Softnet Technology (SOFN) 10QSB/A 2005 Q2 Quarterly report (small business) (amended)

Securities and Exchange Commission
Washington, D.C.

FORM 10QSB/A

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

       For the quarterly period ended June 30, 2005

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

       For the transition period from                            to                            

000-07693
(Commission file number)


SoftNet Technology Corporation
(Exact name of small business issuer as specified in its charter)

Nevada                                                                                13-4096315
              (State or other jurisdiction                                                            (IRS Employer                     
       of incorporation or organization)                                                  Identification No.)              

One Anderson Road, Suite 105
Bernardsville, New Jersey 07924
(Address of principal executive offices) (Zip Code)


(908) 204-9911
(Issuer's telephone number)


T & G2, Inc.
(Former name, former address and former fiscal year, if changed
since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ].

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common equity, as of latest practicable date: Class A 148,892,072 shares of Common Stock, $0.001 par value, as of August 15, 2005; 5,000,000 Class B $0.001 par value as of August 15, 2005.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005 AND 2004

2

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)


INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheet as of June 30, 2005 (Restated)                                       4

Condensed Consolidated Statements of Operations for the Six and Three Months Ended
   June 30, 2005 (Restated) and 2004 (Restated)                                                                          5

Condensed Consolidated Statement of Comprehensive Income (Loss) for the
    Six Months Ended June 30, 2005 (Restated) and 2004 (Restated)                                            6

Condensed Consolidated Statements of Cash Flows for the Six Months Ended
   June 30, 2005 (Restated) and 2004 (Restated)                                                                        7-8

Notes to Condensed Consolidated Financial Statements                                                              9-35

3

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G2 INC.)
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2005 (RESTATED)
ASSETS
Current Assets:
Cash and cash equivalents	$       133,027
Accounts receivable, net	265,098
Current portion of notes receivable	325,000
Inventory	28,517
Prepaid expenses and other current assets	28,232
Total Current Assets	779,874
Notes receivable, net of current portion	140,000
Fixed assets, net of depreciation	23,080
Deposits	1,500
Goodwill, net of impairment	-
TOTAL ASSETS	$       944,454
	============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
Current Liabilities:
Accounts payable and accrued expenses	$       686,916
Liability for stock to be issued	1,350,000
Due to related parties	245,628
Current portion of notes payable	235,000
Total Current Liabilities	2,517,544
LONG-TERM LIABILITIES
Notes payable, net of current portion	500,000
Total Liabilities	3,017,544
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, Series A, $1.00 Par Value; 5,000,000 shares
authorized, 0 shares issued and outstanding	-
Preferred Stock, Series B, $.001 Par Value; 5,000,000 shares
authorized, and 0 shares issued and outstanding	-
Common Stock, Class A, $.001  Par Value; 500,000,000
shares authorized, 379,692,072 shares issued ,
150,000,000 and 0 shares held in escrow and
and 229,692,072 shares outstanding	379,692
Common Stock, Class B, $.001  5,000,000 shares authorized
and 4,800,000 shares issued and outstanding	4,800
Subscriptions receivable	-
Stock issued as collateral for note payable	(900,000)
Additional paid-in capital	21,363,088
Accumulated other comprehensive income (loss)	49,424
Deficit	(22,970,094)
Total Stockholders' Equity (Deficit)	(2,073,090)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$       944,454
	============

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

4

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G2 INC.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2005 AND 2004
	SIX MONTHS ENDED		THREE MONTHS ENDED
	JUNE 30,		JUNE 30,
		(Reclassified)		(Reclassified)
	2005	2004	2005	2004
	(Restated)	(Restated)	(Restated)	(Restated)
OPERATING REVENUES
Revenue	$           686,128	$           3,451	$         452,201	$         2,176
COST OF SALES	436,713	30,560	302,204	15,560
GROSS PROFIT	249,415	(27,109)	149,997	(13,384)
OPERATING EXPENSES
Professional fees and compensation expenses	739,339	397,040	441,404	40,575
Advertising and marketing expenses	243,633	54,758	138,409	27,575
General and administrative expenses	328,569	(1,844)	73,439	38,365
Depreciation and impairment	1,283,565	1,322,318	2,701	1,255,165
Total Operating Expenses	2,595,106	1,772,272	655,953	1,361,680
LOSS BEFORE OTHER EXPENSE	(2,345,691)	(1,799,381)	(505,956)	(1,375,064)
OTHER EXPENSE
Legal settlement	(200,000)	(17,500)	(200,000)	-
Interest expense, net	(20,707)	(58,286)	(13,018)	(55,069)
Total Other Expense	(220,707)	(75,786)	(213,018)	(55,069)
NET LOSS FROM CONTINUING OPERATIONS	(2,566,398)	(1,875,167)	(718,974)	(1,430,133)
DISCONTINUED OPERATIONS
Gain (loss) from discontinued operations, net of       income taxes	-	8,482	-	(37,447)
Total Discontinued Operations	-	8,482	-	(37,447)
NET LOSS BEFORE PROVISION FOR INCOME TAXES	(2,566,398)	(1,866,685)	(718,974)	(1,467,580)
Provision for Income Taxes	-	-	-	-
NET LOSS APPLICABLE TO COMMON SHARES	$    (2,566,398)	$  (1,866,685)	$      (718,974)	$ (1,467,580)
	=============	=============	=============	=============
NET LOSS PER BASIC AND DILUTED SHARES	$      (0.00927)	$     (0.04122)	$      (0.00249)	$    (0.02807)
	=============	=============	=============	=============
From continuing operations	$            (0.01)	$           (0.04)	��$            (0.00)	$          (0.03)
From discontinued operations	$                  -	$             0.00	$                 -	$          (0.00)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING	276,769,172	45,288,025	288,236,295	52,277,261
	=============	=============	=============	=============

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

5

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G2, INC.)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
Deficit, December 31, 2004, restated	$ (20,403,696)
Net loss for the six months ended June 30, 2005, restated	(2,566,398)
TOTAL DEFICIT JUNE 30, 2005 (RESTATED)	$ (22,970,094)
	============
Comprehensive loss, December 31, 2004, net of tax	$          (6,691)
Other comprehensive income, net of tax:
Foreign currency gain for six months ended June 30, 2005	56,115
Accumulated other comprehensive income	$         49,424
	============
Deficit, December 31, 2003	$ (17,145,109)
Net loss for the six months ended June 30, 2004	(1,466,685)
TOTAL DEFICIT JUNE 30, 2004	$ (18,611,794)
	============
Comprehensive loss, December 31, 2003, net of tax	$                   -
Other comprehensive income, net of tax:
Foreign currency loss for the six months ended June 30, 2004	(2,921)
Accumulated other comprehensive (loss)	$          (2,921)
	============

