-- We've increased our annual revenue base from $1.3 Million in 2005 to a projected $7 Million during 2006. -- We've turned a $1,997,850 net loss into a meaningful profit during 2006. -- We've increased stockholders equity from $212,411 at year end to $1,844,552 as of June 30, 2006. -- Signed a new five-year contract with DISH networks.At the same time, on January 3, 2006, we had approximately $7.8 Million in stock and cash debt commitments to institutional investors and others related to our acquisition. I'm pleased to report to the stockholders that, during the first 10 months of 2006, we have reduced those commitments by $2.7 Million. By January 4th, 2007, we expect to reduce our debt commitments by an additional $1,250,000 or $4,000,000 during the last 12 months. Based on today's operations, we expect to be a totally debt-free Company generating well over a million dollars a year in net income in the next 10 to 14 months. Management In February we hired a new Chief Operating Officer, David Rasmussen. Dave came to FTS from a subsidiary of GE where he had spent the last 6 years or so. It's been refreshing to work with Dave over the past 9 months and see the Company from a different perspective. He's brought tremendous organizational and professional skills to our Companies that have improved the day-to-day operations of all FTS Companies greatly. Going forward, Dave will play a pivotal role in the continued development of our Company. His experience in dealing with the issues unique to $100 Million plus Companies will be an invaluable asset to our organization. In addition, the founder and President of See World Satellites, Rickey Miller, stayed on to run the day-to-day operations of See World and ensure a smooth transition. Rickey's experience and understanding of the satellite television industry is second to none. We look forward to leveraging his experience and input as we undertake our expansion plans heading into 2007. Shareholder Value Plans Obviously, as a public Company, management's goal is to increase the shareholder value of the underlying Company. But in the real world we all know that more often than not that statement is hollow. I have many a reversed stock position as proof. Many statements are made with no real basis for believability. Although it has taken us a little longer than I expected to achieve profitability, we have. Becoming profitable is a major milestone for any Company, especially an OTCBB Company. Few OTC Companies ever see this milestone. Obviously as someone who holds nearly 12 million shares of FTS common stock, I am not at all pleased with the performance of our stock at the moment. On that note, I have continued to acquire additional shares of FTS common stock in the open market over the year and plan to continue to do so. Even if the street doesn't see the value in our Company, I do and our numbers don't lie. The street doesn't seem to understand our story for some reason; hence our stock price continues to lag. Our current valuation is less than a multiple of 1 times our projected 2006 profitable revenue level. The key to our success is our profitability, at this point our story is relatively straightforward, pay down our debt, grow sales and earnings then use our cash flow to buy back shares and improve our capital structure. The bottom line is, at this leve,l I believe FTS is a very good investment and being profitable, we control our destiny. Spin Offs Last year we discussed possible plans for a liquidity event by "spinning off" our wireless division. We continue to evaluate the feasibility of such a move. The process has proved to be more trying then we originally expected. We're working through the various issues related to the process and are evaluating several different methods of achieving our goals. I firmly believe in the concept of creating liquidity events for two basic reasons. First in certain instances a spin off provides the sub Company with much greater access to capital and creates a new currency to be used to fund continued growth. The second reason is that the underlying Company can accelerate its growth without any further dilution to FTS Group. Our shareholders get stock in the newly spun out Company thereby increasing the return on investment by holding our shares. We'll be issuing our definitive plans before the end of the year. The Next 12 Months An Exchange Listing Now that we've achieved profitability, we have more control of our future. I firmly believe that sometime in the next 12 months FTS will be able to apply for a listing on a national stock exchange, either the Amex or the NASDAQ small cap. I know with our stock trading at $.05 this sounds aggressive and some investors might not be optimistic in our ability to achieve this huge milestone. Many investors didn't think we would become profitable or be on track to post $7 million in revenue from $0 only a few years ago either. Right now we are 100% focused on hitting the fundamental metrics needed for a listing. When we have the fundamentals in place, we'll hit the street and actively tell our story through road shows, print, television, radio, and Internet media outlets to raise our awareness within the investment community. Again I know this sounds aggressive and it won't happen over night, but our financials provide a clear picture as to where we are in the process. I've stated many times that I'm against reverse stock splits. I don't believe a RS is in our future even to gain a listing but we'll address that concern when it matters and we've achieved the fundamental metrics. Acquisitions, Sales and Earnings For us the next 12 months is less about acquisitions and more about growing sales and earnings. I'm reluctant to take on additional debt when our path to generating over a million dollars a year in cash is so clearly within our grasp. When we get to that point we suddenly will have the upper hand with regards to acquisitions and our stock price. Stock buybacks work in situations like ours. With our solid profitable foundation cleaning up our capital structure after our debt is paid should unlock the true potential of our stock. If it doesn't we'll continue to buy more shares and cancel them. As I stated earlier, at the point our debt is paid we control our own destiny. We do continue to actively pursue many potential acquisition targets and are still in the market for the right deal. We've become a lot pickier since becoming profitable and have turned down at least three deals this year. We've also made several unsuccessful purchase offers. There are several organic expansion opportunities for us at the moment in both the wireless and satellite sides of the business that we plan to take advantage of. I'm reluctant to do additional deals unless the price is right due to our low share price. I think the better use of funds at this point is paying down our debt. I also believe we'll see our first significant organic gains in top and bottom line numbers during the coming year as we continue to improve our balance sheet and control costs. The Big Picture Obviously, I'm biased, but to me the big picture looks extremely bright for FTS, our employees and our stockholders. As a former stockbroker and fund manager, my experience in the public markets has taught me some important lessons. The first one is that earnings are the engine of growth that lead to sustainable stock price gains. Not talk or talk perceived as hype, not projections, not press releases or partnerships. We have turned a debt ridden Company with no revenue into a profitable enterprise that will generate around $7 million in profitable revenue this year. We've built an organization that is focused on achieving our goals and expanding our company in a responsible manner that we feel will benefit every shareholder and employee of the Company. The pieces are in place to achieve the goals I've laid out in this letter and in many of my previous communications. It's all about execution at this point. One of my favorite movie quotes once said, "Good things, sometimes take time." I'd like to thank the many shareholders who have been with us for years as well as the ones that have recently joined us. In addition, I'd like to thank the hard working dedicated employees of our organization. Their hard work and dedication form the foundation of our positive operating results.
Best Regards, Scott Gallagher Chairman and CEO FTS Group, Inc.
Contact Information: FTS Contacts: Investors: www.FTSGroup.TV Scott Gallagher CEO Voice: (215) 688-2355 Email Contact Media: Email Contact