**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      DC 20549**





**FORM
      10-Q**








x
            
            **Quarterly
                Report pursuant to Section 13 or 15(d) of the Securities Exchange Act
                of 1934**
              For
                the quarterly period ended:      August 31,
                2006







o
            
            **Transition
                Report pursuant to Section 13 or 15(d) of the Securities Exchange Act
                of 1934**
              For the transition period from ________
                to
                _________




Commission
      File Number: 000-50477








**MANCHESTER
      INC.**


(Exact
      Name of Registrant as specified in its charter)





****


**NEVADA**
            
            **98-0380409**(State
                or other jurisdiction of incorporation or organization)
            
            (IRS
                Employer Identification Number)





**100
      Crescent Court, 7th** **Floor**


**Dallas,
      Texas 75201**


(Address
      of principal executive offices)





**(212) 445-8017**


(Registrant’s
      telephone number, including area code)





**N/A**


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








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


xYes         oNo





Indicate
      by check mark whether the registrant is a Large Accelerated Filer, an
      Accelerated Filer, or a Non-Accelerated Filer. See definitions of “Accelerated
      Filer and Large Accelerated Filer” in Rule 12b-2 of the Exchange Act. (Check
      one):





Large
                Accelerated Filer   o
            Accelerated
                Filer   o
            Non-Accelerated
                Filer   x





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


oYes      
      xNo





Indicate
      the number of shares outstanding of each of the issuer's classes of common
      equity, as of the latest practicable date: 32,787,500 shares
      of $0.001 par value common stock outstanding as of October 19, 2006.










**Explanatory
      Note:**




This
      report on Form 10-Q presents financial statements (unaudited) and disclosures
      for the Company’s third-quarter ended August 31, 2006 without giving effect to
      the Company’s financing and acquisition transactions described herein under Note
      8 - Subsequent Events.





**PART
      I:**  **FINANCIAL
      INFORMATION**





**Item
      1.**  **Financial
      Statements**




**MANCHESTER
                  INC.****(A
                  Development Stage Company)****BALANCE
                  SHEETS****(Stated
                  in U.S. Dollars)**




**(Unaudited)****AUGUST
                  31,**
              
              **NOVEMBER
                  30,****2006**
              
              **2005****ASSETS**Current
                  AssetsCash
                  and cash equivalents
              
              $
              34,781
              
              $
              777Refundable
                  deposit (Note 4)
              
              
              175,011
              
              
              -Prepaid
                  insurance, rentals, other
              
              
              338,578
              
              
              1,330Other
                  current assets
              
              
              25,170
              
              
              -Total
                  Current Assets
              
              
              573,540
              
              
              2,107Office
                  Equipment, net
              
              
              11,892
              
              
              -Deferred
                  acquisition costs
              
              
              292,444
              
              
              -Total
                  Assets
              
              $
              877,876
              
              $
              2,107**LIABILITIES**Current
                  LiabilitiesAccounts
                  payable and accrued liabilities
              
              $
              203,769
              
              $
              10,515Accrued
                  interest
              
              
              29,740
              
              
              5,435Advances
                  payable (Note 5)
              
              
              -
              
              
              535Notes
                  payable (Note 6)
              
              
              1,636,019
              
              
              90,926Total
                  Current Liabilities
              
              
              1,869,528
              
              
              107,411Long-term
                  liabilities
              
              
              -
              
              
              -Total
                  Liabilities
              
              
              1,869,528
              
              
              107,411**STOCKHOLDERS’
                  DEFICIENCY**Capital
                  StockAuthorized:100,000,000
                  common shares, par value $0.001 per share10,000,000
                  preferred shares, par value $0.001 per shareIssued
                  and outstanding:33,137,500
                  common shares
              
              
              33,138
              
              
              33,138Additional
                  paid-in capital
              
              
              157,712
              
              
              40,312Deficit
                  Accumulated During The Development Stage
              
              
              (1,182,502
              )
              
              (178,754
              )Total
                  Stockholders’ Deficiency
              
              
              (991,652
              )
              
              (105,304
              )Total
                  Liabilities and Stockholders Deficiency
              