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

6

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G2 INC.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
		(Reclassified)
	2005	2004
	(Restated)	(Restated)
CASH FLOW FROM OPERTING ACTIVIITES
Continuing Operations:
Net loss	$   (2,566,398)	$  (1,875,167)
Adjustments to Reconcile Net Loss to Net Cash
used in operating activities:
Depreciation and impairment	1,283,565	1,260,067
Common stock issued for consulting services	189,211	331,650
Common stock issued for legal	-	3,300
Common stock issued for settlement of legal proceeding	200,000	-
Foreign currency change	56,115	(2,921)
Net cash received in acquisition of subsidiary	58,235	-
Changes in assets and liabilities
(Increase) decrease in accounts receivable	52,528	(1,067)
(Increase) decrease in prepaid expenses and other assets	12,287	(871)
Increase in inventory	(28,517)	-
Decrease in accounts payable and
and accrued expenses	(38,637)	(15,034)
Total adjustments	1,784,787	1,575,124
Net cash used in operating activities -
continuing operations	(781,611)	(300,043)
Discontinued Operations:
Gain from discontinued operations	-	8,482
Adjustments to Reconcile Net Cash (used in)
discontinuing operations	-	11,655
Net cash (used in) operating activities -
discontinued operations	-	20,137
Net cash used in Operating Activities	(781,611)	(279,906)
CASH FLOWS FROM INVESTING ACTIVITIES:
Continuing Operations:
(Increase) decrease in amounts due to related parties	182,261	(9,752)
Increase in notes receivable	(165,000)	-
Acquisition of fixed assets	(10,664)	(27,517)
Net cash provided by (used in) investing activities	6,597	(37,269)

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

7

SOFTNET TECHNOLOGY CORP., AND SUBSIDIARIES
(FORMERLY T & G2 INC.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
		(Reclassified)
	2005	2004
	(Restated)	(Restated)
CASH FLOWS FROM FINANCING ACTIVITES
Continuing Operations:
Proceeds from common stock issuances and stock subscriptions	$      122,769	$      343,231
Net proceeds from issuance of notes payable - other	735,000	-
Net cash provided by financing activities	857,769	343,231
NET INCREASE IN CASH
AND CASH EQUIVALENTS	82,755	26,056
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD	50,272	16,754
CASH AND CASH EQUIVALENTS - END OF PERIOD	$      133,027	$        42,810
	============	============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
CASH PAID DURING THE PERIOD FOR:
Interest expense	$        30,331	$        10,000
	============	============
SUPPLEMENTAL DISCLOSURE OF NONCASH
ACTIVITIES:
Issuance of common stock for:
Consulting services	$      189,211	$      331,650
	============	============
Legal	$               -	$          3,300
	============	============
Legal settlement	$      200,000	$                  -
	============	============
Accrued expenses	$               -	$          7,500
	============	============
Preferred stock issued for investment	$               -	$   2,000,000
	============	============
Impairment of goodwill	$   1,277,595	$   1,249,964
	============	============

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

8

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005 AND 2004

NOTE 1 -    ORGANIZATION AND BASIS OF PRESENTATION

The unaudited condensed consolidated financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  The condensed consolidated financial statements and notes are presented as permitted on Form 10-QSB and do not contain information included in the Company’s annual consolidated statements and notes.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.  It is suggested that these condensed consolidated financial statements be read in conjunction with the December 31, 2004 audited financial statements and the accompanying notes thereto.  While management believes the procedures followed in preparing these condensed consolidated financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year.

These condensed consolidated unaudited financial statements reflect all adjustments, including normal recurring adjustments which, in the opinion of management, are necessary to present fairly the consolidated operations and cash flows for the periods presented.

On January 12, 2002, International Mercantile Corporation acquired Solutions Technology, Inc. (“STI”), formerly known as Clickese.com (“Clickese”) for 20,511,365 shares of the Class A common stock, and the former owners of STI acquired the 1,142,858 shares of the Class B common stock for $1. Upon this acquisition, STI became a wholly owned subsidiary of International Mercantile Corporation. STI designs, develops and manufactures biometrical time clocks for tracking employees’ time and attendance.

On February 14, 2002, International Mercantile Corporation changed its name to T & G² (the “Company”). In addition, the Company changed its domicile to Nevada, which brought about a reverse 8 to 1 stock split, and a change in the par value of the stock to $0.001.

In addition to STI being a wholly owned subsidiary, the Company acquired Zingo Sales Ltd. (“Zingo”) in March 2002 in a 2,500,000 share Class A common stock acquisition. Zingo’s mission is to design, develop, manufacture and market easy to use complete solutions using the latest available technologies. Their first product was a fixed based bingo unit, for which sales had been generated late in 2002. The Company sold this segment in July 2004 for $300,000. This amount is currently a note receivable on the condensed consolidated balance sheet.

9

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 1 -    ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

The Company has reflected the results of this subsidiary in the discontinued operations section of the statements of operations, and has reclassified the 2004 numbers to show retroactive treatment for this disposal in accordance with SFAS 144.

In November 2002, the Company issued a board resolution authorizing an increase to the authorized capital to 100,000,000 Class A common shares and the Class B common shares to remain at the 2,000,000 share level. In February 2003, the Company issued another board resolution authorizing a further increase in its authorized capital. Under this resolution, the Company increased its Class A common shares and Class B common shares to 250,000,000 shares and 5,000,000 shares authorized, respectively. With this change, the Company issued a board resolution to cancel the 1,142,858 Class B common shares, and issue to its officers 2,500,000 Class B common shares each (5,000,000 total) at par value.

On April 25, 2001, Secure Time, Inc. merged into Clickese.com at which time the resulting company changed its name to STI. The transaction was valued at $1 per share for 10,500,000 shares.

International Mercantile Corporation was originally incorporated in the State of Missouri, on March 10, 1971. Their business purpose included among other things, maintaining an Internet based personal computer manufacturing business selling build-to-order systems throughout the United States to value added retailers and other marketers of micro-computer systems. The Company has terminated all of these business activities.

On or about March 29, 2004, the Company entered into an acquisition agreement with Holtermann & Team, GmbH, a German Company (“Holtermann”), to acquire, effective April 1, 2004, 100% of the assets and equity interests of Holtermann in exchange for 10,000,000 restricted shares of the Company’s Class A Common Stock. Under the terms of the Acquisition Agreement, the Company is the successor in interest to a certain Loan Agreement under which Holtermann is to receive $950,000 by the end of 2004. The shares of common stock were issued in April 2004. The Company issued them an additional 1,000,000 shares in June 2005 to meet certain foreign capital requirements. The Company recorded this as organizational expense in the condensed consolidated statements of operations for the six and three months ended June 30, 2005.

The Company in January 2005 changed the name of its German subsidiary to SoftNet International GmbH.

10

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 1 -    ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

The Company acquired WholesaleByUs (“WBU”) on July 9, 2004. WBU is a technology driven company that developed proprietary technology to sell products through the Internet. The Company acquired WBU for $112,000 and 20,000,000 restricted Class A Common Shares of stock. The Company issued 5,000,000 of these shares to WBU and the remaining 15,000,000 shares were to be issued based on sales criteria. This criteria was not reached, therefore these shares were returned to the Company. On November 4, 2005, the Company and WBU entered into a Termination Agreement (see Note 17).

The Company announced on July 22, 2004 a name change to Softnet Technology Corp.

The Company acquired Indigo Technology Services (Indigo), a technology company based in Atlanta, Georgia and Net Centric Solutions, Inc. in April 2005 for 9,000,000 shares of restricted Class A Common Shares of stock (6,000,000 for Indigo and 3,000,000 for Net Centric). The Company in this transaction acquired $14,170 of accounts receivable and $58,235 in cash. The shares were valued at $.15 per share at the time of the transaction for a value of $1,350,000. The remaining $1,277,595 was recognized as goodwill. Management has determined that the entire amount has been impaired as of June 30, 2005.

