Portfolio Update for September 30, 2006

Overall, we are pleased with our progress at FTII and optimistic about the next several years in the technology equities markets.

1. Net Asset Value Per Share
The NAV per share for Fundamental Technologies II Corp. (FTII) on September 30, 2006 was $12.21 per share - down $0.02 per share from the previous quarter.

This represents a 22% gain for our first shareholders who invested at $10.00 in June 2005.

2. Expenses
Part of our mission at FTII is to keep costs as low as possible. We are maintaining total annualized expenses to around 0.5% of assets.

3. Our Portfolio
At September 30, 2006 there were four companies in our portfolio:

ParaSun Technologies - is our largest investment. This New Westminster based company is the North American market leader in providing high speed internet services in partnership with cable TV operators. ParaSun provides high speed data to 120,000 homes and businesses in over 190 communities in North America. ParaSun is solidly profitable and growing around 30% per year. We expect ParaSun to be sold next year in a cash, or near cash, transaction. Visit ParaSun's website at www.parasun.com.

Visiphor Corporation - is currently an under performer in our portfolio. We made a small investment into Visiphor late in 2005 after being encouraged by their first two sales to the US Department of Homeland Security. Unfortunately, the company has not been able to build on its early sales momentum for their database integration products in the US Justice and Law Enforcement vertical. Even with this slower than hoped adoption rate, the company will double revenues this year. Visiphor's website is www.visiphor.com.

Backbone Systems and Networks - we were the lead investor in this startup company and followed on in their second round. Backbone is capitalizing on one of the biggest new trends in technology - "software as a service." SaaS is the transformation of hardware and software from a capital asset to a pay-as-you-go service. Backbone's website is at www.backbonesystems.ca.

MetroBridge Networks - we recently made a first, small investment into this Vancouver-based, fixed broadband wireless company. MetroBridge has deployed a mesh wireless network that covers over 2,000 square kilometers of the greater Vancouver district. They provide high speed internet connections that are faster, less expensive and more reliable than the legacy wireline providers. MetroBridge is planning to go public in 2007. This company's website is at www.metrobridge.com.

4. Outlook and Plans for 2007

The overall technology equity markets continue to improve. This could be the beginning of a sectoral rotation out of resources, real estate and income trusts with some of those recent gains moving into tech.

In early 2007, we will be opening FTII to new subscriptions and plan to further expand our portfolio of promising, early-stage tech companies.

Our team is working hard to generate what we hope will be outstanding returns for our shareholders.

Please call or e-mail us anytime if you have questions, comments or suggestions.

Dr. Basil Peters CEO and Director

Rick Peterson President and Director