- Annual Report (10-K)

Share Name	Share Symbol	Market	Type
Defentect Group Inc (PK)	USOTC:DFTC	OTCMarkets	Common Stock

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.00	0.00%	0.00795	0.006	0.01				0.00	11:08:01

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2009

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

For the transition period from _______________ to ______________________

Commission file number 333-134658

DEFENTECT GROUP, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware		22-393-8509
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

535 Connecticut Avenue, 2 nd floor, Norwalk, CT 06854

(Address of Principal Executive Offices with Zip Code)

Registrant’s telephone number, including area code ( 203) 354-9164

Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act.

Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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 o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K. o

Indicate by check mark if 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” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o		Accelerated filer o
Non- accelerated filer o		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 o No x

The aggregate market value of the voting and non-voting common equity held by non-affiliates, computed by reference to the price at which the common equity was last sold as of June 30, 2009, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $21,000,000.

As of April 14, 2010, there were 76,110,040 shares of the issuer’s common stock outstanding.

Documents incorporated by Reference: None

DEFENTECT GROUP, INC.

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	3
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	16
Item 2.	Properties	17
Item 3.	Legal Proceedings	17
Item 4.	Reserved	17

PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	18
Item 6.	Selected Financial Data	20
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	20
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 8.	Financial Statements and Supplementary Data	26
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	27
Item 9A(T).	Controls and Procedures	27
Item 9B.	Other Information	29

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	30
Item 11.	Executive Compensation	32
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	33
Item 13.	Certain Relationships and Related Transactions, and Director Independence	34
Item 14.	Principal Accountant Fees and Services	35

PART IV
Item 15.	Exhibits, and Financial Statement Schedules	36

	Signatures	37

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements of Defentect Group, Inc. (formerly known as Splinternet Holdings, Inc.) included in this Report, including matters discussed under the captions “Legal Processings” in Part I, Item 3 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 are “forward-looking statements.” These forward-looking statements generally are based on our best estimates of future results, performances or achievements, based upon current conditions and assumptions. Forward-looking statements may be identified by the use of forward-looking terminology such as “may,” “can,” “could,” “project,” “expect,” “believe,” “plan,” “predict,” “estimate,” “anticipate,” “intend,” “continue,” “potential,” “would,” “should,” “aim,” “opportunity” or similar terms, variations of those terms or the negative of those terms or other variations of those terms or comparable words or expressions. These risks and uncertainties include, but are not limited to:

general economic conditions in both foreign and domestic markets,

cyclical factors affecting our industry,

lack of growth in our industry,

Our ability to comply with government regulations,

a failure to manage our business effectively and profitably, and

Our ability to sell both new and existing products and services at profitable yet competitive prices.

You should carefully consider these risks, uncertainties and other information, disclosures and discussions which contain cautionary statements identifying important factors that could cause actual results to differ materially from those provided in the forward-looking statements. Defentect Group, Inc. undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

PART I.

Item 1. Business.

Overview

Defentect Group, Inc., formerly known as Splinternet Holdings, Inc. (the “Company”) is the parent company of Splinternet Communications, Inc., originally a provider of Internet Telephony services, which entered the radiation detection market in 2007, and Vidiation, Inc., a security sales and marketing company which was acquired on April 30, 2008.

The Company develops and markets technologies for the security and threat management industry. Our products react to the detection of chemical, biological, radiological or nuclear (“CBRNE”) threats and notify responders and key administrators immediately. The Company’s unique response technology can be easily integrated with other manufacturers’ sensors, and serve many different markets.

The Company’s product suite is currently installed in several locations around the United States, including hospitals, self storage facilities and other high risk facilities.

Although revenues still come from the Internet Telephony business, the Company has been primarily engaged in the security and threat management business since 2008. We continue to seek new markets for our core technologies.

History

The Company was incorporated in the State of Delaware on March 22, 2006 under the name Splinternet Holdings, Inc. On April 3, 2006, the Company conducted a share for share exchange of securities with Splinternet Communications, Inc. whereby 214,002 shares of the common stock, par value $0.001 per share of Splinternet Communications, Inc. were exchanged for 53,500,500 shares of the common stock, par value $0.001 per share (the “Common Stock”) of the Company (the “Share Exchange”), as a result of which Splinternet Communications, Inc. became a wholly owned subsidiary of the Company.

On April 30, 2008, the Company consummated the transaction contemplated by an Agreement and Plan of Merger (the “Vidiation Merger Agreement”) dated February 7, 2008 among the Company, Vidiation, Inc., a Delaware corporation and Splinternet Merger Sub I, Inc. (a wholly owned subsidiary of the Company formed for the purpose of such transaction) (the “Merger Sub”) pursuant to which the Merger Sub has merged into Vidiation, Inc. resulting in Vidiation, Inc. becoming a wholly-owned subsidiary of the Company. Upon closing, the Company issued an aggregate of 4,788,179 shares of common stock to the shareholders of Vidiation, Inc. in exchange for the cancellation of the then outstanding shares of common stock of Vidiation, Inc.

Splinternet Communications, Inc. was incorporated in the State of Connecticut on January 12, 2000. Since inception, we have been a developer of products, services, and marketing strategies centered around opportunities in Internet communications. From 2000 through 2007 our approach was to develop products and services that would capitalize on the shift in telecommunications technologies from traditional telephony to Internet telephony. During this period the Company experienced disappointing revenue growth in this market. Because of this, during 2007 we shifted our focus into the development of a new radiation detection device which launched us into the radiation detection market. In 2008 our research and development was focused on developing an Internet Protocol (IP) based management, monitoring and messaging system which interfaced with our radiation detection devices and other third-party sensors. In 2009 we successfully completed several pilot programs which utilized our management, monitoring and messaging system and sensors.

Vidiation, Inc. was a radiation detection sales and marketing company incorporated in the State of Delaware on December 10, 2007, which acquired certain assets from Vidiation LLC. Vidiation LLC was a radiation detection technology development company which had extensive sales and marketing experience in the surveillance and security market space and was actively engaged in that space. The progress Vidiation, Inc. had been making in that business was desired by the Company and precipitated the above-referenced transaction.

Pursuant to a Certificate of Amendment to our Certificate of Incorporation filed with the State of Delaware and effective as of March 23, 2010, (i) the number of authorized shares of Common Stock, par value $0.001 per share, of the Company increased from 90,000,000 to 250,000,000 (the “Capitalization Amendment”), and (ii) the Company’s name changed from “Splinternet Holdings, Inc.” to “Defentect Group, Inc.” (the “Corporate Name Change”). The Capitalization Amendment and Corporate Name Change were approved by the Board of Directors along with requisite stockholder consent. As a result of the Corporate Name Change, our stock symbol changed to DFTC with the opening of trading on April 5, 2010 on the OTCBB.

The holding company does not conduct any business or own any assets other than all of the issued and outstanding shares of Splinternet Communications, Inc. and Vidiation, Inc. References herein to “we”, “us” or “our” refer to the Company and its wholly owned subsidiaries, unless explicitly stated to the contrary.

Our corporate address is 535 Connecticut Avenue, 2 nd floor, Norwalk, Connecticut 06854. Our telephone number is (203) 354-9164.

Our Business

Security and Threat Management

In 2007, we developed a device and process to both detect and report the detection of radiation, specifically gamma rays characteristic of the materials most likely to be used in creating radiation dispersion devices. We have initiated the process of patenting the detection and reporting process. The Company believed that there was a large market for such a product. We believed that our system was significantly more effective than existing systems in the market at the time. We documented the results in two private laboratories. The Company began production and sale during the second quarter of 2008. We intended to outsource the manufacture of the hardware so as to reduce the investment required to a minimum. We have and will continue to engage third parties to market the product. The Company believes that its largest customers will be the government, health care, shipping, transportation, security and related industries.

During 2008, we developed Internet Protocol (IP) based management, monitoring and messaging system that interfaced with our radiation detection devices, third-party radiation detection sensors and other third-party threat-event sensors. The management and messaging software utilized our existing communications infrastructure, to provide administrative, configuration and messaging services. This enabled our customers to add a variety of devices to their existing security systems and achieve timely situational awareness and response.

Splinternet Communications, Inc. is the primary operating unit, doing business as Defentect and utilizing the sales and marketing resources of Vidiation, Inc.

Working with a network of independent representatives and integrators in the IP Video Surveillance industry, Defentect has focused IP Radiation Detection (IPRD) sales and marketing resources in segments where the awareness of public safety and environmental concerns surrounding radiological materials is increasing and personnel are being trained to respond. The market segments are:

Hospitals & Research Centers – The use of IPRD systems help hospitals to enhance security and safety in areas where radioactive materials may be present. Some areas of concern are; potential abuse of radiological materials used in the hospital, monitoring of hospital public entrances in case of the influx of people after a radiological event in the community and the prevention of improper disposal of contaminated hospital waste.

Waste Transfer Stations & Landfills – In this segment radiation levels can range from just above background, which is found in nature, to highly radioactive. High radiation can occur from the improper disposal of waste which has been contaminated such as protective shoe covers and clothing, wiping rags, mops, filters, reactor water treatment residues, equipment and tools, luminous dials, medical tubes, swabs, injection needles, syringes and laboratory animal carcasses and tissues. In this market the use of IPRD systems helps to prevent radioactive contaminated waste from entering the facility and into landfills.

Municipalitie s – The use of IPRD systems are needed in public facilities and transportation hubs, along with financial, law and commerce centers as defined by the needs of local public safety officials.

Public Self-Storage – Responding to a memorandum distributed by the FBI highlighting the risk of terrorists’ use of storage facilities as the place to amass radiological materials and construct a “dirty bomb,” Defentect has developed an industry specific IPRD offering for the public self-storage industry.

Acquisition of Vidiation, Inc .

As mentioned above, on April 30, 2008 and pursuant to the Vidiation Merger Agreement, we acquired Vidiation, Inc. resulting in Vidiation, Inc. becoming a wholly-owned subsidiary of the Company. Vidiation, Inc. had signed numerous reseller agreements, established relationships with key corporations in the radiation detection industry and negotiated pilot programs to test the Splinternet Defentect technology at the time of the acquisition. These were measurable outputs that Vidiation, Inc. had achieved as a sales and marketing firm in the radiation technology industry at the time of the acquisition. The combination of these outputs with its policies, procedures, management and systems, combined to allow the Vidiation, Inc. to meet the definition of a business and therefore was subject to SFAS 141, Business Combinations accounting.

Prior to the acquisition, and in February, March and April 2008, the Company made loans to Vidiation, Inc. in the principal amount of $165,000 which loans are due on demand and accrue interest at a rate of 6.0% per annum to the date of payment in full. Such obligation has been guaranteed by Frank O’Connor and Vidiation LLC. Such loans made by the Company to Vidiation, Inc. are referred to as the “Vidiation Loans”.

On April 30, 2008, and in connection with the closing under the Vidiation Merger Agreement, the parties executed a supplemental closing agreement whereby, among other things, (i) the parties acknowledged that the Vidiation Loans shall not be extinguished as a result of the transaction consummated under the Vidiation Merger Agreement, and (ii) Vidiation, Inc. and Frank O’Connor reaffirmed and acknowledged their continuing obligation under the Vidiation Loans. In addition, both Vidiation, Inc. and Frank O’Connor agreed to indemnify the Company with respect to any of the then existing liabilities of Vidiation, Inc.

The acquisition is intended to accelerate revenue growth in the Company’s security and threat management business by increasing sales coverage through the addition of sales people from Vidiation, Inc. with knowledge of the marketplace and existing client relationships, increasing the Company’s presence in targeted markets and providing greater coverage in several key industries. The acquisition is also intended to achieve cost synergies in general and administrative expenses.

Our Services

Our business, in the past, consisted of reselling excess telecommunications capacity to areas where our presence can more cheaply and efficiently route the call. For example, we may buy minutes from a local telephone or Internet telephony carrier in a particular country and re-sell those minutes to a traditional international long distance carrier, as purchasing the minutes from us is often cheaper (if possible at all) for the long distance carrier than procuring those same minutes directly from the local carrier. This opportunity is enabled by the usual circumstance that traditional long distance carriers charge for the duration of each call and include the cost of carrying the traffic across international borders. In contrast, Internet capacity is usually charged at a monthly rate, rather than by the minute, for a fixed capacity, and local calls are frequently relatively inexpensive. As a result, the cost of an Internet call terminated to a local phone is less than the cost of an international call to the same phone. We look for those routes that are underserved or where there is excess capacity and the minutes can be purchased inexpensively.

During the quarter ended June 30, 2007, we began purchasing long distance minutes at wholesale prices from phone companies and then reselling them at a markup to our customers. The Company will continue doing business in this market.

Regulatory Environment

The security and threat management industry is subject to federal, state, and international governmental regulation. Unknown matters, new laws and regulations, or stricter interpretations of existing laws or regulations may materially affect our proposed entry into this business or operations in the future and/or could increase the cost of compliance. Our products will have to comply with various domestic and international standards that are used by regulatory and accreditation bodies for approving such services and products. The failure of the Company to obtain accreditation for its products and services may adversely affect us and the market perception of the effectiveness of our proposed products. In the future, changes in these standards and accreditation requirements may also result in the Company having to incur substantial costs to adapt its offerings and procedures. Additionally, changes affecting security and threat management practices, including new understandings of the hazards of radiation exposure and amended regulations, may impact how the Company’s services are used by its customers and may, in some circumstances, cause the Company to alter its products and delivery of its services.