              $
              877,876
              
              $
              2,107


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


2
 **MANCHESTER,
        INC**


**(A
        Development Stage Company)**
 **INTERIM
        STATEMENTS OF OPERATIONS** **(Unaudited)** **(Stated
            in U.S. Dollars)**
 **CUMULATIVE****PERIOD
                    FROM****INCEPTION****THREE
                    MONTHS ENDED**
                
                **NINE
                    MONTHS ENDED**
                
                **AUGUST
                    27,****AUGUST
                    31,**
                
                **AUGUST
                    31,**
                
                **2002
                    TO****2006**
                
                **2005**
                
                **2006**
                
                **2005**
                
                **AUGUST
                    31, 2006****Revenue**
                
                $
                -
                
                $
                -
                
                $
                -
                
                $
                -
                
                $
                -**Expenses**Compensation
                    and benefits
                
                
                258,437
                
                
                -
                
                
                513,126
                
                
                -
                
                
                513,126Consulting
                    fees
                
                
                22,368
                
                
                -
                
                
                66,643
                
                
                -
                
                
                99,153Insurance
                    expense
                
                
                79,651
                
                
                -
                
                
                79,651
                
                
                -
                
                
                80,962Depreciation
                
                
                1,201
                
                
                -
                
                
                2,512
                
                
                -
                
                
                1,201Advertising
                    and promotion
                
                
                -
                
                
                -
                
                
                499
                
                
                -
                
                
                3,619Interest
                    on notes payable
                
                
                27,220
                
                
                1,343
                
                
                35,944
                
                
                3,987
                
                
                41,379Mineral
                    property exploration expenditures
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                12,000Mineral
                    property option payments
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                10,000Office
                    and sundry
                
                
                7,948
                
                
                703
                
                
                10,846
                
                
                805
                
                
                14,681Rent
                
                
                8,022
                
                
                -
                
                
                18,137
                
                
                -
                
                
                18,137Professional
                    fees
                
                
                167,655
                
                
                4,582
                
                
                252,072
                
                
                36,561
                
                
                359,142Transfer
                    agent and filing fees
                
                
                3,904
                
                
                -
                
                
                7,998
                
                
                2,600
                
                
                19,583Travel
                    and entertaining
                
                
                8,936
                
                
                -
                
                
                16,396
                
                
                -
                
                
                16,396**Loss
                    before the following**
                
                
                585,342
                
                
                6,628
                
                
                1,003,824
                
                
                43,953
                
                
                1,189,379Interest
                    earned
                
                
                (25
                )
                
                (87
                )
                
                (76
                )
                
                (233
                )
                
                (312
                )Forgiveness
                    of advances payable
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (6,565
                )**Net
                    Loss For The Period**
                
                $
                585,317
                
                $
                6,541
                
                $
                1,003,748
                
                $
                43,720
                
                $
                1,182,502**Basic
                    And Diluted Loss Per Share**
                
                $
                (0.02
                )
                $
                (0.00
                )
                $
                (0.03
                )
                $
                (0.00
                )
                $
                (0.04
                )**Weighted
                    Average Number Of Shares****Outstanding**
                
                
                33,137,500
                
                
                33,137,500
                
                
                33,137,500
                
                
                33,137,500
                
                
                33,137,500






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




3


MANCHESTER,
      INC **(A
          Development Stage Company)**


**INTERIM
        STATEMENTS OF CASH FLOWS** **(Unaudited)**
 (Stated in U.S. Dollars)  **CUMULATIVE****PERIOD
                    FROM******
                
                
                
                
                
                
                
                **INCEPTION****THREE
                    MONTHS ENDED**
                
                **NINE MONTHS****ENDED**
                
                **AUGUST
                    27,****AUGUST
                    31,**
                
                **AUGUST
                    31,**
                
                **2002
                    TO****2006**
                
                **2005**
                
                **2006**
                
                **2005**
                
                **AUGUST
                    31, 2006****Cash
                    Flows From Operating Activities**Net
                    loss for the period
                
                $
                (585,317
                )
                $
                (6,541
                )
                $
                (1,003,748
                )
                $
                (43,720
                )
                $
                (1,182,502
                )**Adjustments
                    To Reconcile Net Loss To Net Cash Provided By (Used In) Operating
                    Activities**Depreciation
                
