UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-QSB

(Mark One)



[X]

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period endedSeptember30, 2006



[  ]

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



For the transition period from ________________ to _______________



000-24835

(Commission file number)



LEGEND MOBILE, INC.

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



Delaware

38-3399098

(State or other jurisdiction

(IRS Employer

of incorporation or organization)

Identification No.)





244 Fifth Ave. Ste. P203 New York, New York 10001

(Address of principal executive offices)



212-252-2459

(Issuer's telephone number)



N/A

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



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



State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of May  1, 2006 20,298,021 shares of common stock



Transitional Small Business Disclosure Format (check one):  Yes [   ]   No [X]







1













LEGEND MOBILE, INC.

Index



Page

Number



PART I.

FINANCIAL INFORMATION

2



Item 1.

Financial Statements

2



Consolidated Balance Sheet as of September 30, 2006 (unaudited)

2



Consolidated Statements of Operations for the

three months ended September 30, 2006 and 2005 (unaudited)

4



Consolidated Statement of Stockholders Deficit for the

three months ended September 30, 2006 (unaudited)

5



Consolidated Statements of Cash Flows for the

three months ended September 30, 2006 and 2005 (unaudited)

6



Notes to Consolidated Financial Statements (unaudited)

8



Item 2.

Management's Discussion and Analysis or Plan of Operation

14



Item 3.

Controls and Procedures

17



PART II.

OTHER INFORMATION

17



Item 1.

Legal Proceedings

17



Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

18



Item 3.

Defaults Upon Senior Securities

18



Item 4.

Submission of Matters to a Vote of Security Holders

18



Item 5.

Other Information

18



Item 6.

Exhibits

18



SIGNATURES

18









2











|LEGEND MOBILIE AND SUBSIDIARIES                                            |  |  |  |  |  |  |                     
|-------------------------------------------------------------------------- |  |  |  |  |  |  | --------------------
|CONSOLIDATED INTERIM BALANCE SHEET                                         |  |  |  |  |  |  |                     
|AS AT SEPTEMBER 30, 2006                                                   |  |  |  |  |  |  |                     
|(UNAUDITED)                                                                |  |  |  |  |  |  |                     
|                                                                           |  |  |  |  |  |  |                     
|CURRENT ASSETS:                                                            |  |  |  |  |  |  |                     
|Cash                                                                       |  |  |  |  |  |  | $                 50
|Inventory                                                                  |  |  |  |  |  |  | 20,034              
|TOTAL CURRENT ASSETS                                                       |  |  |  |  |  |  | 20,084              
|FIXED ASSETS - at cost                                                     |  |  |  |  |  |  |                     
|Computer and office equipment                                              |  |  |  |  |  |  | 52,930              
|Less: Accumulated depreciation                                             |  |  |  |  |  |  | (51,561)            
|NET FIXED ASSETS                                                           |  |  |  |  |  |  | 1,369               
|GOODWILL                                                                   |  |  |  |  |  |  | 48,188              
|TOTAL ASSETS                                                               |  |  |  |  |  |  | $          69,641   
|                                                                           |  |  |  |  |  |  |                     
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                      |  |  |  |  |  |  |                     
|CURRENT LIABILITIES:                                                       |  |  |  |  |  |  |                     
|Accounts payable                                                           |  |  |  |  |  |  | $        194,635    
|Accrued expenses                                                           |  |  |  |  |  |  | 686,908             
|Accrued interest                                                           |  |  |  |  |  |  | 683,728             
|License fees payable                                                       |  |  |  |  |  |  | 200,000             
|Due to related parties                                                     |  |  |  |  |  |  | 144,581             
|Notes payable - other                                                      |  |  |  |  |  |  | 758,920             
|Notes payable                                                              |  |  |  |  |  |  | 698,750             
|Note payable - officer                                                     |  |  |  |  |  |  | 288,496             
|TOTAL CURRENT LIABILITIES                                                  |  |  |  |  |  |  | 3,656,018           
|                                                                           |  |  |  |  |  |  |                     
|COMMITMENTS AND CONTINGENCIES                                              |  |  |  |  |  |  | -                   
|STOCKHOLDERS' DEFICIT                                                      |  |  |  |  |  |  |                     
|Series A Preferred Stock, $0.001 par value, 1,000,000 shares               |  |  |  |  |  |  |                     
|authorized; 2,225 shares issued and outstanding                            |  |  |  |  |  |  | 22                  
|Series B Convertible Preferred Stock, $0.01 par value; 850,000             |  |  |  |  |  |  |                     
|shares authorized; 850,000 shares issued and outstanding                   |  |  |  |  |  |  |                     
|authorized; 1,000,000 Class A shares issued and outstanding                |  |  |  |  |  |  | 8,500               
|Series C Convertible Preferred Stock, $0.01 par value; 147,775             |  |  |  |  |  |  |                     
|shares authorized; 147,775 shares issued and outstanding                   |  |  |  |  |  |  | 1,478               
|Common stock; $0.001 par value; 75,000,000 shares                          |  |  |  |  |  |  |                     
|authorized; 25,298,021 issued and outstanding                              |  |  |  |  |  |  | 25,298              
|Additional paid-in capital                                                 |  |  |  |  |  |  | 15,724,389          
|Stock subscription receivable                                              |  |  |  |  |  |  | (156,300)           
|Accumulated deficit                                                        |  |  |  |  |  |  | (19,189,764)        
|TOTAL STOCKHOLDERS' DEFICIT                                                |  |  |  |  |  |  | (3,586,377)         
|                                                                           |  |  |  |  |  |  |                     
|TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                |  |  |  |  |  |  | $          69,641   
|The accompanying notes are an integral part of these financial
statements. |  |  |  |  |  |  |                     







3













|LEGEND MOBILE, INC. AND SUBSIDIARIES         |                    |                    |                  |                 
|-------------------------------------------- | ------------------ | ------------------ | ---------------- | ----------------
|CONSOLIDATED INTERIM STATEMENT OF OPERATIONS |                    |                    |                 
|(UNAUDITED)                                  |                    |                    |                  |                 
|                                             |                    |                    |                  |                 
|                                             | THREE MONTHS ENDED | NINE MONTHS ENDED  |                  |                 
|                                             | SEPTEMBER 30,      | SEPTEMBER 30,      |                  |                 
|                                             | 2006               | 2005               | 2006             | 2005            
|                                             |                    |                    |                  |                 
|                                             |                    |                    |                  |                 
|REVENUE                                      | $                - | $                - | $              - | $         1,996 
|                                             |                    |                    |                  |                 
|COST OF REVENUE                              | -                  | -                  | -                | -               
|                                             |                    |                    |                  |                 
|GROSS PROFIT                                 | -                  | -                  | -                | 1,996           
|                                             |                    |                    |                  |                 
|EXPENSES:                                    |                    |                    |                  |                 
|Selling, general and administrative          | 97,624             | 18,055             | 294,192          | 371,969         
|                                             |                    |                    |                  |                 
|TOTAL EXPENSES                               | 97,624             | 18,055             | 294,192          | 371,969         
|                                             |                    |                    |                  |                 
|LOSS FROM OPERATIONS                         | (97,624)           | (18,055)           | (294,192)        | (369,973)       
|                                             |                    |                    |                  |                 
|OTHER INCOME (EXPENSE):                      |                    |                    |                  |                 
|Interest expense and financing costs         | (127,441)          | (100,920)          | (199,969)        | (235,413)       
|                                             |                    |                    |                  |                 
|TOTAL OTHER INCOME (EXPENSE)                 | (127,441)          | (100,920)          | (199,969)        | (235,413)       
|                                             |                    |                    |                  |                 
|LOSS BEFORE PROVISION FOR INCOME TAXES       | $   (225,065)      | $   (118,975)      | $ (494,161)      | $   (605,386)   
|                                             |                    |                    |                  |                 
|PROVISION FOR INCOME TAXES                   | -                  | -                  | -                | -               
|                                             |                    |                    |                  |                 
|NET LOSS                                     | $   (225,065)      | $   (118,975)      | $ (494,161)      | $   (605,386)   
|                                             |                    |                    |                  |                 
|BASIC AND DILUTED LOSS PER                   |                    |                    |                  |                 
|COMMON SHARE                                 | $        (0.010)   | $        (0.006)   | $      (0.024)   | $        (0.033)
|                                             |                    |                    |                  |                 
|WEIGHTED AVERAGE NUMBER OF                   |                    |                    |                  |                 
|COMMON SHARES OUTSTANDING -                  |                    |                    |                  |                 
|BASIC AND DILUTED                            | 21,548,021         | 19,720,548         | 20,298,021       | 18,125,994      
|                                             |                    |                    |                  |                 

