UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D. C. 20549

FORM 10-QSB

(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities

and Exchange Act of 1934.

For the quarterly period ended September 30, 2006

( ) Transition report pursuant to Section 13 or 15(d) of the Exchange

Act for the transition period from _________ to _________.

Commission File Number: 333-112499

IN TOUCH MEDIA GROUP, INC.

(FKA DATA RESOURCES CONSULTING, INC.)

(Exact name of registrant as specified in charter)

FLORIDA
(State of or other jurisdiction of
incorporation or organization)

01-0626963
(IRS Employer I.D. No.)

205 S. Myrtle Ave.

Clearwater, FL 33756

(Address of Principal Executive Offices)

(727) 465-0925

(Registrant’s Telephone Number, Including Area Code)

Check whether the registrant: (1) has filed all reports required to be filed by Section by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 ( )

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.

YES [

] NO x

Indicate the number of shares outstanding of each of the issuer’s classes of stock as of October 31, 2006.

35,987,111 Common Shares

Transitional Small Business Disclosure Format:

YES ( ) NO (x)

IN TOUCH MEDIA GROUP, INC.

(FKA DATA RESOURCES CONSULTING, INC.)

INDEX TO FORM 10-QSB

PART I. FINANCIAL INFORMATION	Page

Item 1. Consolidated Financial Statements (unaudited)

Consolidated Balance Sheet as of September 30, 2006	3

Consolidated Statements of Operations for the three and nine months ended September 30, 2006 and 2005	4

Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2006 and 2005	5

Condensed Notes to Consolidated Financial Statements	7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (including cautionary statement)	18

Item 3. Controls and Procedures	24

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	25

Item 2. Changes in Securities	26

Item 3. Defaults Upon Senior Securities	26

Item 4. Submission of Matters to a Vote of Securities Holders	26

Item 5. Other Information	26

Item 6. Exhibits	26

Signature	26

Item 1. CONSOLIDATED FINANCIAL STATEMENTS.

IN TOUCH MEDIA GROUP, INC. AND SUBSIDIARY

(FKA DATA RESOURCES CONSULTING, INC.)

CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2006

(Unaudited)


ASSETS

CURRENT ASSETS:
Cash	$	35,557
Cash in escrow – restricted		11,000
Receivables:
Trade (net of allowance for doubtful accounts of $10,000)		96,450
Related party		256,592
Other current assets		15,670
Total current assets		415,269

FURNITURE AND EQUIPMENT (net of accumulated depreciation of $19,311)		77,975

OTHER ASSETS:
Restricted securities		150,000
Loan acquisition costs (net of accumulated amortization of $208,673)		165,471
Other assets		26,985
Total other assets		342,456

TOTAL	$	835,700

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES:
Accounts payable	$	120,849
Current portion of capital lease obligation		4,788
Current portion of deferred revenue		144,618
Due to related parties		134,734
Accrued payroll and other liabilities		132,754
Convertible note payable (net of unamortized discount of $926,792)		73,208
Current portion of derivative financial instruments		1,335,486
Total current liabilities		1,946,437

Derivative financial instruments, net of current portion		4,658,773
Capital lease obligation, net of current portion		4,780
Total liabilities		6,609,990

STOCKHOLDERS’ DEFICIT:
Common stock, $0.001 par value, 100,000,000 shares authorized, 35,987,111 shares issued and outstanding		35,987
Additional paid-in capital		1,793,698
Deferred stock compensation		(172,658)
Deficit		(7,431,317)
Total stockholders’ deficit		(5,774,290)

TOTAL	$	835,700

See notes to consolidated financial statements.

IN TOUCH MEDIA GROUP, INC. AND SUBSIDIARY

(FKA DATA RESOURCES CONSULTING, INC.)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


		For the Nine Months Ended September 30, 2006		For the Nine Months Ended September 30, 2005		For the Three Months Ended September 30, 2006		For the Three Months Ended September 30, 2005

REVENUES (see Note A regarding related party revenues)	$	2,490,841	$	1,140,563	$	659,172	$	329,623

COST OF REVENUES		442,969		249,199		64,521		49,772

GROSS PROFIT		2,047,872		891,364		594,651		279,851

OPERATING EXPENSES:
Employee compensation and benefits		353,960		355,658		135,944		133,142
Professional and consulting fees:
Stock based		458,979		720,000		118,986		240,000
Other		168,816		105,335		77,101		41,442
Management fees – related party		556,388		339,829		195,000		143,992
Selling and marketing		442,582		247,054		96,248		95,337
Equity in loss of joint venture		-		16,000		-		4,000
Impairment of restricted securities		1,050,000		-		525,000		-
Other general and administrative		202,479		54,854		66,895		23,922
Total other operating expenses		3,233,204		1,838,730		1,215,174		681,835

LOSS FROM OPERATIONS		(1,185,332)		(947,366)		(620,523)		(401,984)

OTHER EXPENSES:
Derivative financial instruments		(3,947,362)		-		(4,547,721)		-
Amortization of debt discount and loan costs and other interest expense		(317,628)		-		(131,183)		-
Other		-		(22,477)		-		(6,040)
Total other expense		(4,264,990)		(22,477)		(4,678,904)		(6,040)

NET LOSS	$	(5,450,322)	$	(969,843)	$	(5,299,427)	$	(408,024)

LOSS PER COMMON SHARE – BASIC AND DILUTED	$	(.16)	$	(.04)	$	(.15)	$	(.02)

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING – BASIC AND DILUTED		34,536,116		24,287,500		35,987,111		26,196,800

See notes to consolidated financial statements.

IN TOUCH MEDIA GROUP, INC. AND SUBSIDIARY

(FKA DATA RESOURCES CONSULTING, INC.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


		For the Nine Months Ended September 30, 2006			For the Nine Months Ended September 30, 2005

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(5,450,322)	$		(969,843)
Adjustments to reconcile net loss to net cash used in operating
activities:
Stock based consulting		458,979			720,000
Depreciation and amortization		10,303			3,721
Provision for bad debts		7,100			1,400
Loss (gain) on sale of equipment		1,133			(566)
Amortization of loan acquisition costs		187,072			-
Amortization of debt discount		69,343			-
Stock received for services		(1,200,000)			-
Impairment of restricted securities		1,050,000			-
Derivative financial instruments expense		3,947,362			-
Unrealized loss on trading securities		-			16,280
Equity in loss of joint venture		-			16,000
Changes in assets and liabilities, net:
Receivables		(328,281)			3,067
Other assets		(35,110)			(25,000)
Due to related parties		216,332			3,695
Deposits		-			(1,115)
Accounts payable, and accrued payroll and other liabilities		144,538			107,429
Deferred revenue		79,509			17,000
NET CASH USED IN OPERATING ACTIVITIES		(842,042)			(107,932)
CASH FLOWS FROM INVESTING ACTIVITIES:
Disbursements to fund escrow account		(50,000)			(13,473)
Payments made from escrow account		39,000			-
Proceeds from sale of equipment		-			630
Investment in joint venture		-			(16,000)
Purchases of furniture and equipment		(26,910)			(38,459)
CASH USED IN INVESTING ACTIVITIES		(37,910)			(67,302)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowing under convertible notes payable		-			194,000
Payments on capital lease obligation		(3,242)			(581)
Proceeds from issuance of derivative financial instruments		550,000			-
NET CASH PROVIDED BY FINANCING ACTIVITIES		546,758			193,419

