10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ______________to _______________.

Commission File Number 0-49801

MEDIANET GROUP TECHNOLOGIES, INC.

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

Nevada (State or other jurisdiction of incorporation or organization) 13-4067623 (I.R.S. Employer Identification No.)

5200 Town Center Circle, Suite 601

Boca Raton, FL 33486

(Address of principal executive offices)

561-417-1500

(Issuer’s telephone number)

(Former name, former address and former fiscal year if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for the 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 ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ¨    No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨
Non-accelerated filer	¨
Accelerated filer	¨
Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨   No x

Number of shares of preferred stock outstanding as of May 1, 2011:	None
Number of shares common stock outstanding as of May 1, 2011:	321,667,345

USE OF NAMES

In this quarterly report, the terms “MediaNet,” “Company,” “we,” or “our,” unless the context otherwise requires, mean MediaNet Group Technologies, Inc. and its subsidiaries.

INDEX

PART I: FINANCIAL INFORMATION
Item 1.	Financial Statements	3
§	Consolidated Balance Sheets as of March 31, 2011 and September 30, 2010	4
§	Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2011 and 2010	5
§	Consolidated Statements of Shareholders’ Equity for the Six Months Ended March 31, 2011 and the Year Ended September 30, 2010	6
§	Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2011 and 2010	7
§	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 4.	Controls and Procedures	37
PART II: OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 5.	Other Information	41
Item 6.	Exhibits	42
SIGNATURES		42
INDEX TO EXHIBITS		43

2

PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

3

MediaNet Group Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

	March 31, 2011			September 30, 2010
	Unaudited			Audited
Assets:
Current Assets:
Cash and cash equivalents	$	370,442		$	487,171
Restricted cash		426,929			351,111
Accounts receivable		23,074			58,442
Inventories		273,521			386,185
Prepaid customer acquisition costs		566,947			956,017
Prepaid expenses		16,632			110,633
Total Current Assets		1,677,545			2,349,559
Property and equipment, net		1,259,400			1,721,182
Other Assets:
Restricted cash		2,039,073			2,037,495
Real estate contract		2,846,862			2,519,138
Option agreement		250,000			250,000
Other		109,732			82,796
Total Other Assets		5,245,667			4,889,429
Total Assets	$	8,182,612		$	8,960,170
Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts payable	$	817,355		$	681,310
Accrued and other liabilities		251,556			168,360
Loyalty points payable		348,889			413,755
Commissions payable		958,823			1,368,282
Deferred revenue		1,791,342			2,892,397
Note payable - related party		899,739			840,884
Total Current Liabilities		5,067,704			6,364,988
Long Term Liabilities:
Note payable		27,000			30,901
Total Liabilities		5,094,704			6,395,889
Stockholders' Equity:
Preferred stock- $0.01 par value, 50 million shares authorized, -0- and -0- outstanding, respectively		-			-
Common stock -$.001 par value, 500 million shares authorized 318,586,463 and 244,200,626 issued and outstanding, respectively		318,587			244,201
Additional paid-in capital		4,292,090			2,559,483
Accumulated other comprehensive income (loss)		193,600			(444,987	)
Retained earnings (deficit)		(1,716,369	)		205,584
Total Stockholders’ Equity		3,087,908			2,564,281
Total Liabilities and Stockholders' Equity	$	8,182,612		$	8,960,170

See accompanying notes to condensed consolidated financial statements.

4

MediaNet Group Technologies, Inc. and Subsidiaries

Consolidated Statements of Operations - Unaudited

	For the Three Months ended March 31,						For the Six Months ended March 31,
	2011			2010			2011			2010
				Restated						Restated
Revenues	$	3,076,926		$	6,332,129		$	6,507,807		$	10,616,064
Direct cost of revenues		1,282,054			3,546,552			2,968,257			6,760,916
Gross profit		1,794,872			2,785,577			3,539,550			3,855,148
Selling, general and administrative		3,144,469			1,529,680			5,460,170			2,137,420
Income (loss) from operations		(1,349,597	)		1,255,897			(1,920,620	)		1,717,728
Interest income expense		(1,303	)		(5,512	)		(3,801	)		(7,138	)
Gain (loss) on sale of Asset		(999	)		-			2,467			-
Income (loss) from operations before income taxes		(1,351,899	)		1,250,385			(1,921,954	)		1,710,590
Income taxes-benefit (expense)		-			-			-			-
Net Income (loss)		(1,351,899	)		1,250,385			(1,921,954	)		1,710,590
Foreign currency translation adjustment		299,038			(395,991	)		638,587			(412,309	)
Comprehensive Income (Loss)	$	(1,052,861	)	$	854,394		$	(1,283,367	)	$	1,298,281
Net income (loss) per common share
Basic	$	(0.01	)	$	0.04		$	(0.01	)	$	0.06
Diluted	$	0.00		$	0.00		$	0.00		$	0.01
Weighted average shares outstanding:
Basic		247,129,155			28,484,206			246,148,800			28,484,206
Diluted		249,696,480			339,037,717			248,645,221			277,167,462

See accompanying notes to condensed consolidated financial statements.

5

MediaNet Group Technologies, Inc. and Subsidiaries

Consolidated Statements of Shareholders' Equity

For the Six Months ended March 31, 2011 and the Year Ended September 30, 2010

														Accumulated
	Series A Preferred Stock						Common Stock							Other			Retained			Total
	Shares			Par			Shares		Par Value		Paid-In			Comprehensive			Earnings			Equity
	Outstanding			Value			Outstanding		Value		Capital			Income (Loss)			(Deficit)			(Deficit)
Balance September 30, 2009		-			-			27,303,552		27,304		(768,529	)		(96,014	)		(2,049,224	)		(2,886,463	)
Restatement adjustment																		27,979			27,979
Series A Preferred shares issued in reverse merger		5,000,000			50,000							(50,000	)								-
Warrants exercised								818,028		818		132,307									133,125
Common shares issued to correct an error								500,100		500		(500	)								-
Software contributed by major shareholder												1,337,673									1,337,673
Real estate contract contributed by major shareholder												1,440,708									1,440,708
Preferred shares returned pursuant to stock transfer agreement		(1,141,933	)		(11,419	)						11,419									-
Preferred shares converted into common shares		(3,858,067	)		(38,581	)		214,178,946		214,179		(175,598	)								-
Common shares issued pursuant to compensation agreements								1,400,000		1,400		632,003									633,403
Foreign currency translation adjustment															(348,973	)					(348,973	)
Net income																		2,226,830			2,226,830
Balance September 30, 2010		-		$	-			244,200,626	$	244,201	$	2,559,483		$	(444,987	)	$	205,585		$	2,564,282
Common shares issued pursuant to compensation agreements								2,000,000		2,000		658,876									660,876
Two step transfer to Trust								63,393,933		63,394		(63,394	)								-
Stock Subscriptions								8,991,904		8,992		1,137,125									1,146,117
Foreign currency translation adjustment															638,587						638,587
Net income																		(1,921,954	)		(1,921,954	)
Balance March 31, 2011		-		$	-			318,586,463	$	318,587	$	4,292,090		$	193,600		$	(1,716,369	)	$	3,087,908

See accompanying notes to condensed consolidated financial statements.

6

MediaNet Group Technologies, Inc. and subsidiaries

Consolidated Statements of Cash Flows - Unaudited

For the Six Months Ended March 31,

	2011			2010
				Restated
Cash flows from operating activities
Net income (loss) from operations	$	(1,921,954	)	$	1,715,720
Reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization		473,688			19,595
Stock based compensation		660,876			-
Promotional DubLi Credits		93,740			-
Restatement adjustment		-			(294,977	)
Changes in operating assets and liabilities:
Restricted cash		(61,332	)		(994,471	)
Accounts receivable		35,474			(66,367	)
Inventory		114,818			(205,043	)
Prepaid expenses		94,224			(465,361	)
Prepaid customer acquisition costs		409,268			(1,540,629	)
Accounts payable		119,822			(2,258	)
Accrued liabilities		505,566			(285,127	)
Accrued loyalty points		(64,866	)		(297,940	)
Commission payable		(536,986	)		(589,401	)
Customer deposits		-			62,863
Deferred revenue		(1,164,680	)		3,388,314
Net cash provided by operations		(1,242,342	)		444,918
Investing activities:
Purchases of equipment and software		(8,928	)		(1,037,338	)
Payments on real estate contract		(327,724	)		-
Other assets		(26,127	)		(131,604	)
Restricted cash		256,888			-
Net cash provided by (used in) investing activities		(105,891	)		(1,168,942	)
Financing activities
Proceeds from note payable - related party		287,819			23,761
Repayments of note payable - related party		(260,007	)		(216,355	)
Accrued interest payable - related party					6,692
Repayments of note payable		(3,659	)		-
Proceeds from Stock Subscriptions		1,146,117
Proceeds from common shares & warrants		-			691,479
Net cash provided by (used in) financing activities		1,170,270			505,577
Effect of exchange rate changes on cash		61,234			(135,315	)
Net increase (decrease) in cash and equivalents		(116,729	)		(353,762	)
Cash at beginning of period		487,171			2,533,649
Cash at end of period	$	370,442		$	2,179,887
Supplemental cash flow information:
Cash paid for interest	$	3,801		$	7,138
Cash paid for income taxes		-			-
Shareholder contribution for software		-			1,337,673
Recapitalization		-			6,874,886
Foreign currency translation adjustment		638,587			(412,310	)
Two step common share transfer		63,394			-

See accompanying notes to condensed consolidated financial statements.

7

MediaNet Group Technologies, Inc. and Subsidiaries

Condensed Notes to Consolidated Financial Statements (Unaudited)

Note 1 - Description of Business

MediaNet Group Technologies, Inc. (“MediaNet Group,” the “Company,” “we,” or “us”), through its wholly owned subsidiaries, is a global marketing company that sells merchandise to consumers through Internet-based auctions conducted under the trade name “DubLi.com.” Our online auctions are conducted in Europe, North America, Australia and New Zealand and a global auction portal serving the balance of the world. We have a large network of independent business associates that sell the right to make a bid in one of our auctions (referred to herein as “Credit” or “DubLi Credits”). These auctions are designed to offer consumers substantial savings on these goods. The Company, through its BSP Rewards, Inc. subsidiary, also offers private branded loyalty and reward web malls where members receive rebates (rewards) on products and services from participating merchants.

The Company is organized in Nevada and has its principal executive offices in Boca Raton, Florida. The Company’s wholly owned subsidiaries are domiciled in Delaware, Florida and Nevada in the United States and in the British Virgin Islands, Cyprus and Berlin, Germany.

As of March 31, 2011, our President and Chief Executive Officer, through his beneficial ownership of Zen Holding Group Limited ("Zen Holding"), has the indirect power to cast approximately 87% of the combined votes that can be cast by the holders of the Common Stock. Accordingly, he has the power to control the outcome of important corporate decisions or matters submitted to a vote of our shareholders, including, but not limited to, increasing the authorized capital stock of the Company, the dissolution, merger or sale of the Company’s assets and the size and membership of the Board of Directors and all other corporate actions.

Note 2 - Summary of Significant Accounting Policies

Accounting Principles

The accompanying consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America.

Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of MediaNet Group Technologies, Inc. and its subsidiaries which are wholly owned or otherwise under common control. All intercompany accounts and transactions have been eliminated in consolidation. The following subsidiaries are included in the consolidation at March 31, 2011 and 2010.

BSP Rewards, Inc.	Wholly owned	Actively engaged in business
CG Holdings, Ltd.	Wholly owned	Actively engaged in business
DUBLICOM Limited	Wholly owned	Actively engaged in business
DubLi Network Limited	Wholly owned	Actively engaged in business
Lenox Logistik und Service GmbH	Wholly owned	Actively engaged in business
Lenox Resources, LLC	Wholly owned	Actively engaged in business
DubLi Logistics LLC	Wholly owned	Actively engaged in business
DubLi Properties, LLC	Wholly owned	Actively engaged in business
DubLi.com, LLC	Under Common Control	Discontinued operations
DubLi.com GmbH	Under Common Control	Discontinued operations
DubLi Network, LLC	Under Common Control	Discontinued operations

8

DubLi Logistics LLC (“Dubli Logistics”) was identified as one of the consolidated subsidiaries of the Company in Amendment No. 1 to the Company’s Form 8-K filed with the SEC on February 4, 2010 (the “Form 8-K”) and the Company’s Form 10-Q for the quarter ended December 31, 2009 (the “Form 10-Q”) based upon DubLi Logistic’s historical and current operation as an affiliated, profitless, product purchasing agent of DUBLICOM. DubLi Logistics is operated exclusively by employees of Lenox Logistik.

The results of operations and assets and liabilities of DubLi.com, LLC’s subsidiaries were also included in the Company’s consolidated results of operations as reported in the Form 8-K and Form 10-Q based upon their common ownership and historical relationship to CG Holdings Limited (“CG”) and its other consolidated subsidiaries. DubLi.com, LLC, which is a holding company, has never directly operated a business and its subsidiaries were sold or their businesses were discontinued in the second quarter of 2009.

Recent Authoritative Accounting Pronouncements

In January 2010, the FASB issued Accounting Standards Update (“ASU”) No. 2010-06 to amend ASC 820, “Fair Value Measurements and Disclosures” to improve disclosures about fair value measurements.  This ASU provides amendments that require new disclosures regarding transfers in and out of Levels 1 and 2 and with respect to various activities in Level 3 fair value measurements.  The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009.  The adoption of this portion of the ASU effective January 1, 2010 did not have a material impact to the Company’s consolidated financial statements.  The disclosures with respect to purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements are effective for fiscal years beginning after December 15, 2010.  The adoption of ASU 2010-06 did not have a material impact on our consolidated financial position, results of operations or cash flows.