Indigo is a provider of business technology consulting and technology products and solutions designed to help companies integrate technology into everyday lives. Indigo is the creator of Guest Worx High Speed Internet Access. Net Centric provides similar services that Indigo provides.

The Company amended its previously issued condensed consolidated financial statements. See Note 18 for the details of the amendments.

NOTE 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and all of its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

11

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Use of Estimates

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

Revenue Recognition

Commencing in 2002, the Company started generating revenues. The Company currently records its revenue as follows for each of its operating entities:

Pursuant to SAB 104, the general criteria for recognition of revenue are:

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

A)      SoftNet Technology Corporation

No revenue generated.

B)       Solutions Technology, Inc. 

The only revenue generated in this company is service revenue relating to consulting and maintenance services on the company’s time clocks.

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

12

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition (Continued)

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

C)      SoftNet International GmbH

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

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

D)      WholesaleByUS, LLC

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

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

13

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition (Continued)

Within general criteria number 2 of SAB No. 104 as noted above, it states, delivery has occurred or services have been rendered. To better clarify the arrangement that exists, WholesaleByUs (WBU), acts as a consignee, whereby WBU “purchases” the goods simultaneously with the sale of the goods to the customer. The service is rendered when the order is placed and it can take up to 3 to 5 days to ship that order. The service however is performed at placement, and therefore the revenue is recognized at that point. As far as when title and significant risks and rewards pass to the customer, this occurs upon shipment, i.e. FOB shipping point. If a customer were to order a product that falls above the 3 to 5 day shipment window, WBU classifies these as “special orders”. Again, WBU still recognizes revenue upon placement of that order, not shipping date.

WBU both sells a product and provides a service. They simultaneously, “purchase” the goods and sell the goods as a service over the internet. They do, however, perform these services at a rate that reduces cost for the suppliers.

WBU considers themselves the primary obligor for their product sales. When a customer orders the goods, it is WBUs’ responsibility to ensure completion of that order. WBU additionally takes responsibility for that order and it is their obligation to either return the money to the customer, or replace the goods with goods acceptable to the customer. The terms that WBU has with its suppliers are that the suppliers must accept back the goods if for any reason, the goods were not acceptable to the customer.

E)     Indigo Technology Services

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

14

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition (Continued)

Although SOP 97-2 specifically deals with software revenue recognition, there are basic principles the Company follows contained in this pronouncement. They are 1) Licensing vs. Sales, meaning transfers of rights to software by licenses rather than by outright sales will have the same impact on revenue recognition; 2) Product may not equate with delivery of software, relating to specifically when the services do not entail significant production, modification or customization of the software, the services are accounted for as a separate element; 3) Delivery is the key threshold issue for revenue recognition, which is consistent with CON #5, Recognition and Measurement in Financial Statements of Business Enterprises; 4) Revenue must be allocated to all elements of the sales arrangement, with recognition dependent upon meeting the criteria on an element-by-element basis, this being vendor specific objective evidence (VSOE). This principle does not apply to the Company at this time; and 5) The earnings process is not complete if fees are subject to forfeiture.

EITF 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent, provides guidance on whether an entity is an agent for a vendor-manufacturer, and thus recognizes the net retainage (commission) for serving in that capacity, or whether that entity is a seller of goods (principal), and thus recognizes revenue for the gross amount billed to a customer and an expense for the amount paid to the vendor-manufacturer. The Company, considers this EITF when recognizing revenue for its WholesaleByUs subsidiary. The Company considers themselves the primary obligor in an arrangement, and establishes the selling price and assumes the credit risk, therefore recognizes revenue gross.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments and other short-term investments with an initial maturity of three months or less to be cash equivalents.

The Company maintains cash and cash equivalent balances at several financial institutions that are insured by the Federal Deposit Insurance Corporation up to $100,000.

15

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fixed Assets

Fixed assets are stated at cost. Depreciation is computed primarily using the straight-line method over the estimated useful life of the assets.

Furniture and fixtures                                            7    Years
Office equipment                                              3 to 5 Years
Time clock equipment                                         1.5  Years
Time clock software                                             3    Years

Income Taxes

Deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates.

Comprehensive Income

The Company adopted Statement of Financial Accounting Standards No, 130, “Reporting Comprehensive Income,” (SFAS No. 130). SFAS No. 130 requires the reporting of comprehensive income in addition to net income from operations. 

Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of information that historically has not been recognized in the calculation of net income.

Segment Information

The Company follows the provisions of SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information”. This standard requires that companies disclose operating segments based on the manner in which management disaggregates the Company in making internal operating decisions.

16

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Advertising

Costs of advertising and marketing are expensed as incurred. Advertising and marketing costs were $243,633 and $54,758 for the six months ended June 30, 2005 and 2004, respectively.

Goodwill and Other Intangible Assets

In June 2001, the FASB issued Statement No. 142 “Goodwill and Other Intangible Assets”. This statement addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB Opinion No. 17, Intangible Assets. It addresses how intangible assets that are acquired individually or with a group of other assets (but not those acquired in a business combination) should be accounted for in financial statements upon their acquisition. This Statement also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. The Company tests for impairment of the goodwill at least annually, if not more depending upon substantial changes in the Company that may lead to a change in the goodwill during interim periods.

The following represents the changes in the carrying amount of goodwill for the six months ended June 30, 2005 and 2004:

	SoftNet		Indigo
	International	WBU	Technology	Total
Balance, January 1, 2004	$              -	$   -	$              -	$           -
Goodwill acquired during the six months	1,249,964	-	-	1,249,964
Impairment losses, restated	(1,249,964)	-	-	(1,249,964)
Balance, June 30, 2004 (Restated)	$              -	$   -	$              -	$           -
	============	=======	============	============
Balance, January 1, 2005 (Restated)	$              -	$   -	$              -	$           -
Goodwill acquired during the six months	-	-	1,277,595	1,277,595
Impairment losses, restated	-	-	(1,277,595)	(1,277,595)
Balance, June 30, 2005 (Restated)	$              -	$   -	$              -	$           -
	============	=======	============	============

The impairment of goodwill was determined based on the current business plan of the Company not meeting earlier objectives and the sale of the WBU subsidiary in November 2005, and the delay of SoftNet International and Indigo meeting its current budgets.

17

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Software Development Costs

Internal use software costs are recorded in accordance with Statement of Position (SOP) No. 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use".  Qualifying costs incurred during the application development stage, which consist primarily of outside services are capitalized and amortized over the estimated useful life of the asset. All other costs are expensed as incurred. The Company has determined that all costs for the six months ended June 30, 2005 and 2004, do not relate to the application development stage and therefore have expensed these costs as they were incurred.

Reclassifications

Certain amounts for the six months ended June 30, 2004 have been reclassified to conform to the presentation of the June 30, 2005 amounts. The reclassifications have no effect on net income for the six months ended June 30, 2004.

Earnings (Loss) Per Share of Common Stock

Historical net income (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) includes additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be antidilutive for the periods presented.

18

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Earnings (Loss) Per Share of Common Stock (Continued)

The following is a reconciliation of the computation for basic and diluted EPS:

                                                                      June 30,                    June 30,
                                                                        2005                         2004
                                                                    (Restated)              (Reclassified) 

Net Loss                                                      ($2,566,398)          ($1,866,685)

Weighted-average common shares
  outstanding (Basic)                                     276,769,172            45,288,025

Weighted-average common stock
   equivalents:
      Stock options                                                        -                              -
      Warrants                                                               -                              -

Weighted-average common shares
    outstanding (Diluted)                                  276,769,172           45,288,025

Options and warrants outstanding to purchase stock were not included in the computation of diluted EPS because inclusion would have been antidilutive.

