notes bear interest at a rate of 20% which was paid in the form of an original issue discount to the Note. Payments are due to each Assignee in accordance with their pro rata share.

- the sales were made to an accredited investor, as defined in Rule 501; and

- the Company gave the Assignee the opportunity to ask questions and receive answers concerning the terms and conditions of the offering and to obtain any additional information which it possessed or could acquire without unreasonable effort or expense that is necessary to verify the accuracy of information furnished.

The Company accounted for the issuance of stock and warrants under the convertible notes in line with the provisions of EITR 00-27 which states that when a debt instrument includes detachable instruments such as warrants, the proceeds of the issuance should be allocated to the convertible instrument and the detachable instruments in proportion to their relative fair market values. Accordingly, the Company calculated fair value of the stock based on current market price and fair value of the warrants using the Black-Scholes pricing model. Total proceeds from the funding were then allocated among debt and equity based on their relative fair values.

(5) INCOME TAXES

Income taxes for the interim periods were computed using the effective tax rate estimated to be applicable for the full fiscal year, which is subject to ongoing review and evaluation by management. The estimated federal income tax expense for the three months ended March 31, 2007 and 2006 is eliminated by net operating loss carry forwards.

(6) OPERATING LEASES

The Company leases real property for its seven retail locations. Six of the locations have lease terms ranging from three months to three years while one location is on a month-to-month basis.

Future minimum payments due on the non-cancelable leases are as follows:

Year Ending		Annual Payments
2007	$	51,175
2008	$	30,000
	$	81,175
		========

Rent expense was $53,297 and $49,713 for the three months ended March 31, 2007 and 2006, respectively.

(7) CONCENTRATION OF CREDIT RISK

The Company's concentrations of credit risk consist principally of Accounts Receivable and Accounts Payable. The Company purchases approximately 95% of its satellite system supplies from Echostar Satellite, L.L.C. and DISH Network Service, L.L.C. The Company further purchases approximately 90% of its telephone supplies from one vendor, Metro PCS. Additionally, these three vendors are major customers of the Company who provide products that generate over 90% of revenue.

(8) STOCK

On January 22, 2007, the Company issued 15,000,000 restricted shares of common stock to four accredited investors relating to a $1,000,000 financing.

On January 5, 2007, the Company issued 1,000,000 restricted shares of common stock relating to the conversion of $40,000 of debt at a price of $0.04 per share.

On February 14, 2007, the Company issued 188,857 restricted shares of common stock relating to the conversion of $4,627 of debt at a price of $0.025 per share.

On February 13, 2007, the Company issued 160,177 restricted shares of common stock relating to the conversion of $4,627 of debt at a price of $0.029 per share.

On March 1, 2007, the Company issued 263,911 restricted shares of common stock to two investors relating to the conversion of $6,940 of debt at a price of $0.026 per share.

On March 16, 2007, the Company issued 246,050 restricted shares of common stock relating to the conversion of $9,710 of debt at a price of $0.039 per share.

On March 30, 2007 the Company issued 275,430 restricted shares of common stock to two investors relating to the conversion of $6,940 of debt at a price of $0.025 per share.

COMMON STOCK

Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of common stock do not have cumulative voting rights. Holders of common stock are entitled to share ratably in dividends, if any, as may be declared from time to time by the Company's Board of Directors in its discretion from funds legally available therefore, subject to the rights of Preferred stockholders. Holders of common stock have no preemptive rights to purchase the Company’s common stock. There are no conversion or redemption rights or sinking fund provisions with respect to the common stock. In the event of the Company's liquidation, dissolution or winding up, the holders of common stock are entitled to share pro rata all assets remaining after payment in full of all liabilities, subject to the rights of Preferred stockholders. Please refer to the discussion below under "Preferred Stock."

PREFERRED STOCK

The Company's Articles of Incorporation, as amended, vest its Board of Directors with authority to divide the Company’s Preferred Stock into series and to fix and determine the relative rights and preferences of the shares of any such series so established to the full extent permitted by the laws of the State of Nevada and the Articles of Incorporation, as amended, in respect to, among other things, (i) the number of shares to constitute such series and the distinctive designations thereof, (ii) the rate and preference of dividends, if any, the time of payment of dividends, whether dividends are cumulative and the date from which any dividend shall accrue, (iii) whether Preferred Stock may be redeemed and, if so, the redemption price and the terms and conditions of redemption, (iv) the liquidation preferences payable on Preferred Stock in the event of involuntary or voluntary liquidation, (v) sinking fund or other provisions, if any, for redemption or purchase of Preferred Stock, (vi) the terms and conditions by which Preferred Stock may be converted, if the Preferred Stock of any series are issued with the privilege of conversion and (vii) voting rights, if any. A total of 150,000 shares were designated Series A Preferred Stock, however, none are outstanding. All Series A shares have an issue price and preference on liquidation equal to $1.00 per share. The Series A Preferred Shares accrue dividends at the rate of 10% per annum during the first two years following issuance, which dividend is payable in cash and is cumulative. During the third through fifth year in which the Series A Preferred Shares are outstanding, the holders are entitled to 3.75% of the Company's net profits, also payable in cash. The Company may redeem this Preferred Stock at any time following notice to the holder for an amount equal to the issue price, plus any accrued but unpaid dividends.