In February 2010, the FASB issued ASU No. 2010-09 to amend ASC 855, “Subsequent Events” with respect to certain recognition and disclosure requirements.  The amendments in this ASU are effective upon issuance.  The Company adopted the provisions of ASC 855 in accordance with the effective date. During the current subsequent event reporting period, the Company evaluated events through the date the accompanying consolidated financial statements were issued. For subsequent events, see Part I, Item 1, Note 15 on this Form 10-Q.

In April 2010, the FASB issued ASU No. 2010-13, "Compensation—Stock Compensation (Topic 718)." This update provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in ASU 2010-13 are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The provision of ASU No. 2010-13 did not have a material effect on the consolidated financial position, results of operations or cash flows of the Company.

In August 2010, the FASB issued ASU 2010-21, “Accounting for Technical Amendments to Various SEC Rules and Schedules: Amendments to SEC Paragraphs Pursuant to Release No. 33-9026: Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies”(“ASU 2010-21”), issued to conform the SEC’s reporting requirements to the terminology and provisions in ASC 805, Business Combinations, and in ASC 810-10, Consolidation. ASU No. 2010-21 was issued to reflect SEC Release No. 33-9026, “Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies,” which was effective April 23, 2009. The ASU also proposes additions or modifications to the XBRL taxonomy as a result of the amendments in the update. Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.

9

In August 2010, the FASB issued ASU 2010-22, “Accounting for Various Topics: Technical Corrections to SEC Paragraphs”(“ASU 2010-22”),which amends various SEC paragraphs based on external comments received and the issuance of SEC Staff Accounting Bulletin (SAB) No. 112, which amends or rescinds portions of certain SAB topics. The topics affected include reporting of inventories in condensed financial statements for Form 10-Q, debt issue costs in conjunction with a business combination, sales of stock by subsidiary, gain recognition on sales of business, business combinations prior to an initial public offering, loss contingent and liability assumed in business combination, divestitures, and oil and gas exchange offers. The adoption of this update did not have any material impact on the Company’s consolidated financial statements.

In December 2010, the FASB issued the FASB Accounting Standards Update No. 2010-28 “Intangibles—Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts”(“ASU 2010-28”). ASU 2010-28, if the carrying amount of a reporting unit is zero or negative, an entity must assess whether it is more likely than not that goodwill impairment exists. To make that determination, an entity should consider whether there are adverse qualitative factors that could impact the amount of goodwill, including those listed in ASC 350-20-35-30. As a result of the new guidance, an entity can no longer assert that a reporting unit is not required to perform the second step of the goodwill impairment test because the carrying amount of the reporting unit is zero or negative, despite the existence of qualitative factors that indicate goodwill is more likely than not impaired. ASU 2010-28 is effective for public entities for fiscal years, and for interim periods within those years, beginning after December 15, 2010, with early adoption prohibited.  ASU 2010-28 did not have a material effect on the accompanying consolidated financial statements.

In December 2010, the FASB issued the FASB Accounting Standards Update No. 2010-29 “Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations”(“ASU 2010-29”). ASU 2010-29 specifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments in this Update also expand the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amended guidance is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted. Management does not believe that this standard would have a material effect on the accompanying consolidated financial statements.

Foreign Currency

Financial statements of foreign subsidiaries operating in other than highly inflationary economies are translated at year-end exchange rates for assets and liabilities and historical exchange rates during the year for income and expense accounts. The resulting translation adjustments are recorded within accumulated other comprehensive income or loss. Financial statements of subsidiaries operating in highly inflationary economies are translated using a combination of current and historical exchange rates and any translation adjustments are included in current earnings. Gains or losses resulting from foreign currency transactions are recorded in operating expense.

Reclassifications

Certain amounts reported in previous periods have been reclassified to conform to the Company’s current period presentation.

Management’s Use of Estimates and Assumptions

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates, judgments and assumptions that affect the reported amounts of the assets and liabilities, disclosure of contingent assets and liabilities, deferred income, accruals for incentive awards and unearned auction Credits at the date of the consolidated financial statements, and the reported amounts of revenue and expense during the reporting periods. Examples, though not exclusive, include estimates and assumptions of: loss contingencies; depreciation or amortization of the economic useful life of an asset; stock-based compensation forfeiture rates; estimating the fair value and impairment of assets; potential outcome of future tax consequences of events that have been recognized in our financial statements or tax returns; estimates of incentive awards and unearned auction Credits and determining when investment impairments are other-than temporary. The Company bases its estimates on historical experience and on various assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may materially differ from these estimates under different assumptions and conditions.

10

Management regularly reviews estimates. Revisions to the estimates are reflected in results of operations as a change in accounting estimate in the period in which the facts that give rise to the revision become known by management. During the fourth quarter of 2010, the Company revised its estimates of breakage related to sales of DubLi Credits based upon historical analysis of actual usage. The Company also revised its estimate of direct and incremental direct costs related to those revenues based on an analysis of historical unit costs. The changes in accounting estimates resulted in a decrease in both deferred revenue and expense with corresponding increases in both revenue and expense as more fully described in Note 5.

Cash, Cash Equivalents and Financial Instruments

The Company considers all highly liquid instruments with original maturities of three months or less at the date of purchase to be cash equivalents. In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short term investments.

Concentrations

The Company maintains its cash in bank deposit accounts in the United States, Germany and Cyprus, which at times may exceed the federally insured limits in those countries. The Company has not experienced any losses in such account and believes it is not exposed to any significant credit risk on cash and cash equivalents.

As discussed below in “revenue recognition,” the Company’s revenue is concentrated 8% in goods and services sold at auction; 84% in sales of DubLi Credits; 5% in subscription fees; and 3% in BSP Rewards Mall commissions.

Geographically, the Company revenues are concentrated in the following markets: 45% European Union; 11% North America; 18% Australia & New Zealand; and, 26% worldwide.

Fair Value of Financial Instruments

The Company has adopted and follows ASC 820-10, “Fair Value Measurements and Disclosures” for measurement and disclosures about the fair value of its financial instruments. ASC 820-10 establishes a framework for measuring fair value in accordance with generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820-10 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by ASC 820-10 are:

Level1 —            Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

11

Level2 —           Inputs (other than quoted market prices included in Level1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level3 —           Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Valuation of instruments includes unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

As defined by ASC 820-10, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale, which was further clarified as the price that would be received to sell an asset or paid to transfer a liability (“an exit price”) in an orderly transaction between market participants at the measurement date. The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, prepaid and other current assets, and other assets, accounts payable, accrued expenses, accrued interest, taxes payable, and other current liabilities, approximate their fair values because of the short maturity of these instruments. The Company’s notes payable to shareholders approximates the fair value of such instrument based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at March 31, 2011.

The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis and, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at March 31, 2011, nor any gains or losses reported in the statement of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date.

Accounts receivable

Accounts receivable are reported at the customers' outstanding balances less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable. We evaluate receivables outstanding greater than ninety days on a regular basis for potential reserve.

Inventory

The inventory represents finished goods merchandise purchased at cost and available for sale on either the Xpress Bid or Unique Bid auctions. Inventories are stated at lower of cost or market. Cost is determined on the first-in, first-out basis. Shipping and handling costs are included in purchases for all periods presented.

Property, Software and Leasehold Improvements

Property is recorded at cost. The cost of maintenance and repairs of equipment is charged to operating expense when incurred. Depreciation and amortization is determined based upon the assets’ estimated three to seven year useful lives, and is calculated on a straight-line basis beginning when the asset is placed into service. When the Company sells, disposes or retires equipment, the related gains or losses are included in operating results.

Impairment of Long-Lived Assets

In accordance with Statement of ASC 360-10-35, Property, Plant and Equipment – Subsequent Measurement, the Company reviews the carrying value of its long-lived assets, which includes property and equipment, and intangible assets (other than goodwill) annually or whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of the asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. The estimate of cash flows is based upon, among other things, certain assumptions about expected future operating performance, growth rates and other factors. Estimates of undiscounted cash flows may differ from actual cash flows due to, among other things, technological changes, economic conditions, changes to the business model or changes in operating performance. If the sum of the undiscounted cash flows (excluding interest) is less than the carrying value, an impairment loss will be recognized, measured as the amount by which the carrying value exceeds the fair value of the asset. Fair value is determined using available market data, comparable asset quotes and/or discounted cash flow models. Management conducted an evaluation of long-lived assets and determined no impairments currently exist. Accordingly, we did not recognize any impairment charges in the quarters ended March 31, 2011 or 2010.

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Revenue Recognition

Product Sales and Services - The Company recognizes revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”). ASC 605-10 requires that four basic criteria be met before revenue can be recognized: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the selling price is fixed and determinable; and (iv) collectability is reasonably assured. Determination of criteria (iii) and (iv) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue that is subject to refund, and for which the product has not been delivered or the service has not been rendered net of an estimated allowance for breakage. The Company revenue recognition policies for each its products and services are as follows:

• Goods and services sold at auction – Revenue is recognized after receipt of payment and product shipment net of credit card charge-backs and refunds.

• “DubLi Credits” – Consumers bid on the Company’s online auctions by purchasing “DubLi Credits” either directly on DubLi.com or from DubLi’s independent business associates who are members of the DubLi Marketing Network. All proceeds from the sales of “DubLi Credits” are recorded as deferred revenue until used by the consumer in the bidding process and the related revenue is earned. Purchases of DubLi Credits are non-refundable after three days. Unused Credits remaining in deferred revenue after 12 months are recorded as revenue as if earned (“breakage”). Management makes this estimated adjustment to reduce the deferred revenue liability and to increase revenue recognized based upon historical statistical utilization rates.

• Subscription Fees – “DubLi Business Associates” pay a $175 annual subscription fee for the marketing and training services provided by DubLi Network. Subscribers to our online entertainment and shopping services pay monthly subscription fees ranging from $5 to $20. All proceeds from the sales of subscription fees are recorded as deferred revenue and recorded as revenue ratably over the twelve month service period plus any promotional extensions.

• Online shopping mall revenue is earned principally from revenue rebates (commissions) earned from merchants participating in its online shopping malls. The Company receives rebates from participating merchants on all transactions processed by BSP Rewards through its online mall platform. The percentage rebate paid by merchants varies between 1% and 30% and BSP Rewards normally shares 50% of the rebate with the member who made the purchase in the form of “Rewards Points.” The members’ share of the rebates are recorded as a liability until claimed by the member or until the two year expiration period is reached at which time the unclaimed Rewards Points are taken into income.

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Direct Cost of Revenues

Included in Direct Cost of Revenues are the costs of goods sold and commissions and incentive bonuses earned by business associates on the sales of DubLi Credits. Commissions are based upon each business associate’s volume of Credit sales and that of other business associates who are sponsored by the subject business associate. Commissions are paid to business associates at the time of the sale of the Credits and are recognized as a deferred expense until the Credits are used and then are charged to expense. Incentive bonuses are paid either monthly or quarterly and the related expense is recorded when the business associate meets the stated sales goal for each particular promotional event.

Advertising and Marketing Expenses

Advertising and marketing costs are expensed as incurred and include the costs associated with internally developed websites and other marketing programs and materials.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include costs associated with distribution activities, research and development, information technology, and other administrative costs, including finance, legal and human resource functions. Research and development is performed by in-house staff and outside consultants and those costs are expensed as incurred. In addition, the Company capitalizes certain incremental direct expenses incurred to obtain new business associates.

Comprehensive Income

Comprehensive income consists of net earnings, unrealized gains or losses on investments, foreign currency translation adjustments and the effective portion of the unrealized gains or losses on derivatives. Comprehensive income is presented in the consolidated statements of shareholders’ equity and comprehensive income.

Income Taxes

The Company accounts for income taxes under ASC 740-10, Income Taxes. Deferred income tax assets and liabilities are recognized based on differences between the financial statement and tax basis of assets and liabilities using presently enacted tax rates. At each balance sheet date, the Company evaluates the available evidence about future taxable income and other possible sources of realization of deferred tax assets, and records a valuation allowance that reduces the deferred tax assets to an amount that represents management’s best estimate of the amount of such deferred tax assets that more likely than not will be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.

Computation of Income and Loss per Share

The Company computes income and loss per share in accordance with ASC 260, previously SFAS No. 128, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential Common Stock outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. In periods in which a net loss has been incurred, all potentially dilutive shares of Common Stock are considered anti-dilutive and thus are excluded from the calculation. As of March 31, 2011, the Company had two classes of potentially dilutive derivatives of Common Stock as a result of warrants granted and options.

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Dividends

The Company’s policy is to retain earnings to provide funds for the operation and expansion of our business and not to pay dividends.

Share-Based Payments

The Company accounts for stock-based compensation in accordance with the provisions of ASC 718, Stock Compensation, which establishes the accounting for share-based awards and the inclusion of their fair value in net earnings in the respective periods the awards were earned. Consistent with the provisions of ASC 718, the Company estimates the fair value of stock options and shares issued under its employee stock purchase plan using the Black-Scholes option-pricing model. Fair value is estimated on the date of grant and is then recognized (net of estimated forfeitures) as expense in the Consolidated Statement of Operations over the requisite service period (generally the vesting period).

ASC 718 requires companies to estimate the fair value of stock-based compensation on the date of grant using an option-pricing model. The Company uses the Black-Scholes model to value stock-based compensation. The Black-Scholes model determines the fair value of stock-based payment awards based on the stock price on the date of grant and is affected by assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to the Company’s expected stock price volatility over the term of the awards (computed at 141.24% and actual and projected employee stock option exercise behaviors). Option-pricing models were developed for use in estimating the value of traded options that have no vesting or hedging restrictions and are fully transferable. Although the fair value of stock options granted by the Company is determined in accordance with ASC 718 and Staff Accounting Bulletin (“SAB”) No. 107, Share-Based Payment, (“SAB 107”) as amended by SAB No. 110, using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction. The Company issues new shares for its share based payments as not from treasury.