                
                1,201
                
                
                -
                
                
                2,512
                
                
                -
                
                
                2,512Share
                    capital issued
                
                
                -
                
                
                -
                
                
                117,400
                
                
                -
                
                
                -(Increase)
                    decrease in refundable deposit
                
                
                74,989
                
                
                -
                
                
                (175,011
                )
                
                -
                
                
                (175,011
                )Increase
                    in prepaid expenses
                
                
                (327,078
                )
                
                (4,449
                )
                
                (337,248
                )
                
                (3,799
                )
                
                (338,578
                )Increase
                    in other current assets
                
                
                (22,146
                )
                
                -
                
                
                (25,170
                )
                
                -
                
                
                (25,170
                )Increase
                    (decrease) in accounts payable and accrued liabilities
                
                
                101,918
                
                
                (1,152
                )
                
                193,254
                
                
                (1,169
                )
                
                203,769Increase
                    in accrued interest
                
                
                15,580
                
                
                1,343
                
                
                24,305
                
                
                3,987
                
                
                29,740Net
                    cash used in operating activities
                
                
                (740,853
                )
                
                (10,799
                )
                
                (1,321,106
                )
                
                (44,701
                )
                
                (1,485,240
                )**Cash
                    Flows From Investing Activities**Purchase
                    of office equipment
                
                
                -
                
                
                -
                
                
                (14,404
                )
                
                -
                
                
                (14,404
                )Increase
                    in deferred acquisition costs
                
                
                (85,517
                )
                
                -
                
                
                (292,444
                )
                
                -
                
                
                (292,444
                )Net
                    cash used by investment activities
                
                
                (85,517
                )
                
                -
                
                
                (306,848
                )
                
                -
                
                
                (306,848
                )**Cash
                    Flows From Financing Activities**Advances
                    from notes payable
                
                
                745,355
                
                
                1,463
                
                
                1,545,093
                
                
                1,463
                
                
                1,636,019Advances
                    payable
                
                
                -
                
                
                -
                
                
                (535
                )
                
                -
                
                
                -Share
                    capital issued
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                190,850Net
                    cash provided by financing activities
                
                
                745,355
                
                
                1,463
                
                
                1,661,958
                
                
                1,463
                
                
                1,826,869**Net
                    Increase (Decrease) In Cash**
                
                
                (81,015
                )
                
                (9,336
                )
                
                34,004
                
                
                (43,238
                )
                
                34,781**Cash
                    at beginning of period**
                
                
                115,796
                
                
                31,519
                
                
                777
                
                
                65,421
                
                
                -**Cash
                    at end of period**
                
                $
                34,781
                
                $
                22,183
                
                $
                34,781
                
                $
                22,183
                
                $
                34,781Supplemental
                    Disclosure Of Cash Flow InformationInterest
                    paid
                
                $
                -
                
                $
                -
                
                $
                -
                
                $
                -
                
                $
                -Income
                    taxes paid
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -




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







4


**MANCHESTER
      INC.**


**(A
      Development Stage Company)**





**NOTES
      TO INTERIM FINANCIAL STATEMENTS**





**AUGUST** **31, 2006 AND 2005**


**(Unaudited)**


**(Stated
      in U.S. Dollars)**








**1.** **BASIS
          OF PRESENTATION**




The
      unaudited financial information furnished herein reflects all adjustments,
      which
      in the opinion of management are necessary to fairly state the Company’s
      financial position and the results of its operations for the periods presented.
      This report on Form 10-Q should be read in conjunction with the Company’s
      financial statements and notes thereto included in the Company’s audited
      financial statements for the fiscal year ended November 30, 2005. The Company
      assumes that the users of the interim financial information herein have read
      or
      have access to the audited financial statements for the preceding fiscal year
      and that the adequacy of additional disclosure needed for a fair presentation
      may be determined in that context. Accordingly, footnote disclosure which would
      substantially duplicate the disclosure contained in the Company’s audited
      financial statements for the fiscal year ended November 30, 2005 has been
      omitted. The results of operations for the three-month and nine-month periods
      ended August 31, 2006 are not necessarily indicative of results for the entire
      year ending November 30, 2006.