At March 31, 2007, a total of 1,000,000 shares were designated Series B Preferred Stock and all 1,000,000 shares are outstanding. Upon liquidation (voluntary or otherwise), dissolution or winding up of the Company, holders of Series B Convertible Preferred Stock will receive their prorate share of the total value of the assets and funds of the Company to be distributed, assuming the conversion of Series B Convertible Preferred Stock to common stock. The holders of shares of Series B Convertible Preferred Stock shall not be entitled to receive dividends and shall have no voting rights. After June 1, 2006, the shares of Series B Convertible Preferred Stock shall be redeemable at $2.00 per share solely at the Company's option.

(9) OPTIONS AND WARRANTS

OPTIONS

The Company had a Non-Qualified Stock Option and Stock Grant Plan (the “Plan”). For the year ended December 31, 2005, the Company had not granted any options. Under the Plan, the Company's board of directors had reserved 2,500,000 shares that may have been granted at the board of directors' discretion. No option may have been granted after July 27, 2007 and the maximum term of the options under the Plan is ten years. In accordance with SFAS 123R, the Company reviewed the provisions of the Plan and its related outstanding options to comply with the required fair value analysis component to SFAS 123R that took effect January 1, 2006. During this analysis, the Company determined that the 598,000 options previously issued have expired and are no longer outstanding as of January 1, 2006 per Plan provisions.

WARRANTS

The following details warrants outstanding as of March 31, 2007:

In accordance with the subscription agreement relating to the private placement the Company closed during the period ended March 31, 2005, the Company issued the following warrants. Investors received two classes of warrants, Series A and Series B warrants, for each share of common stock purchased. The B warrants had an initial exercise price of $0.08 and A warrants had an initial exercise price of $0.12. The Company filed the terms and conditions of the financing and registration rights in March 2005 on Form 8-K. The funds raised in the private placement were primarily used for working capital, costs related to the opening of new locations and to reduce outstanding liabilities.

	March 31, 2007		March 31, 2007
	Underlying Shares		Exercise Price
Warrants issued during 2000	1,036,000	$	1.50
Warrants issued during 2004 (10% Warrant Dividend)	3,000,000	$	0.25
Warrants issued during 2004 and 2005, A Warrants	4,956,250	$	0.045

On September 28, 2005, the Company reduced the exercise price of the A warrants from $0.12 to $0.10. Additionally, the Company reduced the exercise price of the B warrants from $0.08 to $0.03. On July 17, 2006, the Company lowered the exercise price on the A warrants from $0.10 to $0.045.

In accordance with the subscription agreement relating to the private placement closed on December 29, 2005, the Company issued the following warrants. Investors received two classes of warrants, called Series A and Series B warrants, for each share of common stock purchased. The A warrants have an exercise price of $0.02868 and the B warrants have an exercise price of $0.0239.

The table below summarizes the A and B warrants outstanding as of March 31, 2007 relating to the financing closed on December 29, 2005.

	March 31, 2007		March 31, 2007
	Underlying Shares		Exercise Price
Warrants issued in December 2005
A Warrants	46,465,550	$	0.02868
B Warrants	11,774,437	$	0.0239
B Warrants (new)	11,458,338	$	0.04

At March 31, 2007, 1,185,350 restricted shares due to one of the investors remained unissued.

Based on the table of A and B Warrants related to the December 31, 2005 financing, the following summarizes the settlement alternatives at each balance sheet date assuming net settlement in shares:

	March 31, 2007			December 31, 2006
	Shares		Fair Value	Shares		Fair Value
A Warrants	46,465,550	$	261,857	46,465,550	$	302,026
B Warrants	23,232,775	$	130,928	23,232,775	$	151,013
	69,698,325	$	392,785	69,698,325	$	453,039

Although the shareholders did authorize an increase in shares from 150,000,000 to 855,000,000 in October 2006, the warrants are still classified as a derivative in total. Per EITF-0019, the reset provision in the Subscription Agreement prevents the warrants from being reclassified into equity while they are outstanding. Warrants will be classified into equity upon effectiveness of the SB-2 and exercise of the warrants into shares.