Foreign Currency Cash Flows

ASC 830-230-45 requires companies with foreign operations or foreign currency transactions to prepare the statement of cash flows using the exchange rates in effect at the time of the cash flows. The Company uses an appropriately weighted average exchange rate for the period for translation if the result is substantially the same as if the rates at the dates of the cash flows were used. The statement of cash flows reports the effect of exchange rate changes on cash balances held in foreign currencies as a separate part of the reconciliation of the change in cash and cash equivalents during the period.

Subsequent Events

Accounting Standards Codification (“ASC”) 855 “Subsequent Events,” previously SFAS No. 165 “Subsequent Events” established general standards of accounting for and disclosure of events that occur after the balance sheet date, but before the financial statements are issued or available to be issued (“subsequent events”). An entity is required to disclose the date through which subsequent events have been evaluated and the basis for that date. For public entities, this is the date the financial statements are issued. SFAS No. 165 does not apply to subsequent events or transactions that are within the scope of other GAAP and did not result in significant changes in the subsequent events reported by the Company. SFAS No. 165 became effective for interim or annual periods ending after June 15, 2009 and did not impact the Company’s financial statements. The Company evaluated for subsequent events through the issuance date of the Company’s financial statements. See Note 15.

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Restatement of Previously Filed Interim and Annual Financial Statements

On December 16, 2010, the CFO and Company’s Board of Directors concluded that the previously issued financial statements contained in the Company’s Quarterly Reports on Form 10-Q for each of the first three quarters during the year ended September 30, 2010, and the 2009 financial statements of CG Holdings Limited and its wholly owned subsidiaries as of September 30, 2009 and for the year then ended and the related pro forma financial statements also contained in the Company’s Form 8-K/A filed with the Securities and Exchange Commission (the “SEC”) on February 4, 2010 should not be relied upon because of the following errors that require a restatement of such financial statements.

Intercompany eliminations - We determined that certain intercompany eliminations were not made during each of the first three quarters during the year ended September 30, 2010 and for the fiscal year ended September 30, 2009. As a result, our previously issued financial statements for the periods identified above overstated revenues and misstated costs of goods sold. In this connection, we determined that during the periods referred to above, we had insufficient personnel resources to perform review and monitoring controls within the accounting function.

Cutoffs - We determined that certain revenue and expense transactions for the quarter ended March 31, 2010 were erroneously recorded in quarter ended December 31, 2009. In this connection, we determined that certain supervisory and monitoring controls had not been performed for these periods which resulted in these accounting errors.

Account errors - We determined that sales, deferred revenue, commissions and prepaid customer acquisition costs were incorrectly recorded during the first three quarters during the year ended September 30, 2010 and for the fiscal year ended September 30, 2009. In this connection, we determined that certain supervisory and monitoring controls had not been performed for these periods, which resulted in these accounting errors.

Enrollment fees - We determined that revenue from the sale of our eBiz kits was erroneously recorded for each of the first three quarters during the year ended December 31, 2010 and for the fiscal year ended September 30, 2009. As a result, our previously issued financial statements for the periods identified above, had overstated revenues. The Company's non-refundable eBiz kits fee revenue was previously recognized when collected. Based on a review of Staff Accounting Bulletin (“SAB”) 104, the Company revised its revenue recognition of non-refundable eBiz kits to recognize them on a straight-line basis over the term of the renewal period (12 months). In this connection, we determined that periods referred to above, we had insufficient personnel resources and technical accounting expertise within the accounting function to resolve non-routine or complex accounting matters.

Income taxes - Taking into consideration the restatement and related adjustments described above, we have reassessed our income tax provision in accordance with Financial Accounting Standards Statement No. 109 and accordingly, we made certain adjustments to reflect the changes required as a result of the restatement to all affected periods and we restated our 2009 income tax provision and related liability.

The Company has filed with the SEC, Amended Quarterly Reports on Form 10-Q /A as of December 31, 2009, March 31, 2010 and June 30, 2010 and for each of the three months then ended and the Company has also restated the September 30, 2009 consolidated financial statements.

Note 3 – Restricted Cash

The Company has agreements with organizations that process credit card transactions arising from purchases of products and DubLi Credits by business associates and customers of the Company. Credit card processors have financial risk associated with the products and services purchased because the processor generally forwards the cash related to the purchase to the Company soon after the purchase is completed. The organizations that processes MasterCard/Visa transactions allows the credit card processor to create and maintain a reserve account that is funded by retaining cash that it otherwise would deliver to the Company (i.e., “restricted cash”). The reserve requirements have ranged from a low of 5% to a high of 50% for a rolling term of six months. The restricted cash is on deposit with two such merchant account providers, one in Europe and one in the United States. With the European processor, the Company had on deposit $426,929 and $351,111 as of March 31, 2011 and September 30, 2010, respectively. With the U.S. processor, the Company had on deposit $2,164,073 with a $125,000 provision for impairment loss for a net asset value of $2,039,073 as of March 31, 2011.

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The Company has historically relied upon two service providers to process credit card transactions arising from purchases of the Company’s services and products. Disagreements have emerged between the Company and one such service provider, National Merchant Center ("NMC"), as to the permitted amount of reserves, if any, that NMC is eligible to maintain. On September 22, 2010 certain of the Company’s subsidiaries instructed NMC to return to them all of the cash held in reserve with respect to the Company’s account. In response to such demand, on November 1, 2010, NMC informed the Company that it was terminating the Company’s merchant account with NMC and holding all of the Company’s funds and deposits for a period of 180 days after the last chargeback (which have averaged less than 1.2% of sales or approximately $63,000 since the account was established in December 2009).

On October 27, 2010, DUBLICOM Limited and DubLi Network Limited, both of which are wholly owned subsidiaries of the Company, initiated legal action against NMC in U.S. District Court for the Southern District of Florida (the “Court”) to seek recovery of the approximately $2,162,000 of reserves (which is approximately 37% of all such sales) held at the direction NMC plus various other awards, costs and expenses. NMC’s legal counsel has since informed the Company that NMC is in bankruptcy, the subject funds are being held in escrow in California by a third party in a bank account and such funds are not involved in the NMC bankruptcy case. The Court issued an order transferring the case to a U.S. District Court in California. For additional information pertaining to the case, see Part II, Item 1 of this Form 10-Q. The Company will continue to aggressively pursue legal action against NMC and, based upon advice of counsel, expects to recover the funds.

Note 4 – Foreign Currency

Three of the Company’s foreign subsidiaries designate the Euro as their functional currency. The total amount of cash held by foreign subsidiaries, translated into U.S. Dollars at March 31 is as follows:

	March 31, 2011						September 30, 2010
	Unrestricted		Restricted Current		Restricted Long-Term		Unrestricted		Restricted Current		Restricted Long-Term
Euro	$	193,777	$	94,606	$	-	$	211,034	$	193,641	$	-
Australian Dollar		48,219		174,809		-		72,386		92,596		-
U.S. Dollar		103,555		157,514		2,164,073		54,022		64,874		2,037,495
Total	$	345,551	$	426,929	$	2,164,073	$	337,442	$	351,111	$	2,037,495

Note 5 – Deferred Revenue and Expense

The Company defers revenue from: (1) the unearned portion of the annual subscription fees paid by business associates who join the DubLi Network, (2) the unearned portion of the monthly online entertainment and shopping subscriptions fees, and (3) the value of the “DubLi Credits” sold to customers but not yet used to bid at auction, net of estimated breakage. The Company also defers direct and incremental direct costs related to the sale of “DubLi Credits” under the caption “Prepaid customer acquisition costs.” The following summarizes the components of deferred revenue:

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	March 31, 2011		September 30, 2010
Prepaid customer acquisition costs	$	566,947	$	956,017
Unused DubLi Credits	$	1,057,130	$	1,791,881
Subscription fees		734,212		1,100,516
	$	1,791,342	$	2,892,397

Note 6 – Property and Equipment

Equipment consists of office furniture, computer equipment and software at March 31 as follows:

	March 31, 2011			September 30, 2010
Cost	$	2,452,110		$	2,487,405
Accumulated Depreciation		(1,192,710	)		(766,223	)
Total	$	1,259,400		$	1,721,182

Depreciation expense was $196,066 and $473,688 and $7,576 and $19,595 for the three and six months ended March 31, 2011 and 2010, respectively.

Note 7 – Real Estate Contract

DubLi Properties, LLC was contributed to the Company by Mr. Hansen on May 24, 2010 in satisfaction of Mr. Hansen’s oral pledge to contribute the Cayman Property Rights (described below) to the Company. The Cayman Property Rights, which had a book value of $2,846,862 as of March 31, 2011, were acquired by DubLi Properties, LLC in December 2009 in exchange for 34 parcels of real property valued at $2,132,375, $43,381 of cash and an agreement by DubLi Properties LLC to make an additional $824,244 of payments for a total contract price of $3,000,000. The contract was paid in full in March 2011 and the Company is waiting to receive title.

The primary purpose of the Cayman Property Rights, which consists of a purchase deed with respect to 15 lots in the Cayman Islands, is to reward DubLi business associates upon completion of certain performance objectives. See also Note 12 Merger for a description of the May 24, 2010 acquisition of DubLi Properties, LLC and its land purchase agreement.

Note 8 – Note Payable

In April 2010, the Company purchased and financed an automobile for $41,277 with a note payable for sixty monthly payments of principle and interest of $807. Interest accrues at 6.5 percent and the loan matures as follows: 2011; $5,704, (included in current liabilities) 2012; $8,047, 2013; $8,581, 2014; $9,152 and 2015; $3,183.

Note 9 – Commitments and Contingencies

Litigation

The Company has historically relied upon two service providers to process credit card transactions arising from purchases of the Company’s services and products. A dispute has arisen between the Company and one such service provider, National Merchant Center (“NMC”) as to the permitted amount of reserves, if any, that NMC is permitted to maintain and the length of time NMC may hold such reserves under the Merchant Services Processing Agreement entered into by NMC and the Company (the "Agreement"). On September 22, 2010, two wholly-owned subsidiaries of the Company, Dublicom Limited and DubLi Network Limited (collectively, the "Subsidiaries"), through counsel, made demand upon NMC to release the monies held in reserve in connection with the Company’s account under the Agreement. On October 27, 2010, the Subsidiaries initiated legal action against NMC in the Circuit Court in and for Miami-Dade County, Florida seeking recovery of approximately $2,162,000 of reserves held at the direction of NMC plus various other awards, costs and expenses. The Subsidiaries alleged that NMC committed civil theft and conversion by its wrongful retention and misuse of the reserve funds. On November 1, 2010, NMC informed the Company that it was terminating the Company’s merchant account with NMC and holding all of the Company’s funds and deposits for a period of 180 days after the last chargeback. Notably, the Company's historical chargebacks under the Agreement averaged less than 1.2% of sales or approximately $63,000 since the reserve account was established in December 2009. Thereafter, the Company learned that NMC was in Chapter 11 bankruptcy and, on or about November 12, 2010, the Company learned that the reserve funds in dispute were being held in an escrow account at Wells Fargo Bank, maintained by First Data Merchant Services ("First Data"), as processor for NMC, and were not involved in NMC's bankruptcy. The case filed in Circuit Court was removed to the U.S. District Court for the Southern District of Florida and subsequently transferred to the U.S. District Court for the Central District of California.

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On February 9, 2011, NMC filed suit against the Company in the Superior Court of the State of California, Case Number: 30-2011-00449062-CU-BC-CJC, seeking to recover approximately $706,000, as a termination fee under the Agreement, plus attorneys' fees, interest and costs. NMC alleges that the Company breached the Agreement by not using NMC as its exclusive credit card processor and by taking the position that the Company does not own the website www.dubli.com. NMC alleges that it terminated the Agreement based upon the Company's alleged breaches of the Agreement and is therefore entitled to recover a termination fee. On March 17, 2011, the Company removed the action to the California Federal Court, where it is currently pending, Case No 8:11-cv-00433-AG-JCG. On April 7, 2011, the Company filed an Answer to the complaint, in which it denied NMC's substantive allegations, raised affirmative defenses to NMC's claims and asserted Counterclaims against NMC, First Data and parties identified as Roes 1 – 20. The Company's counterclaims, all of which are based upon or relate to the Agreement, assert claims for relief in tort and contract and also assert claims for injunctive and declaratory relief. The Company has asserted its counterclaims to obtain a judicial determination of its rights under the Agreement and to obtain the release of approximately $2,162,000 of reserve funds being held in an escrow account by First Data. On April 8, 2011, the Court entered an Order setting a Scheduling Conference on June 13, 2011.

For additional information about both cases, see Part II, Item 1 of this Form 10-Q.

Note 10 – Stock Subscription

The Company is conducting a three million dollar private placement offering, exempt from the registration requirements of the Securities Act of 1933, as amended under Regulation S. The offering is limited to European investors who are non-U.S. persons, as defined in Regulation S, and is expected to close in May 2011. As of March 31, 2011, the Company received stock subscriptions totaling $1,146,117 representing approximately 9.0 million shares. Subsequent to March 31, 2011, the Company received additional subscriptions for approximately $462,000 representing an additional 3.1 million shares.

Note 11 – Related Party Transactions:

Loans from CG and its Affiliates

Prior to the Merger, entities affiliated with CG loaned us money. More specifically, on July 9, 2009, in accordance with a Letter of Intent dated July 7, 2009, DubLi Network, LLC loaned $100,000 to the Company. The loan bore interest at an annual rate of 6% and was scheduled to mature on July 9, 2011. In addition, on August 14, 2009, DubLi Network Limited, a wholly-owned subsidiary of CG, loaned an additional $150,000 to the Company. The loan bore interest at an annual rate of interest of 6% and was scheduled to mature on July 9, 2011. These loans were eliminated in consolidation after consummation of the Merger.