The use of the Internet and private IP networks to provide voice, video and other forms of real-time, two-way communications services have existed for some time. Although the provisioning of such services is currently permitted by United States law and largely unregulated within the United States, several foreign governments have adopted laws and/or regulations that could restrict or prohibit the provisioning of voice communications services over the Internet or private IP networks. More aggressive domestic or international regulation of the Internet in general, and Internet telephony providers and services specifically, may materially and adversely affect our business, financial condition, operating results and future prospects, particularly if increased numbers of governments impose regulations restricting the use and sale of IP telephony services.

In addition to regulations addressing Internet telephony and broadband services, other regulatory issues relating to the Internet in general could affect our ability to provide our services. Congress has adopted legislation that regulates certain aspects of the Internet, including online content, user privacy, taxation, liability for third-party activities and jurisdiction. In addition, a number of initiatives pending in Congress and state legislatures would prohibit or restrict advertising or sale of certain products and services on the Internet, which may have the effect of raising the cost of doing business on the Internet generally.

Federal, state, local and foreign governmental organizations are also considering tax and other legislative and regulatory proposals that would place additional burdens on the Internet. We cannot predict whether new taxes will be imposed on our services, and depending on the type of taxes imposed, whether and how our services would be affected thereafter. Increased regulation of the Internet may decrease its growth and hinder technological development, which may negatively impact the cost of doing business via the Internet or otherwise materially adversely affect our business, financial condition and results of operations.

Research and Development

In 2007 we shifted our focus to the development of a radiation detection device that we believed would broaden our scope to take advantage of opportunities in related technologies.

During 2008, we developed an Internet Protocol (IP) based management, monitoring and messaging system that interfaced with our radiation detection devices, third-party radiation detection sensors and other third-party threat-event sensors. The software is managed over the Web, utilizing our existing network infrastructure to provide administrative access to the system. This enabled our customers to add a wide range of devices to their existing security systems for unmanned detection and automated response to variety of threats.

In 2009, we undertook a major effort to enhance our proprietary software in response to customer comments and assessments. We determined that the Defentect Management, Monitoring and Messaging (DM3) System was an asset deserving of full commercial development and the bulk of our research and development efforts were related to our software and defining a standard protocol other sensors could use to gain the benefit of our DM3 system.

Research and development expenses include costs directly attributable to the conduct of research and development projects primarily related to the development of new product design and improving the efficiency and capabilities of our existing products and processes. Such costs include services provided primarily by outside contractors. All costs associated with research and development are expensed as incurred. During the years ended December 31, 2009 and 2008, the amounts spent on research and development activities were $134,488 and $237,126, respectively.

Intellectual Property

With regard to the Company’s DM3 system patents will be material to our operations. We have initiated the process of patenting our detection and reporting process. No assurance can be given that such patent application will be granted.

Development or ownership of intellectual property is not necessary for the services we seek to provide in the telecommunications industry. Consequently, we do not own or license any telecommunications- related intellectual property. The hardware necessary for our services is not proprietary to the Company and much of the software utilized is open source software. We have written proprietary software which functions as the user and administrative interface to our sensors. This software is a component of our overall system and is also sold on its own to users who want to add functionality to systems that do not use our sensors. We have also contracted with non-employees to develop special purpose tools and system enhancements.

Competition

With regard to the security and threat management business, we will compete on the basis of advanced technologies, competent implementation of these technologies, the quality, reliability and price of our services and our prompt and responsive performance. In much of the world, radiation detection activities are conducted by a combination of private entities and governmental agencies. In the United States, most of our competitors are larger, have substantial resources, and have been particularly active in recent years in soliciting business. We will also face substantial competitive pressures from a number of smaller competitors.

Employees

As of December 31, 2009, we employed four full-time employees through our subsidiaries. We use contract labor for most of our technical and professional needs.

We provide equity-based compensation programs to reward and motivate employees and significant contractors. We believe that relations with our employees and contractors are good.

We cannot be assured of being able to attract quality employees in the future. The future success of our business will be largely contingent on our ability to attract and retain personnel for the management team. There is no assurance that we can find suitable management personnel or will have the financial resources to attract or retain such people, if found.

Item 1A. Risk Factors

There are numerous and varied risks, known and unknown, that may prevent us from achieving our goals, including those described below. The risks described below are not the only ones we will face. Additional risks not presently known to us or that the Company currently deems immaterial may also impair our financial performance and business operations. If any of these risks actually occurs, our business, financial condition or results of operations may be materially adversely affected. In such case, the trading price of our Common Stock could decline, and you may lose all or part of your investment. Before making any investment decision, you should also review and consider the other information set forth in this report.

BUSINESS AND FINANCIAL RISKS

THE ONGOING ECONOMIC SLOWDOWN MAY HAVE A MATERIAL ADVERSE IMPACT ON OUR BUSINESS AND FINANCIAL CONDITION THAT WE CURRENTLY CANNOT PREDICT.

The ongoing global economic slowdown has caused turmoil and upheaval characterized by extreme volatility and declines in prices of securities, diminished liquidity and credit availability, inability to access capital markets, the bankruptcy, failure, collapse or sale of financial institutions and an unprecedented level of intervention from the United States federal government and other governments. Unemployment has risen while businesses and consumer confidence have declined and there are fears of a prolonged recession. While the ultimate outcome of these events cannot be predicted, they could materially adversely affect our business and financial condition, including our ability to raise any equity or debt financing in the future.

OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM HAVE ISSUED A GOING CONCERN OPINION.

Our auditors have included an explanatory paragraph in their opinion that accompanies our audited financial statements as of and for the year ended December 31, 2009, indicating that our recurring losses from operations, stockholders’ deficiency, and working capital deficiency raise substantial doubt about our ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

WE WILL NEED ADDITIONAL FINANCING IN ORDER TO CONTINUE OUR OPERATIONS WHICH WE MAY NOT BE ABLE TO RAISE.

We will require additional capital to finance our future operations. We can provide no assurance that we will obtain additional financing sufficient to meet our future needs on commercially reasonable terms or otherwise. If we are unable to obtain the necessary financing, our business, operating results and financial condition will be materially and adversely affected.

OUR PERFORMANCE DEPENDS ON MARKET ACCEPTANCE OF OUR PRODUCTS AND WE CANNOT BE SURE THAT OUR PRODUCTS ARE COMMERCIALLY VIABLE.

We expect to derive a substantial portion of our future revenues from the sales of radiation detection equipment and services that is only now entering the initial marketing phase. Although we believe our products and technologies will be commercially viable, these are new products. If markets for our products fail to develop further, develop more slowly than expected or are subject to substantial competition, our business, financial condition and results of operations will be materially and adversely affected.

RAPIDLY CHANGING TECHNOLOGY AND SUBSTANTIAL COMPETITION MAY ADVERSELY AFFECT OUR BUSINESS.

Our business is subject to rapid changes in technology. We can provide no assurances that research and development by competitors will not render our technology obsolete or uncompetitive. We compete with a number of companies that have technologies and products similar to those offered by us and have greater resources, including more extensive research and development, marketing and capital than we do. If our technology is rendered obsolete or we are unable to compete effectively, our business, operating results and financial condition will be materially and adversely affected.

DEFECTS IN OUR PRODUCTS MAY ADVERSELY AFFECT OUR BUSINESS.

Complex technologies such as the technologies developed by us may contain defects when introduced and also when updates and new products are released. Our introduction of technology with defects or quality problems may result in adverse publicity, product returns, reduced orders, uncollectible or delayed accounts receivable, product redevelopment costs, loss of or delay in market acceptance of our products or claims by customers or others against us. Such problems or claims may have a material and adverse effect on our business, financial condition and results of operations.

WE HAVE HAD LIMITED REVENUES THUS FAR.

To date, we have had limited revenues. Because we are subject to all risks inherent in a business venture, it is not possible to predict whether we will ever be profitable. Our revenues for our fiscal year 2009 and 2008 were primarily from a single customer (BuenaVox LLC). Even if we succeed with our current business plan, we may never become profitable, as we will continue to incur operating and capital expenditures for items such as salary, inventory, data processing equipment, shipping and other ongoing business activities.

Accordingly, it is not possible to predict whether or not our current and proposed activities will be sufficiently profitable. Purchasers of our shares should bear in mind that, in light of the risks and contingencies involved, no assurance can be given that we will ever generate enough revenue to offset expenses or to generate a return on invested capital. There is no guarantee of our successful, profitable operation. Our failure to achieve or maintain profitability can be expected to have a material adverse effect on our business, financial condition, results of operations and future business prospects.

WE MAY EXPERIENCE SIGNIFICANT FLUCTUATIONS IN OUR OPERATING RESULTS AND RATE OF GROWTH AND MAY NOT BE PROFITABLE IN THE FUTURE.

Our results of operations may fluctuate significantly due to a variety of factors, many of which are outside of our control and difficult to predict. The following are some of the factors that may affect us from period to period and may affect our long-term financial performance:

our ability to retain and increase revenues associated with customers and satisfy customers’ demands;

our ability to be profitable in the future;

our investments in longer-term growth opportunities;

our ability to expand our marketing network, and to enter into, maintain, renew and amend strategic alliance arrangements on favorable terms;

changes to service offerings and pricing by us or our competitors;

fluctuations caused by marketing efforts and competitors’ marketing and pricing strategies;

changes in the terms, including pricing, of our agreements with our telecommunications providers;

the effects of commercial agreements and strategic alliances and our ability to successfully integrate them into our business;

technical difficulties, system downtime or interruptions;

the effects of litigation and the timing of resolutions of disputes;

the amount and timing of operating costs and capital expenditures;

changes in governmental regulation and taxation policies; and

changes in, or the effect of, accounting rules, on our operating results.

OUR HISTORICAL FINANCIAL STATEMENTS MAKE EVALUATION OF OUR BUSINESS BY POTENTIAL INVESTORS AND OTHERS DIFFICULT.

We commenced our business operations in January 2000 and began generating revenue in 2001. However, since we recently refocused our business strategy to include security and threat management software, our historical financial statements, which primarily reflect our Internet telephony retail sales, are of limited usefulness in evaluating our potential future financial position.

WE MAY NOT SUCCESSFULLY ENHANCE EXISTING OR DEVELOP NEW PRODUCTS AND SERVICES IN A COST-EFFECTIVE MANNER TO MEET CUSTOMER DEMAND IN THE RAPIDLY EVOLVING MARKETS IN WHICH WE ARE ENGAGED.

The markets in which we are engaged are characterized by rapidly changing technology, evolving industry standards, changes in customer needs and frequent new service and product introductions. Our future success will depend, in part, on our ability to use leading technologies effectively, to continue to develop our technical expertise, to enhance our existing services and to develop new services that meet changing customer needs on a timely and cost-effective basis. We may not be able to adapt quickly enough to changing technology, customer requirements and industry standards. If we fail to use new technologies effectively, to develop our technical expertise and new services, or to enhance existing services on a timely basis, either internally or through arrangements with third parties, our product and service offerings may fail to meet customer needs, which would adversely affect our revenues and prospects for growth.

We have spent and will continue to spend signification resources enhancing, developing, implementing and launching our security and threat management products and services. We believe threat detection products and services represent a significant growth opportunity. However, losses are expected to result in the early stages until a sufficient number of customers are added whose recurring revenues, net of recurring costs, more than offset sales, marketing and other expenses incurred to add additional customers.

To the extent we pursue commercial agreements, acquisitions and/or strategic alliances to facilitate new product or service activities, the agreements, acquisitions and/or alliances may not be successful. If any of this were to occur, it could damage our reputation, limit our growth, negatively affect our operating results and harm our business.

RELIANCE UPON THIRD-PARTY SUPPLIERS FOR COMPONENTS MAY PLACE US AT RISK OF INTERRUPTION OF SUPPLY OR INCREASE IN COSTS.

We rely on third-party suppliers for the hardware and software necessary for our services and we do not have any long-term supply agreements. Although we believe we can secure other suppliers, we expect that the deterioration or cessation of any relationship would have a material adverse effect, at least temporarily, until the new relationships are satisfactorily in place.

We also run the risk of supplier price increases and component shortages. Competition for materials in short supply can be intense, and we may not be able to compete effectively against other purchasers who have higher volume requirements or more established relationships. Even if suppliers have adequate supplies of components, they may be unreliable in meeting delivery schedules, experience their own financial difficulties, provide components of inadequate quality or provide them at prices which reduce our profit. Any problems with our third-party suppliers can be expected to have a material adverse effect on our financial condition, business, results of operations and continued growth prospects.

WE FACE SIGNIFICANT COMPETITION.

We compete on the basis of advanced technologies, competent execution of these technologies, the quality, reliability and price of our services and our prompt and responsive performance. For example, in much of the world, radiation detection activities are conducted by a combination of private entities and governmental agencies. In the United States, most of our competitors are larger, have substantial resources, and have been particularly active in recent years in soliciting business. We will also face substantial competitive pressures from a number of smaller competitors.