(10) SEE WORLD ACQUISITION

Effective January 3, 2006, the Company acquired 100% of the capital stock of See World Satellites, Inc. ("See World"), for consideration, providing for (i) $1,000,000 in cash to the shareholder of See World, (ii) a promissory note in the amount of $3,500,000, and (iii) $1,000,000 in convertible preferred stock of the Company.

Current assets	$185,850
Property and Equipment, net	$136,454
Goodwill	$5,177,696
	$5,500,000
	===========

Goodwill recorded as a result of the acquisition is assignable to the See World Satellites, Inc. segment and is tax deductible over a period of fifteen years.

Unaudited pro forma data (included in the Company's 8-K/A filing on March 3, 2006) summarizes the results of operations of the Company for the years ended December 31, 2005 and 2004 as if the acquisition had been completed on January 1, 2004. The pro forma data gives effect to the actual operating results prior to acquisition. The pro forma results do not purport to be indicative of the results that would have actually been achieved if the acquisition had occurred on January 1, 2004 or may be achieved in the future.

(11) RELATED PARTY TRANSACTIONS (SEE WORLD ACQUISITION)

At March 31, 2007, the Company had the following debt obligations and made the following payments to Mr. Richard Miller, a director and President of the Company's wholly-owned subsidiary See World. The Company paid Mr. Miller $500,000 on January 3, 2006 relating to the acquisition of See World. The Company carried a short-term note obligation in the amount of $500,000 due to Mr. Miller. This note is due within 30 days of the effective date of a new five-year contract between Echo Star Satellites, L.L.C., DISH Network Services, L.L.C. and See World. During the three months ended September 30, 2006, the Company paid this note in full. Additionally, the Company issued 1,000,000 shares of its Series B Convertible Preferred stock to Mr. Miller during the three months ended March 31, 2006. The conversion rate for the Series B stock is 25 shares of common stock for each share of Series B Convertible Preferred Stock. The shares of Series B Convertible Preferred Stock may be converted into common stock at any time after January 3, 2008, at the Company's option or that of the holder. The Series B stock has no voting rights. Each share is worth $1.00. On April 3, 2006, the Company made a $250,000 payment to Mr. Miller reducing the outstanding note amount to $3.25 million as of June 30, 2006. On July 5, 2006, the Company made a $250,000 payment to Mr. Miller reducing the outstanding note amount to $3 million. In October 2006, the Company made a $250,000 payment to Mr. Miller reducing the outstanding note amount due to $2.75 million. In January 2007, the Company made a $1,000,000 payment to Mr. Miller reducing the outstanding note amount to $1.75 million. In February 2007, the Company made a $162,500 payment to Mr. Miller reducing the outstanding note amount to $1.587 million at March 31, 2007. The Company filed an 8-K with the terms and conditions of this note on January 5, 2006.

(12) STOCK-BASED COMPENSATION

The disclosures required by paragraph 84 of SFAS 123 ( R ) are stated below, although the Company had not granted any options since 2001 to the March 31, 2007.

	March 31, 2007		March 31, 2006
Net Income/ (Loss) as reported	($116,865	)	($7,517,693	)
Basic and diluted earnings per share as reported	($0.00	)	($0.06	)
Share-based employee compensation cost net of related tax effects included in net income as reported	-		-
Share-based employee compensation cost net of related tax effects that would have been included in the net income if the fair-value based method had been applied to all awards	-		-
Pro-forma net income as if the fair-value method had been applied to all awards	($116,865	)	($7,517,693	)
Pro-forma basic and diluted earnings per share as if the fair-value based method had been applied to all awards.	($0.00	)	($0.06	)

(13) SEGMENT INFORMATION

The Company has two reportable segments and corporate overhead: (1) product sales for wireless products segment include sales of wireless handsets and accessories; (2) service revenues for installments of satellites segment includes sales of satellite dish equipment and installations; and (3) a holding company for future commercial ventures. The corporate overhead includes the Company's investment holdings including financing current operations and expansion of its current holdings as well as evaluating the feasibility of entering into additional businesses.

The Company's reportable segments are strategic business units that offer different technology and marketing strategies.

The Company's areas of operations are principally in the United States. No single foreign country or geographic area is significant to the consolidated financial statements.