The accompanying notes are an integral part of these financial statements.







4













|LEGEND MOBILE, INC. AND SUBSIDIARIES                                      |                     |                       
|------------------------------------------------------------------------- | ------------------- | ----------------------
|CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS                              |                     |                       
|(UNAUDITED)                                                               |                     |                       
|                                                                          | NINE MONTHS ENDED  
|                                                                          | SEPTEMBER 30,      
|                                                                          | 2006                | 2005                  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                     |                     |                       
|Net loss                                                                  | $      (494,161)    | $         (605,386)   
|Adjustment to reconcile net loss to net cash used in operating activities |                     |                       
|Depreciation                                                              | 402                 | 803                   
|Issuance of common stock for services and expenses                        | 13,750              | 234,500               
|Issuance of warrants for services/financing costs                         | -                   | 523                   
|Changes in operating assets and liabilities:                              |                     |                       
|Inventory                                                                 | (20,034)            |                       
|Accounts payable                                                          | (30,000)            | 12,999                
|Accrued expenses                                                          | (490,002)           | 137,392               
|Accrued interest                                                          | 186,719             | 136,103               
|                                                                          |                     |                       
|Net cash used in operating activities                                     | (833,326)           | (83,066)              
|                                                                          |                     |                       
|CASH FLOWS FROM FINANCING ACTIVITIES:                                     |                     |                       
|Notes payable in exchange for accrued salaries                            | 758,920             | -                     
|Conversion of advances to notes payable                                   | 22,500              | -                     
|Advances (to)from related parties, net                                    | 40,705              | 66,807                
|Issuance of stock to convert advances                                     | 11,250              | -                     
|Proceeds from the sale of common stock                                    | -                   | 14,846                
|                                                                          |                     |                       
|Net cash provided by financing activities                                 | 833,375             | 81,653                
|                                                                          |                     |                       
|INCREASE (DECREASE) IN CASH                                               | 49                  | (1,413)               
|                                                                          |                     |                       
|CASH, Beginning of period                                                 | 1                   | 1,518                 
|                                                                          |                     |                       
|CASH, End of period                                                       | $                50 | $                 105 
|                                                                          |                     |                       
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                        |                     |                       
|Interest paid                                                             | $       199,969     | $          235,413    
|Income taxes paid                                                         | $                 - | $                    -



The accompanying notes are an integral part of these financial statements.







5













LEGEND MOBILE, INC. and SUBSIDIARIES

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2006



Note 1 - Organization and Significant Accounting Policies



Organization and Lines of Business

----------------------------------



Legend Mobile,  Inc.,  formerly,  PTN Media, Inc. (the "Company"),  was  incorporated  in Delaware on January 13, 1998 and is the  successor  to Interactive  Entertainment  Studio, Inc. (IES). IES was incorporated in the State of Nevada on May 27,  1997 and was merged into the Company in March 1998 for the sole purpose of changing the domicile of the Company  to Delaware.  This merger was  retroactively  reflected in the December  31, 1997  financial  statements.  On June 27, 2002, the Company filed a  Certificate of Amendment to its Certificate of  Incorporation  to amend the Company's Certificate of Incorporation name from PTN Media, Inc. to Legend Mobile, Inc.



The  Company  is a  developer  and  marketer  of branded  mobile  phone products,  including faceplates,  phone accessories,  SMS services, and mobile data  applications.  Through the Company's 50% owned subsidiary, Legend Credit,  Inc.,  (formerly PTN Wireless,  Inc. ("Legend Credit"), the Company  also  develops and markets  stored value cards,  including gift cards bearing the Visa and MasterCard logo.  Effective  October 1, 2004,  Mr.  Klamka,  the Company's CEO and 60% owner of Legend  Credit, contributed an additional 10% interest in Legend Credit to the Company. Legend  Credit  currently  markets  the Hello  Kitty  reloadable  debit MasterCard   card.   The   Hello   Kitty   card   is   sold   via   the www.hellokittycard.com.  Hello  Kitty  is one of  the  most  recognized animated  characters  in the world.  The  Company's  Hello  Kitty Debit MasterCard  card  generate  revenue by charging  cardholders a suite of fees including an initial  processing fee of up to $14.95,  a per month fee of up to  $2.95  and  an ATM  withdrawal  fee of up to  $1.50.  The Company  derives  limited  revenues  from the sale of covers for mobile phones.  The Company's  suppliers require it to purchase these products and resell them to  consumers  and  wholesalers.  The  Company  created products  under its licenses from athletes,  entertainers,  and popular trademarks.  The Company  also sells a  NASCAR-themed,  SMS-based  text messaging service called "Racemobile.com".  The Company also is seeking to sell mobile application software either via over-the-air download or bundled with a particular mobile phone.  These applications may be sold as a subscription or as a single download. The Company has entered into an  agreement  with the  American  Society of  Composers,  Authors  and Publishers  ("ASCAP") for the licensing of ring tones for mobile phones.  ASCAP maintains the rights to 8 million copyrighted musical works.







6













In February  2001,  the Company  formed Legend Credit as a wholly owned subsidiary.  On April 1, 2003,  Mr. Peter  Klamka,  CEO of the Company, contributed  the rights to an affinity  credit card business  valued at $37,000 to Legend Credit. Mr. Klamka's contribution has been determined pursuant to Accounting  Principles  Board Opinion No. 29,  "Non monetary Transactions,"  using his cost  basis in the  investment,  which is the

most readily  determinable  cost.  In exchange  for this  contribution, Legend  Credit  issued  to Mr.  Peter  Klamka  60% of  the  issued  and outstanding shares of Legend Credit common stock and the Company issued to Mr. Klamka 850,000 shares of Series B convertible  preferred  stock. These issuances were valued at $22,200 and $14,800,  respectively.  The Company  retains a 40%  minority  interest  in Legend  Credit  which is accounted for using the equity method.  Effective  October 1, 2004, Mr. Klamka  contributed  an additional 10% interest in Legend Credit to the Company at was valued at $3,700 (10% of $37,000,  the original value of the affinity credit card business).