In January 2010, DubLi Network Limited was asked to lend $150,000 to the Company to, among other things, satisfy the Company’s $135,978 of indebtedness to Mr. Martin Berns and $30,000 to Mr. Eugene Berns. Although DubLi Network Limited maintained that it had no legal obligation to extend such a loan pursuant to the Merger Agreement, on January 5, 2010 DubLi Network Limited lent an additional $100,000 to the Company and on January 11, 2010, the Company’s debts to Messrs. Martin and Eugene Berns were satisfied in full. The loan was assumed by the Company in the merger and has been eliminated in the consolidation of the financial statements along with all other intercompany debt.

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Transactions with Directors and Officers

Michael Hansen - As a Company founder, Mr. Hansen has been involved in the Company’s operations since its inception and accordingly, he is business associate No. 1 holding the rank of Senior Vice President in the DubLi network organization. Like any other vice president in the Network, Mr. Hansen has numerous business associates whose income from earned commissions is shared with business associates at higher levels, as more fully described in Item 2, Business. In this connection, Mr. Hansen earned commissions of $200,538 and $337,237 during the years ended 2010 and 2009, respectively, of which Mr. Hansen was actually paid commissions of $100,000 and $157,321 during the years ended 2010 and 2009, respectively. Mr. Hansen was owed commissions of $272,121 and $175,281 as of September 30, 2010 and 2009, respectively. Effective September 30, 2010, Mr. Hansen waived his right to the earned but unpaid commissions and forgave the debt to the Company. For the three and six months ended March 31, 2011 Mr. Hansen earned $95,056 and $155,478, respectively and was paid $-0-in commissions leaving an unpaid balance of $155,478. As Founder, Mr. Hansen is exempt from the requirement that business associates must purchase credits from the Company for resale in order to earn the maximum commissions.

During the nine month period ended September 30, 2009, Michael Hansen, the President and Chief Executive Officer of the Company, loaned $99,855 to a subsidiary of CG subsequently acquired in the Merger. The loan was interest free and the Company repaid the loan in full on January 11, 2010.

During 2010, Michael Hansen advanced the Company $399,356 for working capital purposes. The loan is evidenced by an unsecured note dated August 22, 2010, payable by the Company to Mr. Hansen in the amount referenced above. The note is interest free and payable upon demand of Michael Hansen made after August 21, 2011. During the fourth quarter of 2009, Mr. Hansen advanced an additional $441,528 to the Company without interest or repayment terms, which advance increased the total debt owed to Mr. Hansen to $840,884 at September 30, 2010. Subsequent to September 30, 2010, Mr. Hansen advanced the Company an additional $426,069 resulting in a total debt of $1,266,953 as of March 23, 2011 the date upon which the Company and Mr. Hansen entered into $5 million Promissory Grid Note (“Grid Note”). The amount of this Note equals an existing outstanding balance of $1,266,953 then owed to Mr. Hansen plus any new borrowings under the Grid Note up to an aggregate of $5 million at any given time. This Note is issued in replacement of the Promissory Note dated August 23, 2010 in the principal amount of $399,356. The Grid Note has a term of one year; bears interest at 6% per annum accruing from the date of the Grid Note and is guaranteed by DubLi Properties, LLC and secured by a pledge of its assets. At March 31, 2011 the balance of the note was $899,739.

DubLi Properties, LLC was contributed to the Company by Mr. Hansen on May 24, 2010 in satisfaction of Mr. Hansen’s oral pledge to contribute the Cayman Property Rights (described below) to the Company. The Cayman Property Rights, which had a book value of $2,669,138 as of March 31, 2011, were acquired by DubLi Properties, LLC in December 2009 in exchange for 34 parcels of real property valued at $2,132,375, $43,381 of cash and an agreement by DubLi Properties LLC to make an additional $824,244 of payments for a total contract price of $3,000,000. The contract was paid in full in March 2011 and the Company is waiting to receive title. The primary purpose of the Cayman Property Rights, which consists of a purchase deed with respect to 15 lots in the Cayman Islands, is to reward DubLi’s business associates upon completion of certain performance objectives.

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Note 12 – Stock and Equity

Common Stock

The Company had authorized 500 million and 50 million shares of Common Stock, par value $.001 per share, at March 31, 2011 and September 30, 2010, respectively. Common shares issued and outstanding at March 31, 2011 and 2010 were 318,586,463 and 244,200,626, respectively.

Preferred Stock

The Company had authorized 5,000,000 shares of Preferred Stock, par value $0.01 per share, at March 31, 2011 and December 31, 2009, respectively. As of March 31, 2011 and September 30, 2010, respectively, there were no shares of Preferred Stock outstanding. On May 24, 2010, 1,141,933 preferred shares were returned to the Company and cancelled. On December 31, 2010, the remaining 3,858,067 shares of Preferred Stock outstanding, all of which were designated as “Series A Convertible Preferred Stock” (the “Series A Preferred Stock”) were converted to 214,178,946 common shares.

On October 16, 2009, the Company filed a Certificate of Designation for the Series A Preferred Stock pursuant to which the Company, at the direction of its Board of Directors, designated the rights and preferences of all 5,000,000 authorized shares of Preferred Stock. The Certificate of Designation was subsequently amended on December 24, 2009 and May 24, 2010 to adjust the Conversion Ratio (defined below).

Under the Certificate of Designation in effect prior to December 31, 2010, the Series A Preferred Stock was automatically convertible into shares of the Common Stock at the conversion ratio of 55.514574 shares of Common Stock for each share of the Series A Preferred Stock (the “Conversion Ratio”). The holders of the Series A Preferred Stock were not entitled to any dividend preference but were entitled to participate pari passu in dividends declared with respect to the Common Stock as if the Series A Preferred Stock was converted in Common Stock at the Conversion Ratio. Similarly, the holders of the Series A Preferred Stock were not entitled to any liquidation preference but, in the event of any liquidation, dissolution or winding up of the Company, the outstanding shares of Series A Preferred Stock would be deemed converted into shares of Common Stock at the Conversion Ratio and would participate pari passu in the distribution of liquidation proceeds. Holders of the Series A Preferred Stock were entitled to vote on matters presented to the holders of Common Stock as if the Series A Preferred Stock was converted into the Common Stock at the Conversion Ratio. Except as provided by Nevada law, holders of Series A Preferred Stock vote together with the holders of Common Stock as a single class.

Prior to December 31, 2010, the Company did not have reserved and available out of its authorized but unissued shares of Common Stock the number of shares of common stock that was sufficient to effect the conversion of all outstanding shares of Series A Preferred Stock. The Company’s shareholders had not previously effectively approved an increase in the Company’s authorized shares of Common Stock to five hundred million (500,000,000) shares.

Change in Control

On October 19, 2009, there was a change in the effective control of the Company. On that date, pursuant to the Merger Agreement (the “Merger Agreement”), dated as of August 10, 2009, and subsequently amended and restated on September 25, 2009, among the Company, the Company’s then subsidiary MediaNet Merger Sub, Inc., a Nevada corporation, and CG Holdings Limited, the Company acquired all of the issued and outstanding shares of CG for 5,000,000 shares of the Company’s Series A Preferred Stock (the “Merger”). Holders of the Series A Preferred Stock were entitled to vote on matters presented to the holders of Common Stock as if the Series A Preferred Stock was converted into the Common Stock at the Conversion Ratio. Accordingly, Zen Holding Group Limited, the sole record holder of CG owns approximately 87% of the voting power of the Company. Michael Hansen and Michel Saouma, who is neither a director nor executive officer of the Company, indirectly share the right to vote and make investment decisions with respect to the shares held by Zen.

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In addition, as a condition to the Merger, the Company agreed to appoint:

• Michael Hansen as a director and as President and Chief Executive Officer of the Company;

• Kent Holmstoel as Chairman of the Board and Chief Operating Officer of the Company; and

• Andreas Kusche as a director and as General Counsel of the Company.

In connection with the Merger, all of the persons serving as directors of the Company as of October 19, 2009, resigned. On October 29, 2009, the Company appointed Mr. Hansen as President and Chief Executive Officer, Mr. Holmstoel as Chief Operating Officer and Mr. Kusche as General Counsel of the Company. Also on such date, Steven Adelstein was appointed to the Board by Mr. Berns, who was then the sole remaining Board member. On February 23, 2010, Mr. Adelstein resigned and was replaced by Andreas Kusche. The appointment of Messrs. Hansen and Holmstoel was effective on December 31, 2010, upon our compliance with Securities and Exchange Commission Rule 14f-1. On September 10, 2010 the Company filed a Schedule 14f-1 with Securities and Exchange Commission and made a distribution of such schedule to its shareholders. The Company also filed a Form 8-K announcing the effectiveness of the appointment of Messrs Hansen and Holmstoel on September 20, 2010.

Note 13 – Warrants and Options

As of March 31, 2011 and September 30, 2010, the Company had outstanding warrants to purchase up to -0- and 801,250 shares of Common Stock and options then exercisable to purchase up to 2,125,000 million and 1,000,000 and shares of Common Stock, respectively. These securities give the holder the right to purchase shares of the Common Stock in accordance with the terms of the instrument.

	Warrants			Options
Balance, September 30, 2010		801,250			1,000,000
Granted		-			1,125,000
Exercised		-			-
Expired		(801,250	)		-
Balance, March 31, 2011		-			2,125,000

All of the warrants expired unexercised. The Option are described below.

2010 Omnibus Equity Compensation Plan

The 2010 Omnibus Equity Compensation Plan (the “Plan”) became effective September 30, 2010. The 2010 Omnibus Equity Compensation Plan has not been approved by our stockholders. The Plan is designed for the benefit of the directors, executives, employees and certain consultants and advisors of the Company (i) to attract and retain for the Company personnel of exceptional ability; (ii) to motivate such personnel through added incentives to make a maximum contribution to greater profitability; (iii) to develop and maintain a highly competent management team; and (iv) to be competitive with other companies with respect to executive compensation. Awards under the Plan may be made to Participants in the form of (i) incentive stock options; (ii) nonqualified stock Options; (iii) stock appreciation rights; (iv) restricted stock; (v) deferred stock; (vi) stock awards; (vii) performance shares; (viii) other stock-based awards; and (ix) other forms of equity-based compensation as may be provided and are permissible under the Plan and the law. A total of 50 million shares of Common Stock have been reserved for issuance under the Plan. As of March 31, 2011, options with respect to 5 million shares were granted to Mr. Mroczkowski, our Chief Financial Officer, and options with respect to 500,000 shares were granted to Anabella Teverovsky, our Controller. All options are outstanding. All of these outstanding options were granted with an exercise price at $.001. As of March 31, 2011, Mr. Mroczkowski’s options had vested with respect to 2 million shares and the balance vest at the rate of 500,000 shares each quarter through December 31, 2012 and have a maximum term expiring in 2020. As of March 31, 2011, Ms. Teverovsky’s options had vested with respect to 125,000 shares and the balance vest at the rate of 62,500 shares each quarter through December 31, 2012 and have a maximum term expiring in 2020.

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Restricted Stock Awards

On September 30, 2010, the Company entered into a restricted stock award agreement with Betina Dupont Sorensen, the Company’s Head of Marketing, whereby the Company granted five million shares of restricted common stock (“Restricted Stock”) to Ms. Sorensen. Ms. Sorensen’s interest in the shares of Restricted Stock vest as follows:

• One million (1,000,000) of the shares of Restricted Stock vested on September 30, 2010;

• Five hundred thousand (500,000) of the shares of Restricted Stock are scheduled to vest at the end of each of the eight calendar quarters immediately following September 30, 2010.

In addition, on September 30, 2010, the Company entered into a restricted stock award agreement with Andreas Kusche, the Company’s General Counsel, whereby the Company granted five million shares of Restricted Stock to Mr. Kusche. Mr. Kusche’s interest in the shares of Restricted Stock vests as follows:

• Four hundred thousand (400,000) of the shares of Restricted Stock vested on September 30, 2010;

• Five hundred thousand (500,000) of the shares of Restricted Stock are scheduled to vest at the end of each of the eight calendar quarters immediately following September 30, 2010.

Both of the above restricted stock awards, provide that in the event that either person (i) is terminated by us without cause, (ii) terminates their employment with us for good reason or (iii) dies or is disabled, any unvested Restricted Stock then held by such person or their estate will vest immediately. In the event that either person is terminated by us with “cause” or terminates his employment with us without “good reason,” any unvested Restricted Stock then held by such will be forfeited.

The following table shows the number and weighted-average grant-date fair value of equity instruments for all of the of equity instruments issued under the 2010 Omnibus Equity Compensation Plan:

	Number of Shares			Weighted Average Grant Date Fair Value
Non-vested at the beginning of the quarter		10,937,500		$	2,486,823
Granted during the quarter		-			-
Vested during the quarter		(1,562,500	)		(372,279	)
Forfeited during the quarter		-			-
Non-vested at the end of the quarter		9,375,000		$	2,114,544

The Company recognized $330,438 and $660,876 and $0 and $0 compensation expense from the restricted stock awards and the option grant for the three and six months ended March 31, 2011 and 2010, respectively.

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Note 14 – Merger

The Merger and Merger Related Transactions

Pursuant to the Merger Agreement, the Company acquired on October 19, 2009 all of the outstanding shares of CG in exchange for the issuance to CG’s shareholders of 5,000,000 shares of the Series A Preferred Stock. The Agreement provided that the Series A Preferred Stock would be automatically converted into Common Stock of at such time as the Company’s Articles of Incorporation were amended to increase the number of authorized shares of Common Stock to 500,000,000 shares. If all of the shares of Series A Preferred Stock had been converted into Common Stock as of October 19, 2009, the former record holder of CG, Zen Holding Group Limited (“Zen Holding”), would have become the record holder of 90% of the then issued and outstanding Common Stock, on a fully diluted basis.