Fair Value of Financial Instruments

The carrying amount reported in the condensed consolidated balance sheet for cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and notes payable approximate fair value because of the immediate or short-term maturity of these financial instruments.

19

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock-Based Compensation

The Company has elected to follow Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB No. 25), and related interpretations, in accounting for their employee stock options rather than the alternative fair value accounting allowed by SFAS No. 123, “Accounting for Stock-Based Compensation”, and has adopted the enhanced disclosure provisions of SFAS No. 148, “Accounting for Stock Based Compensation – Transition and Disclosures”, an amendment of SFAS No. 123. APB No. 25 provides that the compensation expense relative to the Company’s employee stock options is measured based on the intrinsic value of the stock option.  SFAS No. 123 requires companies that continue to follow APB No. 25 to provide a pro-forma disclosure of the impact of applying the fair value method of SFAS No. 123.

Recent Accounting Pronouncements

On December 16, 2004, the Financial Accounting Standards Board (“FASB”) published Statement of Financial Accounting Standards No. 123 (Revised 2004), “Share-Based Payment” (“SFAS 123R”).  SFAS 123R requires that compensation cost related to share-based payment transactions be recognized in the financial statements. Share-based payment transactions within the scope of SFAS 123R include stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employee share purchase plans.  The provisions of SFAS 123R, as amended, are effective for small business issuers beginning as of the next fiscal year after December 15, 2005. 

NOTE 3-     ACCOUNTS RECEIVABLE

The Company extends unsecured credit to its customers in the ordinary course of business but mitigates the associated credit risk by performing credit checks and actively pursuing past due accounts. An allowance for doubtful accounts has not been established at June 30, 2005, since Management is of the opinion that all accounts receivable are fully collectible.

20

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 4-     FIXED ASSETS

Fixed assets consist of the following at June 30, 2005:

Office equipment                                       $   30,032
Furniture and fixtures                                        2,646
Time clock equipment                                    38,730
Time clock software                                      54,144
                                                                   125,552
                                                                 (102,472)
                               Total                        $    23,080
                                                               ========

Depreciation expense was $5,970 for the six months ended June 30, 2005.

NOTE 5-     NOTES PAYABLE - BANK

On April 3, 2001, the Company entered into a line of credit agreement with a bank. The note, which is due on demand bears interest at prime plus 2.25% and provides for maximum borrowings up to $63,100. The line of credit is guaranteed by a majority shareholder. The outstanding balance at June 30, 2005 was $0. The line of credit was STI’s, and was assigned over to the Company upon the acquisition. There was no interest expense charged to operations for the six months ended June 30, 2005 and 2004, respectively.

NOTE 6-     NOTES PAYABLE

In April 2005, the Company entered into an agreement with a company to borrow money. The amount funded by this company at June 30, 2005 was $235,000. There is no interest being charged on this note, the note is due on demand, and has been classified by the Company as a current liability.

In February 2005, the Company entered into a loan agreement with a foreign company in the amount not to exceed $500,000. This foreign company funded the entire $500,000 to the Company in February 2005. The term of the agreement is for three years, and the Company is obligated to make quarterly payments of interest at 10% only, with a balloon payment due on the maturity date. As of June 30, 2005, the outstanding liability is $500,000, which is reflected as a long-term liability in the condensed consolidated balance sheet. Interest for the six months ended June 30, 2005 and accrued interest at June 30, 2005 is $18,685.

In June 2005, the Company and Alexander Holtermann (“Lender”) entered into a Loan Agreement whereby the Company issued 100,000,000 shares of its Class A common stock as collateral for a loan in the amount of 30% of the Market Value of the Company’s Class A common stock as defined in the Loan Agreement.

21

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 6-     NOTES PAYABLE (CONTINUED)

On November 28, 2005, the Loan Agreement was terminated due to the Lender’s failure to fund the loan. By letter dated November 28, 2005, the Company returned the share certificates to the Company’s transfer agent for cancellation. There are no further obligations outstanding with respect to the Loan Agreement.

NOTE 7-     RELATED PARTY TRANSACTIONS

Amounts due to related parties at June 30, 2005 were $245,628 and consists of the following:

Note receivable from a company through common ownership in the amount of $1,197 at June 30, 2005.

Note receivables to a company through common ownership in the amount of $227,625 at June 30, 2005, at 10% interest, payable monthly, due on demand. At June 30, 2005, the Company has approximately $19,390 in accrued interest to this company.

The Company has $9,200 outstanding to another entity related through common ownership at June 30, 2005. At June 30, 2005, the Company has approximately $1,045 in accrued interest to this company.

The Company’s subsidiary, Wholesale By Us, borrowed $10,000 from the officer of the Company in May 2005. There are no terms of repayment, and no interest is being charged on the note.

NOTE 8-     ACQUISITIONS

On January 12, 2002, the Company acquired STI as a wholly owned subsidiary for 20,511,365 shares of common stock. At the time of the acquisition, STI’s book value of their net assets was approximately $0. The acquisition of the 20,511,365 shares were valued at the Company’s fair value at the time of the issuance which approximated $.15 per share, $3,177,556. In accordance with FASB 142, the Company impaired the goodwill for that amount.

In March, 2002, Zingo was acquired as a wholly owned subsidiary by the Company for 2,500,000 shares of common stock. Zingo Sales, Ltd., a relatively new company had very little activity and also had a net book value of approximately $0. The shares issued were valued at $1.95, the fair value of the stock at the time of issuance. The $4,875,000, was recorded as goodwill and subsequently impaired to $0. The impairment is included in the consolidated statements of operations for the year ended December 31, 2002. The Company sold Zingo in July 2004, and has accounted for this disposal in accordance with SFAS 144.

22

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 8-     ACQUISITIONS (CONTINUED)

On or about March 29, 2004, the Company entered into an acquisition agreement with Holtermann & Team, GmbH, a German Company (“Holtermann”), to acquire, effective April 1, 2004, 100% of the assets and equity interests of Holtermann in exchange for 10,000,000 restricted shares of the Company’s Class A Common Stock.

Under the terms of the Acquisition Agreement, the Company is the successor in interest to a certain Loan Agreement under which Holtermann was to receive $950,000 by the end of 2004. The shares of common stock were issued in April 2004.

The Company acquired WholesaleByUs (“WBU”) on July 9, 2004. WBU is a technology driven company that developed proprietary technology to sell products through the Internet. The Company acquired WBU for $112,000 and 5,000,000 restricted Class A Common Shares of stock. On November 4, 2005, the Company and WBU entered into a Termination Agreement (see Note 17).

The Company acquired Indigo Technology Services (Indigo), a technology company based in Atlanta, Georgia and Net Centric Solutions, Inc. in April 2005 for 9,000,000 shares of restricted Class A Common Shares of stock (6,000,000 for Indigo and 3,000,000 for Net Centric). The Company in this transaction acquired $14,170 of accounts receivable and $58,235 in cash. The shares were valued at $.15 per share at the time of the transaction for a value of $1,350,000. The remaining $1,277,595 was recognized as goodwill. Management has determined that the entire amount has been impaired as of June 30, 2005.