In July 1999,  the  Company  formed,  Legend  Studios,  Inc.  (formerly FragranceDirect.com,   Inc.)  ("Legend  Studios"),   a  majority  owned subsidiaries.  Through this entity, the Company sold fragrance products over the Internet.  On June 28, 2004,  the Company,  through its Legend Studios  subsidiary,  entered  into a  definitive  agreement  to  begin operating seven radio stations owned by Quorum Radio Partners, Inc. and Quorum  Radio  Partners  of  Virginia,  Inc.  Under  the  terms  of the agreement,  Legend Studios will operate for a 12-month term,  beginning July 1, 2004,  seven  stations  located in Virginia,  West Virginia and Missouri.  Legend  Studios paid  $50,000  pursuant to the terms of this agreement to operate the ratio stations  which is being  amortized over for a 12-month  period.  In the 4th quarter of 2004, the Company claims that the  owners of the radio  stations  failed to honor the  operating agreement  by  failing  to allow  the  Company  to  control  the  radio stations. As a result, the Company has expensed the unamortized portion of  the  $50,000  payment  pursuant  to  the  operating  agreement  and discontinued the recognition of revenue since the Company was no longer able to control the radio operations. (See Note 11).



Basis of Presentation

---------------------



The accompanying  consolidated  financial statements have been prepared in conformity  with  accounting  principles  generally  accepted in the United States of America, which contemplate continuation of the Company as a going concern.  The Company incurred a net loss for the nine months ended September 30, 2006 of  $494,161  and at  September  30,  2006,  had an accumulated  deficit of $19,086,071  and a working  capital  deficit of $3,635,934. In addition, the Company generates minimal revenue from its operations and is in default on the payment of notes payable and license fee payable obligations. These conditions raise substantial doubt as to the  Company's   ability  to  continue  as  a  going   concern.   These consolidated  financial  statements do not include any adjustments that might result from the outcome of this uncertainty.  These  consolidated financial  statements  do not include any  adjustments  relating to the recoverability and classification of recorded asset amounts, or amounts and  classification  of liabilities  that might be necessary should the Company be unable to continue as a going concern.









7











The Company plans to take the following  steps that it believes will be  sufficient  to provide  the  Company  with the  ability to  continue in  existence.  The Company,  through its subsidiary,  Legend Credit, Inc., continues  to sell  branded  debit  cards.  The Company is also seeking additional  equity  capital to expand its cellular  phones  faceplates, mobile data services, and mobile applications business.



Principles of Consolidation

---------------------------



The accompanying consolidated financial statements include the accounts of the Company and its 91%-owned subsidiary, Legend Studios and its 50% owned subsidiary, Legend Credit. All inter company transactions have been eliminated.



Stock Based Compensation

------------------------



SFAS No. 123,  "Accounting for Stock-Based  Compensation,"  establishes and encourages the use of the fair value based method of accounting for stock-based compensation  arrangements under which compensation cost is determined using the fair value of stock-based  compensation determined as of the date of grant and is recognized over the periods in which the related services are rendered.  The statement also permits companies to elect to continue using the current  intrinsic value accounting  method specified  in  Accounting  Principles  Board  ("APB")  Opinion  No. 25, "Accounting  for Stock Issued to Employees," to account for stock-based compensation.  The Company has elected to use the intrinsic value based method and has  disclosed  the pro forma effect of using the fair value based  method to account  for its  stock-based  compensation  issued to employees. For options granted to employees where the exercise price is less than the fair value of the stock at the date of grant, the Company recognizes an expense in accordance with APB 25. For non-employee stock based compensation the Company recognizes an expense in accordance with SFAS No. 123 and values the equity  securities  based on the fair value of the security on the date of grant. For stock-based  awards the value is based on the market  value for the stock on the date of grant and if the stock has restrictions as to transferability a discount is provided for lack of  tradability.  Stock  option  awards are  valued  using the Black-Scholes option-pricing model.



Use of Estimates

----------------



The preparation of consolidated financial statements in conformity with accounting  principles  generally  accepted  in the  United  States  of America  requires  management 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 and the reported  amounts of revenue and expenses during the reporting periods. As of September 30, 2006, the Company used estimates  in   determining   the  value  of  common  stock  issued  to consultants  for  services.  Actual  results  could  differ  from these estimates.



Fair Value of Financial Instruments







8











-----------------------------------



For certain of the Company's  financial  instruments,  including  cash, accounts  payable,  accrued  expenses,  accrued  interest,  license fee payable and advances from  related parties,  the carrying  amounts  approximate fair value due to their short  maturities.  The amounts shown for notes payable also approximate fair value because current interest rates and terms  offered to the Company for similar  debt are  substantially  the same.



Cash and Cash Equivalents

-------------------------



For purposes of the statements of cash flows,  the Company defines cash equivalents  as all highly  liquid debt  instruments  purchased  with a maturity of three months or less, plus all certificates of deposit.



Concentration of Credit Risk

----------------------------



Financial  instruments,   which  potentially  subject  the  Company  to concentrations of credit risk,  consist of cash. The Company places its cash with high quality  financial  institutions and at times may exceed the FDIC $100,000  insurance limit. The Company extends credit based on an evaluation of the customer's financial condition,  generally without collateral.  Exposure to losses on receivables is principally dependent on each  customer's  financial  condition.  The  Company  monitors  its exposure for credit losses and  maintains  allowances  for  anticipated losses, as required.



Fixed Assets

------------



Fixed  assets are  recorded  at cost.  Depreciation  is  provided  on a straight-line  basis  over  estimated  useful  lives of the  assets  as follows:



Computer equipment        3 years

Furniture and fixtures       5 years



Expenditures  for  maintenance and repairs are charged to operations as incurred  while renewals and  betterments  are  capitalized.  Gains and losses on disposals are included in the results of operations.







9













Impairment of Long-Lived Assets

-------------------------------



In  October  2001,  the FASB  issued  SFAS  No.  144,  "Accounting  for  Impairment or Disposal of Long-Lived Assets", which supersedes SFAS No. 121,  "Accounting  for the  Impairment  of  Long-Lived  Assets  and for Long-Lived  Assets to Be Disposed Of", and the accounting and reporting provision   of  APB   Opinion   No.   30,"Reporting   the   Results  of Operations-Reporting  the  Effects  of  Disposal  of  a  Segment  of  a Business, and Extraordinary,  Unusual and Infrequently Occurring Events and  Transactions",  for the disposal of a segment of a business.  This statement also amends ARB No. 51, "Consolidated  Financial Statements", to eliminate the exception to consolidation  for a subsidiary for which control is likely to be impaired. SFAS No. 144 requires that long-lived assets  to be  disposed  of by sale,  including  those of  discontinued operations,  be measured at the lower of carrying  amount or fair value less cost to sell,  whether  reported in  continuing  operations  or in discontinued  operations.  SFAS  No.  144  broadens  the  reporting  of discontinued  operations  to include all  components  of an entity with operations  that can be  distinguished  from the rest of the entity and that will be eliminated from the ongoing  operations of the entity in a disposal  transaction.  SFAS No. 144 also establishes a "primary-asset" approach to determine  the cash flow  estimation  period for a group of assets and  liabilities  that  represents  the unit of accounting for a long-lived asset to be held and used. The Company's  adoption effective January  1,  2002  did not  have a  material  impact  to the  Company's financial position or results of operations.