NET CHANGE IN CASH AND RESTRICTED CASH		(333,194)			18,185

CASH AT BEGINNING OF PERIOD		368,751			7,315

CASH AT END OF PERIOD	$	35,557	$		25,500
				(continued)

IN TOUCH MEDIA GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:			For the Nine Months Ended September 30, 2006			For the Nine Months Ended September 30, 2005

	Income taxes paid	$		-	$		895
	Interest paid	$		2,361	$		-

	SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

	Other convertible notes payable converted to common stock	$		194,000	$		-
	Settlement of due to related parties with common stock	$		183,048	$		-
	Net liabilities received in recapitalization	$		-	$		140,000
	Common stock issued as part of recapitalization	$		-	$		4,899
	Increase (decrease) in common stock subscribed	$		(3,000)	$		3,000
	Deferred stock compensation issued in connection with consulting agreement	$		-	$		960,000
	Equipment acquired under capital lease	$		-	$		13,117

See notes to consolidated financial statements.

IN TOUCH MEDIA GROUP, INC. AND SUBSIDIARY

(FKA DATA RESOURCES CONSULTING, INC.)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE A – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES

In Touch Media Group, Inc. (“the Company”) was initially incorporated in 2002 under the laws of the state of Florida as Data Resources Consulting, Inc. (“DRC”). The Company, which is located in Clearwater, Florida, provides marketing services, including targeted market research, search engine marketing and design, e-mail broadcasts, website development, blogs, and other related services to customers worldwide.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and Corium Marketing Group, Inc. (collectively “we”, “us”, “our”), a 50% owned joint venture that we control. Financial position and results of operations for this joint venture have been minimal through September 30, 2006; as such no minority interest has been recorded in the accompanying financial statements. All intercompany transactions and balances have been eliminated in consolidation.

We also held a 49.9% joint venture interest in Summit View Group, LLC that has effectively been dormant since its inception and has minimal financial position and/or results of operations. Because we do not control the venture, the investment is accounted for using the equity method:

On May 16, 2006, Nightlife Interactive Gaming, LLC (“Nightlife”) was created for the purpose of developing and marketing an interactive Internet game and social network. We received 7 million ownership units of this entity at the inception of the entity. During June and July of 2006 Nightlife received capital contributions from investors, and the total units outstanding at September 30, 2006 totaled 22,155,556. Accordingly, we own approximately 32% of the Limited Liability Company (a Partnership for tax purposes). We are the manager, however in accordance with Emerging Issues Task Force Issue (EITF) 04-5 we have accounted for the investment under the equity method of accounting because the other unit holders have substantive participating rights whereby they participate in the daily operating decisions and they control the operating cash accounts. During the quarter ended September 30, 2006 Nightlife incurred approximately $704,000 of losses which were funded by the investment dollars. Included in these losses were $315,225 and $535,225 of expenses for the three and nine months ended September 30, 2006 for marketing research and website marketing services rendered by us. We didn’t reflect our share of those losses in the financial statements based on limitations set forth in the operating agreement of the entity, and because our investment basis in this entity is minimal (the equity basis of accounting for Limited Liability Companies only requires recognition of losses up to the value of our investment).

On August 10, 2006, Speedzone Interactive Gaming, LLC (Speedzone) was created to offer an interactive gaming experience for racing fans. As of September 30, 2006, Nightlife owns 45% of the units in this entity. During the three months ended September 30, 2006, we generated approximately

$162,900 of revenue from market research services and website construction for Speedzone. On October 15, 2006 we entered into an agreement to become the manager of Speedzone.

On August 10, 2006, Internet Gaming and Marketing Technologies, LLC (Technologies) was formed as a 90% owned subsidiary of Nightlife for the purpose of holding certain intellectual property that is currently being developed by Nightlife. It did not have any substantial activity as of September 30, 2006.

On October 23, 2006, we acquired 57% ownership of Interactive Gaming and Marketing Ventures, LLC (“Ventures”) from a Limited Liability Entity owned by a party indirectly related to us through equity investment in Speedzone (See “Principles of Consolidation” in Note A). As of September 30, 2006, Ventures owned a 10% interest in both Technologies and Nightlife (See “Principles of Consolidation” in Note A.)

Merger

In April 2005, DRC consummated a merger and recapitalization with Universal Healthcare Management Systems, Inc. (“Universal”), a publicly held company incorporated in the state of Florida. From a legal perspective, Universal was the surviving company and thus continued its public reporting obligations. However, for financial statement purposes, the transaction was treated as a reverse merger and recapitalization whereby DRC was deemed to be the acquirer, and no goodwill or other intangible assets were recorded. In connection therewith, DRC succeeded to Universal’s name (which name was changed to In Touch Media Group, Inc. on May 2, 2005), and its shareholders received 21,297,573 shares of Universal’s common stock on the date of transaction (which amount was supposed to represent 82.5% of the outstanding number of Universal’s shares after the merger). However, between the date of the Merger Agreement and the effective date of the merger, Universal settled certain liabilities by issuing 381,511 shares of its common stock and accordingly, immediately prior to the recapitalization Universal had 4,899,178 shares outstanding.

During January 2006, management decided to restore the shareholders of DRC to the aforementioned 82.5% ownership position and issued an additional 1,798,552 shares to such shareholders.

In addition to the issuance of stock, the Company assumed liabilities of $140,000 which had a remaining unpaid balance of $45,800 as of December 31, 2005. On November 29, 2005 we agreed to issue 184,000 shares of our common stock to certain former shareholders of Universal to satisfy this liability, and we issued this stock on January 13, 2006. We also agreed that (i) if the trading price of our stock is not above $.50 per share for 5 trading days during the period between January 13, 2007 and February 12, 2007 and (ii) if we do not have a minimum daily trading volume of at least forty thousand shares during such period, then we would issue an additional 276,000 shares of our common stock to these individuals.

Stock Split

Immediately prior to the merger, DRC increased its outstanding shares via a reverse stock split whereby its outstanding shares were increased to 21,297,573 shares. All references to the number of shares in the accompanying consolidated financial statements and notes thereto have been adjusted to reflect the stock split as though it occurred at the date of our incorporation.