THE RADIATION DETECTION INDUSTRY IS SUBJECT TO EXTENSIVE DOMESTIC AND FOREIGN GOVERNMENT REGULATIONS, WHICH COULD INCREASE OUR COSTS, CAUSE US TO INCUR LIABILITIES AND ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.

The radiation detection industry is subject to federal, state, and international governmental regulation. Unknown matters, new laws and regulations, or stricter interpretations of existing laws or regulations may materially affect our proposed entry into this business or operations in the future and/or could increase the cost of compliance. Our products will have to comply with various domestic and international standards that are used by regulatory and accreditation bodies for approving such services and products. The failure of the Company to obtain accreditation for its products and services may adversely affect us and the market perception of the effectiveness of our proposed products. In the future, changes in these standards and accreditation requirements may also result in the Company having to incur substantial costs to adapt its offerings and procedures. Additionally, changes affecting radiation detection practices, including new understandings of the hazards of radiation exposure and amended regulations, may impact how the Company’s services are used by its customers and may, in some circumstances, cause the Company to alter its products and delivery of its services.

OUR INABILITY TO PROTECT OUR INTELLECTUAL PROPERTY IN THE RADIATION DETECTION INDUSTRY COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS.

With regard to our radiation detection device, patents will be material to our operations. We have initiated the process of patenting our detection and reporting process. No assurance can be given that such patent application will be granted. Our success will depend in part on our ability to develop patentable products and obtain and enforce patent protection for our products both in the United States and in other countries. Patents may not be issued for any pending or future patent applications owned by or licensed to us, and the claims allowed under any issued patents may not be sufficiently broad to protect our technology. Any issued patents owned by or licensed to us may be challenged, invalidated or circumvented, and the rights under these patents may not provide us with competitive advantages. In addition, competitors may design around our technology or develop competing technologies. Intellectual property rights may also be unavailable or limited in some foreign countries, which could make it easier for competitors to capture increased market position. We could incur substantial costs to defend ourselves in suits brought against us or in suits in which we may assert our patent rights against others. An unfavorable outcome of any such litigation could materially adversely affect our business and results of operations.

THERE IS NO ASSURANCE THAT WE CAN SUCCESSFULLY IMPLEMENT JOINT VENTURES OR FIND PARTNERS FOR OUR BUSINESS.

With regard to our radiation detection business, we intend to acquire or joint venture with security companies that sell or install security systems to various markets. These markets include and are not limited to hospitals and waste management. The success of out business plan is predicated on us finding appropriate partners and introducing the Company’s radiation detection products to their operations.

There is no assurance that we will be able to access such companies or to complete their acquisition or negotiate joint ventures.

ONGOING SUCCESS AND OUR ABILITY TO COMPETE DEPEND UPON HIRING AND RETENTION OF KEY PERSONNEL.

Success will be dependent to a significant degree upon the involvement of current management. These individuals have critical industry experience and relationships upon which we rely. The loss of services of any of our key personnel could divert time and resources, delay the development of our business and negatively affect our ability to sell our services or execute our business. In addition, we will need to attract and retain additional talented individuals in order to carry out our business objectives. The competition for such persons is intense and there are no assurances that these individuals will be available. Such problems might be expected to have a material adverse impact on our financial condition, results of current operations and future business prospects.

WE ARE SUBJECT TO CONTROL BY OFFICERS AND MANAGEMENT AND THERE COULD BE CONFLICTS OF INTEREST WITH MANAGEMENT WHICH MAY BE ADVERSE TO YOUR INTERESTS.

Officers and Directors of Defentect Group, Inc. beneficially own 45.7% of the voting shares of the Company as of March 24, 2010. As a result, management will possess meaningful influence and control over the Company, and will be able to control and direct the Company’s affairs, including the election of directors and approval of significant corporate transactions.

A conflict of interest may arise between our management's personal pecuniary interest and its fiduciary duty to our stockholders. Conflicts of interest create the risk that management may have an incentive to act adversely to the interests of other investors. Such influence may not necessarily be consistent with the interests of our other stockholders.

DIRECTOR AND OFFICER LIABILITY IS LIMITED.

As permitted by Delaware law, the certificate of incorporation of the Company limits the personal liability of directors to the fullest extent permitted by the provisions of the Delaware General Corporation Law. As a result of our charter provision and Delaware law, stockholders may have limited rights to recover against directors for breach of fiduciary duty. In addition, the certificate of incorporation of the Company provides that it shall indemnify its directors and officers to the fullest extent permitted by law.

RISKS RELATING TO THE OUR COMMON STOCK

WE HAVE HAD IMPAIRMENT OF GOODWILL.

the Company concluded an impairment charge of $2,831,790 should be taken at December 31, 2009 in connection with the recorded goodwill arising from its acquisition made in 2008, This impairment charge was the result of projected revenue related to the acquisition not being achieved and future sales contracts not being projected.

THE PRICE OF OUR COMMON STOCK IS HIGHLY VOLATILE.

The price of our common stock is highly volatile. Fluctuations in the market price of our common stock may be a result of any number of factors or a combination of factors including, but not limited to:

the number of shares in the market and the number of shares we may be required to issue in the future compared to market demand for our shares;

our performance and meeting expectations of performance, including the development and commercialization of our current and proposed products and services;

market conditions for Internet and media companies in the small capitalization sector; and

general economic and market conditions.

PENNY STOCK REGULATIONS MAY IMPOSE CERTAIN RESTRICTIONS ON MARKETABILITY OF THE COMPANY’S SECURITIES.

Our common stock relies on the OTC Bulletin Board for the quotations and is subject to rules pertaining to “penny stocks”. The SEC has adopted regulations which generally define a “penny stock” to be any equity security that has a market price (as defined) of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our shares currently have a market price of less than $5.00 per share. As a result, the Company’s Common Stock is subject to rules that impose additional sales practice requirements on broker/dealers who sell such securities to persons other than established clients and “accredited investors”. For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser's written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the penny stock market. The broker-dealer must also disclose the commission payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the “penny stock” rules may restrict the ability of broker/dealers to sell shares of the Company’s Common Stock and may affect the ability of investors to sell such shares of Common Stock in the secondary market and the price at which such investors can sell any of such shares.

Investors should be aware that, according to the SEC, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include :

control of the market for the security by one or a few broker/dealers that are often related to the promoter or issuer;

manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;

“boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;

excessive and undisclosed bid-ask differentials and markups by selling broker/dealers; and

the wholesale dumping of the same securities by promoters and broker/dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

Section 15(g) of the Exchange Act and Rule 15g-2 of the Securities and Exchange Commission require broker/dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before making any transaction in a penny stock for the investor’s account. You are urged to obtain and read this disclosure carefully before purchasing any of our shares.

Rule 15g-9 of the Securities and Exchange Commission requires broker/dealers in penny stocks to approve the account of any investor for transactions in these stocks before selling any penny stock to that investor. This procedure requires the broker/dealer to:

get information about the investor’s financial situation, investment experience and investment goals;

reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor can evaluate the risks of penny stock transactions;

provide the investor with a written statement setting forth the basis on which the broker/dealer made his or her determination; and

receive a signed and dated copy of the statement from the investor, confirming that it accurately reflects the investors’ financial situation, investment experience and investment goals.

Compliance with these requirements may make it harder for our stockholders to resell their shares.

IF WE RAISE ADDITIONAL FUNDS THROUGH THE ISSUANCE OF EQUITY SECURITIES, OR DETERMINE IN THE FUTURE TO REGISTER ADDITIONAL COMMON STOCK, YOUR PERCENTAGE OWNERSHIP WILL BE REDUCED, YOU WILL EXPERIENCE DILUTION WHICH COULD SUBSTANTIALLY DIMINISH THE VALUE OF YOUR STOCK AND SUCH ISSUANCE MAY CONVEY RIGHTS, PREFERENCES OR PRIVILEGES SENIOR TO YOUR RIGHTS WHICH COULD SUBSTANTIALLY DIMINISH YOUR RIGHTS AND THE VALUE OF YOUR STOCK.

The Company may issue additional shares of Common Stock for various reasons and may grant stock options to employees, officers, directors and third parties. If the Company determines to register for sale to the public additional shares of Common Stock or other debt or equity securities in any future financing or business combination, a material amount of dilution can be expected to cause the market price of the Common Stock to decline. One of the factors which generally affects the market price of publicly traded equity securities is the number of shares outstanding in relationship to assets, net worth, earnings or anticipated earnings. Furthermore, the public perception of future dilution can have the same effect even if actual dilution does not occur.

SINCE WE DO NOT INTEND TO DECLARE DIVIDENDS IN THE FORESEEABLE FUTURE, THE RETURN ON YOUR INVESTMENT WILL DEPEND UPON APPRECIATION OF THE MARKET PRICE OF YOUR SHARES.

We have never paid any dividends on our common stock. Our board of directors does not intend to declare any dividends in the foreseeable future, but intends to retain all earnings, if any, for use in our business operations. As a result, the return on your investment in us will depend upon any appreciation in the market price of our common stock. The holders of common stock are entitled to receive dividends when, as and if declared by the board of directors out of funds legally available for dividend payments. The payment of dividends, if any, in the future is within the discretion of our board of directors and will depend upon our earnings, capital requirements and financial condition, and other relevant factors.

Item 1B. Unresolved Staff Comments.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 2. Properties.

Our principal executive offices are located in approximately 1,760 square feet of office space located at 535 Connecticut Avenue, 2 nd floor, Norwalk, Connecticut 06854. We have leased this space for a period of three years with the lease expiring March 31, 2009. On February 27, 2008, the Company has renewed the lease for another three years and three months and receives three free months of rent under the new lease. The new monthly rent is $3,632 for the first year, $3,741 for the second, $3,853 for the final year and $3,968 for the last three months, plus a monthly electricity charge of $293.50 per month for the duration of the lease. The Company has an option to renew the lease for an additional three year period.

Vidiation, Inc. leases an office at 108 South Wynstone Park Drive, Suite 114, North Barrington, IL 60010. We have leased this space for a period of three years starting December 1, 2007. The office is approximately 230 square feet. The lease expires on November 30, 2010 and costs approximately $10,500.00 per year. Vidiation, Inc. has no option to renew the lease and expects to continue leasing the office space after the lease ends.

The Company believes the facilities occupied are adequate for the purposes for which they are currently used and are well maintained.

Item 3. Legal Proceedings.

Except as set forth below, we are not a party to any pending legal proceeding, nor is our property the subject of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of our business. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.

On April 28, 2009, The Idler Company, Inc. (“Idler”) commenced an action against the Company, Vidiation, Inc., Vidiation, LLC, Frank O’Connor and James C. Ackerly in the United States District Court, District of Connecticut pertaining to the purchase by Idler of shares of Vidiation, LLC for $100,000 in 2007. Such action alleges various securities law violations, breach of contract, rescission, fraud and unjust enrichment. We intend to vigorously defend this matter. However, we cannot predict or estimate the timing or ultimate outcome of this matter.

Item 4. Reserved.

PART II.

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities .

Our common stock is quoted on the OTC Bulletin Board. As a result of our recent corporate name change from Splinternet Holdings, Inc. to Defentect Group, Inc., our stock symbol changed to DFTC with the opening of trading on April 5, 2010 on the OTC Bulletin Board. Prior thereto, our stock symbol was “SLNH.” We have been listed on the OTC Bulletin Board since October 5, 2006. The high and low closing prices for our common stock, for the two fiscal years ended December 31, 2008 and 2009, respectively, are as follows:

	High		Low

Common Stock Fiscal 2008
1 st Quarter	$	1.15	$	0.41
2 nd Quarter	$	1.80	$	1.02
3 rd Quarter	$	1.45	$	0.51
4 th Quarter	$	1.01	$	0.13
Common Stock Fiscal 2009
1 st Quarter	$	0.35	$	0.09
2 nd Quarter	$	0.33	$	0.04
3 rd Quarter	$	0.34	$	0.07
4 th Quarter .	$	0.12	$	0.05

The closing price of our common stock on April 12, 2010 was $0.19.

As of April 12, 2010, there were approximately 89 stockholders of record of our common stock. This does not reflect persons or entities that hold their stock in nominee or “street name”. As of April 12, 2010, we believe there are approximately 275 beneficial owners of our common stock.

We have never declared or paid any cash dividends on our common stock. We do not anticipate declaring or paying any dividends on our common stock in the foreseeable future. We currently intend to retain future earnings, if any, to finance the expansion of our business.