Intangible Assets

-----------------



Intangible  assets  consist of goodwill  acquired  with the increase in ownership of Legend Credit. In accordance with SFAS No. 142,  "Goodwill and Other Intangible  Assets," the Company evaluates  intangible assets and other long-lived assets for impairment, at least on an annual basis and  whenever  events or changes  in  circumstances  indicate  that the carrying  value may not be recoverable  from its estimated  future cash flows.  Recoverability of intangible assets and other long-lived assets is measured by comparing their net book value to the related  projected undiscounted  cash  flows from these  assets,  considering  a number of factors   including   past   operating   results,   budgets,   economic projections,  market trends and product  development cycles. If the net  book value of the asset  exceeds the related  undiscounted  cash flows, the asset is  considered  impaired,  and a second test is  performed to measure the amount of impairment loss.







10













Revenue Recognition

-------------------



The  Company  generates  revenue  from the sale of  products on its web sites and through other channels,  the sale of  advertisements on radio stations it operated and service fees from the sale of debit cards. The Company recognizes revenue for these product sales when the product is shipped to the customer.  The Company recognizes revenue from the radio stations  it  operated  when  advertisements  were  aired.  The Company recognizes service fee revenue from the sale of debit cards at the time the customer is sent the debit card.  Shipping  and handling  costs are recorded as revenue and related costs are charged to cost of sales.



Income Taxes

------------



The Company  accounts for income taxes in accordance with SFAS No. 109, "Accounting  for Income  Taxes."  Deferred  taxes are  provided  on the liability  method  whereby  deferred  tax  assets  are  recognized  for deductible  temporary  differences,  and deferred tax  liabilities  are recognized for taxable temporary differences. Temporary differences are the differences  between the reported amounts of assets and liabilities and their tax bases.  Deferred  tax assets are  reduced by a  valuation allowance  when, in the opinion of  management,  it is more likely than not  that  some  portion  or all of the  deferred  tax  assets  will be realized.  Deferred  tax assets and  liabilities  are  adjusted for the effects of changes in tax laws and rates on the date of enactment.



Earnings (Loss) Per Share

-------------------------



The Company  reports  earnings (loss) per share in accordance with SFAS No. 128,  "Earnings  per  Share."  Basic  earnings  (loss) per share is  computed by dividing income (loss) available to common  shareholders by the  weighted  average  number  of  common  shares  available.  Diluted earnings (loss) per share is computed  similar to basic earnings (loss) per share  except  that the  denominator  is  increased  to include the number of additional  common shares that would have been outstanding if the  potential  common  shares had been  issued  and if the  additional common shares were dilutive.  Diluted earnings (loss) per share has not been  presented  since the effect of the assumed  conversion of options and  warrants to purchase  common  shares  would have an  anti-dilutive effect.  The following  potential common shares have been excluded from the  computation  of  diluted  net loss per  share  for the nine months ended September 30,  2006  and  2005  because  the  effect  would  have  been  anti-dilutive:







11













2006          2005



-----------   -----------



Conversion of Series A preferred stock

44,500         44,500

Conversion of Series B convertible preferred stock              8,500,000    8,500,000

Conversion of Series C convertible preferred stock            14,777,500  14,777,500

Stock options issued to employees and consultants

under the Company's stock option plan                             1,150,000    1,150,000

Stock options issued outside of plan                                            --                --

Warrants issued to officers                                                       231,000       231,000

Warrants issued for services                                                      50,000         50,000

Warrants issued with notes                                                       100,000       100,000

Warrants issued for penalty/interest                                         234,000       234,000

Warrants issued with note conversion                                      300,000       300,000



-----------   -----------



25,387,000  25,387,000



Comprehensive Loss

------------------



SFAS No. 130, "Reporting Comprehensive Loss," establishes standards for the reporting and display of comprehensive income and its components in the  financial  statements.  For the nine months ended  September 30, 2006 and 2005,  the  Company  does  not  have  items  that   represented   other comprehensive  income  and,  accordingly,   has  not  included  in  the statement of stockholders' equity the change in comprehensive loss.



Minority Interest

-----------------



Minority interest represents the minority  shareholders'  proportionate share of the equity of Legend  Studios.  During the year ended December 31, 2000, the Company sold 410,000 or 17% of the common stock of Legend Studios.  Legend Studios,  on a stand-alone  basis, had a shareholders' deficit. As a result, the Company's  investment in Legend Studios had a negative  carrying  value.  The  increase in  capitalization  of Legend Studios  resulting  from the sale of 410,000  shares of common stock to outside investors benefited the Company in that it reduced the negative carrying  value  of  the  Company's   investment  in  Legend   Studios. Accordingly,   the  Company  has   accounted  for  the  change  in  its proportionate  share  of  Legend  Studios'  equity  resulting  from the issuance of stock to outside  investors as an increase in shareholders' equity  and  a  reduction  in  minority   interest   liability  in  the consolidated  financial  statements.  During 2001,  three of the Legend Studios shareholders  exchanged 173,999 shares of Legend Studios common stock for 173,999  shares of the Company's  common stock.  During 2002, one of the Legend Studios shareholders exchanged 1,000 shares of Legend Studios  common stock for 1,000 shares of the  Company's  common stock. The  accompanying  consolidated  financial  statements do not reflect a minority interest  liability as of September 30, 2006 as Legend Studios, on a stand-alone  basis,  had a stockholders'  deficit as of such date. The







12











accompanying  consolidated  statements of operations for the nine months ended September 30, 2006 and 2005 do not reflect the minority interest's share of Legend  Studios'  losses for said years as the related accrual would  result  in the  Company's  recordation  of a  minority  interest receivable.



In addition,  during the year ended  December 31, 2004,  the  Company's ownership in Legend  Credit  increased to 50%  resulting in the Company consolidating  the  financial  statement  of  Legend  Credit  with  the Company.  The  accompanying  consolidated  financial  statements do not reflect a minority interest liability as of September 30, 2006 or September 30, 2005 as Legend  Credit, on a stand-alone basis, had a stockholders'  deficit as of such date. The  accompanying  consolidated  statements of operations for the nine months ended  September 30, 2006 or September 30, 2005 do not reflect the  minority  interest's share of Legend  Credits'  losses for 2006 or 2005 as the related accrual would result in the Company's recordation of a minority interest receivable.



Recently Issued Accounting Pronouncements

-----------------------------------------



In November  2004, the FASB issued SFAS No. 151  "Inventory  Costs,  an amendment  of ARB No. 43,  Chapter 4 (" SFAS No. 151".  The  amendments made by  SFAS  151  clarify  that  abnormal  amounts  of idle  facility expense,  freight,  handling  costs,  and wasted  materials  (spoilage) should  be  recognized  as  current-period   charges  and  require  the allocation  of fixed  production  overheads to  inventory  based on the normal capacity of the production facilities. The guidance is effective for inventory  costs incurred  during fiscal years beginning after June 15, 2005. Earlier application is permitted for inventory costs incurred during fiscal years  beginning after November 23, 2004. The Company has evaluated  the impact of the adoption of SFAS 151, and does not believe the impact will be  significant  to the  Company's  overall  results of operations or financial position.