Basis of Presentation

Our accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-QSB and Rule 10-1 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, these consolidated financial statements do not include all of the footnotes required by accounting principles generally accepted in the United States of America. In our opinion, all adjustments (consisting of normal and recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2006 are not necessarily indicative of the results that may be expected for the year ended December 31, 2006. The accompanying consolidated financial statements and the notes thereto should be read in conjunction with our audited consolidated financial statements as of December 31, 2005 and for the years ended December 31, 2005 and 2004 contained in our Form 10-KSB.

Revenue Recognition, Accounts Receivable and Allowance for Doubtful Accounts

Our revenue recognition policy is consistent with the criteria set forth in Staff Accounting Bulletin 104 – Revenue Recognition in Financial Statements (“SAB 104”) for determining when revenue is realized or realizable and earned. In accordance with the requirements of SAB 104 we recognize revenue when (1) persuasive evidence of an arrangement exists; (2) delivery of our services has occurred; (3) our price to our customer is fixed or determinable; and (4) collectibility of the sales price is reasonably assured. As such, we recognize revenues as services are rendered.

Generally our fees for our services are paid in advance and/or upon completion of the services. However, alternative terms are negotiated periodically, and such receivables are presented in the balance sheet net of an allowance for doubtful accounts. We evaluate the allowance for doubtful accounts on a regular basis through periodic reviews of the collectibility of the receivables in light of historical experience, adverse situations that may affect our customers’ ability to repay, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Accounts receivable are determined to be past due based on how recently payments have been received and we charge bad debts in the form of an allowance account in the period the receivables are deemed uncollectible. Receivables are written off when we abandon our collection efforts.

Use of Estimates

The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements. Estimates that are critical to the accompanying consolidated financial statements relate principally to the determination and valuation of derivative financial instruments, as well as the recoverability of long-lived assets. The markets for our services are characterized by intense competition which could impact the future realizability of our assets. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the period that they are determined to be necessary. It is at least reasonably possible that our estimates could change in the near term with respect to these matters.

Long-Lived Assets

Financial Instruments and Concentrations of Credit Risk

We believe the book value of the financial instruments included in our current assets and liabilities approximates their fair values due to their short-term nature. In addition, we believe the book value of our capital lease obligation approximates its fair value as the interest rate on such obligation approximates rates at which similar types of arrangements could be currently negotiated by us. Finally, we believe the book values of our convertible note payable and derivative financial instrument liabilities (see policy note below) approximates their fair values as such amounts were derived using a Black Scholes pricing model and assumptions that we believe are reasonable in the circumstances.

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash, and receivables. We maintain all of our cash in deposit accounts with financial institutions, where deposit accounts at times may exceed federally insured limits. We have not experienced any losses in such accounts.

Substantially all of our revenues and receivables arise primarily from marketing services agreements. As of September 30, 2006, two related parties (Nightlife and Speedzone) accounted for approximately 70% of our accounts receivable balance. These same customers also accounted for 70% and 30% of the revenues during the three and nine months ended September 30, 2006, respectively. In addition, approximately 48% of our revenues for the nine months ended September 30, 2006 resulted from the contract discussed at Note F. We perform ongoing credit evaluations of our customers and generally do not require collateral as we believe we have certain collection measures in-place to limit the potential for significant losses.

Derivative financial instruments

We review the terms of convertible debt and equity instruments we issue to determine whether there are embedded derivative instruments, including embedded conversion features. When the risks and rewards of an embedded derivative instrument are not “clearly and closely” related to the risks and rewards of the host instrument, the embedded derivative instrument is generally required to be bifurcated and accounted for separately. If the convertible instrument is debt, or has debt-like characteristics, the risks and rewards associated with the embedded conversion option are not “clearly and closely” related to that debt host instrument because the conversion option has the risks and rewards associated with an equity instrument rather than a debt instrument, because its value is related to the value of our stock.

Nonetheless, if the host instrument is considered to be “conventional convertible debt” (or “conventional convertible preferred stock”), bifurcation of the embedded conversion option is generally not required. However, if the instrument is not considered to be conventional convertible

debt (or conventional convertible preferred stock) because the conversion feature is not based on a fixed number of shares, it is not considered to be “conventional convertible debt” as that term is used in Emerging Issues Task Force Issue 00-19 (“EITF 00-19”) and bifurcation of the embedded conversion option may be required in certain circumstances. Generally, when the ability to physical or net-share settle the conversion option is deemed to be beyond our control, the embedded conversion option is required to be bifurcated and accounted for as a derivative financial instrument liability.

In connection with the sale of convertible debt and equity instruments, we may also issue freestanding options or warrants. Additionally, we may issue options or warrants to non-employees in connection with consulting or other services they provide. Although the terms of the options and warrants may not provide for net-cash settlement, in certain circumstances, physical or net-share settlement is deemed to not be within our control and, accordingly, we are required to account for these freestanding options and warrants as derivative financial instrument liabilities, rather than as equity.

Certain instruments, including convertible debt and equity instruments and freestanding options and warrants, may be subject to registration rights agreements, which impose penalties for failure to register the underlying common stock. The existence of these potential cash penalties may also require that the embedded conversion option and the freestanding options or warrants be accounted for as derivative instrument liabilities.

Derivative financial instruments are initially measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to results of operations. For option-based derivative financial instruments, we use the Black-Scholes Option Pricing Model to value the derivative instruments.

To the extent that the initial fair values of the bifurcated and/or freestanding derivative instrument liabilities exceed the total proceeds received, an immediate charge to operations is recognized, in order to initially record the derivative instrument liabilities at their fair value. The discount from the face value of the convertible debt resulting from allocating part or all of the proceeds to the derivative instruments, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to operations, using the effective interest method.

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.

Income (Loss) Per Common Share

We compute net income (loss) per share in accordance with SFAS No. 128 “Earnings per Share” (“SFAS No. 128”) and SEC Staff Accounting Bulletin No. 98 (“SAB 98”). Under the provisions of SFAS No. 128 and SAB 98, basic net loss per share is computed by dividing the net loss available to common stockholders for the period by the weighted average number of common shares outstanding during the periods. Diluted net income (loss per) share is computed by dividing the net loss for the period by the number of common and common equivalent shares outstanding during the period. There were no dilutive common stock equivalents outstanding during the three or nine months ended

September 30, 2005. Subsequent to such date, common stock equivalent shares arose from the warrants discussed at Notes C. Because of our net losses in the periods presented, these warrants are anti-dilutive; accordingly basic and diluted net loss per share are identical for each of the periods in the accompanying consolidated statements of operations.

u>Stock-Based Compensation

Prior to December 31, 2005, we used Statement of Financial Accounting Standards No. 148 “Accounting for Stock-Based Compensation - Transition and Disclosure” (SFAS No. 148) to account for our stock based compensation arrangements. This statement amended the disclosure provisions of FASB statement No. 123 to require prominent disclosure about the effects on reported net income of an entity’s accounting policy decisions with respect to stock-based employee compensation. As permitted by SFAS No. 123 and amended by SFAS No. 148, we would have used the intrinsic value method under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” to account for our stock-based employee compensation arrangements (no such arrangements were applicable through September 30, 2006).