Consolidated revenues, operating income/(losses), and identifiable assets were as follows:

		March 31
		2007		2006
Revenues:	$		$
Service revenue - See World Satellites, Inc.		1,098,458		1,138,036
Product sales - FTS Wireless, Inc.		702,962		495,578
Corporate		-		-
	$	1,801,420	$	1,633,614
Income (loss) from operations:	$		$
Service revenue - See World Satellites, Inc.		201,302		234,025
Product sales - FTS Wireless, Inc.		27,516		(14,947)
Corporate		(236,413)		(177,132)
	$	(7,595)	$	41,946
Identifiable assets:	$		$
Service revenue - See World Satellites, Inc.		5,895,481		5,923,343
Product sales - FTS Wireless, Inc.		543,620		933,787
Corporate		237,052		266,226
	$	6,676,153	$	7,123,356

(14) RESTATEMENT

The Company has restated its financial statements for the year ended December 31, 2005 to amend and restate the accounting for derivatives issued in connection with a financing closed December 29, 2005. These security components were originally treated as equity transactions associated with the issuance of secured, convertible promissory notes. Upon further review of accounting issues, statements and pronouncements by the APB (Accounting Principals Board), FASB (Financial Accounting Standards Board) and EITF (Emerging Issues Task Force) the Company identified the need to include fair value accounting of certain warrants, considered to be derivatives in order to be compliant with GAAP (Generally Accepted Accounting Principals) accounting in its quarterly and annual financial statements. For this reason the Company restated its 10QSB/A for the period ended March 31, 2006 to include fair value derivative accounting and reclassification of certain other financial items.

There were also related adjustments to the Company’s consolidated statement of cash flows and consolidated statement of stockholder’s equity.

The effect of the restatement on specific amounts provided in the consolidated financial statements is as follows:

Restatement of previously Issued Quarterly Data (Unaudited)

	As
	previously		Restatement		As
	reported		adjustments		restated
Three months ended March 31, 2006
Interest income (expense)	(36,695	)	(2,334	)	(39,029	)
Change in fair value of derivative liabilities	0		(7,478,664	)	(7,478,664	)
Total other income (expenses)	(36,695	)	(7,480,998	)	(7,517,693	)
Net income (loss)	5,251		(7,480,998	)	(7,475,747	)


		As
		Previously			Increase			As
		Reported			(Decrease	)		restated
March 31, 2006
Cash and cash equivalents	$	624,801		$	(500,000	)	$	124,801
Restricted cash	$	-		$	500,000		$	500,000
Property and equipment, net	$	319,762		$	70,000		$	389,762
Investment in private entity	$	70,000		$	(70,000	)	$	-
Investments	$	-		$	15,000		$	15,000
Prepaid expenses	$	122,512		$	(43,333	)	$	79,179
Accounts payable and accrued expenses	$	236,552		$	2,334		$	238,886
Fair value of derivative liabilities	$	-		$	9,332,605		$	9,332,605
Convertible preferred stock	$	1,000,000		$	(990,000	)	$	10,000
Additional paid-in capital	$	10,699,663		$	765,890		$	11,465,553
Accumulated deficit	$	(10,300,511	)	$	(9,110,829	)	$	(19,411,340	)
Deferred Compensation	$	-		$	(28,333	)	$	(28,333	)

In addition, two reclassifications were required for previously reported activity. Firstly, the Company invested funds into Elysium Internet. This investment was initially treated as prepaid expense; however, a reclassification to Investment is appropriate in each of the first three quarters. Secondly, David Rasmussen was given 1,500,000 shares of the Company’s common stock as part of his employment contract. The value of this stock was entered as a prepaid item, and is being amortized over the term of his employment contract. However, a reclassification to Deferred Compensation is appropriate for this item. These two items have balance sheet impact only.

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WHERE TO FIND MORE INFORMATION ABOUT US

We have filed with the Securities and Exchange Commission a registration statement on Form SB-2 under the 1933 Act with respect to the shares offered by this prospectus. This prospectus, filed as a part of the registration statement, does not contain certain information contained in Part II of the registration statement or filed as exhibits to the registration statement. We refer you to the registration statement and exhibits which may be inspected and copied at the Public Reference Department of the Commission, 100 F Street, NE, Washington, D.C. 20549, at prescribed rates. You can contact the Commission's Public Reference Department at (800) SEC-0330. The registration statement and exhibits also are available for viewing at and downloading from the EDGAR location within the SEC's internet website (http://www.sec.gov).

Our common stock is registered with the SEC under section 12(g) of the Securities Exchange Act of 1934. We file with the SEC periodic reports on Forms 10-KSB, 10-QSB, and 8-K, and proxy statements, and our officers and directors file reports of stock ownership on Forms 3, 4 and 5. These filings may be viewed and downloaded from the SEC's internet website (http://www.sec.gov) at the EDGAR location. Also, we will provide copies of these documents and any exhibits to them, without charge to prospective investors upon request addressed to FTS Group, Inc., 7610 West Hillsborough Ave., Tampa, Florida 33615. We intend to send annual reports containing audited financial to the stockholders.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL

DISCLOSURE.

Changes in accountants were previously reported on Form 8-K. We had no disagreements with our accountants in 2005 or 2006.

FTS (FLIP) Inactive 424B3Prospectus supplement