The Company and CG originally contemplated that Zen would receive Common Stock upon consummation of the Merger and the Merger would be completed in the first quarter of 2010 in order to:

• provide the Company sufficient time to prepare a complex proxy statement and hold a shareholder meeting to consider approval of the Merger Agreement and an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of common stock from 50 million to 500 million shares; and

• provide the beneficial owners of CG adequate time to contribute and/or transfer a number of entities or properties to CG.

For instance, upon completion of the Merger the Company expected that CG would own directly or indirectly all of the following subsidiaries or assets:

• DUBLICOM LIMITED (“DUBLICOM”), a Cyprus limited company, which runs DubLi’s auction websites;

• Lenox Resources, LLC, a Delaware limited liability company, that holds DubLi’s intellectual property;

• DUBLI NETWORK LIMITED (“DUBLI NETWORK”), a British Virgin Islands limited company, that operates DubLi’s global network with its business associates;

• Lenox Logistik und Service GmbH (“Lenox Logistik”), a German corporation, serves as the product purchasing agent of DUBLICOM for products sold to customers outside of North America, Australia and New Zealand. Lenox Logistik also serves as an outsourced service provider that employs persons who are collectively responsible for DubLi’s administrative, accounting, marketing and purchasing activities.

• DubLi Logistics, LLC, a Delaware limited liability company (“DubLi Logistics”), serves exclusively as the product purchasing agent of DUBLICOM for products sold to customers in North America (United States, Mexico, Puerto Rico, Canada), Australia and New Zealand;

• certain rights to real estate in the Cayman Islands (the “Cayman Property Rights”) now held by DubLi Properties, LLC, a Delaware limited liability corporation.

In compliance with Generally Accepted Accounting Principles, the Company also expected to include in its consolidated financial statements DubLi.com, LLC, a Delaware limited liability company that was the holding company for two subsidiaries that have since discontinued operations: DubLi.com GmbH, a German corporation, and DubLi Network, LLC, a Delaware limited liability company.

In early September 2009, the Company and CG were advised by legal counsel that the merger could be effected sooner than previously anticipated if, in lieu of Common Stock, Zen Holding received the Series A Preferred Stock, which would be converted later into Common Stock. Accordingly, on October 19, 2009, the Merger was consummated and Zen Holding was issued the Series A Preferred Stock.

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Completed Post-Merger Adjustments

After completing the Merger, the Company determined that certain of its expectations with respect to the Merger had not been met. In particular, upon completion of the Merger on or about the targeted completion date of June 30, 2010, the Company expected that: it would (i) directly or indirectly hold 100% of the equity interests of DubLi Logistics; (ii) directly or indirectly hold certain real estate rights now held by DubLi Properties LLC; and (iii) certain investors in DubLi.com, LLC would become shareholders in the Company.

As a result of the acceleration of the Merger closing and the substantial amount of work required to complete the Merger and the related SEC disclosure documents, Mr. Hansen’s oral pledge to, prior to the Merger, transfer his 100% ownership interest in DubLi Logistics to CG was not evidenced by definitive transfer documents until May 24, 2010. Similarly, Mr. Hansen’s oral pledge to contribute his 100% indirect ownership interest in the Cayman Property Rights (now owned by DubLi Properties, LLC) to the Company in support of DubLi’s marketing programs was not evidenced by definitive transfer documents until May 24, 2010.

As of May 24, 2010, the Company had acquired all of the equity interests in DubLi Logistics and DubLi Properties LLC that the Company expected it would own.

DubLi Logistics - Purchasing Agent of DUBLICOM

DubLi Logistics was identified as one of the consolidated subsidiaries of the Company in Amendment No. 1 to the Company’s Form 8-K filed with the SEC on February 4, 2010 (the “Form 8-K”) and the Company’s Form 10-Q for the quarter ended December 31, 2009 (the “Form 10-Q”) based upon DubLi Logistics historical and current operation as an affiliated, profitless, product purchasing agent of DUBLICOM. DubLi Logistics is operated exclusively by employees of Lenox Logistik.

DubLi Properties - Property Orally Pledged to DubLi

DubLi Properties, LLC was contributed to the Company by Mr. Hansen on May 24, 2010 in satisfaction of Mr. Hansen’s oral pledge to contribute the Cayman Property Rights to the Company. The value of the contract at the date of contribution was $1,440,708. The Cayman Property Rights, which had a book value of $2,669,138 as of March 31, 2011, were acquired by DubLi Properties, LLC in December 2009 in exchange for 34 parcels of real property, $43,381 of cash and an agreement by DubLi Properties LLC to make an additional $824,244 of payments. The primary purpose of the Cayman Property Rights, which consists of a purchase deed with respect to 15 lots in the Cayman Islands, is to reward DubLi business associates upon completion of certain performance objectives.

DubLi.com, LLC - Discontinued Businesses

The results of operations and assets and liabilities of DubLi.com, LLC’s subsidiaries were also included in the Company’s consolidated results of operations as reported in the Form 8-K and Form 10-Q based upon their common ownership and historical relationship to CG and its other consolidated subsidiaries. DubLi.com, LLC, which is a holding company, has never directly operated a business and its subsidiaries were sold or their businesses were discontinued in the second quarter of 2009.

The Company and Mr. Hansen had previously expected that the investors in DubLi.com, LLC (the “DubLi.com Investors”) would receive from Zen Holding certain shares of Common Stock. With the acceleration of the Merger closing and Merger restructuring, the DubLi.com Investors were expected to receive from Zen Holding 62,679,116 shares of Common Stock upon the conversion of the Series A Preferred Stock to Common Stock. Since Zen Holding has not transferred and does not intend to transfer Common Stock to the DubLi.com Investors as previously anticipated, the Company and Zen Holding entered into an agreement, dated May 24, 2010 (the “Post-Merger Agreement”), pursuant to which Zen Holding returned to the Company 1,129,057 shares of Preferred Stock, which were otherwise convertible into 62,679,116 shares of Common Stock.

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Pursuant to the Post-Merger Agreement, Zen Holding has also returned to the Company 12,876 shares of Series A Preferred Stock which were convertible into 714,817 shares of Common Stock (the “Lenox Shares”).

Accordingly, as of May 24, 2010, the Company had 3,858,067 and 28,621,680 issued and outstanding shares of Series A Preferred Stock and Common Stock, respectively.

Outstanding Post-Merger Adjustments

Amendment of Certificate of Designation

In connection with the preparation of the Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 and a review of the transfer agent records, it came to the Company’s attention that the number of shares of the Company’s Common Stock outstanding prior to the Merger was understated by a total of 439,878 (the “Additional Common Stock”), comprised of 500,000 shares purchased by a shareholder in July 2007 (although the certificate was not issued until January 2010) offset by an accounting error in connection with the net exercise of warrants involving approximately 60,000 shares.  In light of this understatement, as of May 24, 2010 the Company amended the Certificate of Designation setting forth the terms of the Preferred Stock (the “Adjustment Amendment”).  In the Adjustment Amendment, the Conversion Ratio was increased from 54.7229736 to 55.514574 to permit the holders of the Preferred Stock to maintain their expected percentage ownership after taking into account the Additional Common Stock.

Proposed Two Step Transfer of Common Stock to DubLi.com Beneficiaries and Lenox Beneficiaries

As described above, in May 2010 Company announced that:

• Zen Holding had returned to the Company 1,141,933 shares of Preferred Stock, which were convertible into 63,393,933 shares of Common Stock (the “Loyalty Shares”);

• the Company intended to use 62,679,116 of the  Loyalty Shares to purchase, in a registered tender offer, various outstanding interests in DubLi.com, LLC from persons (the “DubLi.com Beneficiaries”) other than  Mr. Michael Hansen; and

• the Company intended to transfer 714,817 of the Loyalty Shares to various employees (the “Lenox Beneficiaries” and together with the DubLi.com Beneficiaries, the “Beneficiaries”) of Lenox Resources, LLC.

The Company has since determined not to seek to acquire interests in DubLi.com, LLC. Nonetheless, the Company would still like to provide the Beneficiaries a significant ownership interest in the Company.

Accordingly, the Company transferred the Loyalty Shares to a trust (the “Trust”) on March 28, 2011, (the “Initial Transfer Date”) and, on March 28, 2012 (the “Final Transfer Date”), have the Trust transfer the Loyalty Shares to the Beneficiaries (the “Two Step Transfer”). The Loyalty Shares are expected to be freely transferrable after the Final Transfer Date.

The Company believes the Two Step Transfer process is preferable to conducting some form of registered offerings in the United States and numerous other countries due to, among other things, the projected expense and time required to complete registered offerings in numerous jurisdictions.

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Establishment of the Trust and Issuance of the Loyalty Shares

The Two Step Transfer process is governed by the share transfer agreement, dated February 25, 2011 (“Share Transfer Agreement”).  The Trust was established on March 28, 2011, and is administered by Batista Guerra y Asociados, an independent offshore trust company (the “Trustee”), pursuant to the terms and conditions set forth in the trust agreement which was signed on February 25, 2011 (the “Trust Agreement”).  The following summary of the Share Transfer Agreement and the Trust Agreement is qualified in its entirety by the actual forms of agreement filed as exhibits hereto and which are hereby incorporated by reference herein.

The Company was not required to issue the Loyalty Shares to the Trust until prior satisfaction of the following, among other things: (1) the terms of the Share Transfer Agreement have been publicly disclosed by the Company at least 20 days prior to the issuance of the Loyalty Shares to the Trust; (2) on or prior to the Initial Transfer Date, the Company shall not have received any comments from the SEC or any other comparable foreign or U.S. State regulator with respect to the transactions contemplated by the Share Transfer Agreement (other than comments that are resolved to the satisfaction of the Company, in its sole and absolute discretion); and (3) on or prior to the Initial Transfer Date, the Company shall not have received notice of any demand, claim or a threatened claim with respect to the transactions contemplated by the Share Transfer Agreement (other than comments, demands, claims or threatened claims that are resolved to the satisfaction of the Company, in its sole and absolute discretion).

Terms and Conditions of the Trust

The Trustee is required to transfer the Loyalty Shares to the Beneficiaries without requiring any payment or other consideration from the Beneficiaries (other than any transfer taxes or tariffs that may be imposed in connection with the transfer).  In order to receive the Loyalty Shares, each Beneficiary will be required to complete, execute and return to the Company a Beneficiary Representation Affidavit certifying that the Beneficiary, among other things: (1) has received an information memorandum relating to the transfer of the Loyalty Shares; (2) has had access to such financial information and other information concerning the Company and the Loyalty Shares; and (3) understands and agrees that the Beneficiary is receiving the Loyalty Shares pursuant to Regulation S, Regulation D or another applicable exemption from the registration requirements of the U.S. Securities Act of 1933 (the “Securities Act”).  No Beneficiary shall have any right, title or interest of any kind in the Loyalty Shares until such time, if ever, that the Trustee transfers Loyalty Shares to the subject Beneficiary in accordance with the terms of the Trust.

Until the Final Transfer Date, the Trustee has agreed not to, among other things: (1) vote the Loyalty Shares or enter into any form of voting agreement to vote other shares of common stock of the Company or to allow another person to vote the Loyalty Shares; (2) propose nominees to the Company’s board of directors or solicit proxies with respect to election of directors; (3) voluntarily pledge, encumber or in any other way subject the Loyalty Shares to any form of liens or security interests of any kind; (4) incur indebtedness of any kind (5) acquire any additional shares of the Company's common stock; (6) engage in any form of hedging transaction involving the Company's common stock; or (7) take any other action to control or influence the control of the Company.

The Company would like to provide the Beneficiaries a significant ownership interest in the Company since:  (i) virtually all of the DubLi.com Beneficiaries are former business associates of DubLi Network, LLC a wholly owned subsidiary of DubLi.com, LLC, and current business associates of DUBLI NETWORK LIMITED, a wholly owned subsidiary of the Company; (ii) virtually all of the Lenox Beneficiaries have been and are currently employees or consultants of the Company, (iii) notwithstanding the financial failure of DubLi.com, LLC, the Company believes that the DubLi Network, LLC business associates assisted the Company build brand awareness for the DubLi.com trade name; and (iv) consistent with many of their expectations, the Company likes the Beneficiaries to have a significant ownership interest in the entity which owns and is further developing the DubLi brand.

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Accounting for Two Step Transfer

When the Two Step Transfer is concluded as planned:

   (i)     the Company will have issued 277,573,770 shares of common stock in connection with the merger and the Two-Step Transfer,  the same number of shares the Company initially  planned to issue in connection with the Merger (disregarding adjustments due to errors in the Company's stock ledger);

   (ii)    the Beneficiaries will be receiving the same number of shares of Common Stock they would have received if the Merger had been completed as planned and Zen Holding had transferred the Loyalty Shares to the Beneficiaries as intended (disregarding adjustments due to errors in the Company's stock ledger); and

   (iii)    the Company will have received no more consideration in connection with the Merger and the Two-Step Transfer than it planned to receive in connection with the Merger.

The Company has reacquired and cancelled 1,141,933 shares of preferred stock (convertible into 63,393,933 shares of common stock) pursuant to an agreement with Zen Holding dated May 24, 2010, which agreement did not require the Company to tender Zen Holding any consideration. The Company has issued 63,393,933 new common shares pursuant to the Share Transfer Agreement. The new share issuance is equivalent to the number of common shares into which the preferred stock would have converted.

The Company has made the following entries with respect to the equity section of its consolidated financial statements to account for the Merger, as amended, and the Two Step Transfer as follows:

1. For merger consideration, the Company issued 5 million preferred shares on October 19, 2009 and recorded the $50,000 par value of the preferred stock as disclosed in Form 10-Q for the first quarter ended December 31, 2009.