In December 2004, the Financial Accounting Standards Board issued Statement Number 123 (“FAS 123 (R)”), Share-Based Payments, which became effective on January 1, 2006. The statement requires us to recognize compensation expense in an amount equal to the fair value of share-based payments such as stock options granted to employees. Since we had not issued any stock options through September 30, 2006, the adoption of this statement did not have an effect on our consolidated financial statements.

Loan Acquisition Costs

Loan acquisition costs, which arose from the origination of the convertible note payable discussed at Note C, are being amortized over the term of the indebtedness (18 months) using the straight line method.

Reclassifications

Certain amounts in the prior period consolidated financial statements have been reclassified to conform to the current period presentation.

NOTE B – GOING CONCERN

Our consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. We have incurred losses from operations and at September 30, 2006 have working capital and stockholders’ deficits. In addition, at September 30, 2006, we have minimal cash. While we believe that cash generated from operations will improve this cash balance will not be adequate to meet our operating commitments for the next twelve months. As such, we will require additional debt or equity financing in the next twelve months. However, there can be no assurance that we will be successful in raising additional debt or equity capital in the event our current and anticipated cash resources are not adequate to meet our needs. These factors, among others, indicate that we may be unable to continue as a going concern for a reasonable period of time. Our consolidated financial statements do not include any adjustments relating to the recoverability and

classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

NOTE C – CONVERTIBLE NOTES PAYABLE, COMMON STOCK WARRANTS AND DERIVATIVE FINANCIAL INTRUMENTS

At September 30, 2006, the convertible note payable is comprised of the following:

9% Senior Secured Promissory Note, due May 31, 2007	$	1,000,000

Less: unamortized discount related to bifurcated embedded derivative instruments and freestanding warrants		(926,792)

Convertible Note Payable	$	73,208

On November 30, 2005, we issued a $1,000,000 9% Senior Secured Convertible Promissory Note, due May 31, 2007, unless sooner converted as discussed below (the “Note”) and 15,000,000 Common Stock Purchase Warrants (“Warrants”), for aggregate consideration of $1,000,000. The Note, together with accrued and unpaid interest, is convertible at any time at the option of the holder into shares of our common stock at $0.20 per share. Semi-annual interest payments are due on May 31 and November 30, however, and assuming certain conditions exist, we have the right to satisfy such interest in registered shares of our common stock, at an amount equal to the interest accrued divided by 85% of the average of the closing bid price for the five trading days immediately preceding the interest payment dates. While we have not yet paid interest that is due under this arrangement, we anticipate satisfying such interest by issuing shares of our common stock.

In connection with the Note and the Warrants, we entered into a Registration Rights Agreement with the purchasers, requiring us to file a registration statement registering 120% of the shares of Common Stock issuable upon conversion of the Note and the shares of Common Stock issuable upon repayment of the principal amount of the Note, including any interest accrued thereon, and 100% of the shares of Common Stock issuable upon exercise of the Warrants. The required registration statement was initially filed on January 25, 2006 and became effective on February 9, 2006, and such registration was updated in July 2006 for the changes in the Warrants resulting from the $550,000 cash infusion described in Note F. While we will not receive any proceeds from the sale of the shares, we may receive proceeds from the Selling Stockholders if they exercise their Warrants.

We are required to maintain the effectiveness of the registration statement until all registered securities have been sold or until they may be sold without restriction under Rule 144(k). In the event that we fail to do so, we are obligated to pay, to the holders of the Note, damages of 1% of the face amount of the Note per month, up to an aggregate maximum of 9%.

As long as the Note is outstanding, if we enter into any subsequent financing on terms more favorable than the terms governing the Note, then the holders of the Note may exchange the Note, valued at their stated value, together with accrued but unpaid interest (which interest payments are payable, at the option of the holders, in cash or in the form of the new securities to be issued in the subsequent financing), for the securities to be issued in the subsequent financing. Additionally, if we issue common stock or other securities convertible into common stock at a price per share lower than the conversion price of the Note, the conversion price of the Note will be reduced to that lower conversion price.

If an Event of Default, as defined in the Note, occurs and is continuing, the holders of the Note may declare the entire unpaid principal balance of the Note, together with all interest accrued, due and payable.

The Warrants, which are exercisable at any time, had initial terms as follows:

•	Series A - 5,000,000 warrants, expiring November 30, 2010, at an exercise price of $0.45/share.

•	Series B - 5,000,000 warrants, expiring November 30, 2012, at an exercise price of $0.70/share.

•	Series C - 5,000,000 warrants, expiring November 30, 2015, at an exercise price of $0.90/share.

In connection with the Note and the Warrants, we also issued 3,200,000 warrants as a finder’s fee. These warrants, which may be exercised on a cashless basis, had initial terms as follows:

•	Series M-1 - 800,000 warrants, expiring March 31, 2007, at an exercise price of $0.20/share.

•	Series M-2 - 800,000 warrants, expiring November 30, 2010, at an exercise price of $0.45/share.

•	Series M-3 - 800,000 warrants, expiring November 30, 2012, at an exercise price of $0.70/share.

•	Series M-4 - 800,000 warrants, expiring November 30, 2015, at an exercise price of $0.90/share.

On May 5, 2006, we closed a $550,000 funding agreement with the convertible note holder. We agreed to re-price the Series A Warrants above from $.45 to $.0001 and extend the term of such warrants to May 5, 2012 and to issue a new Series A-2 Warrant for 5,000,000 common shares with an exercise price of $.30 and an expiration date of May 5, 2012. In addition we agreed to re-price the M-2 placement agent Warrants from $.45 to $.0001 and extend the term of such warrants to May 5, 2012 and issue a new placement agent Warrant for 500,000 common shares with an exercise price of $.30 and an expiration date of May 5, 2012. The net charge to operations as a result of the re-pricing agreement totaled $992,188.

All of the above mentioned warrants require that, if we issue common stock or other securities convertible into common stock at a price per share lower than the exercise price of the warrants, the exercise price of the warrants will be reduced to that lower price.