Indigo is a provider of business technology consulting and technology products and solutions designed to help companies integrate technology into everyday lives. Indigo is the creator of Guest Worx High Speed Internet Access. Net Centric provides similar services that Indigo provides.

23

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 8-     ACQUISITIONS (CONTINUED)

The summarized unaudited pro forma financial information for the six months ended June 30, 2005 and 2004 that follows assumes the acquisition of Indigo Technology, Net Centric Solutions, Inc. and Cord Consulting was consummated on January 1, 2004:

	Six Months
	June 30,	June 30,
	2005	2004
Sales	$        819,261	$       181,009
Cost of sales	496,657	159,482
Gross profit (loss)	322,604	21,527
Operating expenses	2,683,956	1,800,086
Loss before other (expense)	(2,361,352)	(1,778,559)
Other (income) expense	219,793	75,786
Net loss before provision for income taxes	(2,581,145)	(1,854,345)
Provision for income taxes	1,619	-
Net loss	$     (2,582,764)	$    (1,854,345)
	=============	=============
Net loss per basic and diluted shares	$             (0.01)	$            (0.04)
	=============	=============
Weighted average number of common shares
outstanding	276,769,172	45,288,025
	=============	=============

The unaudited pro forma results of operations for the six months ended June 30, 2005 and 2004, are not necessarily indicative of what the actual results of operations of the Company would have been had the acquisition been consummated on January 1, 2004.

24

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 9-      STOCKHOLDERS’ EQUITY (DEFICIT)

Preferred Stock

At June 30, 2005, there are 5,000,000 shares of Class A Preferred Stock, par value $1.00 authorized and 0 shares issued and outstanding. In April, 2003, the Company passed a board resolution to re-instate the Series A Preferred Stock changing its par value to $.001.

Additionally, the Company passed a board resolution to authorize 5,000,000 shares of Class B Preferred Stock, par value $.001. As of June 30, 2005, the Company has 0 shares issued and outstanding. 282,703 shares were issued to Mercatus Partners, Ltd. in connection with an amended loan agreement. These shares were issued when the Company cancelled the 66,666,667 shares of Class A Common Stock that were issued as collateral to the original loan agreement. The amended loan agreement was terminated by the Company and all 282,703 shares have been cancelled of record. As of June 30, 2005 certificates representing 117,885 have been surrendered to the Company. 

An additional 668,000 shares were issued to a Bermuda company as collateral for a promissory note. These shares were valued at the par value and recorded against additional paid in capital as the preferred shares have no readily determinable market value. Effective April 9, 2004, the Company terminated this agreement due to this company’s failure to make loan advances as set forth in the agreement.  All shares have been surrendered to the Company.

The Company had issued 2,000,000 shares of the Class B Preferred Stock in accordance with a March 24, 2004 Investment Exchange Agreement (the “Agreement”) with Cross Capital Fund, LLC. (“Cross Capital”). The Company entered into the Agreement that provides for Cross Capital to make an equity investment in the Company and the Company will receive from Cross Capital an Investor Membership Interest in an aggregate amount equal to $2,000,000 over the next twelve months (March 2005). The 2,000,000 shares were issued in exchange for the Investor Membership Interest. The Company had originally recorded the $2,000,000 as a subscription receivable on the consolidated balance sheet at December 31, 2004. The Preferred shares convert to the Company’s Class A Common Shares as set forth in the agreement. Cross Capital never funded the Company in accordance with the terms of the agreement, The Company’s legal counsel and Cross Capital had several discussions regarding this agr eement and the Company made several attempts to receive the 2,000,000 shares of Class B Preferred Stock back from Cross Capital and terminate their agreement. As of July 2004, the agreement was terminated. The Company has amended their consolidated financial statements to reflect the termination of the preferred stock as of December 31, 2004.

25

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

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

Common Stock

As of June 30, 2005, there were 500,000,000 shares authorized, and 379,692,072 shares issued, 150,000,000 shares in escrow and 229,692,072 shares outstanding respectively, of the Company’s common stock A with a par value of $.001. In February 2003, the Company upon an approved board resolution increased the authorized limit of the Class A common shares to 250,000,000 and increased it to 500,000,000 in 2004.

As of June 30, 2005, there were 5,000,000 shares authorized, and 5,000,000 shares issued and outstanding of the Company’s common stock B with a par value of $.001, respectively. In February 2003, the Company upon an approved board resolution increased the authorized limit of the Class B common shares to 5,000,000. Subsequent to this board resolution, the Company cancelled the outstanding 1,142,858 shares and issued the entire 5,000,000 shares to two of its officers. Of this amount, 200,000 were converted to Class A common shares in June 2005.

The following shares of common stock Class A were issued for the six months ended June 30, 2005 and year ended December 31, 2004:

The Company in the quarter ended June 30, 2005 issued 898,000 shares of common stock for services valued at $151,160 ($.168 per share average).

The Company in the quarter ended June 30, 2005 issued 10,000,000 shares of common stock in conversion of Class B common shares. This transaction resulted in $10,000 of consulting expenses.

The Company in the quarter ended June 30, 2005 issued 1,003,000 shares of common stock in settlement of a legal matter ($.20 per share).

The Company in the quarter ended June 30, 2005 issued 1,000,000 shares of common stock to Softnet International as additional capitalization of the Company valued at $210,000 ($.21 per share).

The Company in the quarter ended June 30, 2005 issued 100,000,000 shares of common stock for a stock as security regarding a loan agreement (See Note 6).

The Company retired the 281,400 shares they held in treasury during the quarter ended June 30, 2005.

The Company in the quarter ended March 31, 2005 issued 3,375,000 shares of common stock for cash in the amount of $67,500. Additionally, the Company received $55,269 in cash from prior share issuances.

26

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

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

Common Stock (Continued)

The Company in the quarter ended March 31, 2005 issued 550,000 shares of common stock for services valued at $90,750 ($.165 per share).

The Company in the quarter ended December 31, 2004 issued 12,525,000 shares of common stock for cash in the amount of $536,000.

The Company issued 5,000,000 shares of common stock in its acquisition of WholesaleByUs. There were 15,000,000 shares to be issued based on certain sales criteria being met. Those criteria were not met, and therefore not issued. The shares are valued at $800,000 and were originally reflected as goodwill on the consolidated balance sheet at December 31, 2004. The Company in its restated financial statements impaired this goodwill. On November 4, 2005, the Company and WBU entered into a Termination Agreement (see Note 17).

The Company in the quarter ended September 30, 2004 issued 17,433,333 shares of common stock for cash in the amount of $205,500.

The Company in September 2004 issued 150,000,000 shares of common stock as collateral under a loan agreement. These shares are being held by an escrow agent, and are restricted. The Company has recorded these shares at the fair value of $900,000, and has classified them in their equity section as collateral under note agreement. In May, 2005, the Company terminated this agreement, however, have not received back the shares of stock. The Company has reflected these shares as issued but not outstanding since they are with the escrow agent and have placed a cautionary stop on the certificate.

The Company in the quarter ended June 30, 2004 issued 13,858,059 shares of common stock for cash in the amount of $237,231. In addition, the Company has a subscription receivable of $39,930 due for a portion of these shares.