2. For no consideration, the Company received and canceled 1,141,933 preferred shares May 24, 2010 and recorded a reduction of preferred stock par value and increase in paid-in capital of $11,419 as disclosed in Form 10-Q for the third quarter ended June 30, 2010.

3. The Company converted 3,858,067 preferred into 214,178,946 common on December 31, 2010, and recorded a reduction in preferred stock par value of $38,581 and increase in common stock par value of $214,179 and a reduction of paid-in capital of $175,598 which will be disclosed in Form 10-K for the year ended December 31, 2010.

4. For no consideration, the Company has issued 63,393,933 common shares on March 28, 2011, and recorded an increase in common stock par value and a reduction of paid-in capital of $63,394 which is disclosed in this Form 10-Q for the second quarter ending March 31, 2011.  In accordance with ASC 805-50-05-4, the common shares will be issued at par value and no goodwill or other step-up of assets will be recognized because the shares will be issued to the members of DubLi.com, LLC, (see Note 2) an entity under common control.  The shares will be issued to the members in proportion to their ownership of DubLi.com, LLC.

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The following table illustrates the accounting for the aforementioned transactions:

		Series A			Series A			Common		Common
		Preferred Stock			Preferred Stock			Shares		Stock		Paid-In
		Issued			Par Value			Issued		Par Value		Capital
1.	Oct 19, 2009; Preferred shares Issued in merger transaction		5,000,000		$	50,000						$	(50,000	)
2.	May 24, 2010; Return and cancel  preferred shares		(1,141,933	)		(11,419	)						11,419
3.	December 31, 2010; Convert preferred to common shares		(3,858,067	)		(38,581	)		214,178,946	$	214,179		(175,598	)
4.	March 28, 2011; Issue common shares								63,393,933		63,394		(63,394	)
Totals			-0-		$	-0 -			277,572,879	$	277,573	$	(277,573	)

Note 15 – Subsequent Events

Currency Translation Effects

Subsequent to the balance sheet date the exchange rate between the EURO and the US dollar increased by approximately 5.28%.  These recent changes would increase the currency translation adjustment and decrease comprehensive income and current assets by approximately $34,000.

New Members of the Board of Directors

On April 8, 2011, the Company announced that Niels Burtenshaw Thuesen, Blas Garcia Moros, and Lester Rosenkrantz were appointed to the Company’s Board of Directors (the “Board”).  All three new members have agreed to serve on the Audit Committee of the Board.

Note 16 - Segment Information

SFAS No. 131 (ASC280) requires that the Company disclose information about its operating segments. The Company has two strategic business units, one which sells DubLi Credits through the web sites for use on its online auctions and the second that offers an online shopping experience from which the Company earns rewards on products and services from participating merchants. In October 2010, the Company rolled out DubLi Entertainment, a music sharing service. All of these services are offered through the same website and share the same synergies. Currently, the Company accounts for these services in separate accounts but within one set of financial statements. Evaluation procedures are performed on the Company as a whole.

Geographically, the Company revenues are segmented in the following markets:

European Union	$	2,919,934	45	%
North America		709,526	11	%
Australia & New Zealand		1,155,391	18	%
Worldwide		1,722,956	26	%
	$	6,507,807	100	%

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

FORWARD LOOKING STATEMENTS

Introductory Note

Caution Concerning Forward-Looking Statements

The discussion contained in this Form 10-Q, contains forward-looking statements that involve risks and uncertainties.  The issuer’s actual results could differ significantly from those discussed herein.  These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as “anticipate,” “expect,” “intend,” “plan,” “will,” “we believe,” “the Company believes,” “management believes” and similar language, including those set forth in the discussions under “Notes to Financial Statements” and “Management’s Discussion and Analysis or Plan of Operation” as well as those discussed elsewhere in this Form 10-Q.  The forward-looking statements reflect our current view about future events and are subject to risks, uncertainties and assumptions.  We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from those expressed in any forward-looking statement.  The following important factors could prevent us from achieving our goals and cause the assumptions underlying the forward-looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements:

· our inability to establish and maintain a large growing base of business associates;

· our inability to develop brand awareness for our online auctions;

· our failure to maintain the competitive bidding environment for our online auctions;

· our failure to adapt to technological change;

· an assertion by a regulatory agency that one or more of our auctions constitute some form of “gaming” or a “lottery”;

· increased competition;

· increased operating costs;

· changes in legislation applicable to our business; and

· our failure to improve our internal controls.

See also the risks discussed in our Form 10-K for the fiscal year ended September 30, 2010 and those discussed in other documents we file with the Securities and Exchange Commission.

However, other factors besides those referenced could adversely affect our results, and you should not consider any such list of factors to be a complete set of all potential risks or uncertainties. Any forward-looking statements made by us herein speak as of the date of this Form 10-Q. We do not undertake to update any forward-looking statement, except as required by law.  Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

INTRODUCTION

The following discussion and analysis summarizes the significant factors affecting: (i) our consolidated results of operations for the three and six months ended March 31, 2011 compared to the three and six months ended March 31, 2010; and (ii) our financial liquidity and capital resources.  This discussion and analysis should be read in conjunction with our consolidated financial statements and notes included in this Form 10-Q. 

MediaNet Group Technologies, Inc. (“MediaNet Group” or the “Company”) through its wholly owned subsidiaries is a global marketing company that sells branded merchandise to consumers through Internet-based auctions conducted under the trade name “DubLi.com.”  As of March 31, 2011, our online auctions were conducted in Europe, North America, Australia and New Zealand and a global auction portal serving the balance of the world. We have a large network of independent business associates that sold “credits”, or the right to make a bid in one of our auctions (referred to herein as “Credit” or “DubLi Credits”).  These auctions are designed to offer consumers real savings on these high end goods.  The Company, through its BSP Rewards subsidiary, also offers private branded loyalty and reward web malls where members receive rebates (rewards) on products and services from participating merchants.

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Online Auctions

The DubLi.com auctions are designed to provide consumers with the ability to obtain goods at discounts to retail prices through a fun and convenient shopping portal.  These auctions offer only new inventory from the world’s leading manufacturers.

In order to participate in and make bids in any the DubLi.com online auctions, consumers must purchase Credits.  Each Credit costs US$0.80 (EUR 0.50) and entitles the consumer to one bid in one auction.  Discounts are available on the purchase of a substantial volume of Credits at one time.  Credits can be purchased directly from DubLi or from one of DubLi’s business associates.  Accordingly, we generate revenue from the DubLi.com auctions both on the sale of Credits and on the sale of products to the ultimate auction winners.

DubLi has two types of auctions which it operates on separate platforms for Europe, North America (United States, Mexico, Puerto Rico, Canada), Australia and New Zealand and a global portal serving the balance of the world: Xpress and Unique Bid.

In Xpress auctions, the product up for auction is displayed with a starting price, which is the lowest available retail price (the “Starting Price”). Each time a person makes a bid (which costs him or her one Credit), the Starting Price is decreased by US$0.25 (EUR 0.20) and the reduced price becomes visible to the person making a bid and to no other person.  The bidder can choose to purchase the item at the reduced price so shown or can opt to wait in the hopes that others will make bids and drive down the price.  The actual purchase price is always less than the Starting Price and is often a substantial discount to the Starting Price.

In Unique Bid auction, the auction is scheduled with a definitive start and end time.  At any time prior to the auction end time, persons can make bids (one bid for one Credit) on the price at which it would purchase the product. Bids must be made in US$0.20 increments. The person who has placed the lowest unique bid (i.e. no other person has bid the same US$0.20 incremental amount) is entitled to purchase the product at such bid price.

In both styles of auctions, there are generally a high number of bidders and most bidders place more than one bid.  Accordingly, between the sale of the product and Credits, DubLi often realizes more than the price which it paid for an item. Substantially all items sold by DubLi in the online auctions are purchased by DubLi on the open market at market price without any discount, although in the future DubLi may seek to work with wholesalers or retailers to purchase items for less than they can be purchased by the average customer.

Credits are sold to consumers directly by DubLi, through our network of business associates, or through the Partner Program (described below).  As of March 31, 2011, approximately 94% of our Credit sales are made through our network of business associates and, accordingly, we are dependent on our business associates for a significant portion of our sales.  As of March 31, 2011, we had business associates located in over 87 countries.  Business associates are incentivized to locate and sponsor new business associates (“Downstream Associates”) and establish their own sales organization.

Business associates earn commissions on:

· the sale of Credits by the subject business associate directly to retail consumers (“Affiliated Consumers”) who are signed up by such business associate (“Retail Commissions”);

· the sale of Credits by Downstream Associates sponsored by the subject business associate or such business associate’s Downstream Associates (“Organizational Commission”).

To earn Retail Commissions, a business associate must purchase Credits from DubLi and resell such Credits to its Affiliated Consumers.  Credits are sold to business associates by DubLi at the same price offered to retail consumers.  When an Affiliated Consumer places an order for Credits, the Credits are automatically deducted from the subject Business Associate’s account and transferred to the Affiliated Consumer’s account, and the Business Associate is eligible to earn Retail Commission.  If a Business Associate does not have sufficient Credits in his account to cover an order by an Affiliated Consumer, DubLi will supply the balance of Credits to fill the order, but the business associate will not be eligible to earn commissions on the Credits supplied by DubLi.  The amount of the Retail Commissions earned by a business associate varies from 5-25% based on the total Credits purchased by the business associate over a consecutive twelve-month period.

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To become a business associate, an applicant must register with DubLi by filling out an online Business Associate Application and Agreement and purchase an e-Biz kit for US $175.00. The e-Biz kit is the only purchase required to become a business associate.

DubLi also offers a partner package and program (the “Partner Program”) to companies, associations, affinity groups and non-profit organizations (which it refers to as a “white label solution”). Using the Partner Program, these groups can, through DubLi, open and utilize an auction portal open to their members. Each partner earns a thirty percent (30%) commission on all Credits sold to such Partner’s members through their portal. Using the Partner Program gives participating organizations a professional web presence, access to products offered on the auction portal through DubLi, and the use of DubLi to complete all customer purchase processes. DubLi provides a variety of ready-made templates that can be customized to the individual requirements of any organization, including the use of the organization’s URL. The Company receives the remaining 70% of the sales proceeds from which it pays all related costs and expenses.

Demand for our products and services will be dependent on, among other things, market acceptance of our products, traffic to our websites, growth in our Business Associate Network, and general economic conditions. Inasmuch as a major portion of our activities is the receipt of revenues from the sales of Credits and continued demand at our auction portals.

Our success will be dependent upon implementing our plan of operations, which is subject to various risks including those contained in our various public reports filed with the Securities and Exchange Commission. We plan to strengthen our position in existing and new markets by continuing to aggressively market our products and services.

BSP Rewards

BSP Rewards provides private branded loyalty and rewards programs designed as a shopping service through which members receive rebates (rewards points) on purchases of products and services from participating merchants in our Internet mall platform.  These rewards act as a common currency that may be accumulated and donated to a charity or loaded onto a debit MasterCard and used towards additional purchases from any participating merchant in the program. Additionally, once the loyalty points are loaded on the MasterCard, the consumer can utilize this debit card at any merchant where the debit MasterCard is accepted.

The BSP Rewards program is a web based retail mall concept. Retail sellers of goods and services who join in the program as participating merchants agree to pay rebates to us for our members who purchase goods and services through the program at their individual web stores. We collect all rebates paid by participating merchants and retain a portion as our fee for operating the program. Another portion of the rebate (generally one-half), is designated as a “reward” earned by the member who made the purchase. A portion of the Company’s rebate is paid to the organization or company which enrolled the member in the program.

DubLi uses the BSP Shopping Mall in combination with its auction sites.

We have also developing a new platform of websites to better provide DubLi.com shoppers with an enjoyable experience. The new platform provides DubLi.com shoppers’ website displays that, among other things: facilitate shoppers’ monitoring and participation in Xpress Auctions and Unique Bid Auctions simultaneously; provide shoppers with expanded merchandise search capabilities; and provides shoppers with expanded capabilities to monitor auctions.

We are also contemporaneously seeking to expand our service offering to a wide range of entertainment products and services via streaming content downloads (i.e. music, movies, television and radio).

Working from the “Cinch” technology we acquired from MSC, Inc., in October 2009, we intend to offer users a fast and convenient method of locating and enjoying entertainment content readily available on the Internet, free of charge.  We hope that Cinch will expand DubLi.com's relationship with its shoppers and thereby assist us to better identify our shopper’s needs and shopping habits.

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MediaNet is targeting to launch its new websites during 2011 and has launched new sites in Germany and the U.S. as of April 27, 2011.  See “Risk Factors.”

Our Industry

The Company provides a variety of shopping alternatives for which the industry is segmented and diverse.  MediaNet Group’s service offering emphasize bringing pricing value to consumers in a format that is unusual within the current ecommerce environment. While the industry consists of many companies and organizations that provide shopping, loyalty and rewards in various means and fashions, few offer a complete package. There are many other similar businesses; however, most others do not include many of the features and benefits that MediaNet Group does. It requires significant time and resources to develop a mature, flexible, broad-based platform and to attract and market the program to a wide variety of business segments. We believe our various businesses have and will generally continue to benefit from the growing popularity of online shopping versus traditional brick and mortar shopping.

Competition

MediaNet Group believes that there are a number of companies engaging in reverse auctions. However, it does not believe that any of these companies present significant competition to DubLi. The Company believes that its DubLi online auction business has been able to distinguish itself from other competitors based upon its advanced, customer friendly technology, multi-level marketing strategy, local marketing knowledge through the DubLi Network sales force, and its exclusive focus on new inventory from the world’s leading manufacturers.

The BSP Rewards services offer private branded web mall program for companies, organizations and associations with features that include, but is not limited to, their logo and corporate image, cross links between the mall and their own corporate websites where the end user associates the mall with the host brand. Our competition includes other established loyalty/rewards companies, service providers that aggregate affiliate network merchants and existing web portals. While some competitors offer a private branded rewards program, most do not offer all of the features as BSP, including our redemption option through a stored value MasterCard, cross marketing applications and customer communications. BSP intends to compete on the basis of pricing and speed to market, ease of use, our platform and the number of features available in our proprietary BSP Rewards application.