Because the conversion price of the Note and the exercise price of the warrants will be lowered if we sell securities at a lower conversion or exercise price, the number of shares that we may have to issue on conversion of the Note or exercise of the warrants is not fixed or determinable. As a result, the Note is not considered to be “conventional convertible debt”, as that term is used by EITF Issue 00-19. Accordingly, the embedded conversion option in the Note is subject to the requirements of EITF Issue 00-19. Because the number of shares we may have to issue is indeterminate, we are required by EITF Issue 00-19 to bifurcate the embedded conversion option of the Note and account for it, as well as the warrants, as derivative financial instrument liabilities. The derivative financial instrument liabilities are initially recorded at their fair value and are then adjusted to fair value at the end of each subsequent period, with any changes in the fair value charged or credited to income in the period of change.

We use the Black-Scholes option pricing model to value the warrants, and the embedded conversion option component of the bifurcated embedded derivative instrument. In valuing these derivative instruments, both at inception and at each quarter end, we use the market price of our common stock on the date of valuation, an expected dividend yield of 0%, and the remaining period to the expiration date of the warrants or repayment date of the Note. Because of the limited historical trading period of our common stock, the expected volatility of our common stock over the remaining life of the warrants and

the Note has been estimated at 35%, by comparison to the average volatility of companies considered by management as comparable. The risk-free rates of return used ranged from 4.34% to 4.49%, based on constant maturity rates published by the U.S. Federal Reserve, applicable to the remaining life of the warrants and the Note.

The fair value of the Warrants, together with the fair value of the bifurcated embedded derivative instrument, initially exceeded the face amount of the Note. As a result, the Note was initially recorded at zero and is being accreted using an effective interest method, to its redemption value of $1,000,000 over the 18 month period to its maturity on May 31, 2007.

At September 30, 2006, the following derivative instrument liabilities related to the Warrants and the embedded derivative instrument in the Note, as adjusted for the warrants described in Note F, were outstanding:

Issue	Expiration		Strike Price	Initial Values	Values
Date	Date	Instrument	Per Share	Initial Values	09/30/2006

11/30/2005	5/5/2012	5,000,000 Series A-1r Warrants	$ 0.0001	$ 278,597	$ 1,999,618
5/5/2006	5/5/2012	5,000,000 Series A-2 Warrants	$ 0.30	-	1,034,163
11/30/2005	11/30/12	5,000,000 Series B Warrants	$ 0.70	229,041	508,035
11/30/2005	11/30/15	5,000,000 Series C Warrants	$ 0.90	289,734	599,026
11/30/2005	03/31/07	800,000 Finder’s Fee Warrants	$ 0.20	72,411	163,830
5/5/2006	5/5/2012	500,000 Finder’s Fee Warrants	$ 0.0001	28,500	199,962
11/30/2005	11/30/10	300,000 Finder’s Fee Warrants	$ 0.45	17,099	37,250
11/30/2005	11/30/12	800,000 Finder’s Fee Warrants	$ 0.70	37,788	81,360
11/30/2005	11/30/15	800,000 Finder’s Fee Warrants	$ 0.90	-	95,907
5/5/2006	5/5/2012	500,000 Finder’s Fee Warrants	$ 0.30	47,431	103,452
Fair Value of Warrants				1,000,601	4,822,603
11/30/2005	5/31/07	Embedded derivative	$ 0.20	501,296	1,171,656

Derivative financial instruments				1,501,897	5,994,259
Less current portion of derivative financial instruments				-	(1,335,486)
Derivative financial instruments, net of current portion				$1,501,897	$ 4,658,773

NOTE D – COMMITMENTS

Through June 23, 2005, we paid management fees to our principal officers/stockholders under verbal agreements. Subsequent to such date, we have compensated these executives under various management agreements with entities they control. The agreements, which are expected to be converted to separate employment agreements for these officers in the future, currently expire June 11, 2008 and, unless otherwise canceled, automatically renew for successive one year terms thereafter. Compensation under these arrangements increases 6% annually commencing in June 2006. The agreements also entitle the executives to various fringe benefits that are provided by us to other executive officers, and beginning with the quarter ended September 30, 2005, on a quarterly basis, the executives are entitled to receive options to purchase up to a total of 1,000,000 shares of our common stock each quarter, at a price equal to 50% of the price of such shares on the date of the execution of this agreement, provided certain profitability and revenue measures were met during the respective quarter. For various reasons, the principals of these entities waived any rights to options that they might have been owed under this agreement during the three months ended June 30, 2006. Because of this, and because we had not met the aforementioned profitability and revenue measures for all other

periods through September 30, 2006, we have no obligation to issue any stock options under these agreements as of September 30, 2006.

Total management fees incurred under these arrangements during the three months ended September 30, 2006 and 2005 approximated $195,000 and $144,000, respectively. Total management fees incurred to these officers during the nine months ended September 30, 2006 and 2005 approximated $556,400 and $340,000, respectively. As of September 30, 2006 approximately $67,200 is due to senior management under these arrangements.

On June 15, 2006, we issued 721,309 shares of common stock to satisfy $106,676 of accrued compensation due to affiliated companies of senior management for services provided by senior management through March 31, 2006 as well as $30,573 of compensation for services provided subsequent to March 31, 2006.

NOTE E – DEFERRED STOCK COMPENSATION

Deferred stock compensation existing at September 30, 2006 arises from the following:

•

In January 2006, we entered into a one year corporate consulting agreement to provide marketing and branding services. In consideration for such services, we initially agreed to issue this entity 1,250,000 of our common stock and warrants to acquire an additional 1,200,000 shares of our common stock. However, shortly thereafter the entity agreed to reduce the consideration for their services to 1,200,000 shares of our common stock, and forego receipt of the warrants, and in June 2006 a subsequent agreement was executed that formalized these changes. We have issued 1,200,000 shares of our common stock that had a fair value of $0.30 per share on the effective date of the agreement. We recorded deferred compensation of $360,000 at the commencement of the agreement and have expensed $257,918 and $90,000 of that deferred compensation in the nine and three month periods ended September 30, 2006, respectively. The term of this agreement is one year and it is cancelable by either party for cause. In addition, we have the right to renew the agreement for an additional twelve months under the same terms as discussed herein.

•

On May 12, 2006, we entered into a one year agreement with a firm to provide assistance in finding capital financing, establishing relationships with broker-dealers, market makers, and investor and public relation firms. In addition to a cash fee of $4,000 per month, we issued them 500,000 shares of common stock. The stock had a fair value of approximately $.23 on the date of the consummation of the agreement and accordingly, we initially recorded deferred compensation of $115,000. During the three and nine months ended September 30, 2006, we have recognized approximately $28,900 and $44,400 of stock based consulting expense under this arrangement. The stock was issued in June 2006.