**2.**  **NATURE
      OF OPERATIONS**


a)
              Organization


The
      Company was incorporated in the State of Nevada, U.S.A., on August 27, 2002.
      The
      Company is
      a
      development stage company as defined by Statement of Financial Accounting
      Standards (“SFAS”) No. 7. The Company had previously been in the mining and
      exploration stage since its formation and did not realize any revenues from
      its
      planned operations. Subsequently, the Company changed its current focus of
      acquiring and managing “Buy-Here, Pay-Here” automobile dealerships.





b)
            Going
                Concern





The
      accompanying interim financial statements have been prepared assuming the
      Company will continue as a going concern.





As
      shown
      in the accompanying interim financial statements, the Company has incurred
      a net
      loss of $1,182,502 for the period from August 27, 2002 (inception) to August
      31,
      2006, and has no revenues. The future of the Company is dependent upon its
      ability to obtain financing and upon future profitable operations from the
      development of the “Buy-Here, Pay-Here” automobile dealership business. The
      interim financial statements do not include any adjustments relating to the
      recoverability and classification of recorded assets, or the amounts of and
      classification of liabilities that might be necessary in the event the Company
      cannot continue in existence.





5


**MANCHESTER
      INC.**


**(A
      Development Stage Company)**





**NOTES
      TO INTERIM FINANCIAL STATEMENTS**





**AUGUST** **31, 2006 AND 2005**


**(Unaudited)**


**(Stated
      in U.S. Dollars)**








**3.** **SIGNIFICANT
          ACCOUNTING POLICIES**





The
      interim financial statements of the Company have been prepared in accordance
      with generally accepted accounting principles in the United States. Because
      a
      precise determination of many assets and liabilities is dependent upon future
      events, the preparation of interim financial statements for a period necessarily
      involves the use of estimates which have been made using careful
      judgement.





The
      interim financial statements have, in management’s opinion, been properly
      prepared within reasonable limits of materiality and within the framework of
      the
      significant accounting policies summarized below:





a)
            Deferred
                Acquisition Costs





Acquisition
      costs to acquire “Buy-Here, Pay-Here” automobile dealerships are
      capitalized.





b)
            Office
                Equipment





Office
      Equipment is recorded at cost and is depreciated over its estimated useful
      life
      at the following rate:





Office
              Equipment
            3 years straight line.





c)
            Use
                of Estimates





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





d)
            Income
                Taxes





The
      Company provides for income taxes as required by Statement of
      Financial Accounting Standards No. 109 - “Accounting for Income Taxes” (SFAS
      109). This standard requires the use of an asset and liability approach for
      financial accounting, and reporting on income taxes. If it is more likely than
      not that some portion or all of a deferred tax asset will not be realized,
      a
      valuation allowance is recognized





e)
            Foreign
                Currency Translation





The
      Company’s functional currency is the U.S. dollar. Foreign currency balances are
      translated into U.S. dollars as follows:





i)
            monetary
                items at the rate prevailing at the balance sheet
                date;


ii)
            non-monetary
                items at the historical exchange
                rate;


iii)
            revenue
                and expense at the rate in effect at the time of the
                transaction.







6


**MANCHESTER
      INC.**


**(A
      Development Stage Company)**





**NOTES
      TO INTERIM FINANCIAL STATEMENTS**





**AUGUST** **31, 2006 AND 2005**


**(Unaudited)**


**(Stated
      in U.S. Dollars)**








**3.** **SIGNIFICANT
      ACCOUNTING POLICIES** **(continued)**





f)
            Stock
                Options





Effective
      March 1, 2006, the Company adopted the Financial Accounting Standards Board's
      revised Statement of Financial Accounting Standards No. 123 (FAS 123R),
“Share-based Payment.” FAS 123R requires compensation costs related to
      share-based payments (stock options) to be recognized in the income statement
      over the requisite service and vesting periods. The amount of the compensation
      cost is to be measured based on the grant-date fair value of the instrument
      issued. FAS 123R is effective for awards granted or modified after the date
      of
      adoption.





g)
            Basic
                and Diluted Loss Per Share





In
      accordance with SFAS No. 128 - “Earnings Per Share”, the basic earning/loss per
      common share is computed by dividing net loss available to common stockholders
      by the weighted average number of common shares outstanding. Diluted loss per
      common share is computed similar to basic loss per common 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. At August 31, 2006, the Company's
      common stock equivalents that were anti-dilutive are discussed in Note
      7.