Equity Compensation Plan Information

On April 22, 2008, the Board of Directors of the Company adopted the 2008 Stock Incentive Plan (the “2008 Stock Plan”). The purpose of the 2008 Stock Plan is to provide officers, other employees and directors of, and consultants to, us an incentive to (a) enter into and remain in our service or that of our subsidiaries or to provide services to us or our subsidiaries, (b) enhance our long term performance and that of our subsidiaries, and (c) acquire a proprietary interest in us. Under the 2008 Stock Plan, we will have the right to issue stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares or performance units, and stock or stock-based awards. The number of shares subject to the 2008 Stock Plan may not exceed 6,000,000 shares in total. The 2008 Stock Plan is administered by a committee of the Board of Directors (or if there is no committee, the Board of Directors itself). In 2008, the Board of Directors granted 1,265,000 nonqualified stock options to employees and consultants, 360,000 of which have been forfeited as of December 31, 2009. No options were granted in 2009 under the 2008 Stock Plan. In addition, through December 31, 2009, 2,135,537 shares of common stock have been awarded under the 2008 Stock Plan, all of which were awarded in 2009.

In addition to the foregoing, during 2009, 3,563,824 shares of common stock and 650,000 warrants were granted outside of the 2008 Stock Plan pursuant to individual compensation arrangements.

The following equity compensation plan information relates to stock options granted under the 2008 Stock Plan and does not include individual warrants granted outside the 2008 Stock Plan.

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted-average Exercise price of Outstanding options, Warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders		-0-		-0-		-0-
Equity compensation plans not approved by security holders		1,205,000		1.16		2,659,463
Total		1,205,000		1.16		2,659,463

Recent Sales of Unregistered Securities

The information set forth below describes our issuance of securities without registration under the Securities Act of 1933, as amended, during the year ended December 31, 2009, that were not previously disclosed in a Quarterly Report on Form 10-Q, or in a Current Report on Form 8-K:

In connection with the appointment of Ambassador L. Paul Bremer, III to serve as a member of the Company’s Board of Directors, effective October 10, 2008, the Board has agreed to issue to Ambassador Bremer, or his designee, 1,000,000 shares of our common stock which will vest quarterly over two years with acceleration of vesting when authorized by the Board of Directors in acknowledgement of extraordinary circumstances or success. As a result, unless accelerated, 125,000 shares will be issued to Ambassador Bremer quarterly and the Company will record non-cash compensation expense for the fair value of shares issued. Through December 31, 2009, a total of 625,000 shares have been issued. Of such amount, 500,000 were issued in 2009. The issuance of these shares of common stock are exempt from registration requirements pursuant to Section 4(2) of the Securities Act of 1933, as amended.

During the fourth quarter of 2009, the Company issued to Frank O’Connor for services rendered 400,000 shares of common stock and 400,000 warrants which are exercisable into shares of common stock at $0.10 per share and expire in two years. The issuance of these securities were exempt from registration requirements pursuant to Section 4(2) of the Securities Act of 1933, as amended.

During the fourth quarter of 2009, the Company issued 1,163,824 shares of common stock to six other persons and entities for certain services rendered. The issuance of these securities were exempt from registration requirements pursuant to Section 4(2) of the Securities Act of 1933, as amended.

In April, 2009 the Company issued a private placement for up to 5,000,000 of common stock with warrants attached. The cost per share was $0.125 per share. For every share of common stock sold, the Company issued the purchaser one warrant for common stock. The warrant life is two years with a strike price of $0.10 per shares. In April, 2009 the Company sold 560,000 common shares and 560,000 two-year warrants with a strike price of $0.10 per share. In August 2009 the Company sold 160,000 common shares and 160,000 two-year warrants with a strike price of $01.00 per share.

Item 6. Selected Financial Data

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

Results of Operations

Fiscal 2009 compared to Fiscal 2008

Revenues

Net revenues for 2009 were $733,886 which is a decrease from $818,214 in 2008. The decrease is due to lower than expected sales of termination services in 2009. The Company’s strategy has been to limit our purchase of long distance minutes to calling areas with higher margins. During 2009 there were fewer of these calling areas than there were on 2008. The decrease in termination services was offset by an increase in sales of the Company’s radiation detection products as compared to the same period in 2008.

Selling, general and administrative expenses

In 2009, total selling, general and administrative expenses were $1,211,414, which is a decrease from $1,632,237 in 2007. This decrease is primarily due to the Company implementing cost saving measures in an effort to conserve cash. Some of the cost saving measures implemented included, but are not limited to employee attrition and reducing the Company’s use of outside consultants. Additionally, during 2009 the Company’s stock price was lower as compared to 2008 which caused our stock compensation expense to decrease.

Impairment of goodwill

The Company performed its annual impairment test of goodwill and determined that the recorded goodwill arising from its acquisition of Vidiation, Inc. in 2008 was not fully recoverable since projected revenue related to the acquisition had not been achieved and future sales contracts have not been projected. Consequently, the Company concluded an impairment charge of $2,831,790 should be taken at December 31, 2009.

Research and development expenses

Research and development decreased to $134,488 in 2009 from $237,126 in 2008. The decrease was the result of the development of the Company radiation detection sensors being completed and the reduced use of consultants.

Interest Income

The Company had $5,389 interest income in 2009. The Company recorded $23,990 in interest income in 2008. The decrease is due to lower average balances available for investing in 2009 versus 2008 which is offset by interest earned on the Company’s Promissory Note.

Interest Expense

The Company recorded $42,249 in interest expense in 2008. The Company recorded $3,973 in interest expense in 2007. The increase is due to the accrual of interest expense on additional loans made to the Company by the CEO in 2009 as compared to the same period in 2008.

Provision for Income Taxes

Up to this date, the Company has not had taxable income as it has incurred losses for tax purposes. The tax asset generated by the tax losses and any temporary differences has been fully reserved.

Net Loss

The Company had a loss of $4,180,276 in 2009 compared to a loss of $1,785,832 in 2008. The increase in the loss was due primarily to the Company’s determination that the entire goodwill balance of $2,831,790 was unrecoverable and impaired therefore written off to operation on December 31, 2009. During 2009 the Company implementing cost saving measures in an effort to conserve cash. Some of the cost saving measures implemented included, but are not limited to employee attrition and reducing the Company’s use of outside consultants. During 2009 the Company’s stock price was lower as compared to 2008 which caused our stock compensation expense to decrease. These cost saving measures contributed to decreasing the Company’s net loss by $420,823 in 2009.

Financial Condition, Liquidity and Capital Resources

As of December 31, 2009, we had approximately $24,000 in cash, $104,000 in accounts receivable and $78,000 in notes and interest receivable and approximately $1,246,000 in liabilities. The Company has primarily supplied its cash needs through loans from Mr. Ackerly (the Company’s President and Chief Executive Officer) and stock offerings. The Company’s need to obtain capital from outside investors is expected to continue until we are able to achieve profitable operations, if ever. There is no assurance that management will be successful in fulfilling all or any element of its plans. The failure to achieve these plans will have a material adverse effect on our Company’s financial position, results of operations and ability to continue as a going concern. As noted in our auditor’s report dated April 15, 2010, there is substantial doubt about our Company’s ability to continue as a going concern. Although Mr. Ackerly has loaned the Company funds to support its operations, there is no guarantee that he will be able to continue to do so.

Net cash used by operating activities for the year ended December 31, 2009 was $690,073 which was primarily the result of the net loss of $4,180,276 and is off set by goodwill impairment of $2,831,790 and the increase in deferred revenue and non-cash stock compensation expenses. This compared to net cash used by operating activities of $1,283,298 for the year ended December 31, 2008 which was primarily the result of the net loss of $1,785,832. For the year ended December 31, 2008, net cash provided by financing activities was $184,648 compared to a source of $708,000 for the year ended December 31, 2009. The $184,648 was due to collection of a note, sale of equity, and loans from an officer off set by loans made to Vidiation, Inc. prior to its acquisition by the Company. The change in 2009 is primarily due to loans from an officer and the sale of equity. We have recently experienced cash flow difficulties primarily because our expenses have exceeded our revenues. We expect to incur additional operating losses for the immediate near future. These factors, among others, raise significant doubt about our ability to continue as a going concern. If we are unable to generate sufficient revenue from our operations to pay expenses or we are unable to obtain additional financing on commercially reasonable terms, our business, financial condition and results of operations will be materially and adversely affected.

Contractual Obligations

The following table is a summary of contractual obligations recorded as of December 31, 2009.

	Payments due by period
Contractual Obligations	Total		Less than 1 Year		1-3 years

Operating Lease Obligations		141,231		71,862		69,369
Officer Loan Payable		828,000				828,000
Officer Interest Payable		46,067				46,067
Total	$	1,015,298	$	71,862	$	943,436

Future Commitments

None.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, results of operations, liquidity or capital expenditures.

Critical Accounting Policies

The following is a discussion of the accounting policies the Company believes are critical to its operations:

Revenue Recognition

The Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured.

The Company recognizes revenue when termination services have been performed. The Company does not offer prepays for termination services. For the Company’s radiation detection products which require an acceptance period during which the customer may cancel their contract or purchase order without penalty, the Company defers the revenue recognition until the end of that acceptance period. The Company offers a one year warranty on its radiation detection products and provides for estimated future warranty costs at the time revenue is recognized. As of this filing date, no warranty obligation has been recorded.

The Company has recognized revenue for purchased hardware (for resale) when the products have been shipped and all of the conditions above have been met. In the past these suppliers have offered a warranty of one year. The Company generally warrants these same hardware products for one year after sale and provides for estimated future warranty costs at the time revenue is recognized. Consequently, our warranty liability is limited to the cost of the logistics involved in accepting returns and shipping replacements. As of the filing date, no warranty obligation has been recorded for hardware purchased for resale.

Research and Development Costs

During 2008, we developed an Internet Protocol (IP) based management, monitoring and messaging system which interfaces with our radiation detection devices, third-party radiation detection sensors and other third-party threat-event sensors. The software is managed over the Web, utilizing our existing network infrastructure to provide administrative access to the system. This enables our customers to add a wide range of devices to their existing security systems for unmanned detection and automated response to a variety of threats.

The Company will continue to enhance the DM3 software with planned new features and improvements. In addition we will continue to seek customer comments and assessments. The Company can not ensure all customer comments and assessments will be incorporated into future DM3 releases.

Research and development expenses include costs directly attributable to the conduct of research and development projects primarily related to the development of new product design and improving the efficiency and capabilities of existing products and processes. Such costs include services provided primarily by outside contractors. All costs associated with research and development is expensed as incurred. The Company incurred research and development costs of $134,488 and $237,126 in the year ended December 31, 2009 and 2008 respectively.

Impairment of Goodwill

Goodwill represents the excess of the purchase price over the fair market value of net assets acquired. The process of determining goodwill requires judgment. The Company had recorded Goodwill as a result of its acquisition of Vidiation, Inc. Vidiation, Inc. had signed numerous reseller agreements, established relationships with key corporations in the radiation detection industry and negotiated pilot programs to test the Defentect technology at the time of the acquisition. These were measurable outputs that Vidiation, Inc. had achieved as a sales and marketing firm in the radiation technology industry at the time of the acquisition. The combination of these outputs with its policies, procedures, management and systems, combined to allow the Vidiation, Inc. to meet the definition of a business and therefore was subject to Business Combination accounting. As a result, after allocating the purchase price to tangible and intangible assets, the difference was determined to be Goodwill. Evaluating goodwill for impairment involves the fair value of the reporting units. Inherent in such fair value determinations are certain judgments and estimates, including the interpretation of current economic indicators and market valuations, and the strategic plans with regard to the Company’s operations. To the extent additional information arises or the strategies change, it is possible the conclusion regarding goodwill impairment could change, which could have a material effect on the financial position and results of operations. For these reasons, the Company believes the accounting estimates related to goodwill impairment is a critical accounting estimate.

The Company has significant intangible assets related to goodwill. In determining the recoverability of goodwill, assumptions are made regarding estimated future cash flows and other factors to determine the fair value of the assets. After completing the impairment testing of goodwill, the Company concluded an impairment charge should be taken at December 31, 2009 in connection with the recorded goodwill arising from its acquisition made in 2008 since the projected revenue related to the acquisition had not been achieved and future revenue sales contracts have not been projected.

Segment Disclosure

Effective January 1, 2010 management determined that it would cease the separate reporting of two separate businesses and focus the entire organization on the development and sale of software and services. All of the company's products are based on the same basic software system. In support of the Company’s new focus, the Company changed its name to Defentect Group, Inc. The software will be sold and marketed through its subsidiary Vidiation, Inc. As a result of this change in operations, the Company will report its operations as one segment effective January 1, 2010.

Income Taxes

Effective January 1, 2007, we adopted the accounting standard on accounting for uncertainty in income taxes This standard provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Tax positions must meet a “more-likely-than-not” recognition threshold at the effective date to be recognized upon adoption and in subsequent periods. Upon adoption, we had no unrecognized tax benefits. During the year ended December 31, 2009, we recognized no adjustments for uncertain tax benefits.

We recognize interest and penalties, if any, related to uncertain tax positions in selling, general and administrative expenses. No interest and penalties related to uncertain tax positions were accrued at December 31, 2009.

Income taxes are computed using the asset and liability method of accounting. Under the asset and liability method, a deferred tax asset or liability is recognized for estimated future tax effects attributable to temporary differences and carryforwards. The measurement of deferred income tax assets is adjusted by a valuation allowance, if necessary, to recognize future tax benefits only to the extent, based on available evidence; it is more likely than not such benefits will be realized. Our deferred tax assets were fully reserved at December 31, 2009 and 2008.