In December  2004,  the FASB issued SFAS No.152,  "Accounting  for Real Estate Time-Sharing Transactions-an amendment of FASB Statements No. 66 and 67" ("SFAS 152") SFAS 152 amends SFAS No. 66, "Accounting for Sales of Real Estate",  to reference the financial  accounting  and reporting guidance for real estate time-sharing  transactions that is provided in AICPA  Statement of Position  (SOP) 04-2,  "Accounting  for Real Estate Time-Sharing   Transactions".   SFAS  152  also  amends  SFAS  No.  67, "Accounting  for Costs and  Initial  Rental  Operations  of Real Estate Projects", to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate  projects does not apply to real estate time-sharing  transactions.  The accounting for those operations and costs is subject to the guidance in SOP 04-2. SFAS 152 is effective for  financial  statements  for fiscal years  beginning  after June 15, 2005, with earlier  application  encouraged.  The Company has evaluated the impact of the adoption of SFAS 152, and does not believe the impact will be  significant  if  any,  to the  Company's  overall  results  of operations or financial  position since the Company does not enter into such transactions.



In  December  2004,   the  FASB  issued  SFAS  No.153,   "Exchanges  of Non monetary  Assets,







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an amendment of APB Opinion No. 29, Accounting for Non monetary Transactions." The amendments made by SFAS 153 are based on the principle that  exchanges of non-monetary  assets should be measured based  on  the  fair  value  of  the  assets  exchanged.  Further,  the amendments eliminate the narrow exception for non-monetary  exchanges of similar  productive  assets and replace it with a broader exception for exchanges of non-monetary assets that do not have commercial  substance. Previously,  Opinion 29 required that the accounting for an exchange of a  productive  asset for a similar  productive  asset or an  equivalent interest in the same or similar productive asset should be based on the recorded  amount of the asset  relinquished.  Opinion  29  provided  an exception to its basic measurement principle (fair value) for exchanges of  similar  productive  assets.  That  exception  required  that  some non-monetary  exchanges,   although  commercially  substantive,   to  be recorded on a carryover  basis.  By focusing the exception on exchanges that lack commercial substance,  the FASB believes SFAS No.153 produces financial  reporting that more  faithfully  represents the economics of the  transactions.  SFAS  No.153 is  effective  for  non-monetary  asset exchanges  occurring in fiscal periods  beginning  after June 15, 2005.  Earlier  application  is  permitted  for  non-monetary  asset  exchanges occurring in fiscal periods  beginning after the date of issuance.  The provisions of SFAS No.153 shall be applied  prospectively.  The Company has  evaluated  the impact of the  adoption  of SFAS 153,  and does not believe the impact will be significant to the Company's overall results of operations or financial position.



In  December  2004,  the  FASB  issued  SFAS  No.123   (revised  2004), "Share-Based  Payment"  ("SFAS  123(R)").   SFAS  123(R)  will  provide investors  and other users of financial  statements  with more complete and neutral  financial  information by requiring that the  compensation cost  relating to  share-based  payment  transactions  be recognized in financial  statements.  That  cost will be  measured  based on the fair value of the equity or liability instruments issued. SFAS 123(R) covers a wide range of share-based  compensation  arrangements including share options,  restricted  share  plans,   performance-based  awards,  share appreciation  rights,  and employee share purchase  plans.  SFAS 123(R) replaces SFAS No. 123, "Accounting for Stock-Based  Compensation",  and supersedes  APB  Opinion  No.  25,  "Accounting  for  Stock  Issued  to Employees".  SFAS 123, as  originally  issued in 1995,  established  as preferable a  fair-value-based  method of  accounting  for  share-based payment transactions with employees.  However, that Statement permitted entities the option of  continuing to apply the guidance in Opinion 25, as long as the  footnotes to financial  statements  disclosed  what net income would have been had the preferable  fair-value-based method been used.  Public  entities  (other  than  those  filing as small  business issuers)  will be required to apply SFAS 123(R) as of the first interim or annual  reporting  period  that  begins  after June 15,  2005.  This pronouncement is effective for the Company, a small business issuer, as of the  first  interior  annual  reporting  period  that  begins  after December 15, 2005. The Company has evaluated the impact of the adoption of SFAS 123(R),  and does not believe the impact will be significant to the Company's overall results of operations or financial position.



In May 2005, the FASB issued Statement No. 154, Accounting Changes and Error Correctionsa replacement of APB Opinion No. 20 and FASB Statement No. 3 (FAS 154), which changes the requirements for the accounting for and reporting of a change in accounting principle, requires retrospective application to prior periods financial statements of changes in accounting principle and carries forward without change the guidance contained in Opinion 20







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for reporting the correction of an error in previously issued financial statements and a change in accounting estimate. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company does not expect the adoption of FAS 154 to affect future reporting or disclosures.



Note 2 - Fixed Assets



Fixed assets at September 30, 2006 consisted of the following:

Computer equipment              $    49,478

Furniture and fixtures                     3,452

-----------

52,930

Less accumulated depreciation   (51,561)

-----------



Total                              $      1,369

===========



Depreciation expense for the six months ended June 30, 2006 was $268.



Note 3 - Investment in/Consolidation of Legend Credit, Inc.



On April 1, 2003, the Company's CEO, Mr. Peter Klamka,  contributed the rights to an affinity credit card business at his historical cost basis of  $37,000  to  Legend  Credit.  Mr.  Klamka's  contribution  has been determined  pursuant to  Accounting  Principles  Board  Opinion No. 29, "Non-monetary  Transactions,"  using his cost  basis in the investment, which is the most  readily  determinable  cost.  In  exchange  for this contribution,  Legend  Credit  issued to Mr. Peter  Klamka,  60% of the issued and outstanding shares of common stock and the Company issued to Mr. Klamka 850,000 shares of Series B convertible  preferred stock that were valued at $22,200 and $14,800, respectively, pro rata based on the percentage of interest  owned.  Effective  October 1, 2004,  Mr. Klamka contributed  an additional 10% interest in Legend Credit to the Company at was valued at $3,700  (10% of  $37,000,  the  original  value of the affinity credit card  business).Mr.  Klamka received  147,775 shares of the Company's Series C convertible preferred stock in exchange for this contribution.   Effective   October  1,  2004,   the   Company   began consolidating  the  operations  of  Legend  Credit.



Note 4 - Accrued Expenses



Accrued expenses at September 30, 2006, consist of the following:



Michael Jordan settlement                $    655,908

Accrued legal judgment                           31,000



------------



$   686,908

=========









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Note 5 - Notes Payable - Related Party



As of September 30, 2004,  the Company  converted  $291,000(now $288,496) of advances from its CEO, Mr.  Klamka,  into a note payable that bears  interest at 21% per annum and is payable  upon  demand.  In 2006, the Company converted an additional $25,000 of accrued salary to Mr. Klamka into a note and added it to the current note payable As of September 30, 2006, accrued interest related to this note amounted to $121,828.