**4.**  **REFUNDABLE
      DEPOSIT**





The
      Company paid a $250,000 refundable deposit (the “Deposit”) to Surge Capital
      (“Surge”) for the purpose of assuring coverage of future fees, costs, expenses
      and disbursements expected to be incurred by Surge in connection with Surge’s
      consideration of providing the Company with a senior secured revolving financing
      facility (“Due Diligence Expenses”). Through the end of the third quarter, Surge
      had incurred a total of $74,989 of Due Diligence Expenses which Surge withdrew
      from the Deposit as such expenses were incurred. Prior to the end of the third
      quarter, the Company had decided to pursue alternative sources of senior secured
      revolving credit facilities. As the Company determined that it was more likely
      than not that it would ultimately use one of these alternative sources of senior
      secured revolving financing the Due Diligence Expenses incurred by Surge through
      the end of the third quarter were expensed in the quarter. The Company plans
      to
      request Surge to return the balance of any unused amounts from the Deposit
      to
      the Company.





**5.**  **ADVANCES
      PAYABLE**





Advances
      payable are unsecured, bear no interest and have no fixed terms of repayment.
      As
      of August 31, 2006, $nil (2005 - $535) was owing to a director of the
      Company.






7


**MANCHESTER
      INC.**


**(A
      Development Stage Company)**





**NOTES
      TO INTERIM FINANCIAL STATEMENTS**





**AUGUST** **31, 2006 AND 2005**


**(Unaudited)**


**(Stated
      in U.S. Dollars)**











**6.**  **NOTES
      PAYABLE**





As
      of
      August 31, 2006, notes payable in the amount of $1,636,019 were outstanding.





One
      note
      payable, dated June 27, 2006 (the “Amended and Restated Note”), is to Mr. Robert
      Sim. Mr. Sim is not a related party of the Company. The Amended and Restated
      Note is unsecured, bears interest at 8% per annum and has a fixed repayment
      date
      of June 30, 2007. As of August 31, 2006, the amount of the principal and accrued
      interest on the Amended and Restated Note was $101,306.





The
      Amended and Restated Note replaced a previous note with Mr. Sim dated November
      24, 2004 (the “2004 Note”). The 2004 Note was unsecured, bore interest at 6% per
      annum and was repayable on December 24, 2005. The Company was in default with
      respect to the 2004 Note from December 24, 2005 until June 27, 2006. Under
      the
      terms of the Amended and Restated Note, Mr. Sim waived the Company’s default of
      the 2004 Note. Pursuant to the Amended and Restated Note, all principal under
      the 2004 Note, plus Mr. Sim’s subsequent loans to the Company were deemed to
      have accrued interest at an annual rate of 6% through May 31, 2006. All such
      amounts due at May 31, 2006 were aggregated and capitalized into the Amended
      and
      Restated Note in principal amount of $99,304, bearing interest as of June 1,
      2006 at 8% per annum. In the event of any default under the Amended and Restated
      Note, interest due will accrue at an annual rate of 15%.





A
      second
      note payable, dated June 19, 2006 (the “First Insurance Note”) was to First
      Insurance Funding Corp. of California. The First Insurance Note is unsecured,
      bears interest at 7.65% per annum and is due in seven equal installments of
      $42,015 beginning July 15, 2006. The proceeds from the First Insurance Note
      were
      used to obtain Directors’ and Officers’ insurance coverage for the company. As
      of August 31, 2006, the amount of the principal and accrued interest on the
      First Insurance Note was $206,806.





As
      of August
      31, 2006, the Company had twelve notes outstanding to Brazos Equities LLC in
      various amounts ranging from $19,000 to $290,000. Brazos Equities LLC is not
      a
      related party to the Company. With accrued interest, the total amount owed
      by
      the Company to Brazos Equities LLC was $1,356,398. These notes are unsecured,
      bear interest at 6% and are payable on demand.