Use of Estimates

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

Item 7A. Quantitative and Qualitative Disclosures About Market Risk .

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 8. Financial Statements and Supplementary Data.

Defentect Group, Inc. and Subsidiaries

Formerly Known as Splinternet Holdings, Inc. and Subsidiaries

TABLE OF CONTENTS

		PAGE

REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		F-1

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets		F-2

Consolidated Statements of Operations		F-3

Consolidated Statements of Stockholders’ Equity		F-4

Consolidated Statements of Cash Flows		F-5

Notes to Consolidated Financial Statements		F-6 – F-19

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Defentect Group, Inc.

We have audited the accompanying consolidated balance sheet of Defentect Group, Inc. and subsidiaries, formerly known as Splinternet Holdings, Inc and subsidiaries, as of December 31, 2009 and 2008, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Defentect Group, Inc. and subsidiaries as of December 31, 2009 and 2008, and the results of their operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2, the Company has recurring losses from operations and a working capital deficiency at December 31, 2009. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also discussed in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

We were not engaged to examine management’s assertion of the effectiveness of Defentect Group, Inc. and subsidiaries internal control over financial reporting as of December 31, 2009, included in the accompanying Management’s Report on Internal Control over Financial Reporting and, accordingly, we do not express an opinion there on.

/s/ McGladrey & Pullen, LLP

New York, New York

April 15, 2010

F-1

Defentect Group, Inc. and Subsidiaries

Formerly Known as Splinternet Holdings, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2009 AND 2008

	2009			2008
ASSETS
Assets
Current assets
Cash and cash equivalents	$	24,334		$	6,407
Accounts receivable		104,290			8,750
Prepaid expenses		86,021			12,452
Inventory		20,152			-
Note receivable		77,947			77,958
Other Current Assets		22,995			-
Due from employees		21,337			-
Total current assets		357,076			105,567

Property and equipment, net		27,911			34,804
Goodwill		-			2,831,790
Deposit		14,394			14,394
Total Assets	$	399,381		$	2,986,555

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Current liabilities
Accounts payable	$	183,566		$	122,621
Accrued expenses		98,778			334,143
Deferred Revenue		80,000			-
Loans from officers		874,067			226,571
Total current liabilities		1,236,411			683,335

Deferred rent		10,000			-

Total liabilities		1,246,411			683,335

Commitments
Stockholders’ Equity:
Preferred Stock, 10,000,000 shares authorized and none outstanding
Common stock, $.001 par value, 250,000,000 shares authorized; 68,360,040 and 61,940,679 issued and outstanding		68,363			61,941
Additional paid-in capital		7,004,366			5,980,762
Accumulated deficit		(7,919,759	)		(3,739,483	)
Total Stockholders’ Equity		(847,030	)		2,303,220
Total Liabilities and Stockholders’ Equity	$	399,381		$	2,986,555

See notes to consolidated financial statements

F-2

Defentect Group, Inc. and Subsidiaries

Formerly Known as Splinternet Holdings, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2009 AND 2008

	2009			2008

Revenues	$	733,886		$	818,214
Cost of sales		699,610			754,700
Gross margin		34,276			63,514
Selling, general and administrative expenses		1,211,414			1,632,237
Impairment of goodwill		2,831,790			-
Research and development costs		134,488			237,126
Loss from operations		(4,143,416	)		(1,805,849	)
Interest income		5,389			23,990
Interest expense ( including $42,158 due to related party)		(42,249	)		(3,973	)

Net loss	$	(4,180,276	)	$	(1,785,832	)

Net loss per share – basic and diluted:
Net loss
Basic and diluted	$	(0.06	)	$	(0.02	)
Weighted average common stock outstanding:
Basic		64,712,916			59,930,420

See notes to consolidated financial statements

F-3

Defentect Group, Inc. and Subsidiaries

Formerly Known as Splinternet Holdings, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

YEARS ENDED DECEMBER 31, 2009 AND 2008

					Additional
	Common Stock				Paid-in		Accumulated			Total
	Shares		Amount		Capital		Deficit			Equity

Balance, December 31, 2007		56,715,000	$	56,715	$	3,195,171	$	(1,953,651	)	$	1,298,235

Issuance of stock related to the purchase of Vidiation, Inc.		4,788,179		4,788		2,604,770					2,609,558

Sale of Common Stock		312,500		313		62,187					62,500

Non-cash stock option expense						91,259					91,259

Issuance of common stock to related parties for services		125,000		125		27,375					27,500

Net loss								(1,785,832	)		(1,785,832	)

Balance, December 31, 2008		61,940,679		61,941		5,980,762		(3,739,483	)		2,303,220

Sale of Common Stock		720,000		720		89,280					90,000

Shares granted to employees for compensation		3,750,184		3,753		345,980					349,733

Issuance of stock for settlement of accrued compensation		949,177		949		254,998					255,947

Shares issued for services		1,000,000		1,000		119,000					120,000

Warrants issued for services						25,094					25,094

Stock-based compensation						189,252					189,252

Net loss								(4,180,276	)		(4,180,276	)
								-
Balance, December 31, 2009		68,360,040	$	68,363	$	7,004,366	$	(7,919,759	)	$	(847,030	)

See notes to consolidated financial statements

F-4

Defentect Group, Inc. and Subsidiaries

Formerly Known as Splinternet Holdings, Inc. and Subsidiaries

CONSOLIDATED STATEMENT OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2009 AND 2008

	2009			2008
Cash flows from operating activities:
Net loss	$	(4,180,276	)	$	(1,785,832	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		6,893			6,046
Issuance of stock, warrants and options to employees and consultants		684,079			118,759
Non-cash interest expense		42,170			3,098
Impairment of goodwill		2,831,790
Deferred rent		10,000
Changes in assets and liabilities:
(Increase) decrease in accounts receivable		(95,540	)		23,613
(Increase) decrease in prepaid expenses		(73,569	)		33,997
Increase in inventory		(20,152	)		-
Increase in other current assets		(22,995	)
Increase in due from employee		(34,000	)
Increase in deferred revenue		80,000
Increase in accounts payable		60,945			27,041
Increase in accrued expenses		20,582			289,980
Net cash used in operating activities		(690,073	)		(1,283,298	)

Cash flows from financing activities:
Repayment of notes receivable		-			77,148
Loans from officer		618,000			210,000
Pre acquisition loans to Vidiation, Inc.		-			(165,000	)
Net proceeds from the sale of common stock and warrants		90,000			62,500
Net cash provided by financing activities		708,000			184,648

Net increase (decrease) in cash and cash equivalents		17,927			(1,098,650	)

Cash and cash equivalents at beginning of year		6,407			1,105,057

Cash and cash equivalents at end of year	$	24,334		$	6,407

Non-cash financing and investing activities:
Issuance of stock to purchase Vidiation, Inc.	$	-		$	2,609,558
Issuance of stock for settlement of accrued compensation	$	255,947		$	-

See notes to consolidated financial statements

F-5

Defentect Group, Inc. and Subsidiaries

Formerly Known as Splinternet Holdings, Inc. and Subsidiaries

notes to consolidated financial statements

NOTE 1. ORGANIZATION AND PRINCIPAL ACTIVITIES OF THE GROUP

Defentect Group, Inc., formerly known as Splinternet Holdings, Inc., (the “Company”) is the parent company of Splinternet Communications, Inc., an Internet telephony company which entered into the radiation detection market with its radiation detection device in 2007, as well as Vidiation, Inc., a radiation detection sales and marketing company which was acquired on April 30, 2008.

The Company was incorporated in the State of Delaware on March 22, 2006. On April 3, 2006, The Company conducted a share for share exchange of securities with Splinternet Communications, Inc. whereby 214,002 shares of the common stock, par value $0.001 per share of Splinternet Communications, Inc. were exchanged for 53,500,500 shares of the common stock, par value $0.001 per share (the “Common Stock”) of the Company (the “Share Exchange”), as a result of which Splinternet Communications, Inc. became a wholly owned subsidiary of the Company.

The Company does not conduct any business or own any assets other than all of the issued and outstanding shares of Splinternet Communications, Inc.

Splinternet Communications, Inc. was incorporated in the State of Connecticut on January 12, 2000. Splinternet Communications, Inc. is a developer of Internet telephony technology and services which enable customers to make phone calls utilizing the Internet as an alternative to the traditional Public Switched Telephone Network (“PSTN”).

On April 30, 2008, the Company acquired Vidiation, Inc. pursuant to which at closing Splinternet Merger Sub I, Inc. (a wholly owned subsidiary of the Company formed in 2008 for the purpose of such transaction) merged into Vidiation, Inc., as a result of which Vidiation, Inc. became a wholly-owned subsidiary of the Company. The Company issued an aggregate of 4,788,179 shares of common stock of the Company to the shareholders of Vidiation, Inc. in exchange for the cancellation of the then outstanding shares of common stock of Vidiation, Inc. As a result, the former stockholders of Vidiation, Inc. owned 7.8% of the total issued and outstanding shares of common stock of the Company as of the date of acquisition.

The acquisition of Vidiation, Inc. was intended to accelerate revenue growth in the Company’s security and threat management business by increasing sales coverage through the addition of sales people from Vidiation, Inc. with knowledge of the marketplace and existing client relationships, increasing the Company’s presence in targeted markets and providing greater coverage in several key industries. The acquisition is also intended to achieve cost synergies in general and administrative expenses.

F-6

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Going Concern

These financial statements have been presented on the basis that the Company is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. During fiscal year 2006, the Company commenced sales of its products and began generating revenues. However, as of December 31, 2009, the Company has negative working capital of $879,335, an accumulated deficit of $7,919,759 and for the year ended December 31, 2009 incurred a net loss of $4,180,276, all of which raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the CEO to support the operations through loans is not determinable.

Managements’ plans for the Company include more aggressive marketing, raising additional capital and other strategies designed to optimize shareholder value. However, no assurance can be made that management will be successful in fulfilling all components of its plan. The failure to achieve these plans will have a material adverse effect on the Company’s financial position, results of operations and ability to continue as a going concern.

Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries Splinternet Communications, Inc. and Vidiation, Inc. All inter-company accounts and transactions have been eliminated in consolidation.

Use of Estimates

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. The Company maintains cash in bank deposit accounts which, at times, exceed federally insured limits. The Company has not experienced any losses on these accounts.

Concentrations of Credit and Market Risks

For the year ended 2009 the Company conducted a major portion of its business with one customer who accounted for 88% of total revenues. Sales to this customer amounted to approximately $716,000. At December 31, 2009, the same customer owed 23% of the accounts receivable balance of $104,290. For 2008 this customer accounted for 86% of total revenue.

Cash

The Company currently does not maintain a substantial amount of cash and cash equivalents with financial which exceeds federally insured limits. The Company maintains its cash with high quality financial institutions, which the Company believes limits risk.

F-7

Accounts Receivable

Trade accounts receivables are recorded at the invoice amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on historical write-off experience. The Company reviews its allowance for doubtful accounts monthly. Past due balances over 90 days and over a specified amount are reviewed individually for collectibility. Account balances are charged off against the allowance after all means of collection have been exhausted and potential for recovery is considered remote. The Company does not have any off-balance-sheet exposure related to its customers.

Fair Value of Financial Instruments

All current assets are carried at their cost and current liabilities are recorded at their contract amount, which approximates fair value because of their short term nature. The carrying value of short-term financing arrangements and notes receivable approximates fair value because interest rates over the relative term of these instruments approximate current market interest rates.

Property and Equipment

Property and equipment are stated at cost. Depreciation is provided using the straight-line method over the estimated useful life of five or seven years. Maintenance and repairs that do not improve efficiency or extend economic life are charged to expense as incurred.

Revenue Recognition

The Company recognizes revenue when termination services have been performed. The Company does not offer prepays for termination services. For the Company’s radiation detection products which require an acceptance period during which the customer may cancel their contact or purchase order without penalty, the Company defers the revenue recognition until the end of that acceptance period. The Company offers a one year warranty on its radiation detection products and provides for estimated future warranty costs at the time revenue is recognized.

The Company has recognized revenue for purchased hardware (for resale) when the products have been shipped and all of the conditions above have been met. In the past these suppliers have offered a warranty of one year. The Company generally warrants these same hardware products for one year after sale and provides for estimated future warranty costs at the time revenue is recognized. Consequently, our warranty liability is limited to the cost of the logistics involved in accepting returns and shipping replacements. No warranty cost or liability has been recorded as of December 31, 2009 and no warranty expense for the years ended December 31, 2009 and 2008.

F-8

Research and Development Costs

Research and development expenses include costs directly attributable to the conduct of research and development projects primarily related to the development of new product design and improving the efficiency and capabilities of existing products and processes. Such costs include services provided primarily by outside contractors. All costs associated with research and development are expensed as incurred.

Goodwill

Goodwill with an indefinite life must be tested for impairment on an annual basis. The Company performs this annual impairment test at fiscal year end for goodwill.

The Company compares the fair value of the reporting unit to its carrying amount on an annual basis to determine if there is potential goodwill impairment. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the fair value of the goodwill within the reporting unit is less than its carrying value. Fair values for goodwill is determined based on discounted cash flows or market multiples as appropriate.