Note 6 - Notes Payable



In July and August  1997,  the  Company  received  $56,250  through the issuance of 8% promissory  notes and common stock purchase  warrants to acquire Company stock.  The notes and accrued  interest are payable one year from the date of issuance  or the closing of an equity  funding of the Company of a minimum of $500,000, whichever is sooner. In 1999, one of the note  holders  converted  $25,000  of  principal  and  $5,500 of accrued  interest into 6,100 shares of the Company's  common stock. The remainder  of the notes,  which  amounts to  $31,250,  continues  to be outstanding  notwithstanding the fact that payments owed by the Company thereunder are now past due.  Interest  accrued as of September 30, 2006 aggregated to $22,875.



In July and August of 1999, the Company's Subsidiaries,  Legend Studios issued 10% promissory notes aggregating to $160,000.  The notes are due the earlier of one year or the completion of an initial public offering of Legend Studios common stock.  In addition,  Legend Studios issued to the note  holders  an  aggregate  of  96,000  two-year  stock  purchase warrants to purchase  Legend  Studios  common stock at $3.50 per share.

During the year ended  December  31, 2002,  two note holders  converted principal  and accrued  interest  of $35,000  and  $13,358  into 48,358 shares of the Company's common stock. As of June 30, 2006, $125,000 of these notes and accrued  interest of $83,334 are still  outstanding. These notes are in default at September 30, 2006.



In August  2001,  the Company  issued  notes  payable for  $100,000 and $300,000  which  were  due in 60 days  and 14  days,  respectively.  In connection  with the issuance of the $300,000 note, the Company granted the note  holders an  aggregate  of 80,000  warrants  to  purchase  the Company's common stock at $1 per share. The Company has determined that the fair value of these  warrants to be $99,317 and has  recognized the expense in the  accompanying  statement of  operations  during the year ended  December 31, 2001. The Company used the  Black-Scholes  model to determine  the  fair  value  of  these   warrants  with  the  following assumptions:  (i) dividend  yield of 0%, (ii)  expected  volatility  of 118%,  (iii)  weight-average  risk-free  interest rate of approximately 4.0%,  and (iv)  expected  life of 3 years.  In July 2002,  the Company converted the $300,000 note into 300,000 shares of its common stock and issued  300,000  warrants to purchase the Company's  common stock at $1 per share.  The value of the warrants issued of $244,701 was determined using the  Black-Scholes  model and this  amount has been  recorded  as financing costs in the accompanying  statement of operations during the year ended  December 31, 2002. The following  assumptions  were used to determine the fair value of these 300,000 warrants:  (i) dividend yield of 0%, (ii) expected volatility of 129%, (iii) weight-average risk-free interest rate of approximately 3.5%, and (iv) expected life of 5 years. The  Company did not repay the  $100,000  note on its due date (and has not yet repaid the note)







16











and issued the investor during the years ended December  31, 2004,  2003 and 2002,  respectively,  72,000,  72,000 and 90,000  warrants as a penalty  valued at $7,443,  $13,685 and  $80,870, respectively.



In September  2002,  the Company issued a note payable in the amount of $400,000  that accrues  interest at 10% per annum.  The  principal  and accrued  interest is to be repaid one-half on February 28, 2003 and the remaining  balance  on May 31,  2003.  The  Company  has not  made  the February 28, 2003 nor the May 31, 2003 payments. Interest accrued as of September 30, 2006  amounted  to  $166,666.  This note is in default at September 30, 2006.



In October  2003,  the Company  issued a note  payable in the amount of $20,000.  The note was due 45 days  after  issuance.  This note has not currently  been repaid.  There is no stated  interest rate on the note, but the Company did issue to the investor  100,000 warrants to purchase shares of the Company's  common stock for $0.35 per share.  The Company used the  Black-Scholes  model  to  determine  the fair  value of these 100,000 warrants with the following assumptions:  (i) dividend yield of 0%, (ii) expected volatility of 118%, (iii) weighted-average  risk-free interest rate of approximately 3.5%, and (iv) expected life of 3 years. The  value of these  warrants  of  $24,890  was has  been  recorded  as interest expense in the accompany consolidated statements of operations during the year ended  December  31,  2003.  This note is in default at September 30, 2006.



Note 7 - Advances to/from related parties



In 2004,  the  Company's  CEO  advanced an  additional  $269,687 to the Company.  During 2004, $291,000($288,496 - September 30, 2006) of these advances were converted into a note payable (see Note 5).



As at September 30, 2006, the Companys CEO advanced a total of $ 88,950 to the Company.  These advances are non-interest bearing, unsecured and have no fixed terms of repayment.



Note 8 -Notes Payable  Other



Notes payable  other represent accrued salaries that were owing to officers and directors of the Company, that were converted in June 2006 to notes totaling $758,920 which bear interest at 21% per annum and have no fixed terms of repayment.



Note 9 - Stockholders' Deficit



Series A Preferred Stock

------------------------



The Company has 1,000,000 shares of $0.001 par value Series A Preferred Stock  ("Series  A")  authorized  of which 2,225  shares are issued and outstanding  at  December  31,  2005.  Each  share  of  Series A can be converted into 20 shares of common stock.











17











Series B Convertible Preferred Stock

------------------------------------



The Company has 850,000  shares of $0.01 par value Series B Convertible Preferred  Stock  authorized  of which  850,000  shares  are issued and outstanding at June 30, 2006.



In the event of a voluntary or involuntary liquidation,  dissolution or winding  up of the  Company,  prior to the time  the  Series B  becomes convertible  into  common  shares,  the  holders  of  Series B shall be entitled to $0.01 per share. In the event of a voluntary or involuntary liquidation,  dissolution  or winding up of the Company  after the time the Series B becomes  convertible  into common  shares,  the holders of Series B shall be entitled  to share with the  holders of common  stock pari  passu in the assets of the  Company,  on an as  converted  basis, whether such assets are capital or surplus of any nature.  The Series B shall be  convertible  upon the  earlier  to occur of: (i) the date the Company generates net profits in any two consecutive fiscal quarters or (ii) April 1, 2006.



The  conversion  of  Series B shall be on the  basis of ten  shares  of common  stock for one Series B share,  as may be adjusted  from time to time. Upon  conversion,  the holder of the Series B will be required to pay to the Company a  conversion  price for each share of common  stock equal to $0.10.



The holders of the Series B shall vote on all matters  with the holders of the common  stock  (and not as a separate  class) on a ten votes per share  basis.  The holders of the Series B shall be entitled to receive all  notices  relating  to  voting as are  required  to be given to the holders of the common stock.



During 2003, the Company issued to Mr. Peter Klamka, the Company's CEO, 850,000 shares of Series B as consideration  for the contribution of an affinity credit card business to Legend Credit. (See Note 3)



Series C Convertible Preferred Stock

------------------------------------



The Company has 147,775  shares of $0.01 par value Series C Convertible Preferred  Stock  authorized  of which  147,775  shares  are issued and outstanding at June 30, 2006.



In the event of a voluntary or involuntary liquidation,  dissolution or winding  up of the  Company  prior  to the time  the  Series C  becomes convertible  into  common  shares,  the  holders  of  Series C shall be entitled to $0.01 per share. In the event of a voluntary or involuntary liquidation,  dissolution  or winding up of the Company  after the time the Series C becomes  convertible  into common  shares,  the holders of Series C shall be  entitled  to share  with the  holders  of  shares of common stock and Series B convertible preferred stock pari passu in the assets of the Company,  on an as converted  basis,  whether such assets are  capital  or  surplus  of any  nature.  . The  Series  C  shall  be convertible  upon the  earlier  to occur of:  (i) the date the  Company generates  net profits in any two  consecutive  fiscal  quarters;  (ii) April 1,  2006;  or (iii) any date that the  market  price per share of common stock equals or exceeds







18











$0.50.