The Company in April 2004 issued 10,000,000 shares of common stock to Holtermann valued at $1,000,000 for the acquisition of that company. On January 14, 2004, the Company entered into a Loan and Security Agreement and a Multiple Advance Promissory Note with a Bermuda company. This agreement establishes a multiple advance loan of a maximum of $2,600,000. As collateral for this note, the Company issued 668,000 shares of its Series B Preferred Stock. Additionally, the Company issued to the Bermuda company a warrant for the purchase of up to 6,000,000 shares of the Company’s common stock A at an exercise price of $.15 per share. The warrants carry no registration rights. Both the Series B Preferred Stock and the warrants have been cancelled due to the Bermuda company’s failure to fund the loan.

27

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

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

Common Stock (Continued)

The Company issued 3,585,000 shares to consultants at various fair market value prices for a total expense of $331,650 (average value of $.09 per share) during the quarter ended March 31, 2004.

The Company issued 30,000 shares for legal services for $3,300 (value of $.11 per share) during the quarter ended March 31, 2004.

The Company issued 50,000 shares during the quarter ended March 31, 2004 in conversion of accrued expenses valued at $7,500 ($.15 per share).

The Company received $106,000 of subscriptions receivable in the quarter ended March 31, 2004 that related to stock issuances in 2003.

Treasury Stock

In January 2003, the Company instituted a buy back program of its own stock. For the six months ended June 30, 2005 and year ended December 31, 2004, the Company bought back no additional shares of its common stock and placed it in its treasury. For the year ended December 31, 2003, the Company bought back 281,400 shares of its common stock and placed it in its treasury. The Company has accounted for its treasury stock utilizing the cost method, and such, the $37,338 at March 31, 2005 represented the cost value of the treasury shares acquired by the Company. These shares during the quarter ended June 30, 2005 have been retired.

NOTE 10-   NOTES RECEIVABLE

The Company sold a business segment in July 2004 for $300,000. This amount is currently a note receivable on the condensed consolidated balance sheet. This amount has been accruing interest at 6% and as of June 30, 2005, there is $23,811 recognized as accrued interest receivable. The amount is classified as a current asset as it is due on demand.

Indigo entered into a loan agreement with Pearlnet LLC, an Atlanta, Georgia based limited liability companion March 1, 2005. Indigo lent Pearlnet LLC, $165,000, which is to be repaid in two annual installments of $25,000, and the remaining $115,000 in the third year. Interest is payable to Indigo at the rate of .007 percent compounded daily. As of June 30, 2005, Indigo accrued $3,619 of interest receivable.

28

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 11-   GOING CONCERN

As shown in the accompanying condensed consolidated financial statements the Company has incurred significant recurring losses of $2,566,398 and $1,866,685 for the six months ended June 30, 2005 and 2004, and has a working capital deficiency of $1,737,670 as of June 30, 2005.  The Company has made acquisitions in the past eighteen months that has had little impact on its operations, and in one case has terminated an agreement. There is no guarantee that the Company will be able to raise enough capital or generate revenues to sustain its operations.  These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period.

Management believes that the Company’s capital requirements will depend on many factors including the success of the Company’s planned acquisition of Inspara, Inc. The Company’s ability to continue as a going concern for a reasonable period following its pending acquisition of Inspara is also dependent upon management’s ability to raise additional interim capital and, ultimately, achieve profitable operations.  There can be no assurance that management will be able to raise sufficient capital, under terms satisfactory to the Company, if at all.

The condensed consolidated financial statements do not include any adjustments relating to the carrying amounts of recorded assets or the carrying amounts and classification of recorded liabilities that may be required should the Company be unable to continue as a going concern.

NOTE 12-   COMMITMENTS

The Company has agreed to issue 9,000,000 shares of restricted Class A Common Shares of stock to the former shareholders of Indigo and Net Centric Solution, Inc. in accordance with the Stock Purchase Agreement. The Company has recorded a liability for stock to be issued in the amount of $1,350,000, which represents those 9,000,000 shares at a value of $.15 per share, the fair value of the stock at the time the agreement was entered into. These shares were issued July 1, 2005.

In November 2002, the Company installed its Securetime system in a restaurant at a major Las Vegas, Nevada casino. The Company has also received an order for the Securetime system from a Native American business in Oklahoma and the installation was completed in late November. Both of these installations signed contracts for continuing and ongoing services in March 2003. In the first quarter of 2004, Securetime has installed a biometric ID system in a bingo facility in Wyoming. All of these systems are currently being upgraded by the Company, and additionally, the Company has installed a system in a legal printing facility in Los Angeles.

29

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 13-   LITIGATION

In an action commenced on or about March 28, 2002 in the Supreme Court of the State of New York, the plaintiff seeks $40,000 in damages from the Company as well as other defendants listed in this action, allegedly sustained as a result of third party payments made on behalf of all defendants, including, but not limited to the Company. An answer denying all material allegations was served upon the Plaintiff on May 1, 2002, within the time allotted by law to do so. The Plaintiff as of March 25, 2004, has failed to respond to the Company’s discovery demands. The Company will seek an Order of the Court dismissing this action due to the plaintiff’s failure to comply. Management is of the belief that all allegations involved in this action are without merit. No liability is recorded for this action as of June 30, 2005.

NOTE 14-   PROVISION FOR INCOME TAXES

Deferred income taxes will be determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities.  Deferred income taxes will be measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s consolidated tax return.  Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.

30

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 14-   PROVISION FOR INCOME TAXES (CONTINUED)

At June 30, 2005, deferred tax assets approximated the following:

Net operating loss carryforwards          $7,809,832
Less:  valuation allowance                     (7,809,832)
                                                            $          -0-
                                                            ========

At June 30, 2005, the Company had accumulated deficits  approximating $22,970,094 available to offset future taxable income through 2024.  The Company established valuation allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods.

A reconciliation of the Company’s effective tax rate as a percentage of income before taxes and federal statutory rate for the six months ended June 30, 2005 and 2004 is summarized as follows:

	2005	2004
Federal statutory rate	(34.0)%	(34.0)%
State income taxes, net of federal benefits	4.0	4.0
Valuation allowance	30.0	30.0
	0%	0%
	==========	==========

NOTE 15–  DISPOSAL OF BUSINESS

In July 2004, the Company sold Zingo Sales. The Company’s condensed consolidated financial statements have been reclassified to reflect these sales as discontinued operations for all periods presented. Summarized operating results of discontinued operations for the six months ended June 30, 2004 are as follows:

Revenues	$    158,977
Income before income taxes	$        8,482
Provision for taxes	-
Net income	$        8,482 =========
Net income  per share	$         (.00) =========
Diluted income per share	$          (.00)

31

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 16-   SEGMENT INFORMATION

The Company’s reportable operating segments include Internet Sales, Consulting and Services - General and Corporate. The Company allocates cost of revenues and direct operating expenses to these segments.