**AUGUST
                  31,**
              
              **NOVEMBER
                  30,****2006**
              
              **2005**Current
                  portion notes payable:Brazos
                  Equities LLC
              
              $
              1,330,600
              
              $
              -First
                  Insuance Corp. of California
              
              
              206,115Mr.
                  Robert Sim
              
              
              99,304
              
              
              90,926Total
                  current portion notes payable
              
              
              1,636,019
              
              
              90,926Long-term
                  portion notes payable
              
              
              -
              
              
              -Total
                  notes payable
              
              $
              1,636,019
              
              $
              90,926





8


**MANCHESTER
      INC.**


**(A
      Development Stage Company)**





**NOTES
      TO INTERIM FINANCIAL STATEMENTS**





**AUGUST** **31, 2006 AND 2005**


**(Unaudited)**


**(Stated
      in U.S. Dollars)**








**7.**  **STOCK
      OPTIONS**





The
      following table summarizes information about stock options for the nine months
      ended August 31, 2006.





AverageExercisePrice
              
              Shares
                  exercisable per yearStock
                  options:
              
              Shares
              
              per
                  Share
              
              2006
              
              2007
              
              2008
              
              2009Exercisable
                  at August 31, 2006
              
              
              50,000
              
              $
              4.39
              
              
              50,000Remaining
                  options to be vested
              
              
              500,000
              
              $
              4.47
              
              
              125,000
              
              
              208,333
              
              
              83,333
              
              
              83,334Total
                  shares outstanding at August 31, 2006
              
              
              550,000
              
              $
              4.46
              
              
              175,000
              
              
              208,333
              
              
              83,333
              
              
              83,334


The
          estimated weighted average fair value of options granted using the Black-Scholes
          option-pricing model was $2.63 per share for the nine months ended August
          31,
          2006. The total compensation expense recorded for the nine months ended
          August
          31, 2006 as a result of Financial Accounting Standards No. 123 (FAS 123R),
          “Share-based Payment” FAS 123R was $117,400. There were no options outstanding
          at August 31, 2005 .
 Assumptions:
                
                
                ParticularsDividend
                    yield
                
                
                -
                %Risk-free
                    interest rate
                
                
                4.94
                %Expected
                    volatility
                
                
                102.18
                %Expected
                    life
                
                
                2
                    - 3 years


**8.**  **SUBSEQUENT
      EVENTS**


a)
              Subsequent
                    toAugust
                    31, 2006, the Company received additional advances in the amount
                    of
                    $254,000 which are unsecured and bear interest at 6% per annum.
 b)
                Subsequent
                      to August 31, 2006, the Company entered into the following
                      transactions:
 ***$300
          Million Commitment***





The
      Company executed a commitment letter dated September 28, 2006 (the “Commitment”)
      with Palm Beach Multi-Strategy Fund L.P. (the “Lender”) pursuant to which the
      Lender committed to provide up to $300 million in revolving warehouse financings
      (the “Financings”) for a roll up strategy to acquire captive subprime
      Buy-Here/Pay-Here auto receivables origination and collection businesses
      nationwide (each, an “Acquisition”). There is no limit to the number of
      Financings. Each Acquisition and Financing pursuant to the Commitment shall
      be
      subject to the Lender’s approval.







9


**MANCHESTER
      INC.**


**(A
      Development Stage Company)**





**NOTES
      TO INTERIM FINANCIAL STATEMENTS**





**AUGUST** **31, 2006 AND 2005**


**(Unaudited)**


**(Stated
      in U.S. Dollars)**








**8.**  **SUBSEQUENT
      EVENTS (continued)**





Pursuant
      to the Commitment, the Company may pay the Lender a total commitment fee of
      $6
      million (the  “Commitment
      Fee”) to the extent that the entire Commitment is funded. In addition, the
      Company has  agreed
      to
      grant the Lender warrants entitling the holder to acquire up to four million
      shares of the  Company’s
      common stock (the “Warrants”). The Warrants are exercisable at a strike price of
      $3.00 per  share.
      The Company will grant certain registration and anti-dilution rights to the
      Lenders under the  Warrants,
      provided that the Warrants will not be exercisable for a minimum period of
      60
      days following  the
      date
      of closing of the Commitment, together with other rights and restrictions to
      be
      defined in the  definitive
      Warrant agreements, as yet to be executed as of the date of this Form 10-Q.





