World Surveillance Group Inc (fka WSGI)

[nerd86]

Coasti Please read the 8K
The referenced INVESTIGATION is being conducted by the SEC. (bolding added)


PART III -- NARRATIVE

State below in reasonable detail why Forms 10-K, 20-F, 11-K, 10-Q, 10-D, N-SAR,
N-CSR, or the transition report or portion thereof, could not be filed within
the prescribed time period.

<PAGE>

On October 6, 2006 the Company announced that the Securities and Exchange
Commission issued a formal order of investigation concerning among other things
certain accounting issues regarding the Company. In accordance with the
Company's established corporate governance procedures, the Board of Directors
has referred this matter to its Audit Committee (the "Audit Committee"). The
Audit Committee has commenced an investigation and will determine what action,
if any, the Company will take.

No conclusions have been reached by the Audit Committee to date, and the Company
cannot predict whether the results of the investigation will have any impact on
its financial results for the quarter and nine-month period ended September 30,
2006 or for any other period. As a result of the ongoing investigation, the
Company will not be able to file its Quarterly Report on Form 10-Q for the
quarter ended September 30, 2006 by the required filing date.

The Company will seek to resolve these issues as quickly as practicable and
plans to file its Form 10-Q as soon as possible following the completion of the
investigation.