The Company’s goodwill represents the excess acquisition cost over the fair of the tangible and identified intangible net assets of the Vidiation, Inc. acquired in 2008. Vidiation, Inc. had signed numerous reseller agreements, established relationships with key corporations in the radiation detection industry and negotiated pilot programs to test the Defentect technology at the time of the acquisition. These were measurable outputs that Vidiation, Inc. had achieved as a sales and marketing firm in the radiation technology industry at the time of the acquisition. The combination of these outputs with its policies, procedures, management and systems, combined to allow the Vidiation, Inc. to meet the definition of a business and therefore was subject to Business Combination accounting. As a result, after allocating the purchase price to tangible and intangible assets, the difference was determined to be Goodwill. For the year ended December 31, 2009, the Company applied what it believes to be the most appropriate valuation methodology for the reporting unit. Management determined that goodwill was not fully recoverable as of December 31, 2009 since the projected revenue related to the acquisition had not been achieved and future revenue sales contracts have not been projected.

Income Taxes

Effective January 1, 2007, the Company adopted the accounting standard on accounting for uncertainty in income taxes. This standard provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Tax positions must meet a “more-likely-than-not” recognition threshold at the effective date to be recognized upon the adoption and in subsequent periods. Upon adoption, the Company had no unrecognized tax benefits. During the year ended December 31, 2009, the Company recognized no adjustments for uncertain tax benefits.

The Company recognizes interest and penalties, if any, related to uncertain tax positions in selling, general and administrative expenses. No interest and penalties related to uncertain tax positions were accrued at December 31, 2009.

The Company accounts for its income taxes using by recognizing deferred tax liabilities and assets for expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

F-9

Income taxes are computed using the asset and liability method of accounting. Under the asset and liability method, a deferred tax asset or liability is recognized for estimated future tax effects attributable to temporary differences and carryforwards. The measurement of deferred income tax assets is adjusted by a valuation allowance, if necessary, to recognize future tax benefits only to the extent, based on available evidence; it is more likely than not such benefits will be realized. The Company’s deferred tax assets were fully reserved at December 31, 2009 and December 31, 2008.

The tax years 2006 through 2008 remain open to examination in the major taxing jurisdictions in which the Company operates. The Company expects no material changes to unrecognized tax positions within the next twelve months.

Net Loss per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding. Warrants to purchase 650,000 and stock options to purchase 1,205,000 shares of common stock are not included in diluted net loss per share for the year ended December 31, 2009 because they would be antidilutive. No potential dilutive securities were outstanding for the year ended December 31, 2008.

Stock-Based Compensation

We recognize stock-based compensation expense net of an estimated forfeiture rate and recognize compensation cost for only those shares expected to vest on a straight-line basis over the requisite service period of the award.

The Company uses the Black-Scholes option pricing model as the most appropriate method for determining the estimated fair value for stock-based awards. The Black-Scholes model requires the use of highly subjective and complex assumptions which determine the fair value of stock-based awards, including the option’s expected term and the price volatility of the underlying stock. The value of the portion of the post adoption award that is ultimately expected to vest is recognized as expense over the requisite service (vesting) period on a straight-line basis in our Consolidated Statements of Operations and the expense has been reduced for estimated forfeitures. Forefeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

In connection with the appointment of Ambassador L. Paul Bremer, III to serve as a member of the Company’s Board of Directors, effective October 10, 2008, the Board has agreed to issue to Ambassador Bremer, or his designee, 125,000 shares of our common stock quarterly over two years with acceleration of vesting when authorized by the Board of Directors in acknowledgement of extraordinary circumstances or success. As a result, unless accelerated, 125,000 shares will be issued to Ambassador Bremer on each applicable vesting date (determined to be December 31, March 31, June 30 and September 30). The issuance of these shares of common stock will be exempt from registration requirements pursuant to Section 4(2) of the Securities Act of 1933, as amended.

Stockholders equity

The Company is currently authorized to issue 250,000,000 shares of common stock, par value $.001 per share and 10,000,000 shares of preferred stock.

Defentect Group, Inc., formerly know as Splinternet Holdings, Inc., (the “Company”) a Company incorporated in the State of Delaware on March 22, 2006 conducted a share for share exchange of securities with Splinternet Communications, Inc. on April 3, 2006 whereby 214,002 shares of the common stock, par value $0.001 per share, of Splinternet Communications, Inc. were exchanged for 53,500,500 shares of the common stock, par value $0.001 per share, of Splinternet Holdings, Inc. (the “Share Exchange”), as a result of which Splinternet Communications, Inc. became a wholly owned subsidiary of the Company.

F-10

On November 6, 2007 two existing shareholders of the Company (Atheneum Capital and The Mountain View Trust) exercised all of their warrants to purchase 3,214,500 shares of common stock. The board of directors agreed to modify the warrant agreements to allow the signing of notes in lieu of payment in cash. Each of the two shareholders signed a one year interest bearing note totaling $77,188 in full payment of the exercise price. The interest rate is 7% and interest only is paid quarterly. The principal and all accrued but unpaid interest was due on November 6, 2008. In November 2008, Atheneum Capital paid its note in full. The Mountain View Trust continues to pay the interest on the note quarterly. Management is pursuing its options in collecting the note. Management believes the note is fully recoverable.

In December 2008 the Company issued a private placement for up to 5,000,000 of common stock with warrants attached. The cost per share was $0.20 per share. For every two shares of common stock sold, the company issues the purchaser one warrant for common stock. The warrant life was two years with a strike price of $0.40 per share. The Company then sold 312,500 common shares and 156,250 two year warrants with a strike price of $0.40 per common share in connection with the private placement.

The Company has assessed whether the warrants should be classified as either a liability or equity and has determined them to be equity.

Recently Issued Accounting Standards

The Financial Accounting Standards Board ("FASB") issued authoritative guidance on the FASB Accounting Standards Codification ("ASC") and the hierarchy of generally accepted accounting principles, codified in ASC 105, Generally Accepted Accounting Principles. The codification was effective for interim or annual periods ending after September 15, 2009, and impacted the Company's financial statement disclosures beginning with the year ending December 31, 2009 as all future references to authoritative accounting literature will be referenced in accordance with the Codification.

The FASB has issued authoritative guidance on Non-controlling Interests in Consolidated Financial Statements. The new codification code is ASC 810, Consolidation. This statement changes the way the consolidated income statement is presented when non-controlling interests are present. It requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest. The implementation of this pronouncement did not have a significant impact on the financial statements of the Company.

The FASB has issued authoritative guidance on Business Combinations. The new codification code is ASC 805, Business Combinations. This statement retains the fundamental requirements that the acquisition method of accounting be used, and applies to all business entities, including mutual entities that previously used the pooling of interest method of accounting for some business combinations. The implementation of this pronouncement did not have a significant impact on the financial statements the Company.

The FASB has issued authoritative guidance on subsequent events, which was primarily codified into Topic 855, Subsequent Events, in the ASC. The guidance established general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The adoption of ASC 855 did not have a material effect on the Company's financial statements and related disclosures.

F-11

Reclassifications

Certain amounts from 2008 may have been reclassified to conform to the 2009 presentation.

NOTE 3. ACQUISITION

On April 30, 2008, the Company acquired Vidiation, Inc. pursuant to which at closing Splinternet Merger Sub I, Inc. (a wholly owned subsidiary of the Company formed in 2008 for the purpose of such transaction) merged into Vidiation, Inc., as a result of which Vidiation, Inc. became a wholly-owned subsidiary of the Company. The Company issued an aggregate of 4,788,179 shares of common stock of the Company to the shareholders of Vidiation, Inc. in exchange for the cancellation of the then outstanding shares of common stock of Vidiation, Inc. As a result, the former shareholders of Vidiation, Inc. owned 7.8% of the total issued and outstanding shares of common stock of the Company as of the date of acquisition.

Vidiation, Inc. is a radiation detection sales and marketing company incorporated in the State of Delaware on December 10, 2007, which acquired certain assets from Vidiation LLC. Vidiation LLC was a radiation detection technology marketing company which had extensive sales and marketing experience in the surveillance and security market space and was actively engaged in that space. The success Vidiation, Inc. had made was desired by the Company and precipitated the above-referenced transaction.

The costs of the acquisition were allocated on the basis of the estimated fair values of the assets acquired and liabilities assumed. The acquisition was accounted for using the purchase method whereby intangible assets identified in “business combinations” connection with the acquisition.

The stock portion of the acquisition consists of 4,788,179 shares at a price per share of $.545, which was the average closing price of a share of the Company common stock for the average of the 5 consecutive trading days before and after the public announcement by the Company of the contemplated purchase of Vidiation, Inc.

The following table summarizes the allocation of the purchase price based on the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:

Total purchase price	$	2,609,558
Assets acquired
Cash		2,306
Prepaid expenses		3,295
Fixed assets		19,994
Deposits		850
Accounts payable and accrued expenses		79,000
Notes payable		169,678
Net liabilities acquired		(222,233	)
Goodwill (residual)	$	2,831,790

F-12

The pro forma effect on revenues, net loss, and loss per share amounts for the fiscal year ended December 31, 2008, assuming the Vidiation, Inc. transaction had closed on January 1, 2008, are as follows:

Net revenues:	$	818,214
Net loss:	$	2,011,991
Loss per share:	$	0.03 per share

The unaudited pro forma combined financial information does not necessarily represent what would have occurred if the acquisition had taken place on the dates presented and is not necessarily representative of the Company’s future consolidated results.

We account for goodwill in accordance with the accounting guidance which requires that goodwill and other intangible assets that have indefinite lives not be amortized but instead be tested at least annually for impairment, or more frequently when events or a change in circumstances indicate that the asset might be impaired. A two-step test is used to identify the potential impairment and to measure the amount of impairment, if any. The first step is to compare the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill is considered not impaired, otherwise goodwill is impaired and the loss is measured by performing step two. Under step two, the impairment loss is measured by comparing the implied fair value of the reporting unit with the carrying amount of goodwill. At December 31, 2009, management determined that the entire goodwill balance of $2,831,790 was impaired since the projected revenue related to the acquisition had not been achieved and future sales revenue contracts not being projected and was therefore written off to operations.

NOTE 4. PROPERTY AND EQUIPMENT

The components of property and equipment are as follows at December 31, 2009 and 2008:

	2009			2008
Property and equipment	$	47,797		$	47,797
Less accumulated depreciation		(19,886	)		(12,993	)
Property and equipment, net	$	27,911		$	34,804

NOTE 5. INCOME TAXES

No provision for income taxes has been recorded due to net operating loss carryforwards of approximately $7,765,000 and $3,575,000 as of December 31, 2009 and 2008 which will expire at various dates through 2029.

Deferred tax assets and the valuation allowances as of December 31, 2009 and 2008 are as follows:

Deferred tax asset:	2009			2008
Net operating loss carryforward	$	2,717,000		$	1,345,000
Stock-based compensation		388,000			150,000
Valuation allowance		(3,105,000	)		(1,495,00	)
	$	-		$	-

F-13

A reconciliation of the effective income tax rate to the statutory rate is as follows:

Year ended December 31,	2009			2008
Tax benefit at federal statutory rates		(34	%)		(34	%)
Valuation allowance		34	%		34	%
		0	%		0	%

Realization of deferred tax assets, including those related to net operating loss carryforwards, are dependent upon future earnings, if any, of which the timing and amount are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance for the years ended December 31, 2009 and 2008. Based upon the Company’s current operating results, management has concluded that it is not more likely than not that such assets will be realized.

NOTE 6. LOANS FROM OFFICERS

Mr. James C. Ackerly, the President and secretary, treasurer and director, made loans to the Company during the year ended December 31, 2009 of $618,000. The loans are demand loans that are secured by all the assets of the Company and accrue interest at the rate of 8%. The Company accrued $42,158 in interest charges due to loans payable to Mr. Ackerly.

An officer of Vidiation, Inc. advanced Vidiation, Inc. $12,663 prior to its acquisition by the Company. The amount is non interest bearing and has no term .

F-14

NOTE 7. BUSINESS SEGMENT INFORMATION

Prior to January 1, 2010, The Company conducted its operations in two business segments; the Radiation Sensor and Detection Division and the VoIP Division. The Company evaluated the performance of its operating segments primarily based on revenues and operating income. Corporate costs are allocated to the Radiation segment based on a three factor formula (revenues, payroll and certain assets).