NOTE F – RESTRICTED SECURITIES

On March 3, 2006 we entered into an agreement with a customer to provide certain acquisition and management services relating to a celebrity endorsement campaign. We received 1,500,000 shares of the customer’s common stock (after reduction of 1,500,000 shares provided directly to the celebrity entertainer). The shares of stock received are restricted and the customer is a non-reporting, public entity. We initially valued our portion of the shares at $1,200,000 based on the estimated value of the services we were to provide (as mentioned at Note A impairment losses have subsequently been recognized), and initially deferred 100% of the revenues. Approximately $50,000 of these revenues

were recognized in the month of March 2006, and the remaining $1,150,000 of such revenues were recognized during the quarter ended June 30, 2006 as we had substantially completed our obligations under the contract as of such date. The remaining carrying value of the restricted securities is $150,000 at September 30, 2006.

NOTE G – OTHER RELATED PARTY TRANSACTIONS

Effective December 16, 2004, we entered a one-year consulting agreement with a principal of one of our joint venture partners. As consideration for assisting us with our business development, increasing our shareholder base and assisting us in locating mezzanine financing and identifying a merger target, we agreed to issue 3,000,000 shares of our common stock to this individual. The stock had a fair value of approximately $.32 on the date of the consummation of our merger and accordingly, we initially recorded deferred compensation of $960,000. In the nine and three month periods ended September 30, 2005, $720,000 and $240,000 was reflected as stock based consulting expenses. The common stock was issued in January 2006.

In addition to management fees (see Note D), we incurred commissions of approximately $125,000 to certain of our principal stockholders/officers during the nine months ended September 30, 2006. At September 30, 2006, approximately $67,500 of these commissions are unpaid and included in due to related parties in the accompanying consolidated balance sheet.

We recognized revenue on services provided to Nightlife and Speedzone (See “Principles of Consolidation” in Note A). This includes $315,225 and $535,225 of revenue to Nightlife for the three and nine months ended September 30, 2006. It also includes $162,867 of revenue to Speedzone for the three months ended September 30, 2006.

End of financial statements.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and the results of our operations are based upon our financial statements and the data used to prepare them. Our financials have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-QSB and Rule 10-1 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Estimates that are critical to our consolidated financial statements relate principally to the determination and valuation of derivative financial instruments and the recoverability of long-lived assets. The markets for our services are characterized by intense competition which could impact the future realizability of our assets. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the period that they are determined to be necessary. It is at least reasonably possible that our estimates could change in the near term with respect to these matters.

Revenue recognition and allowance for doubtful accounts:

Generally our fees for our services are paid in advance and/or upon completion of the services. However, alternative terms are negotiated periodically, and such receivables are presented in the balance sheets net of an allowance for doubtful accounts. We evaluate the allowance for doubtful accounts on a regular basis through periodic reviews of the collectibility of the receivables in light of historical experience, adverse situations that may affect our customers’ ability to repay, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Accounts receivable are determined to be past due based on how recently payments have been received and we charge bad debts in the form of an allowance account in the period the receivables are deemed uncollectible. Receivables are written off when we abandon our collection efforts.

Stock Based Compensation

Prior to December 31, 2005, we used Statement of Financial Accounting Standards No. 148 “Accounting for Stock-Based Compensation - Transition and Disclosure” (SFAS No. 148) to account for our stock based compensation arrangements. This statement amended the disclosure provisions of FASB statement No. 123 to require prominent disclosure about the effects on reported net income of an entity’s accounting policy decisions with respect to stock-based employee compensation. As permitted by SFAS No. 123 and amended by SFAS No. 148, we would have used the intrinsic value method under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” to account for any of our stock-based employee compensation arrangements (no such arrangements were applicable through September 30, 2006).

granted to employees. Since we have not issued any stock options through September 30, 2006, the adoption of this statement did not have an effect on our consolidated financial statements.

Derivative financial instruments

In connection with the sale of debt or equity instruments, we may sell options or warrants to purchase our common stock, which under certain circumstances may be classified as derivative liabilities, rather than equity. Also, the debt or equity instruments may contain embedded derivative instruments, such as conversion options, which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability.

The identification of, and accounting for, derivative instruments and the assumptions used to value them are complex, and can significantly affect our financial statements. Our derivative instrument liabilities are re-valued at the end of each reporting period, with changes in the fair value of the derivative liability recorded as charges or credits to income, in the period in which the changes occur. For options, warrants and bifurcated conversion options that are accounted for as derivative instruments liabilities; we determine the fair value of these instruments using the Black-Scholes option pricing model. That model requires assumptions related to the remaining term of the instruments and risk-free rates of return, our current common stock price and expected dividend yield, and the expected volatility of our common stock price over the life of the option. Because of the limited historical trading period of our common stock, the expected volatility of our common stock has been estimated at 35%, by comparison to the average volatility of companies considered by management as comparable.

Accounting for Investments and Variable Interest Entities

In connection with the creation of entities for the purpose of joint ventures with outside parties we have accounted for those entities on the equity method basis of accounting. This method was chosen after consideration of the accounting standards under Emerging Issues Task Force Issue (EITF) 04-5 and FIN 46(R) because the other owners (unit holders) of the entity have substantive participating rights whereby they participate in the daily operating decisions and they control the operating cash accounts. Under these arrangements, we do not have a controlling interest and therefore could not dictate the decision making process without the consent of other unit holders of the entities. Because we are using the equity method of accounting we have not recognized our share of the losses from these entities (all Limited Liability Companies) because under this method of accounting we can only recognize losses to the extent of our investment in the company, which in this case is minimal. During the three months ended September 30, 2006 these entities incurred approximately $704,000 of losses which were funded by the investment dollars of outside investors.

Long-Lived Assets

Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” requires that long-lived assets, including certain identifiable intangibles, be reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the assets in question may not be recoverable. We evaluated our long-lived assets for recoverability as of September 30, 2006. In connection with this evaluation, we determined that the trading value of our restricted securities approximated $150,000 (or $.10 per share) as of September 30, 2006 (or approximately $1,050,000 less than our cost basis in such shares). As a result thereof, we determined that the carrying value of such shares were impaired and recorded an impairment loss. As of November 10, 2006, the trading value of the shares had declined to a price of $.05 per share. If the share price does not recover, then we will most likely be required to record an additional impairment loss for the difference between our adjusted cost basis of $150,000 and the fair value of the shares in the future. In addition, there can be no assurance that the price of the shares will not

continue to decline.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2006 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2005

Revenues

Revenues increased from approximately $329,600 in the three months ended September 30, 2005 to approximately $659,200 in the three months ended September 30, 2006. The 2006 revenues consist primarily of fees earned from the development and sales of marketing and investor relations programs to customers whereas 2005 revenues consist mostly of the development and sale of mailing campaigns and investor relations marketing programs. Our current strategy is to sell more marketing programs to larger and more sophisticated clients, which we believe will lead to a more stable revenue stream.