Our Customers  

DubLi’s customers are derived primarily from three sources, consumers from the general public who are interested in the DubLi auction formats, consumers signed up by business associates and consumers introduced to the DubLi auctions through our Partner Program.  Sometimes there is overlap among the three categories. Our customers are based all over the world including Europe and North America. We believe that our ability to attract potential buyers to our website is based upon the quality of our merchandise and our focus on word-of-mouth advertising. Our business strategy was designed based on the concept that by rewarding people for their recommendation through referral based commissions, we could potentially attract a large numbers of customers from around the world to our auction portal.

BSP’s business-to-business model enables customers from each of its private branded malls to participate in the rewards malls.  These customer members are either employees from the sponsor of the private branded mall, debit card customers, representatives of network marketing programs and a variety of other membership bases.

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Results of Operations

The following table sets forth certain of our results of operations for the periods indicated.

	Three months ended									Six months ended
	March 31,						Increase			March 31,						Increase
	2011			2010			(Decrease)			2011			2010			(Decrease)
Revenues	$	3,076,926		$	6,332,129		$	(3,255,203	)	$	6,507,807		$	10,616,064		$	(4,108,257	)
Direct cost of revenues		1,282,054			3,546,552			(2,264,498	)		2,968,257			6,760,916			(3,792,659	)
Gross profit		1,794,872			2,785,577			(990,705	)		3,539,550			3,855,148			(315,598	)
Selling, general and administrative		3,144,469			1,529,680			1,614,789			5,460,170			2,137,420			3,322,750
Income (loss) from operations		(1,349,597	)		1,255,897			(2,605,494	)		(1,920,620	)		1,717,728			(3,638,348	)
Other (expense) income		(2,302	)		(5,512	)		3,210			(1,334	)		(7,138	)		5,804
Income (loss) from operations before income taxes		(1,351,899	)		1,250,385			(2,602,284	)		(1,921,954	)		1,710,590			(3,632,544	)
Income taxes-benefit (expense)		-			-			-			-			-			-
Net Income (loss)		(1,351,899	)		1,250,385			(2,602,284	)		(1,921,954	)		1,710,590			(3,632,544	)
Foreign currency translation adjustment		299,038			(395,991	)		695,029			638,587			(412,309	)		1,050,896
Comprehensive Income (Loss)	$	(1,052,861	)	$	854,394		$	(1,907,255	)	$	(1,283,367	)	$	1,298,281		$	(2,581,648	)

Revenues

We had revenues of $3,076,926 for the three months ended March 31, 2011, a decrease of $3,255,203, or 51.4%, as compared to $6,332,129 in the same period ended March 31, 2010.  In the six months ended March 31, 2011, we had net revenues of $6,507,807, a decrease of $4,108,257, or 38.7%, as compared to $10,616,064 in the same period ended March 31, 2010.

The revenue decreases are largely due to reductions in revenue from our subsidiary, BSP Rewards.  Management made a decision during fourth quarter of 2010 to focus the Company’s resources and efforts on higher margin business, primarily its new shopping platform, and eliminate its low margin gift card business from its websites.  While the Company has continued to maintain some of its older format malls, it has focused its marketing efforts on the new platform which launched in Germany in February and the US in April.

Revenue decreases also occurred in both the sales of auction products and sales of DubLi Credits. These sales are generated primarily by our network of business associates and changes in our revenue are directly related to the business associates’ productivity.  As we are introducing new products and services to the business associates, their productivity is negatively affected during the introductory periods.

Direct Cost of Revenues

Direct Cost of Revenues primarily includes the cost of acquiring products to sell in our online auctions, website operation costs and business associate commission expenses. During the three months ended March 31, 2011, we had direct cost of revenues of $1,282,054, or 42% of revenues, versus direct cost of revenues of $3,546,552, or 56% of revenues, in the same period in 2010.  During the six months ended March 31, 2010, we had direct cost of revenues of $2,968,257 or 46% of revenues, compared to direct cost of revenues of $6,760,916, or 64%, of revenues in the same period in 2010. This 63.9% and 56.1% decrease is primarily attributable to the discontinued sale of gift cards from the BSP Rewards online mall as described above. The gift cards had a much higher percentage cost of revenue than our other product offerings thus by eliminating gift card sales, we greatly improved our profit ratio.  In the fourth quarter of 2010, we also changed our method of estimating deferred revenue and expense which we believe provides a more accurate matching of unearned revenue and related direct costs. Variability in the direct costs as a percentage of revenues is a function of the reverse auction bidding process wherein the mix of products offered at auction directly affects the amount of bidding revenue earned from the redemption of DubLi Credits.

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Gross profit

We had gross profit of $1,794,872 and $2,785,577 for the three months ended March 31, 2011 and 2010, respectively.  Gross profit margin was 58% and 44% for those periods. We had gross profit of $3,539,550 and $3,855,148 for the six months ended March 31, 2011 and March 31, 2010, respectively.  Gross profit margin was 54% and 36% for the six months ended March 31, 2011 and March 31, 2010, respectively. The 14% and 18% increase in gross profit percentage is a result of the factors described above in Direct Cost of Revenues.

Operating Expenses

Operating expenses for the three months ended March 31, 2011 were $3,144,469, or 102% of revenues, compared to operating expenses of $1,529,680, or 24% of revenues, for the same period ended March 31, 2010. Operating expenses for the six months ended March 31, 2011 were $5,460,170, or 84% of revenues, compared to operating expenses of $2,137,420, or 20% of revenues, for the same period ended March 31, 2010. The expenses as a percent of revenue are higher than we normally expect due to decreases in revenue and the high cost of planned improvements to our operations including enhancements to our auction websites and backend software.  Operating expenses are also high during the period due to significant professional fees for legal, accounting, tax, and other consultants in connection with litigation, SEC filings, audits, internal control improvements and systems upgrades.

Net Income

We had a net income (loss) of $(1,351,899) or (44) % of revenues for the three month period ended March 31, 2011 compared to comprehensive income of $1,250,385 or 20 % of revenues for the same period ended March 31, 2010. We had a net income (loss) of $(1,921,954) or (30) % of revenues for the six month period ended March 31, 2011 compared to net income of $1,710,590 or 16 % of revenues for the same period ended March 31, 2010.Our net income is a function of revenues, cost of sales and other expenses, as described above.

Earnings (loss) per share in the three month period ended March 31, 2011 were $(0.01) per basic and $0.00 per fully diluted share based on basic weighted average number of shares outstanding during the period of 247,129,155 and fully diluted weighted average number of shares of 249,696,480 compared to earnings per basic share of $0.04 and $0.00 per fully diluted share in the three months ended March 31, 2010 on the basic weighted average number of shares outstanding of 28,484,206 and the fully diluted weighted average number of shares of 339,037,717.

Earnings (loss) per share in the six month period ended March 31, 2011 were $(0.01) per basic and $0.00 per fully diluted share based on basic weighted average number of shares outstanding during the period of 246,148,800 and fully diluted weighted average number of shares of 248,645,221 compared to earnings per basic share of $0.06 and $0.01 per fully diluted share in the six months ended March 31, 2010 on the basic weighted average number of shares outstanding of 28,484,206 and the fully diluted weighted average number of shares of 277,167,462.

For periods that the Company reports a loss, all potential common stock is considered anti-dilutive; for periods when the Company reports net income, potential common shares with combined purchase prices and unamortized compensation cost in excess of the Company’s average common stock fair value for the related period are considered anti-dilutive.

Foreign Currency Translation

We had a foreign currency translation adjustment of $299,038 in the three month period ended March 31, 2011 and a foreign currency translation adjustment of $(395,991) in the three month period ended March 31, 2010. We had a foreign currency translation adjustment of $638,587 in the six month period ended March 31, 2011 and a foreign currency translation adjustment of $(412,309) in the six month period ended March 31, 2010. These non-cash adjustments are the result of translating the European subsidiaries’ financial statements from their functional currency, the Euro, into US Dollars for financial reporting purposes.  The amounts are reflected as other comprehensive income (loss) and do not affect net income or earnings per share.

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Comprehensive Income

We had a comprehensive income (loss) of $(1,052,861) or (34) % of revenues for the three month period ended March 31, 2011 compared to comprehensive income of $854,394 or 13 % of revenues for the same period ended March 31, 2010. We had a comprehensive income (loss) of $(1,283,367) or (20) % of revenues for the six month period ended March 31, 2011 compared to comprehensive income of $1,298,281 or 12 % of revenues for the same period ended March 31, 2010. Our comprehensive income is a function of net income and the foreign currency translation adjustment as described above.

Liquidity and Capital Resources

General

As of March 31, 2011 and September 30, 2010, we had working capital of approximately $(3,390,159) and $(4,015,429), respectively.  Our working capital has increased $625,270 in the six month period ended March 31, 2011 primarily due to $1.1 million in stock subscriptions received offset by operating losses and normal fluctuations in the components of working capital. Our working capital is constrained because we have restricted cash of $2,164,073 classified as a non-current asset that was not available for use in operations.

As of March 31, 2011, we had cash and cash equivalents of $370,442.  We also had $426,929 of restricted cash in current assets in addition to the $2.1 million described above.  Restricted cash is a cash reserve maintained by our credit card processors on sales processed by them.  Our credit card processors are currently maintaining a 20% reserve for six months on each sale processed by them.

Our principal use of cash in our operating activities has historically been for restricted cash, inventory and for selling and general and administrative expenses, both prepaid and expensed. 

Operating Activities

Cash flows provided (used) by operating activities during the six months ended March 31, 2011 were $(1,242,342), compared to cash flows provided by operating activities of $444,918 during the six months ended March 31, 2010. Significant items of working capital that reduced cash flows from operations for the six months ended March 31, 2011 include: an increase in restricted cash of $61,332; a decrease of accrued loyalty points $64,866; a decrease in commissions payable of $536,986; and, a decrease in deferred revenue of $1,164,680.  Items of working capital that increased cash flows from operations include increases in accounts receivable and inventory of $150,292 an increase in prepaid expenses of $94,224; an increase in prepaid customer acquisitions costs of $409,268; a decrease in accounts payable of $119,822 and an increase in accrued liabilities of $505,566. Non-cash expenses included in net income include depreciation and amortization of $ 473,688; stock based compensation of $660,876 and Dubli Credits given as promotions included in expense for $93,740.

Investing and Financing Activities

Cash flows (used) in investing activities were $(105,891) and $(1,168,942) for the six months ended March 31, 2011 and 2010, respectively.  Our primary uses of cash for investing activities were the payment on the real estate contact of $327,724 and $35,055 for office equipment and other assets offset by reduction in restricted cash of $256,888.

Cash flows provided by financing activities were $1,170,270 for the six months ended March 31, 2011, from the $24,153 net proceeds borrowed on the note payable related party and $1,146,117 of stock subscriptions received.

In the six months ended March 31, 2011, we utilized approximately $1,242,342 of cash from operations and $105,891 of cash for investment activities.  We financed this $1,348,233 use of cash with our pre-existing cash resources and approximately $24,153 of net cash advances from our Chief Executive Officer, Mr. Michael Hansen and $1,146,117 of stock subscriptions received.  For the year ending September 30, 2011, we anticipate our capital needs for operating and investing activities will be approximately $2 million.  To fund that cash requirement we secured a $5 million credit facility from our Chief Executive Officer, Mr. Michael Hansen as described in the notes to the condensed consolidated financial statements.

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ITEM 4. CONTROLS AND PROCEDURES

Disclosure controls and procedures are the controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act as of March 31, 2011.  Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of such date, our disclosure controls and procedures were (1) not sufficiently designed to ensure that material information relating to the Company, including our consolidated subsidiaries, was made known to them by others within those entities, particularly in the period in which this report was being prepared and (2) not effective, in that they did not provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. The Chief Executive Officer and Chief Financial Officer further concluded that the disclosure controls and procedures were not effective as of the following prior periods: year ended September 30, 2009; three months ended December 31, 2009; six months ended March 31, 2010 and; nine months ended June 30, 2010; the year ended September 30, 2010 and the three months ended December 31, 2010.

(1)   Control environment—We did not maintain an effective control environment. The control environment, which is the responsibility of senior management, sets the tone of the organization, influences the control consciousness of its people, and is the foundation for all other components of internal control over financial reporting. Each of the following control environment material weaknesses also contributed to the material weaknesses discussed in items (2) through (4) below. Our control environment was ineffective because of the following material weaknesses:

(a)   We did not maintain a sufficient complement of personnel with an appropriate level of accounting knowledge, experience, and training in the application of Generally Accepted Accounting Principles (GAAP) commensurate with our financial reporting requirements and business environment. This material weakness resulted in material restatements and post-closing adjustments relating to revenue recognition, cutoffs, improper report groupings, consolidations and various account errors which have been reflected in the financial statements for the years ended September 30, 2010 and 2009 and the quarters ended December 31, 2009, March 31 and June 30, 2010.

(b)   We did not maintain an effective anti-fraud program designed to detect and prevent fraud relating to (i) an effective whistle-blower program or other comparable mechanism and (ii) an ongoing program to manage and identify fraud risks.

(c)   We did not maintain effective controls over the segregation of duties. Specifically, effective controls were not designed and implemented to ensure the following accounting functions were properly segregated for inventory, purchasing, shipping, bank reconciliations, payroll and accounts payable.  In addition, we did not have effective general controls over information technology security and user access.

(d)   We experienced excessive employee turnover, including the replacement of our accounting staff and CFO, nor did we have proper job descriptions, performance appraisals, and as a result our employees may not have a clear understanding of their responsibilities to facilitate proper internal control over financial reporting.