Year ended December 31, 2009	Radiation			VoIP			Corporate		Total
Revenues	$	7,500		$	726,386		$	-	$	733,886
Impairment of goodwill		(2,831,790	)							(2,831,790	)
Operating income (loss)		(4,156,912	)		23,364			-		(4,180,276	)
Total assets		60,005			121,842			217,534		399,381
Depreciation		4,350			2,543					6,893
Year ended December 31, 2008
Revenues	$	42,000		$	776,214		$	-	$	818,214
Operating income (loss)		(1,622,779	)		(183,070	)		-		(1,805,849	)
Total assets		2,847,442			34,404			104,709		2,986,555
Capital expenditures		-			-			-		-
Depreciation		4,350			1,696			-		6, 046

NOTE 8. STOCK OPTION PLAN

2008 Stock Option Plan

On April 22, 2008, the Board of Directors of the Company adopted the Company’s. 2008 Stock Incentive Plan (the “2008 Stock Plan”). Under the 2008 Stock Plan, officers, other employees and directors of, and consultants to, the Company or its subsidiaries may be awarded stock options, stock appreciation rights and other stock awards. The number of shares subject to the 2008 Stock Plan may not exceed 6,000,000 shares in total. Adoption of the 2008 Stock Plan is subject to the approval by the Company’s shareholders within twelve months of the adoption by the Board of Directors. The 2008 Stock Plan provides for the grant of (i) options that are intended to qualify as incentive stock options ("Incentive Stock Options") within the meaning of Section 422 or 424 of the Internal Revenue Code to key employees and (ii) options not so intended to qualify ("Nonqualified Stock Options") to officers, employees of or consultants to the Company or any non employee director. On April 22 and 30, 2008, the Board of Directors granted 1,265,000 nonqualified stock options to employees and consultants. The Stock Option Plan is administered by a committee of the Board of Directors (or if there is no committee, the Board of Directors itself). The committee shall determine the terms of the options granted, including the exercise price, the number of shares subject to the option and the terms and conditions of exercise. During the three months ended December 31, 2008, 360,000 stock options were forfeited when the individuals stopped working for the Company. During year ended December 31, 2009, the Board granted 2,135,537 shares and 300,000 options to employees and consultants to the Company.

F-15

The exercise price of Incentive Stock Options granted under the plan must be at least equal to the fair market value of the shares on the date of the grant. The maximum term for each Incentive Stock Option granted is five years. Options shall be exercisable at such times and in such installments as the committee shall provide in the terms of each individual option. The maximum number of shares for which options may be granted to any individual in any fiscal year is 2,000,000. The Stock Option Plan also provides for the granting of stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards, qualified performance awards and stock awards. The Board of Directors has not granted any of these other types of awards.

For the year ended December 31, 2009 and 2008 the share-based compensation expense was approximately $189,252 and $91,259, respectively.

The Company recognizes stock-based compensation costs on a straight-line basis over the requisite service period of the award, which is generally the option vesting term.

The following table summarizes stock option activity:

Options Outstanding	Shares Subject to Options Outstanding			Weighted Average Exercise Price Per Option		Weighted Average Remaining Life
Balance at January 1, 2008		-
Granted Options		1,265,000			1.35		5.0
Forfeited Options		(360,000	)		1.25
Balance at December 31, 2008		905,000			1.39		4.3
Granted Options-Fully Vested at Grant		300,000			0.5		5
Balance at December 31, 2009		1,205,000			1.16		3.5

F-16

At December 31, 2009 the aggregate intrinsic value was $0. During the year ended December 31, 2009, the Company issued 300,000 fully vested options and 301,667 options vested bringing the total vested options outstanding to 601,667 and unvested options to 603,333.

			Weighted		Weighted
			Average		Average
			Exercise Price		Contractual
Number Outstanding			Per Option		Life
Non-vested options at January 1, 2008	0
Options Granted	1,265,000			1.35		5.0
Options Forfeited	(360,000	)		1.25		5.0
Options Vested	-
Non-vested options at December 31, 2008	905,000					4.3

Non-vested Options Granted
Options Forfeited
Options Vested	(301,667	)		1.39		3.3

Non-vested options at December 31, 2009	603,333			1.39		3.3

As of December 31, 2009, there was approximately $182,000 of unrecognized compensation cost related to non-vested stock option awards, which is expected to be recognized over a remaining weighted-average vesting period of 1.33 years.

The fair value of options granted during the year ended December 31, 2009 and 2008 was approximately $52,363 and $1,031,000.

The fair value of each option grant is estimated on the date of grant using the Black Scholes option pricing model with the following weighted-average assumptions used for grants during 2008: risk-free interest rate of 2.4% and 2.96% based on the U.S. Treasury yields in effect at the time of grant; expected dividend yields of 0 percent as the Company has not, and does not intend to, declare dividends; and expected lives of 5 years based upon the length of the grant. The expected volatility used was 83% based on an average of volatility calculations from several public companies in the same industry. Options have vesting periods of 3 years with one third vesting on each anniversary date and they have contractual lives of 5 years.

The fair value of each option grant is estimated on the date of grant using the Black Scholes option pricing model with the following weighted-average assumptions used for the grant during 2009: risk-free interest rate of 2.0% based on the U.S. Treasury yields in effect at the time of grant; expected dividend yields of 0 percent as the Company has not, and does not intend to, declare dividends; and expected lives of 5 years based upon the length of the grant. The expected volatility used was 114% based on an average of volatility calculations from the Company and several public companies in the same industry. The options were fully vested when granted.

The Company measures the fair value of the equity instruments issued to non-employees using the stock price and other measurement assumptions as of the earlier of the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or the date at which the counterparty’s performance is complete.

F-17

The Company issued under the 2008 Stock Plan 2,135,537 common shares to consultants and employees during the year at various prices for the performance of services to the Company. The value of the shares issued were expensed at the time of issuance. In addition the Company issued outside of the Plan 3,563,824 shares at various process during the year and 650,000 warrants (400,000 at $0.10 that expire November 23, 2011 and 250,000 at $0.40 that expire June 10, 2011) to employees and consultants outside. The Company recorded share based compensation expense of $499,827 for the year ended December 31, 2009 related to these issuances. Of the shares issued 949,177 were for settlements of accrued compensation from 2008. The fair value of each warrant grant is estimated on the date of grant using the Black Scholes option pricing model with the following weighted-average assumptions used for grants during 2009: risk-free interest rate of 2.2% and 2.2% based on the U.S. Treasury yields in effect at the time of grant; expected dividend yields of 0 percent as the Company has not, and does not intend to, declare dividends; and expected lives of 2 years based upon the length of the grant. The expected volatility used was 142% and 148% based on an average of volatility of the Company’s stock. These warrants have no vesting period.

NOTE 9. COMMITMENTS AND CONTINGENCIES

Leases

The Company has a non-cancelable office lease agreements for its office space in Norwalk, CT. The Company’s office in North Barrington, IL is no longer being utilitized and a third party assumed the lease effective March 1, 2010. The Company also has a one year lease agreement on its co-located space.

Rent expense charged to operations amounted to approximately $72,500 and $70,000 for the years ended December 31, 2009 and 2008 respectively.

The approximate aggregate future minimum lease payments are as follows:

Year Ending December 31:
2010	$	64,062
2011		45,902
2012		23,466
	$	133,430

Employment Agreements

The Company does not have employment agreements with any of its employees and uses outside contractors for some of its work.

Legal Proceedings

F-18

NOTE 10. SUBSEQUENT EVENT

On February 1, and February 25, 2010 James C. Ackerly, President and Chief Executive Officer, loaned the Company $15,000 and $10,000 respectively. On March 22, and March 31, 2010 James C. Ackerly, loaned the Company $7,500 and $16,000 respectively.

On February 23, 2010 the Company sold 500,000 shares of its common stock at $0.05 per share to an accredited investor for total proceeds of $25,000 in a private placement offering. In connection therewith, the investor was also issued a total of 500,000 two-year warrants exercisable for share of common stock at $0.10 per share. These securities were sold directly by the Company, without engaging in any advertising or general solicitation of any kind and without payment of underwriting discounts or commissions to any person. The securities were issued in reliance upon the exemption from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended, and/or Rule 506 thereunder.

On April 13, 2010 the Company sold 1,125,000 shares of its common stock at $0.089 per share to an accredited investor for total proceeds of $100,000 in a private placement offering. In connection therewith, the investor was also issued a total of 1,000,000 two-year warrants exercisable for share of common stock at $0.10 per share, These securities were sold directly by the Company, without engaging in any advertising or general solicitation of any kind and without payment of underwriting discounts or commissions to any person. The securities were issued in reliance upon the exemption from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended, and/or Rule 506 thereunder.

On April 14, 2010 the Company issued 6,000,000 shares of common stock to a vendor in accordance with a consulting agreement between such vendor and the Company dated January 14, 2009 and a subsequent exchange agreement, in which the parties agreed to exchange options to purchase 300,000 shares for the subject issuance in recognition of service provided.

F-19

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A (T). Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures designed to ensure that the information the Company must disclose in its filings with the SEC is recorded, processed, summarized and reported on a timely basis. The Company’s management, under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of December 31, 2009. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2009, the Company’s disclosure controls and procedures were not effective due to the material weakness noted below.

Management’s Annual Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining an adequate system of internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Further, because of changes in conditions, effectiveness of internal control over financial reporting may vary over time.

Management of the Company conducted an evaluation of the effectiveness, as of December 31, 2009, of the Company’s internal control over financial reporting based on the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO Framework”). Based on its evaluation under the COSO Framework, management has concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2009.

Identification of a Material Weakness

A material weakness is a significant deficiency, or a combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

At the end of fiscal year 2009, we decided to change the focus of our business activities as described elsewhere in this document. As a result, the goodwill associated with the acquisition of Vidiation, Inc. in 2008 was impaired. Due to an oversight in our policies and procedures for the review of the testing of goodwill impairment, we temporarily overlooked important issues related to the testing of goodwill impairment. Although this oversight was discovered before filing of any reports, it did create a reasonable possibility that a material misstatement of our annual or interim financial statements might not be prevented or detected on a timely basis in the future. Accordingly, we determined that this control deficiency constituted a material weakness.

During the preparation of our annual report on Form 10-K, the underlying circumstances of this material weakness were fully communicated to and considered by our independent registered public accounting firm to ensure that the appropriate accounting treatment was recorded in the financial statements included in this Form 10-K.

We have developed the following remediation plan to address this material weakness and we are proceeding expeditiously with measures to enhance our internal control over financial reporting:

·	Our Board of Directors will monitor the accounting policies adopted by the company and will direct additional measures as deemed appropriate.

Accordingly, our management believes that the accounting included in this Form 10-K fairly presents in all material respects our financial position, results of operations and cash flows for the periods presented.

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.

Item 9B. Other Information.

None.

PART III.

Item 10. Directors, Executive Officers and Corporate Governance.

Directors and Executive Officers

Our directors and our executive officers and the executive officers of our subsidiaries, their ages and present position are as follows:

Name	Age	Positions
James C. Ackerly	61	President. Secretary, Treasurer and Director

L. Paul Bremer	68	Chairman of the Board

John T. Grippo	54	Chief Financial Officer

Edmund L. Resor	59	Vice President, Director

Set forth below are brief accounts of the business experience during the past five years of each director and executive officer of the Company and each significant employee of the Company.

James C. Ackerly has been President, Secretary, Treasurer and a Director of the Company since its inception in January 2000. Since 1995, Mr. Ackerly has provided technology consulting and design services to AMR Corp., The Sabre Group, AT&T and others while working as an independent consultant. He currently serves on the board of directors of Cronus Technologies, Inc. Mr. Ackerly earned an A.B. in Physics from Williams College and an M.B.A. from Harvard Graduate School of Business Administration.

Ambassador L. Paul Bremer has been a Director and Chairman of the Board of the Company since October 2008. Recognized as one of the world’s leading experts on crisis management, counterterrorism and homeland security, Ambassador Bremer has a unique blend of experience in government and the private sector. His service as an American diplomat spanned eight Presidents. During that time, he was Special Assistant or Executive Assistant to six Secretaries of State. His overseas assignments included service at the Embassies in Afghanistan, Malawi and Norway. President Reagan named him as Ambassador to the Netherlands in 1983 where he served for three years. In May 2003, President Bush appointed Ambassador Bremer Presidential Envoy to Iraq where he remained until June 2004. Ambassador Bremer’s mission to Iraq marked his return to government after a 14 year career in business. Prior to his assignment to Iraq, Ambassador Bremer had been Chairman and Chief Executive Officer of Marsh Crisis Consulting Company. From 1989 to 200, he was Managing Director of Kissinger Associates, a strategic consulting firm headed by former Secretary of State, Henry Kissinger. During this period, Ambassador Bremer served as a director of a number of American and international corporations and on the Board of several not-for-profit organizations. In September 1999, the Speaker of the House of Representatives appointed him Chairman of the bipartisan National Commission on Terrorism. In June 2002, President Bush appointed Ambassador Bremer to the President’s Homeland Security Advisory Council.

John T. Grippo has served as Chief Financial Officer of the Company since 2006. Mr. Grippo has been the president of his own financial management practice, John Grippo, Inc. since 1999. His firm provides services as a Chief Financial Officer to small to mid-sized public and private companies and also provides other related accounting and consulting services. Prior to that, Mr. Grippo served for ten years as a full time Chief Financial Officer to companies in housewares, electric vehicles and financial services industries. He worked for five years as an auditor with Arthur Andersen, LLP, followed by seven years in various accounting positions in the financial services industry.