The increase in revenues was mainly a result of services provided to two related parties, Nightlife and Speedzone, for a total of approximately $478,100.

Cost of Revenue and Gross Profit

Cost of revenues consists mainly of deployment costs such as employee compensation, as well as costs of Internet providers, mailing lists and software licenses. Cost of revenues increased from approximately $49,800 in the three months ended September 30, 2005 to approximately $64,500 in the three months ended September 30, 2006. The increased cost of revenue is a result of increased revenue as described above. The gross margin percentage increased from 85% to 90% due to a $60,000 cost correction that was accrued in error at June 30, 2006. If the impact of the reversal of these costs were removed from the cost of sales in three months ended September 30, 2006, then the gross margin percentage for that period would be reduced from 90% to 81%. The reduction in the adjusted margin decreased from 84% to 81% as a result of increased personnel cost to develop the products described in revenue above.

Operating Expenses

Employee compensation and benefits consists of the cost of employees to operate the selling, general and administrative functions of the company. The cost of these employees remained flat with a slight increase of approximately $2,800 for the three months ended September 30, 2006, compared to the same period last year.

Management fees – related party represents the compensation to five key executives under two separate agreements. This expense increased 35% from approximately $144,000 in the three months ended September 30, 2005 to approximately $195,000 in the three months ended September 30, 2006 because of a change in the way we compensate these individuals, and because we have one more key executive that is receiving management fees in 2006 as compared to 2005.

Other general and administrative expense consists of office expenses, rent, phones, professional fees, amortization, and travel and entertainment. These expenses as a percentage of revenues remained relatively stable for the three month periods ended September 30, 2006 and 2005.

Stock based professional and consulting fees for the three months ended September 30, 2005 was $240,000 as compared to approximately $119,000 during the three months ended September 30, 2006. Stock based consulting expense in the three months ended September 30, 2005 arose solely from a stock based consulting agreement under which the consultant assisted us with various services throughout the year ended December 31, 2005. During the quarter ended September 30, 2006, this expense arose primarily from various issuances of stock for services provided to us by investor relations consultants.

Impairment of Restricted Securities

As mentioned above, in connection with ongoing evaluations of our long-lived assets we determined that the carrying value of our restricted securities was impaired as of June 30, 2006 and as of September 30, 2006. Accordingly, we recorded an impairment loss of $525,000 in the three months ended June 30, 2006 and another $525,000 in the three months ended September 30, 2006 to adjust the carrying value of such securities to their estimated fair value.

Other Expenses

Unrealized derivative financial instrument expenses during the three months ended September 30, 2006 arises from our quarterly re-valuation of our derivative financial instrument liabilities. Since our stock price increased between July 1, 2006 and September 30, 2006, this had the effect of increasing our derivative financial instrument liability (which is based in part on the value of our shares) and as a result, we recognized other expense of $4,547,721 during the three months ended September 30, 2006.

No derivative liabilities were outstanding as of September 30, 2005.

Amortization of debt discount and loan costs and other interest expense for the three months ended September 30, 2006 is attributable to our convertible note payable executed in November 2005. These expenses totaled approximately $131,183 in the three months ended September 30, 2006. At September 30, 2005, we did not have any debt discounts and/or loan costs.

NINE MONTHS ENDED SEPTEMBER 30, 2006 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2005

Revenues

Revenues increased by approximately $1,350,200, from approximately $1,140,600 in the nine months ended September 30, 2005 to $2,490,800 in the nine months ended September 30, 2006. The 2006 revenues consist primarily of fees earned from the development and sales of marketing and investor relations programs to customers; whereas, the 2005 revenues consist mostly of the development and sale of mailing campaigns and investor relations marketing programs. Management’s current strategy is to sell more marketing programs to larger and more sophisticated clients, which they believe will lead to a more stable revenue stream.

The increase in revenues was mainly a result of services provided to two related parties, Nightlife and Speedzone, of approximately $698,100 and a single sales transaction for which we received 1,500,000 shares of the customer’s stock having a value of approximately $1,200,000 as consideration for our agreement to obtain a celebrity endorsement contract for that customer. At March 31, 2006, $1,150,000 of the initial cost basis of the shares was deferred. During the three months ended June 30, 2006, we fulfilled all substantive portions of the contract and have recognized the remaining $1,150,000 of revenue during such quarter. See the discussion regarding the valuation and impairment of these shares in the long lived assets section of critical accounting

policies above.

Cost of Revenue and Gross Profit

Operating Expenses

Employee compensation and benefits consists of the cost of employees to operate the selling, general and administrative functions of the company. The cost of these employees remained flat with a slight decrease of approximately $1,700 for the nine months ended September 30, 2006, compared to the same period last year.

Management fees – related party represents the compensation to five key executives under two separate agreements. This expense increased 64% from approximately $339,700 in the nine months ended September 30, 2005 to $556,400 in the nine months ended September 30, 2006 because of a change in the way we compensate these individuals, and because we have one more individual that is receiving management fees in 2006 as compared to 2005.

Selling and marketing expenses consist mostly of Internet advertising and commissions on sales generated by employees and independent contractors. Sales and marketing expense increased 79% from approximately $247,100 in the nine months ended September 30, 2005 to approximately $442,600 in the nine months ended September 30, 2006, which increase is primarily attributed to the increase in commissions and advertising costs incurred to introduce and sell the new product line described above. Because the clients are larger, the lead time to close a deal has increased; however, we believe the new product mix should ultimately be more profitable due to higher margins.

Other general and administrative expenses consist of office expenses, rent, phones, professional fees, amortization, and travel and entertainment. These expenses increased from approximately $54,900 in the nine months ended September 30, 2005 to approximately $202,500 in the nine months ended September 30, 2006. The increase is mostly due to additional costs necessary to support increased revenues, and an increase in investor relations, accounting and legal fees related to being a public company.

Stock based professional and consulting fees was $720,000 during the nine months ended September 30, 2006 as compared to approximately $459,000 during the nine months ended September 30, 2006. Stock based consulting expense in the nine months ended September 30, 2005 arose solely from a stock based consulting agreement under which the consultant assisted us with various services. During the nine months ended September 30, 2006, this expense arose primarily from various issuances of stock for services provided to us by legal, accounting, sales and investor relations consultants.

Other Expenses

Unrealized derivative financial instrument expense during the nine months ended September 30, 2006 arises from our quarterly re-valuation of the November 30, 2005 and the May 2006 derivative financial instrument liabilities. Since our stock price increased between January 1, 2006 and September 30, 2006, this had the effect of increasing our derivative financial instrument liability and as a result, we recognized other expense of approximately $3,947,362 during the nine months ended September 30, 2006.

No derivative liabilities were outstanding as of September 30, 2005.