Operating segment data for the six months ended June 30, 2005 and 2004 are as follows:

For the six months ended June 30, 2005:

		Internet	Consulting and
	Corporate	Sales	Services	Total
Revenues	$        -	$453,966	$232,162	$686,128
Direct costs of revenues	-	385,620	51,093	436,713
Gross profit (loss)	-	68,346	181,069	249,415
Operating expenses	938,715	203,669	369,157	1,511,541
Depreciation, amortization and impairment	1,001	677	1,281,887	1,283,565
Other income	-	-	-	-
Interest (net)	7,779	-	12,928	20,707
Net income (loss)	(947,495)	(136,000)	(1,482,903)	(2,566,398)
Segment assets	387,786	33,824	522,844	944,454
Fixed Assets, net of depreciation	15,251	6,380	1,449	23,080

For the six months ended June 30, 2004:

		Internet	Consulting and
	Corporate	Sales	Services	Total
Revenues	$        -	$-	$3,451	$3,451
Direct costs of revenues	-	-	30,560	30,560
Gross profit (loss)	-	-	(27,109)	(27,109)
Operating expenses	228,740	-	238,714	467,454
Depreciation, amortization and impairment	3,585	-	1,318,733	1,322,318
Other income	-	-	-	-
Interest (net)	23,021	-	35,265	58,286
Net income (loss)	(255,346)	-	(1,619,821)	(1,875,167)
Segment assets	-	-	-	-
Fixed Assets, net of depreciation	-	-	-	-

32

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 17-   SUBSEQUENT EVENTS

In June 2005, the Company and Alexander Holtermann (“Lender”) entered into a Loan Agreement whereby the Company issued 100,000,000 shares of its Class A common stock as collateral for a loan in the amount of 30% of the Market Value of the Company’s Class A common stock as defined in the Loan Agreement. On November 28, 2005, the Loan Agreement was terminated due to the Lender’s failure to fund the loan. By letter dated November 28, 2005, the Company returned the share certificates to the Company’s transfer agent for cancellation. There are no further obligations outstanding with respect to the Loan Agreement.

On August 1, 2005, the Company acquired the customer lists of Cord Consulting for $200,000. In this acquisition, the Company issued to Cord Consulting a note in the amount of $25,000, and issued to the sole owner of Cord Consulting 727,620 shares of common stock with a value of $175,000. The customer lists are being amortized over 3 years commencing August 1, 2005.

On October 17, 2005, Indigo entered into an Asset Purchase Agreement whereby they sold to Seamless Skyy-Fi, Inc. (“Seamless”) all of its right, title and interest in the “Guest Worx” business of Indigo, including without limitation, all assets, property (including the Guest Worx software) and contracts, in a cashless transaction where the consideration consisted of the delivery of the sufficient number of shares of Seamless’ Class C Preferred Stock with a market value of $100,000 as calculated in the Asset Purchase Agreement. These preferred shares have been converted to common shares totaling 2,500,000. The investment represents approximately 2% of Seamless.

On October 31, 2005, the Company entered into a Plan and Agreement of Reorganization with Inspara, Inc., a Delaware corporation (“Inspara”). Under the terms of the Agreement, Inspara will merge with and into the Company (the Merger). The Merger was scheduled to close no later than November 29, 2005. At the closing, Inspara was to exchange all of its common stock for approximately 40,909,091 shares of common stock of the Company and receive 291,000 shares of the Company’s Class B common stock. The Company and Inspara on November 4, 2005, extended the due date to December 15, 2005, without revising any of the terms of the transaction. The transaction did not close on December 15, 2005, and the Company and Inspara entered into an Amended Plan and Agreement of Reorganization as of January 1, 2006, whereby the number of shares Inspara is to receive was increased to approximately 50,000,000 and established a new closing date of January 18, 2006. On January 18, 2006, the

33

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 17-   SUBSEQUENT EVENTS (CONTINUED)

Company closed the Inspara, Inc. Merger.  Following the Merger, the stockholders of InsPara received, after adjustments for rounding and fractional shares, pro rata, a total of 49,999,998 shares of the Company’s Common Stock (the “Acquisition Shares”).  The Acquisition Shares are unregistered shares and will only be free trading upon a filing of a Registration Statement for the Acquisition Shares, or an exemption from the registration thereof.

On November 4, 2005, the Company entered into an Agreement to Terminate Business Relationship (the “Termination Agreement”) with its wholly-owned subsidiary, WholesaleByUs and five individuals. The individuals were the former members of the limited liability company that the Company acquired on July 1, 2004. The Company acquired WholesaleByUs for $112,000, plus 20,000,000 shares of the Company’s common stock of which 5,000,000 shares of common stock were issued and the remaining 15,000,000 were to be issued upon achievement of certain incentives in the contract which never occurred. Pursuant to the terms of the Termination Agreement, the former members of the limited liability company who received these shares, returned 17,416,666 of these previously issued shares. In exchange, the Company has returned all ownership interests in WholesaleByUs back to the five individuals and has agreed to remit $10,000 to the five individuals. Each party to the transaction have provided mutual relea ses for any claims, except for intentional fraud and misrepresentation arising under the Acquisition Agreement of July 1, 2004. This divestiture is effective as of October 1, 2005. With the sale of WholesaleByUs, the Company has no significant online retail sales operations at this time.

On or about December 31, 2005, the Company and Integrity Time, Inc. entered into a certain Stock Purchase Agreement (the “Agreement”) whereby the Company sold its wholly owned subsidiary, Solutions Technology, Inc., for a purchase price of $100,000 in cash.  $50,000 was paid in January 2006 connection with the execution of the Agreement and the remaining $50,000 was paid on or about March 1, 2006, at which point the sale became fully consummated.  At that point the Company will reflect the disposal of the subsidiary.

NOTE 18-   RESTATED FINANCIAL STATEMENTS

The Company has restated its previously issued condensed consolidated financial statements to include:

34

SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES
(FORMERLY T & G², INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
JUNE 30, 2005 AND 2004

NOTE 18-   RESTATED FINANCIAL STATEMENTS (CONTINUED)

Full segment reporting information for the operating segments of the Company (see Note 16);


Revised disclosure regarding revenue recognition for the Company’s operating segments (see Note 2);


Restatement of goodwill and disclosure of the goodwill in accordance with SFAS 142;


Restatement of revenue and cost of revenue for WholesaleByUs;


Termination of the Cross Capital agreement and retroactive cancellation of the 2,000,000 Class B Preferred Shares issued in that transaction (see Note 9); and


Added disclosure pursuant to SFAS 141 on the acquisitions the Company made (see Note 8).

The net effect of these changes resulted in an increase in the net loss of $1,284,495, due to an increase in impairment of goodwill of $1,277,595 (Indigo), increase in cost of revenue of $107,004 (WholesaleByUs) offset by an increase in revenue of $100,104 (WholesaleByUs) and an increase to accumulated deficit of $1,284,495 to bring the restated loss to $2,566,398 and the restated accumulated deficit to $22,970,094 as of and for the six months ended June 30, 2005. The Company has restated its condensed consolidated financial statements for the six months ended June 30, 2004 to reflect additional impairment of goodwill on the Holtermann & Team GmbH acquisition to reflect an additional $400,000 in impairment charge resulting in an increase to the net loss for the six months ended June 30, 2004 to $1,866,685.

35

Item 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

INTRODUCTION AND FORWARD LOOKING STATEMENTS

            This document contains forward-looking statements which may involve known and unknown risks, uncertainties and other factors that may cause SoftNet Technology Corp’s (“SoftNet”) actual results and performance in future periods to be materially different from any future results or performance suggested by these statements. SoftNet cautions investors not to place undue reliance on forward-looking statements, which speak only to management’s expectations on this date.

