RESULTS OF OPERATIONS
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
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1,801,420 1,633,614
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COST OF GOODS SOLD
Service-See World Satellites, Inc. 176,708 209,208
Product-FTS Wireless, Inc. 550,623 374,274
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727,331 583,482
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GROSS PROFIT
Service-See World Satellites, Inc. 921,750 928,282
Product-FTS Wireless, Inc. 152,339 121,304
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1,074,089 1,050,132
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GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative
expenses 1,120,684 1,008,186
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1,120,684 1,008,186
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INCOME (LOSS) FROM OPERATIONS (46,595) 41,946
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OTHER INCOME (EXPENSE)
Change in fair value of Derivative
Liabilities 60,254 (7,478,664)
Unrealized loss on investments - -
Interest (130,524) (39,029)
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(70,270) (7,517,747)
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NET INCOME (LOSS) $ (116,865) $ (7,475,747)
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PER SHARE INFORMATION
BASIC SHARES OUTSTANDING 154,784,894 107,195,939
NET LOSS PER COMMON SHARE
BASIC (0.00) (0.07)
SEGMENT RESULTS FOR THE 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, &
Administrative
External 268,490 114,686 711,215 1,094,391
Internal - 75,000 300,000 375,000
----------- ----------- ----------- -----------
Segment Selling,
General &
Administrative 268,490 189,686 1,011,215 1,469,391
----------- ----------- ----------- -----------
Subtotal 106,510 (37,347) (89,465) (20,302)
----------- ----------- ----------- -----------
Change in fair value of
derivative liabilities 60,254 - - 60,254
Depreciation (6,923) (10,137) (9,233) (26,293)
Amortization (29,573) - - (29,573)
Interest (100,443) - (508) (100,951)
----------- ----------- ----------- -----------
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)
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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 296,474 247,686
----------- -----------
Total current assets 701,194 866,501
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 $ 6,629,493 $ 6,719,323
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 576,456 $ 548,707
Current portion of notes payable to related
parties, net of discount 1,886,796 1,820,215
Convertible debentures-current portion 1,165,474 1,238,321
Current installments of long-term
debt-equipment loans - 4,824
----------- -----------
Total current liabilities $ 3,628,726 $ 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 $ 4,771,511 $ 5,065,106
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Stockholders' equity:
10% Convertible 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 $ 6,629,493 $ 6,719,323
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About FTS Group, Inc.
FTS Group, Inc. (Contact Information: Contact: www.FTSGroup.com Scott Gallagher CEO Voice: (215) 688-2355 e-mail: Email Contact