(e) We rely extensively on outside service providers, most of which did not provide a Type II SAS 70 report on their internal controls.

(f) We did not maintain effective controls over spreadsheets used in the Company’s financial reporting process. Specifically, controls were not designed and in place throughout the year to ensure that unauthorized modification of the data or formulas within spreadsheets was prevented.

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(g) We experienced problems with the post-merger integration of our accounting processes, personnel, systems and procedures which differed greatly between Berlin, Germany and Boca Raton, Florida.

The control environment material weaknesses described above contributed to the material weaknesses related to our monitoring of internal control over financial reporting, period end financial close and reporting, as described in items (2) to (4) below.

(2)   Monitoring of internal control over financial reporting—we did not maintain effective monitoring controls to determine the adequacy of our internal control over financial reporting and related policies and procedures because of the following material weaknesses:

(a)   Our policies and procedures with respect to the review, supervision and monitoring of our accounting operations throughout the organization were either not designed, in place or operating effectively.

(b)   We did not maintain an effective internal control monitoring function nor did we perform a risk assessment. Specifically, there were insufficient policies and procedures to effectively communicate and determine the adequacy of our internal control over financial reporting and to monitoring the ongoing effectiveness thereof.

(c)   We did not maintain formal cash flow forecasts, business plans, and organizational structure documents to guide the employees in critical decision-making processes.

Each of these material weaknesses relating to the monitoring of our internal control over financial reporting contributed to the material weaknesses described in items (3) through (4) below.

(3)   Period end financial close and reporting—Due to a pervasive lack of proper segregation of duties within the finance department, we did not establish and maintain effective controls over certain of our period-end financial close and reporting processes because of the following material weaknesses:

(a)   We did not maintain effective controls over the preparation and review of the interim consolidated financial statements to ensure that we identified and accumulated all required supporting information to ensure the completeness and accuracy of the consolidated financial statements and that balances and disclosures reported in the consolidated financial statements reconciled to the underlying supporting schedules and accounting records.

(b)   We did not maintain procedures and effective controls over the preparation, review and approval of account reconciliations and application programming interfaces (“API”) with third parties or our own systems. Specifically, we did not have effective controls over the completeness and accuracy of supporting schedules for substantially all financial statement account reconciliations.

(c) We did not maintain effective controls over the recording of either recurring or non-recurring journal entries. Specifically, effective controls were not designed and implemented to ensure that journal entries were properly prepared with sufficient support or documentation or were reviewed and approved to ensure the accuracy and completeness of the journal entries recorded.

(4)  Board of Directors—We did not have a  functioning audit committee due to a lack of a majority of  independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and  procedures. Nor did we have a Compensation Committee, compensation charter or any formal procedure for the review, approval or ratification of certain related-party transactions that may be required to be reported under the SEC disclosure rules.

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Changes in Internal Control over Financial Reporting

As previously reported in Item 9A of our Form 10-K  for the year ended September 30, 2010, we reported material weaknesses in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act). As a result of those material weaknesses in our internal control over financial reporting, our principal financial officer concluded that our internal controls over financial reporting were not effective in prior quarters. Those material weaknesses included the following:

• Inadequate accounting personnel

• Delays in the post-Merger integration of the Company’s and CG’s administrative, accounting and reporting systems and procedures;

• Delays in the post-Merger integration and implementation of an effective system of internal control that governs the combined entities.

• Delays in the adoption of board charters and policies and procedures that specify the policies and procedures to be utilized by Company when considering and/or engaging in related party transactions.

Except for the effects of the departure of our Chief Financial Officer on July 15, 2010 and the hiring of a Chief Financial Officer on September 30, 2010 and certain accounting department personnel in 2010, there have been no changes in the Company’s internal control over financial reporting during the most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.  In addition, during the 4th quarter of 2010, we undertook and began a more detailed analysis of our material weaknesses to understand and disclose the nature of each material weakness and its impact on our financial reporting and its internal controls over financial reporting in order to develop a more detailed framework for remediation.  However, as described below under “Remediation Plans” we have subsequently dedicated significant resources to support our efforts to improve the control environment and to remedy the control weaknesses described herein.

Remediation Plans

To address the identified material weakness discussed above, we have:

1. Engaged a firm of ERP system consultants to assist with the integration of the Companies’ accounting and reporting systems into a single automated system.

2. Hired a new Chief Financial Officer, Controller and Chief Technical Officer.

3. Commenced a reorganization of our accounting and administrative staff designed to improve workflow and enhance internal controls.

4. Engaged a law firm to advise us regarding securities law compliance and corporate governance standards.

5. Hired a CPA firm to assist us in the preparation of our tax accrual and footnote.

6. Hired additional accounting staff.

7. Engaged a consulting CPA to assist with control assessment and remediation.

To address the identified material weakness discussed above, we are in the process of enhancing our internal control processes as follows:

1. Control Environment

a. Continue to upgrade our accounting staff in order to achieve an effective control environment.

b. Develop an anti-fraud program and implement a whistle-blower program and a program to manage and identify fraud risks.

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c. Continue to reorganize our accounting and administrative staff designed to improve workflow and enhance internal controls.

d. Formalize our finance-related job descriptions for all staff levels that specifically identify required financial reporting roles, responsibilities, and competencies, and clarify responsibility for maintaining our internal controls over financial.

e. The Company will use its best efforts to obtain appropriate Type 2 SAS 70 service auditor’s reports from its service organizations.

f. Take training to better utilize our ERP system to lessen the use of spreadsheets and to also develop controls over spreadsheets and migrating from spreadsheet based consolidations to using the consolidations capabilities built into our ERP system.

2. Monitoring of internal control over financial reporting

a. We have revamped of our policies and procedures with respect to the review, supervision and monitoring of our accounting operations.

b. We will perform a risk assessment and improve our monitoring function in conjunction with our ERP system.

c. We have formalized our process to improve the organization structure and develop forecasts and plans by which our management can measure achievement against formalized benchmarks.

3. Period end financial close and reporting

a. We have taken steps to mitigate the lack of segregation of duties, prepare and implement sufficient written policies and checklists for financial reporting and closing processes.

b. We have developed procedures to ensure that supporting schedules for financial statement accounts are reconciled to supporting schedules.

c. During the 4th quarter 2010 we began to document and implement controls over financial reporting and we are continuing that process.

4. Board of Directors - We have remedied the lack of adequate independent oversight (as described above) by searching for and recruiting qualified individuals who have joined us as independent board members and audit committee members and to also assist us with a compensation committee as disclosed in our Form 8-K filed on April 8, 2011.

If the remedial measures described above are insufficient to address any of the identified material weaknesses or are not implemented effectively, or additional deficiencies arise in the future, material misstatements in our interim or annual financial statements may occur in the future and we may continue to be delinquent in our filings. We are currently working to improve and simplify our internal processes and implement enhanced controls, as discussed above, to address the material weaknesses in our internal control over financial reporting and to remedy the ineffectiveness of our disclosure controls and procedures. A key element of our remediation effort is the ability to recruit and retain qualified individuals to support our remediation efforts. While our Board of Directors have been supportive of our efforts by supporting the hiring of various individuals in our finance department as well as funding efforts to improve our financial reporting system, improvement in internal control will be hampered if we cannot recruit and retain more qualified professionals. Among other things, any un-remediated material weaknesses could result in material post-closing adjustments in future financial statements.

Other than as set forth above, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II: OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

The Company has historically relied upon two service providers to process credit card transactions arising from purchases of the Company’s services and products.  A dispute has arisen between the Company and one such service provider, National Merchant Center (“NMC”) as to the permitted amount of reserves, if any, that NMC is permitted to maintain and the length of time NMC may hold such reserves under the Merchant Services Processing Agreement entered into by NMC and the Company (the "Agreement"). On September 22, 2010, two wholly-owned subsidiaries of the Company, Dublicom Limited and DubLi Network Limited (collectively, the "Subsidiaries"), through counsel, made demand upon NMC to release the monies held in reserve in connection with the Company’s account under the Agreement.  On October 27, 2010, the Subsidiaries initiated legal action against NMC in the Circuit Court in and for Miami-Dade County, Florida seeking recovery of approximately $2,162,000 of reserves held at the direction of NMC plus various other awards, costs and expenses. The Subsidiaries alleged that NMC committed civil theft and conversion by its wrongful retention and misuse of the reserve funds. On November 1, 2010, NMC informed the Company that it was terminating the Company’s merchant account with NMC and holding all of the Company’s funds and deposits for a period of 180 days after the last chargeback. Notably, the Company's historical chargebacks under the Agreement averaged less than 1.2% of sales or approximately $63,000 since the reserve account was established in December 2009. Thereafter, the Company learned that NMC was in Chapter 11 bankruptcy and, on or about November 12, 2010, the Company learned that the reserve funds in dispute were being held in an escrow account at Wells Fargo Bank, maintained by First Data Merchant Services ("First Data"), as processor for NMC, and were not involved in NMC's bankruptcy.  The case filed in Circuit Court was removed to the U.S. District Court for the Southern District of Florida and subsequently transferred to the U.S. District Court for the Central District of California.

On February 9, 2011, NMC filed suit against the Company in the Superior Court of the State of California, Case Number: 30-2011-00449062-CU-BC-CJC, seeking to recover approximately $706,000, as a termination fee under the Agreement, plus attorneys' fees, interest and costs. NMC alleges that the Company breached the Agreement by not using NMC as its exclusive credit card processor and by taking the position that the Company does not own the website www.dubli.com. NMC alleges that it terminated the Agreement based upon the Company's alleged breaches of the Agreement and is therefore entitled to recover a termination fee. On March 17, 2011, the Company removed the action to the California Federal Court, where it is currently pending, Case No 8:11-cv-00433-AG-JCG. On April 7, 2011, the Company filed an Answer to the complaint, in which it denied NMC's substantive allegations, raised affirmative defenses to NMC's claims and asserted Counterclaims against NMC, First Data and parties identified as Roes 1 – 20. The Company's counterclaims, all of which are based upon or relate to the Agreement, assert claims for relief in tort and contract and also assert claims for injunctive and declaratory relief. The Company has asserted its counterclaims to obtain a judicial determination of its rights under the Agreement and to obtain the release of approximately $2,162,000 of reserve funds being held in an escrow account by First Data. On April 8, 2011, the Court entered an Order setting a Scheduling Conference on June 13, 2011.

ITEM 5.     OTHER INFORMATION

Loans from Chief Executive Officer

During 2010, Michael Hansen advanced the Company $399,356 for working capital purposes.  The loan is evidenced by an unsecured note dated August 22, 2010, payable by the Company to Mr. Hansen in the amount referenced above.  The note is interest free and payable upon demand of Michael Hansen made after August 21, 2011. During the fourth quarter of 2009, Mr. Hansen advanced an additional $441,528 to the Company without interest or repayment terms, which advance increased the total debt owed to Mr. Hansen to $840,884 at September 30, 2010. Subsequent to September 30, 2010, Mr. Hansen advanced the Company an additional $426,069 resulting in a total debt of $1,266,953 as of March 23, 2011 the date upon which the Company and Mr. Hansen entered into $5 million Promissory Grid Note (“Grid Note”). The amount of this Note equals an existing outstanding balance of $899,739 now owed to Mr. Hansen plus any new borrowings under the Grid Note up to an aggregate of $5 million at any given time.  This Note is issued in replacement of the Promissory Note dated August 23, 2010 in the principal amount of $399,356.  The Grid Note has a term of one year; bears interest at 6% per annum accruing from the date of the Grid Note and is guaranteed by DubLi Properties, LLC and secured by a pledge of its assets.

41

ITEM 6. EXHIBITS

No.	Description
31.1	Certification of Chief Executive Officer*
31.2	Certification of Chief Financial Officer*
32.1	Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.**
32.2	Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002**
*	Filed Herewith
**	Furnished Herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

	MEDIANET GROUP TECHNOLOGIES, INC.
Date: May 16, 2011	By:	/s/ Michael B. Hansen
		Michael B. Hansen President and Chief Executive Officer

42

INDEX TO EXHIBITS

No.	Description
31.1	Certification of Chief Executive Officer*
31.2	Certification of Chief Financial Officer*
32.1	Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.**
32.2	Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002**
*	Filed Herewith
**	Furnished Herewith

43

EX-31.1

EXHIBIT 31.1

Certifications

I, Michael B. Hansen, Chief Executive Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of MediaNet Group Technologies, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the Consolidated Financial Statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Consolidated Financial Statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 16, 2011

/s/ Michael B. Hansen

Michael B. Hansen

President and Chief Executive Officer

(principal executive officer)

EX-31.2

EXHIBIT 31.2

Certifications

I, Mark Mroczkowski, Chief Financial Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of MediaNet Group Technologies, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the Consolidated Financial Statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Consolidated Financial Statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 16, 2011

/s/ Mark Mroczkowski

Mark Mroczkowski

Chief Financial Officer

(principal financial and accounting officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of MediaNet Group Technologies, Inc. (the “Company”) for the period ended March 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael B. Hansen, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company

/s/ Michael B. Hansen

Michael B. Hansen

President and Chief Executive Officer

(principal executive officer)

May 16, 2011

The foregoing certification is being furnished solely to accompany this report pursuant to 18 U.S.C. 1350, and is not being filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company whether made before or after the date hereof, regardless of any general incorporation language in such filing. A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of MediaNet Group Technologies, Inc. (the “Company”) for the period ended March 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark Mroczkowski, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company

/s/ Mark Mroczkowski

Mark Mroczkowski

Chief Financial  Officer

(principal financial and accounting officer)

May 16, 2011

The foregoing certification is being furnished solely to accompany this report pursuant to 18 U.S.C. 1350, and is not being filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company whether made before or after the date hereof, regardless of any general incorporation language in such filing. A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.