Edmund L. Resor has been a Vice President and a Director of the Company since January 2000. Since 1990, Mr. Resor has been the Principal of Edmund Resor & Associates, a consulting business which provides advice in establishing information technology businesses in developing countries. Since 2000, Mr. Resor has also been Senior Consultant and a Principal of NextGen Strategies, a global strategy consulting firm specializing in converging telecommunications, Internet and computer markets. In addition, since 1992, he has been Vice President of International Operations and a founding partner of Somali Telecom Group, which has built a nationwide rural telephone service in Somalia. Mr. Resor earned a B.A. in Anthropology from Yale University and a Master’s Degree in Public and Private Management from the Yale School of Management.

None of the directors and officers is related to any other director or officer of the Company.

No officer or director has, during the past five years, been involved in (a) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time, (b) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses), (c) any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities or (d) a finding by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

Due to the early stage nature of our business, we do not have an audit committee, nor have our board of directors deemed it necessary to have an audit committee financial expert. Insofar that we are not a listed security, we are not required to have an audit committee. Within the next 12 months, however, we expect to have several committees in place, including a compensation, budget and audit committee. At such time, we intend to have a member of the Board of Directors that meets the qualifications for an audit committee financial expert.

Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and have qualified. Officers are appointed to serve until the meeting of the Board of Directors following the next annual meeting of stockholders and until their successors have been elected and qualified.

Section 16(a) Beneficial Ownership Reporting Compliance

Insofar that we do not have a class of securities registered pursuant to Section 12 of the Exchange Act, our directors and executive officers, and persons who own more than ten percent of the Company’s Common Stock, are not required to file with the Securities and Exchange Commission initial reports of ownership and reports of changes of ownership of Common Stock of the Company.

Code of Ethics

The Board of Directors has adopted a Code of Ethics applicable to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, which is designed to promote honest and ethical conduct; full, fair, accurate, timely and understandable disclosure; and compliance with applicable laws, rules and regulations. A copy of the Code of Ethics will be provided to any person without charge upon written request to the Company at its executive offices, 535 Connecticut Avenue, 2 nd floor, Norwalk, Connecticut 06854.

Item 11. Executive Compensation

The following summary compensation table sets forth the aggregate compensation we paid or accrued to our Chief Executive Officer during the fiscal years ended December 31, 2008 and 2009. No other officer received compensation in excess of $100,000.

Summary Compensation Table

Name and Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($) (1)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)			Total
James C. Ackerly,	2009	$	12,000	$	0	$	22,543	$	0	$	0	$	0	$	3,477	(2)	$	38,020
President and Chief Executive Officer	2008		118,750		0		80,065		0		0		0		8,103	(2)		206,918

(1) Represents the dollar amount recognized for financial reporting purposes of stock awards in 2008 and 2009 computed in accordance with SFAS 123(R).

(2) The Company paid $3,477 in 2009 and $8,103 in 2008 of Mr. Ackerly’s medical expenses.

Outstanding Equity Awards at Fiscal Year-End

The following table provides certain information concerning equity awards held by the named executive officer as of December 31, 2009.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

Option Awards

Stock Awards

Name

No. of

Securities

Underlying

Unexercised

Options (#)

Exercisable

Number of

Securities

Underlying

Unexercised

Options (#)

Unexercisable

Option

Exercise

Price ($)

Option

Expiration

Date

Number of

Shares or

Units of Stock

That Have Not

Vested (#)

Equity Incentive Plan

Awards: Number of

Unearned Shares, Units

Or Other Rights That

Have Not Vested(#)

James C. Ackerly

-0-

N/A

-0- (1)

(1)	Mr. Ackerly was issued 315,456 shares of common stock in 2009, all of which vested upon issuance.

Director Compensation

Our directors do not receive fixed compensation for their services as directors. Directors are reimbursed for their reasonable out-of-pocket expenses incurred in connection with their duties.

However, in connection with the appointment of Ambassador L. Paul Bremer, III to serve as a member of the Company’s Board of Directors, effective October 10, 2008, the Board has agreed to issue to Ambassador Bremer, or his designee, 1,000,000 shares of our common stock of which 125,000 shares will vest quarterly over two years with acceleration of vesting when authorized by the Board of Directors in acknowledgement of extraordinary circumstances or success. As a result, unless accelerated, 125,000 shares will be issued to Ambassador Bremer quarterly and the Company will record a non-cash stock compensation expense for the fair value of shares issued. Through December 31, 2009, 625,000 shares of common stock have been issued to Ambassador Bremer pursuant to these arrangements, 500,000 of which were issued in 2009.

The following table provides certain summary information concerning the compensation paid to non-employee directors during fiscal 2009. All compensation paid to Mr. Ackerly is set forth in the Summary Compensation Table.

Director Compensation

Name	Fees Earned or Paid in Cash ($)	Stock Awards (S)	Option Awards ($) (1)	All Other Compensation ($)	Total ($)
L. Paul Bremer	-0-	$45,000 (1)	-0-	-0-	$45,000
Edmund L. Resor	-0-	-0-	-0-	-0-	-0-

(1)	Represents the dollar amount recognized in fiscal 2009 for financial reporting purposes of stock awarded computed in accordance with Financial Accounting Standards 123R.

Employment Agreements

None

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth, as of April 14, 2010, certain information as to the beneficial ownership of our common stock by:

·	each person known by us to own more than ten percent (5%) of our outstanding shares;

·	each of our directors;

·	each of our executive officers named in the Summary Compensation Table under “Executive Compensation”; and

·	all of our directors and executive officers as a group.

	Amount and Nature of Beneficial Ownership (1)(2)
Name and Address of Beneficial Shareholder	Common Stock			Percentage of Ownership (1)(2)			Percentage of Voting Power (1)(2)
James C. Ackerly c/o Defentect Group, Inc. 535 Connecticut Ave, 2nd floor, Norwalk, CT 06854		23,127,431			30.4	%		30.4	%

L. Paul Bremer, III		725,000			1.0	%		1.0	%
c/o Defentect Group, Inc. 535 Connecticut Ave, 2 nd floor,
Norwalk, CT 06854

Edmund L. Resor c/o Defentect Group, Inc. 535 Connecticut Ave, 2 nd floor, Norwalk, CT 06854		7,658,832			10.1	%		10.1	%

Thomas M. Flohr c/o Defentect Group, Inc. 535 Connecticut Ave, 2nd floor, Norwalk, CT 06854		5,282,200			6.9	%		6.9	%

Richard Rankin c/o Atheneum Capital LLC 51 Locust St New Canaan, CT 06840		4,881,840	(3)		6.4	%		6.4	%

All executive officers and directors as a group (3 persons)		31,351,712			41.4	%		41.4	%

(1)	Beneficial ownership is calculated in accordance with Rule 13d-3 under the Securities Exchange Act of 1934. Shares, for purposes of this table, are considered beneficially owned only to the extent currently exercisable or exercisable within 60 days after April 14, 2010.

(2)	Except as otherwise indicated, each of the parties listed has sole voting and investment power with respect to all shares of common stock indicated above.

(3)	Includes 2,629,640 shares of Common Stock which are owned by Atheneum Capital (“Atheneum”), which is a company controlled by Richard Rankin, and 2,252,200 shares of Common Stock held by Mr. Rankin individually.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Other than the compensation paid to Mr. Ackerly as described above under “Executive Compensation” and otherwise as described below, since January 1, 2009, there has not been, nor is there currently proposed, any transaction or series of similar transactions to which we were or will be a party: (i) in which the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last three completed fiscal years; and (ii) in which any director, executive officer, shareholder who beneficially owns 5% or more of our common stock or any member of their immediate family had or will have a direct or indirect material interest.

During the year ended December 31, 2009, James C. Ackerly made loans to the Company in the aggregate principal amount of $618,000. The loans are demand loans that are secured by all of the assets of the Company and accrue interest at 8%.

Subsequent to the 2009 year end and through the date of this report, Mr. Ackerly has made additional loans to the Company in the aggregate principal amount of $25,000. Such loans are demand loans accruing interest at 8% and are secured as described above.

Director Independence

Our board of directors currently consists of three members. They are James C. Ackerly, Ambassador L. Paul Bremer and Edmund L. Resor. Mr. Ackerly is the Company’s President, Secretary and Treasurer, Ambassador Bremer is the Company’s Chairman of the Board and Mr. Resor is a Vice President. None of our directors are independent directors. We have determined their independence using the general independence criteria set forth in the Nasdaq Marketplace Rules.

Item 14. Principal Accountant Fees and Services.

The firm of McGladrey & Pullen (“M&P”) acts as our independent registered public accounting firm. As previously disclosed in our Current Report on Form 8-K filed on November 15, 2007, certain of the partners of Goldstein Golub Kessler LLP (“GGK”) became partners of M&P. As a result, GGK resigned as auditors of the Company effective November 15, 2007, and M&P was appointed as our independent registered public accounting firm in connection with the Company’s annual financial statements for the year ended December 31, 2007. The following is a summary of fees paid to our independent registered public accounting firm for services rendered.

Audit Fees

Audit fees billed to the Company by M&P for its audit of the Company’s financial statements included in this Form 10-K, for its review of the financial statements included in the Company’s Quarterly Reports on Form 10-Q, and its review of financial statement included in the Company’s filing on Form 8-K/A filed with the Securities and Exchange Commission for 2009 and 2008 totaled $38,500 and $63,000, respectively.

Audit-Related

There were no audit- related fees billed to the Company by M&P for the years ended December 31, 2009 and 2008.

Tax Fees

There were no tax fees billed to the Company by M&P for its tax returns for the years ended December 31, 2009 and 2008.

Other

No other fees were billed to the Company by M&P for all other non-audit or tax services rendered to the Company for the years ended December 31, 2009 and 2008.

Audit Committee Pre-Approval Policies

As of this filing date, the Company has no Audit Committee. Therefore it has not adopted a procedure under which all fees charged by M&P must be pre-approved by the Board of Directors, subject to certain permitted statutory de minimus exceptions.

Item 15. Exhibits and Financial Statement Schedules.

The following documents are filed as part of this report:

(1) Financial Statements

Financial Statements are listed in the Index to Consolidated Financial Statements on page 25 of this report.

(2) Financial Statement Schedules

No financial statement schedules are included because such schedules are not applicable, are not required, or because required information is included in the financial statements or notes thereto.

(3) Exhibits

Exhibit No.	Name of Exhibit	Incorporated by Reference to

3.1	Certificate of Incorporation	Exhibit 3.1 (1)

3.2	Certificate of Amendment filed with the Secretary of State of Delaware effective on March 23, 2010	Exhibit 99.1 (5)

3.3	Bylaws	Exhibit 3.2 (1)

10.1	Share Exchange Agreement by and among Splinternet Holdings, Inc., Splinternet Communications, Inc. and the former shareholders of Splinternet Communications, Inc.	Exhibit 10.1 (1)

10.2	Lease by and between Splinternet Communications, Inc. and SYN-CONN, LLC	Exhibit 10.5 (1)

10.3	Agreement and Plan of Merger dated as of February 7, 2008 among Splinternet Holdings, Inc., Splinternet Merger Sub I, Inc. and Vidiation, Inc.	Exhibit 10.1 (2)

10.4	2008 Stock Incentive Plan	Exhibit 10.1 (3)

10.5	Security Agreement dated September 5, 2008 with James C. Ackerly	Exhibit 10.1 (4)

10.6	Form of Secured Demand Promissory Note for loans from James C. Ackerly	Exhibit 10.2 (4)

21.1	Subsidiaries of Defentect Group, Inc.	*

23.1	Consent of McGladrey & Pullen, LLP	*

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of the Exchange Act)	*

31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of the Exchange Act)	*

32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)	*

32.2	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)	*

*	Filed herewith.

(1)	Filed as an exhibit to the Company’s Registration Statement on Form SB-2, filed June 1, 2006, and incorporated by reference herein.

(2)	Filed as an exhibit to the Company’s Current Report on Form 8-K filed on February 12, 2008, and incorporated by reference herein.

(3)	Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008 and incorporated by reference herein.

(4)	Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008 and incorporated by reference herein.

(5)	Filed as an exhibit to the Company’s Current Report on Form 8-K filed on March 29, 2010, and incorporated by reference herein.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Defentect Group, Inc.

Date: April 15, 2010	By:	/s/ James C. Ackerly
		James C. Ackerly
		President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity and on the dates indicated.

Signature	Title	Date

	Chairman of the Board of Directors
L. Paul Bremer

/s/ James C. Ackerly	President, Treasurer and Director	April 15, 2010
James C. Ackerly	(Chief Executive Officer)

/s/ Edmund L. Resor	Vice President and Director	April 15, 2010
Edmund L. Resor

/s/ John T. Grippo	Chief Financial Officer	April 15, 2010
John T. Grippo	(Principal Financial Officer)

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED

SECURITIES PURSUANT TO SECTION 12 OF THE ACT

No annual report covering the last fiscal year or proxy materials with respect to any annual or other meeting of security holders has been sent to our stockholders. An annual report and proxy materials may be sent to our stockholders subsequent to the filing of this Form 10-K. In such event, we shall furnish to the Securities and Exchange Commission copies of any annual report or proxy materials that is sent to our stockholders.

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DFTC Defentect Group Inc (PK)