Amortization of debt discount and loan costs and other interest expense for the nine months ended September 30, 2006 is attributable to our convertible note payable executed on November 30, 2005. These expenses total approximately $317,600 in the nine months ended September 30, 2006. At September, 2005, we did not have any debt discounts and/or loan costs.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2006, we had cash (exclusive of restricted cash) of approximately $35,600, a decrease of approximately $164,000 from December 31, 2005, and a working capital deficiency of approximately $1,531,168. This working capital deficit is mainly due to deferred revenue of approximately $144,600 and the current portion of derivative financial instruments of approximately $1,335,500, neither of which is expected to result in a significant use of corporate funds (given our relatively low cost structure). Our primary source of working capital during the nine months ended September 30, 2006 resulted from cash we had on hand at December 31, 2005 (which primarily resulted from the sale of a $1,000,000 convertible note payable in November 2005 under which we netted approximately $810,000), and $495,000 in cash we received in May 2006 as a result of a $550,000 funding agreement with the holder of such convertible note payable.

We remain optimistic about our long term business prospects, and if we are able to increase our revenues, such increases will provide working capital because many of our customers pay for their services in advance. However, since revenue growth is not guaranteed, we may need to solicit proposals for additional financing. We cannot assure you that we will be able to raise such funds or that such funds will be available to us on favorable terms. If we raise additional funds for the issuance of our securities, such securities may have rights, preferences or privileges senior to those of the rights of our common stock and our stockholders may experience additional dilution.

We have invested a significant amount of our working capital, technical infrastructure and personnel time in preparing for the anticipated revenue increases, and while we still face significant obstacles to achieving profitability, we anticipate that in 2007 we will experience substantial increases in revenue that will help us reach profitability during 2007.

While we believe that cash generated from operations will improve, our current cash resources are not expected to be adequate to meet our operating commitments for the next twelve months. As such, we will require additional debt or equity financing in the next twelve However, there can be no assurance that we will be successful in raising additional debt or equity capital in the event our current and anticipated cash resources are not adequate to meet our needs. If we raise additional funds for the issuance of our securities, such securities may have rights, preferences or privileges similar to those of the rights of our common stock and our stockholders may experience additional dilution.

CAUTIONARY STATEMENT

This Form 10-QSB, press releases and certain information provided periodically in writing or orally by our officers or our agents contain statements which constitute forward-looking statements within the meaning of Section 27A of the Securities Act, as amended and Section 21E of the Securities Exchange Act of 1934. The words expect, anticipate, believe, goal, plan, intend, estimate and similar expressions and variations thereof if used are intended to specifically identify forward-looking statements. Those statements appear in a number of places in this Form 10-QSB and in other places, particularly, Management’s Discussion and Analysis or Results of Operations, and include statements regarding the intent, belief or current expectations us, our directors or our

officers with respect to, among other things: (i) our liquidity and capital resources; (ii) our financing opportunities and plans and (iii) our future performance and operating results. Investors and prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. The factors that might cause such differences include, among others, the following: (i) any material inability of us to successfully internally develop our products; (ii) any adverse effect or limitations caused by Governmental regulations; (iii) any adverse effect on our positive cash flow and abilities to obtain acceptable financing in connection with our growth plans; (iv) any increased competition in business; (v) any inability of us to successfully conduct our business in new markets; and (vi) other risks including those identified in our filings with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise the forward looking statements made in this Form 10-QSB to reflect events or circumstances after the date of this Form 10-QSB or to reflect the occurrence of unanticipated events.

Item 3. CONTROLS AND PROCEDURES

(a)	Evaluation of disclosure controls and procedures.

Within ninety (90) days prior to the filing of this report, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of September 30, 2006. Based on this evaluation, other than as described below, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective such that the material information required to be included in our Securities and Exchange Commission (“SEC”) reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management and our Board of Directors, as appropriate, to allow timely decisions regarding disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

There was a limited liability company created late in the quarter ended June 30, 2006 that we had an ownership interest in and of which we were the operating manager. The creation of and limited transactions with this company were not disclosed as related party transactions. Management did not consider the related party disclosure requirement at the time of the filing, but is now aware of the requirements and is implementing review of all such transactions for related party disclosure consideration and compliance..

Our management, including the principal executive officer and principal financial officer, do not expect that our disclosure controls and procedures will prevent all error and fraud. A control system, no matter how well conceived and operated, can only provide reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

(b)	Changes in internal controls over financial reporting.

There were no significant changes in our internal control over financial reporting that could significantly affect our controls during quarter ended September 30, 2006. We have not identified any significant deficiency or material weaknesses in our internal controls, and therefore there were no corrective actions taken.

PART II. - OTHER INFORMATION

Item 1. Legal Proceedings –

In 2005, we determined that Universal had issued an additional 2,100,000 shares of common stock prior to our merger. Because we believe that no consideration was ever tendered for the shares, we have filed suit to have the shares canceled and we have been successful in obtaining a preliminary injunction precluding the sale and/or transfer of these shares. Because of this, these shares have not been reflected as issued and outstanding in the accompanying consolidated financial statements. In addition, no effect has been given to any loss that may result from the resolution of this matter in the accompanying consolidated financial statements.

On March 8, 2006, we filed a complaint for injunctive and other relief with the United States District Court, Southern District of Florida, and Case No. 06-20571-CIV. This is an action for declaratory, injunctive and other relief arising from Florida common law claims for breach of contract, conversion, rescission and action for replevin, relating to 2,100,000 shares of our common stock that were issued by the management of Universal HealthCare Systems, Inc. prior to our merger with such entity. In this case, we alleged that consideration was never tendered for the issuance of these shares, and accordingly, the defendants did not have a right to such shares. We asked the Court to rescind the transaction and to instruct our transfer agent to cancel the shares.

On June 12, 2006 the United States District Court granted a default judgment against the defendant, Navy Global Energy Corp., Ivan O. Pearson, Jr. and Wendell R. Wiley, Jr. because they failed to answer the complaint. The defendants are permanently restrained from selling or otherwise transferring the 2,100,000 shares in question.

Item 2. Changes in Securities – NONE

Item 3. Defaults Upon Senior Securities – NONE

Item 4. Submission of Matters to a Vote of Securities Holders - NONE

Item 5. Other Information - NONE

Item 6. Exhibits

Exhibits

31.1	13a-14(a)/15d-14(a) Certification of Chief Executive Officer and Acting Chief Financial Officer, Laura Betterly

32.1	Section 1350 Certification, Laura Betterly – Chief Executive Officer and Chief Financial Officer

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report

to be signed on its behalf by the undersigned, thereunto duly authorized.

IN TOUCH MEDIA GROUP, INC.

/s/ Laura Betterly

Laura Betterly, Chief Executive Officer and

Chief Financial Officer

November 20, 2006