The  conversion  of  Series C shall be on the  basis of ten  shares  of common  stock for one Series C share,  as may be adjusted  from time to time. Upon  conversion,  the holder of the Series C will be required to pay to the Company a  conversion  price for each share of common  stock equal to $0.10.



The holders of the Series C shall vote on all matters  with the holders of the common  stock  (and not as a separate  class) on a ten votes per share  basis.  The holders of the Series C shall be entitled to receive all  notices  relating  to  voting as are  required  to be given to the holders of the common stock.



During 2004, the Company issued to Mr. Peter Klamka, the Company's CEO, 147,775 shares of Series C as consideration  for the contribution of an additional 10% ownership in Legend Credit. (See Note 3)



Common Stock

------------



Effective January 12, 2004, the Company increased its authorized $0.001 par value common stock from 10,000,000 to 20,000,000 shares.



In January 2003,  the Company issued 20,000 shares of common stock in a private placement  offering that resulted in gross proceeds of $20,000. Also, in January 2003, the Company issued 25,000 shares of common stock as payment for  services  valued at $20,166.  The value was  determined using the market  value of the  Company's  stock at the date the shares were issued.



In February  2003,  the Company issued 2,500 shares of common stock for the conversion of 125 shares of Series A.



In May 2003,  the  Company  issued  100,000  shares of common  stock as payment for services valued at $16,000.  The value was determined using the market  value of the  Company's  stock at the date the shares  were issued.



In June 2003,  the Company  issued  106,250 shares of common stock in a private placement offering that resulted in gross proceeds of $17,000.



In July 2003,  the Company  issued  68,873  shares of common  stock for financing costs valued at $15,152.  The value was determined  using the market value of the Company's stock at the date the shares were issued.



In July, August and September 2003, the Company issued 1,560,000 shares of common stock for services valued at $477,700. The value was based in the market value of the Company's common stock on the date of issuance.



In October and December 2003, the Company  issued  1,579,670  shares of common  stock for







19











services  valued at $451,671.  The value was based in the market value of the Company's common stock on the date of issuance.



In January 2004,  the Company issued  3,048,674  shares of common stock for services  valued at $723,134.  The value was  determined  using the market value of the Company's stock at the date the shares were issued.



In February 2004, the Company issued 350,000 shares of common stock for services valued at $106,000.  The value was determined using the market value of the Company's stock at the date the shares were issued.



In March 2004,  the Company  issued  222,500 shares of common stock for services valued at $55,625.  The value was determined  using the market value of the Company's stock at the date the shares were issued.



In August 2004,  the Company  issued  10,000 shares of common stock for services  valued at $1,800.  The value was determined  using the market value of the Company's stock at the date the shares were issued.



In October 2004,  the Company issued 840,318 shares of common stock for services valued at $94,241.  The value was determined  using the market value of the Company's stock at the date the shares were issued.



In 2005 the Company amended its articles to increase the authorized common share capital to 75,000,000.



In 2005 the Company issued a total of 2,950,000 for consulting and investor relation services totaling $234,500.



In 2005 the Company issued a total of 834,300 shares for a cash consideration of $14,846.



In 2006 the Company issued 5,000,000 shares of common stock to retire advances made by a third party for a total consideration of $25,000.



Note 10 - Commitments and Contingencies



Litigation

----------



Legend  Studios,  Inc. vs. Quorum Radio  Partners,  Inc.,  Quorum Radio Partners of Virginia, Inc. and Quorum Communications, Inc.



Legend Studios lawsuit arises from  defendants'  breach of the parties' Asset Purchase  Agreement and Time Brokerage  Agreement that govern the sale,  programming,  operations  and revenues of certain radio stations (KELE-AM,  KELE-FM, WIQO, WKEY and WKCI). Legend Studios seeks specific performance of the agreements,  as well as in excess of $1.5 million in







20











damages.  Defendants have been served with the complaint,  but have not filed  answers  and may be subject to entry of  default.  Quorum  Radio Partners of Virginia,  Inc., however, filed a bankruptcy petition after being  served  with  the  complaint,   which  stays  Legend  Studios' proceedings solely against that entity.



On June 14, 2005, Betty Brown Revocable Trust (the Trust) by and through Betty Brown, trustee, Betty Brown individually, and Nancy Larson filed suit in the Iowa District Court for Polk County, Iowa, against Legend Mobile and Peter Klamka, our CEO, and Nicholas Fagan. In connection with the alleged purchase of $366,500 of Legend Mobile stock by the Trust, the alleged purchase of $75,496.54 of Legend Mobile stock by Ms. Larson, and alleged loans in the aggregate amount of $400,000 by the Trust to Legend Mobile, the plaintiffs charge the defendants with fraudulent misrepresentation, conspiracy to defraud, breach of contract, breach of fiduciary duty, and violation of Chapter 706 A of the Iowa Code. The plaintiffs claim actual and punitive damages in an unspecified amount, attorneys fees and investigating fees and other costs, and appropriate injunctive relief. Legend Mobile and Mr. Klamka have until September 19, 2005, to reply to this complaint, and they intend to vigorously contest all charges.



In the ordinary course of business, the Company is generally subject to claims, complaints, and legal actions. At September 30, 2006, management believes that the Company is not a party to any action which would have a  material  impact on its  financial  condition,  operations,  or cash flows.







Item 2.

Management's Discussion and Analysis or Plan of Operation



Forward looking statements



This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Shareholders are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation, our ability to fully establish our proposed websites and our ability to conduct business with Palm, Inc. and be successful in selling products. Although we believe the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements contained in the report will prove to be accurate.



GENERAL



The following discussion and analysis should be read in conjunction with our consolidated financial statements and related footnotes for the year ended December 31, 2005 included in our Annual Report on Form 10-KSB.  The discussion of results, causes and trends should not be construed to imply any conclusion that such results or trends will necessarily continue in the future.



We were incorporated in Delaware on January 13, 1998 and are the successor to Interactive Entertainment Studio, Inc. (IES). IES was incorporated in the State Of Nevada on May 27, 1997 and was merged into us in March 1998 for the sole Purpose of changing the domicile of the company to Delaware.  This merger was retroactively reflected in the December 31, 1997 financial statements.  On June 27, 2002 we changed our name to Legend Mobile, Inc.







21













We are a developer  and  marketer of branded  mobile  phone  products  including faceplates,  phone  accessories,  SMS  services,  and mobile data  applications. Through our 50% subsidiary Legend Credit, Inc., we also develop and market stored value cards including gift cards bearing the Visa and MasterCard logo. Effective October 1, 2004, Mr. Klamka, our CEO and 60% owner of Legend Credit, agreed to contribute an additional 10% interest in Legend Credit to us. Legend Credit currently holds a license to "The Apprentice with Donald Trump for stored value products.  We expect to market a gift card branded with "The Apprentice" logos and trademarks through an affiliate of MasterCard in 2006.   We derive limited revenues from the sale of covers for mobile phones.  Our suppliers require us to purchase these products and resell them to consumers and wholesalers.  We created products under our licenses from athletes, entertainers, and popular trademarks.