At
      the
      invitation of the Company, Palm Beach Links Capital, LP (the general partner
      of
      the Lender) has  agreed
      to
      act as the exclusive arranger for any asset-backed securitization, sale or
      other
      disposition of any  receivables
      undertaken by the Company for an arrangement fee of 3% of the receivables
      securitized, sold or  disposed
      of. The Commitment shall terminate on September 28, 2009 or such earlier date
      specified by the  Lender
      following a breach by the Company of the terms of the Commitment or an event
      of
      default under  any
      of
      the advances made pursuant to the Commitment.





This
      Commitment replaces the commitment the Company previously obtained from another
      financing  source.





***$75
      Million Loan Agreement***





In
      connection with the Commitment described above, Nice Cars Funding, LLC, a
      wholly-owned Company  subsidiary
      (the “Borrower”) entered into a loan agreement with the Lender. Pursuant to a
      Loan and  Security
      Agreement which was entered into on September 28, 2006 (the “Loan Agreement”),
      between the  Borrower,
      the Lender and the Bank of New York, as Collateral Agent (the “Collateral
      Agent”), the Lender  has
      agreed to loan the Borrower an amount of up to $75 million. The Company has
      initially drawn  approximately
      $54 million and may request additional draws on the basis of eligible
      collateralized  receivables
      under the terms of the Loan Agreement (collectively, the “Loan”). The Loan
      Agreement  matures
      on September 28, 2009 unless terminated earlier in accordance with its
      terms.





Interest
      on the Loan will accrue at an interest rate equal to the lesser of: (i) the
      greater of (x) prime rate (as  determined
      daily) plus 9% or (y) 17% per annum; or (ii) the maximum rate which may be
      legally charged  under
      applicable usury law.





In
      connection with the closing of the Loan, the Company has paid the Lender one
      million dollars as a  portion
      of the total Commitment Fee. In addition, the Company has paid all fees, costs,
      expenses and  disbursements
      of the Lender in connection with legal services, origination costs, due
      diligence, closing of  the
      Loan
      and initial interest, which in the aggregate was approximately one million
      dollars.







10


**MANCHESTER
      INC.**


**(A
      Development Stage Company)**





**NOTES
      TO INTERIM FINANCIAL STATEMENTS**





**AUGUST** **31, 2006 AND 2005**


**(Unaudited)**


**(Stated
      in U.S. Dollars)**








**8.**  **SUBSEQUENT
      EVENTS (continued)**





The
      Company and its subsidiaries (collectively, the “Guarantors”) have each agreed
      to guaranty the Loans  made
      under the Loan Agreement up to an amount not exceeding ten percent of the amount
      of the Loan  outstanding
      from time to time, pursuant to the terms of a Guaranty which closed September
      28, 2006. The  Guarantors
      have also entered into a Security Agreement with the Lender and the Collateral
      Agent pursuant  to
      which
      each of the Guarantors has granted to the Collateral Agent and its successors
      and assigns, for the  security
      and benefit of the Lender, a first priority security interest in and mortgage
      lien on all of the  respective
      assets of the Guarantors.





In
      connection with the Loan Agreement, the Borrower, the Company and certain of
      its
      other subsidiaries  have
      entered into a Sale and Servicing Agreement (the “Sale and Servicing
      Agreement”), pursuant to which  Nice
      Cars
      Acceptance AcquisitionCo, Inc. (a subsidiary of the Company now doing business
      as Nice Cars  Capital
      Acceptance Corporation), has agreed to sell all  of
      its
      rights to car sales contract receivables (the “Receivables”) to the Borrower.
      Pursuant to this Sale and  Servicing
      Agreement, the Company shall serve as the servicer for all Receivables, acting
      as agent, and shall  manage,
      service and make collections on the Receivables. The Company has delegated
      its
      duties as  servicer
      to Nice Cars Capital Acceptance Corporation as sub-servicer. The Company and
      Nice Cars  Capital
      Acceptance Corporation have agreed to comply with the terms and conditions
      of a
      servicing  guideline
      and a credit and collection policy provided by the Lender.





Under
      the
      terms of its agreements with the Lender, the Company will apply for listing
      of
      its common stock  on
      the
      Nasdaq stock market.





***Acquisition
      of Nice Cars, Inc and Nice Cars Capital Acceptance Corporation***





On
      October 4, 2006, Manchester Inc. (the “Company”) entered into two agreements for
      the acquisition of a  Buy-Here/Pay-Here
      used car sales enterprise. The transaction consisted of the acquisition of
      Nice
      Cars,  Inc.,
      a
      Buy-Here/Pay-Here car sales company and Nice Cars Capital Acceptance
      Corporation, an affiliate  credit
      acceptance company (collectively, the “Nice Cars Acquisition”).