            Certain statements contained herein, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). Such forward-looking statements are identified by words such as “intends”, “anticipates”, “hopes” and “expects”, among others, and include, without limitation, statements regarding the Company’s plan of business operations, anticipated revenues, related expenditures, and the results of any business transactions. Factors that could cause actual results to differ materially include, among others, the following: acceptability of the Company’s services in the market place, general economic conditions, political and economic conditions in the United States and abroad, and competition.

            The following discussion and analysis highlights the financial position and results of operations of SoftNet as of and for the six and three months ended June 30, 2005 compared to as of and for the six and three months ended June 30,2004. The business activities of the Company were that of the four wholly owned subsidiaries: Solutions Technology Inc., WholesaleByUs, LLC, Indigo Technology Services, and SoftNet International GmbH. Comparisons are provided, however, it is important to understand that the Company’s first year of operations was in 2004. Additionally, the Company disposed of WholesaleByUs in October 2005. It is important to note that the Company currently reports its operations from that of Indigo Technology Services and its newly acquired subsidiary Inspara. Solutions Technology Inc. was also disposed in 2006, however, contributed minimally to the total operations of the Company in 2005 and 2004. SoftNet International was and remains basically in development for both periods.

            In 2004, the Company entered into a transaction to acquire a German based business entity for the distribution and furtherance of the Company’s business, acquired WholesaleByUs, LLC, and utilized funds to further the development of Solutions Technology Inc. to bring the SecureTime Biometric ID System to the point where it could be mass marketed.

            The Company anticipates that their sources of liquidity will come from the private sale of the Company’s securities to cover the funding of corporate expenses, such as legal and accounting and filing fees, as well as Sarbanes-Oxley compliance.

36

            In 2005, the Company acquired Indigo Technology Services and has expended funds to expand the WholesaleByUs business prior to its disposition and engaged TVA Productions in Los Angeles, California to build brand name awareness for the Company’s products, which will assist the Company in achieving profitability. Additionally, new sales agents and a new facility in the southern California area have been obtained and a major marketing push is just being instituted. The development of SoftNet International was completed and preparations to begin sales are in the final stages for business operations in international markets. The Company’s management entered into a transaction for funding in the form of debt financing. With this debt funding, SoftNet issued 150,000,000 shares of the Company’s Class A Common Stock in certificate form. These shares were being held in escrow in certificate form in a reputable European Bank in Switz erland. The loan never closed, and these shares were subsequently cancelled. The Company is still in process of finding a suitable equity source to assist in funding their operations.

SIX MONTHS ENDED JUNE 30, 2005 AND JUNE 30, 2004

            Revenues for 2005 were $686,128 as compared to $3,451 for 2004. As mentioned, the Company’s acquisition of WholesaleByUs, LLC, a company that is in its first full year of operations and Indigo Technology Services consulting revenue were the reasons that the Company experienced revenue growth. The Company’s consulting revenues remained consistent with 2004.

            Cost of revenue for 2005 was $436,713 compared to $30,560 for 2004. The increase in cost of revenue was mainly attributable to the WholesaleByUs business entity.

            The gross margin of 36% in 2005 was attributable to WholesaleByUs.

            Operating expenses for 2005 were $2,485,106 as compared to $1,772,272 in 2004, an increase of approximately $615,000 due in large part to the impairment of goodwill for the Company and increases in corporate expenses for legal and accounting and operating expenditures for the WholesaleByUs subsidiary.

            Other income (expense) was $(220,707) for 2005 compared to $(75,786) for 2004. In 2004, the Company issued shares of common stock in settlement of a legal claim for $17,500 compared to $200,000 for the same purpose in 2005 which is attributable for this change.

            The gain (loss) on discontinued operations and gain (loss) on disposal was from the Company’s former subsidiary Zingo Sales. The Company disposed this subsidiary in July 2004, and in accordance with SFAS 144, restated the 2004 financial statements to reflect the discontinued operations of this subsidiary.

37

THREE MONTHS ENDED JUNE 30, 2005 AND JUNE 30, 2004

            Revenues for 2005 were $452,201 as compared to $2,176 for 2004. As mentioned, the Company’s acquisition of WholesaleByUs, LLC, a company that is in its first full year of operations and Indigo Technology Services consulting revenue were the reasons that the Company experienced revenue growth. The Company’s consulting revenues remained consistent with 2004.

            Cost of revenue for 2005 was $302,204 compared to $15,560 for 2004. The increase in cost of revenue was attributable to the WholesaleByUs business entity.

            The gross margin of 33% in 2005 was attributable to WholesaleByUs.

            Operating expenses for 2005 were $655,953 as compared to $1,361,680 in 2004, a decrease of approximately $706,000 due in large part to the impairment of goodwill for the Company’s German subsidiary.

            Other income (expense) was $(213,018) for 2005 compared to $(55,069) for 2004. In 2005, the Company issued shares of common stock in settlement of a legal claim for $200,000 which is attributable for this change.

            The gain (loss) on discontinued operations and gain (loss) on disposal was from the Company’s former subsidiary Zingo Sales. The Company disposed this subsidiary in July 2004, and in accordance with SFAS 144, restated the 2004 financial statements to reflect the discontinued operations of this subsidiary.

LIQUIDITY AND CAPITAL RESOURCES

            At June 30, 2005, the Company had a net working capital deficit of $1,737,670. The working capital deficit was mainly due to the recognition of a liability for shares to be issued for the acquisition of Indigo Technology Services valued at $1,350,000.

            The Company used  $781,611 in operating activities in 2005 mostly due to the operating loss of  $2,356,398 for the six months ended 2005, compared to using $300,043 in 2004 and a net loss of $1,875,167 for the six months ended June 30, 2005. Changes in operating assets and liabilities were fairly consistent period to period. Another factor was the impairment charge in 2004 contributing to the lower cash used in operations in 2004.

            The Company had  $6,597 in cash provided by investing activities in 2005 compared to cash used in investing activities of $37,269 in 2004. This change was attributable to the Company’s changes in their related party advances during 2005 and the recognition of a note receivable from Indigo Technology Services of $165,000.

            The Company had net cash provided by financing activities of  $857,769 in 2005 compared to $343,231 in 2004. This change was attributable to the Company borrowing $735,000 from a foreign company in 2005.

38

            In pursuing its business strategy, the Company may require additional cash for operating and investing activities. The Company expects future cash requirements, if any to be funded from operating cash flow and cash flow from financing activities.

            The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has suffered recurring losses from operations and at June 30, 2005 had working capital deficits as noted above. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

39

PART II. OTHER INFORMATION


Item 1. Legal Proceedings

          The Company is not engaged in any legal proceedings except litigation in the ordinary course of its business. In the opinion of management, the amount of ultimate liability with respect to any such proceedings will not be material to the Company's financial position or results of operations.

Item 2. Changes in Securities

          None.

Item 3. Defaults Upon Senior Securities

          None.

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

          No matters were submitted to a vote of the security holders of the Company during its fiscal quarter ended September 30, 2004.

Item 5. Other Information

          None.

Item 6. Exhibits and Reports on Form 8-K

          (a) Exhibits

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

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

          (b) Reports on Form 8-K.

40

SIGNATURES

In accordance with the requirements of the Securities Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

                                                                                           SoftNet Technology Corporation



Date: March 21, 2006                                                           By: /s/ James Farinella                       
                                                                                                  James Farinella
                                                                                                  Chairman, Chief Executive Officer
                                                                                                   and President

41