Since our inception, we have incurred significant losses and at September 30, 2006 our current liabilities exceeded current assets. In addition, we are delinquent in certain payments due for license fees and notes payable. We may be unable to continue in existence unless we are able to arrange additional financing and achieve profitable operations. We plan to raise additional capital and expect to generate cash from the sale of "The Apprentice" gift card through Legend Credit, Inc.



We will continue to seek out licenses for popular trademarks in the areas of mobile communications and stored value products.



Significant Accounting Policies and Estimates



Management's Discussion and Analysis of Financial Condition and Results of Operations discusses the Company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates and judgments on historical experiences and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of the Company's financial statements relate to the allowance for doubtful accounts. These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the consolidated financial statements included in this Annual Report on Form l0-KSB for the year ended December 31, 2005.



Results of Operations



Three months ended September 30, 2006  vs. September 30, 2005



Revenue for the three months ended September 30, 2006 Stayed the same at zero



There cost of revenue stayed the same at zero.



Selling, general and administrative expenses for the three months ended September 30, 2006 increased by $79,569 from $18,055 for the three months ended September 30, 2005 to $97,624  for the three months ended September 30, 2006. The increase in selling, general and administrative expenses is due to accrued salary







22













Interest expense and financing costs for the three months ended September 30, 2006 increased by $26,521 or 20% from $100,920 for the three months ended June 30, 2005 to $127,441 for the three months ended September 30, 2006.





Six months ended September 30, 2006 vs. September  30, 2005



Revenue for the nine months ended September 30, 2006 decreased by $1,996 or 100% from $1,996 for the nine months ended September 30, 2005 to $0  for the nine months ended September 30, 2005. We had no sales for the nine months ended September 30, 2006.



Cost of revenue for the nine months ended September 30, 2006 stayed the same. We incurred no costs of revenue during the nine months ended September 30, 2006 or September 30, 2005 as we did not generate any sales during this period.



Selling, general and administrative expenses for the nine months ended September 30, 2006 decreased by $77,777 or 26% from $371,969 for the nine months ended September 30, 2005 to $294,192  for the nine months ended September 30, 2006. The significant decrease in selling, general and administrative expenses is due to reduced payment of certain professional fees with shares of the Company's stock. During the Nine months ended September 30, 2006, we issued 5,000,000 shares of common stock.







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Interest expense and financing costs for the nine months ended September 30, 2006 decreased by $35,444 or18% from $235,413 for the nine months ended September 30, 2005 to $199,969 for the nine months ended September 30, 2006. We continue to accrue interest on our outstanding notes payable



Liquidity and Capital Resources



During 2003, our CEO, Peter Klamka advanced to us a total of $40,476. During the nine months ended March 31, 2004, Mr. Klamka advanced to us an additional $279,534, of which $89,591 was advances to Legend Credit. As of March 31, 2004, we converted $291,000 of these advances into a note payable that bears interest at 21% per annum and is payable upon demand.



We have incurred net losses since our inception of $18,228,480. In order for us to continue in existence, we will have to raise additional capital through the sale of equity or debt or generate sufficient profits from operations, or a combination of both.



Off-balance sheet arrangements



There are no off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.



Item 3.

Controls and Procedures



As required by SEC rules, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures at the end of the period covered by this report. This evaluation was carried out under the supervision and with the participation of our management, including our principal executive officer and principal financial officer. Based on this evaluation, these officers have concluded that the design and operation of our disclosure controls and procedures are effective. There were no changes in our internal control over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities & Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SECs rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.





Part II.

OTHER INFORMATION



Item 1.

Legal Proceedings



Legend  Studios,  Inc. vs. Quorum Radio  Partners,  Inc.,  Quorum Radio Partners of Virginia, Inc. and Quorum Communications, Inc.



Legend Studios lawsuit arises from  defendants'  breach of the parties' Asset Purchase  Agreement and Time Brokerage  Agreement that govern the sale,  programming,  operations  and







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revenues of certain radio stations (KELE-AM,  KELE-FM, WIQO, WKEY and WKCI). Legend Studios seeks specific performance of the agreements,  as well as in excess of $1.5 million in damages.  Defendants have been served with the complaint,  but have not filed  answers  and may be subject to entry of  default.  Quorum  Radio Partners of Virginia,  Inc., however, filed a bankruptcy petition after being  served  with  the  complaint,   which  stays  Legend   Studios's proceedings solely against that entity.



On June 14, 2005, Betty Brown Revocable Trust (the Trust) by and through Betty Brown, trustee, Betty Brown individually, and Nancy Larson filed suit in the Iowa District Court for Polk County, Iowa, against Legend Mobile and Peter Klamka, our CEO, and Nicholas Fagan. In connection with the alleged purchase of $366,500 of Legend Mobile stock by the Trust, the alleged purchase of $75,496.54 of Legend Mobile stock by Ms. Larson, and alleged loans in the aggregate amount of $400,000 by the Trust to Legend Mobile, the plaintiffs charge the defendants with fraudulent misrepresentation, conspiracy to defraud, breach of contract, breach of fiduciary duty, and violation of Chapter 706 A of the Iowa Code. The plaintiffs claim actual and punitive damages in an unspecified amount, attorneys fees and investigating fees and other costs, and appropriate injunctive relief. Legend Mobile and Mr. Klamka intend to vigorously contest all charges.



In the ordinary course of business, the Company is generally subject to claims, complaints, and legal actions. At September 30, 2006, management believes that the Company is not a party to any action which would have a  material  impact on its  financial  condition,  operations,  or cash flows.



Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds



Not applicable.



Item 3.

Defaults Upon Senior Securities



None





Item 4.

Submission of Matters to a Vote of Security Holders



Not applicable.



Item 5.

Other Information





Item 6.

Exhibits



31.1

Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002



32.1

Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002









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SIGNATURES



In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



LEGEND MOBILE, INC.







November 6, 2006

By:

/s/ Peter Klamka



Peter Klamka, Chief Executive and

Principal Accounting Officer











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Exhibit 31.1

CERTIFICATIONS



I, Peter Klamka, Chief Executive and Principal Accounting Officer of Legend Mobile, Inc., certify that:

1.

I have reviewed this Quarterly Report on Form 10-QSB of Legend Mobile, Inc.;

2.

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

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4.

I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

a)

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



b)

evaluated the effectiveness of the small business issuers disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



c)

disclosed in this report any changes in the small business issuers internal control over financial reporting that occurred during the small business issuers most recent fiscal quarter (the small business issuers fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuers internal control over financial reporting; and



5.

I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuers auditors and the audit committee of small business issuers board of directors (or persons performing the equivalent functions):

a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuers ability to record, process, summarize and report financial information; and

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuers internal control over financial reporting.







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November 6, 2006

/s/ Peter Klamka



Peter Klamka, Chief Executive and

Principal Accounting Officer







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Exhibit 32.1





CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Quarterly Report of Legend Mobile, Inc. (the Company) on Form 10-QSB for the quarter ending September 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned, in the capacities and on the date indicated below, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:



(1)

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



(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



|Dated:  November 6, 2006 | By:
/s/ Peter Klamka                            
|------------------------ | ------------------------------------------------
|                         | Peter Klamka                                    
|                         | Chief Executive and Principal Accounting Officer



















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