On
      October 4, 2006, the Company paid an aggregate of $25 million and issued 6.25
      million shares of the  Company’s
      common stock to acquire Nice Cars, Inc. and Nice Cars Capital Acceptance
      Corporation. As  part
      of
      the purchase price, the Company also agreed to the assumption of certain
      obligations and liabilities  as
      discussed in further detail below. The Company acquired Nice Cars, Inc. and
      Nice
      Cars Capital  Acceptance
      Corporation pursuant to the terms of two share purchase and exchange agreements  (respectively,
      the “Nice Cars Operations Acquisition Agreement” and the “Nice Cars Acceptance  Acquisition
      Agreement”, and collectively, the “Acquisition Agreements”).





The
      Company intends to continue the business of Nice Cars, Inc. and Nice Cars
      Capital Acceptance  Corporation
      through the Company’s wholly owned subsidiaries, as managed by the acquired
      companies’  former
      owners, Mr. Raymond Lyle and his spouse, Ms. Victoria E. Lyle.





11


**MANCHESTER
      INC.**


**(A
      Development Stage Company)**





**NOTES
      TO INTERIM FINANCIAL STATEMENTS**





**AUGUST** **31, 2006 AND 2005**


**(Unaudited)**


**(Stated
      in U.S. Dollars)**








**8.**  **SUBSEQUENT
      EVENTS (continued)**





The
      Company’s wholly owned subsidiary, Nice Cars Operations AcquisitionCo, Inc.,
      acquired all of the  issued
      and outstanding shares of Nice Cars, Inc. pursuant to the terms and conditions
      of the Nice Cars  Operations
      Acquisition Agreement. The parties to the agreement included Raymond Lyle and
      Victoria  Lyle
      as
      the shareholders of Nice Cars Inc. (the “NCI Shareholders”), Nice Cars, Inc.,
      the Company and  Nice
      Cars
      Operations AcquisitionCo, Inc. In exchange for all of the Nice Cars, Inc.
      shares, Nice Cars  Operations
      AcquisitionCo, Inc. issued (i) 618,750 shares of the Company’s common stock to
      the NCI  Shareholders;
      and (ii) made a payment of $2,475,000 to the NCI Shareholders. The Company
      utilized  funds
      from the Loan Agreement to pay the cash portion of the purchase price for Nice
      Cars, Inc.





The
      Company’s wholly owned subsidiary, Nice Cars Acceptance AcquisitionCo, Inc.,
      acquired all of the  issued
      and outstanding shares of Nice Cars Capital Acceptance Corporation pursuant
      to
      the terms and  conditions
      of the Nice Cars Acceptance Acquisition Agreement. The parties to the agreement
      included  Raymond
      Lyle and Victoria Lyle as shareholders of Nice Cars Capital Acceptance
      Corporation (the “NCA  Shareholders”
      and together with the NCI Shareholders, the “NC Shareholders”), Nice Cars
      Capital  Acceptance
      Corporation, the Company and Nice Cars Acceptance AcquisitionCo, Inc. In
      exchange for all  of
      the
      issued and outstanding shares of Nice Cars Capital Acceptance Corporation,
      Nice
      Cars Acceptance  AcquisitionCo,
      Inc. (i) paid $15,345,000; (ii) issued 5,568,750 shares of the Company’s common
      stock;  and
      (iii)
      issued a purchase note from the Company and its subsidiaries in the principal
      amount of  $6,930,000
      payable in one year, or earlier as the Company obtains supplemental financing
      for its inventory  of
      cars,
      derives higher advance rates from the Lenders or closes a securitized public
      offering of receivables.  The
      Company utilized funds from the Loan Agreement, to pay the cash portion of
      the
      purchase price for  Nice
      Cars
      Capital Acceptance Corporation.





The
      Company, as part of the purchase price consideration for the acquired companies,
      has also issued a  note
      to
      the NC Shareholders in respect of the assumption of tax obligations for Nice
      Cars, Inc. and Nice  Cars
      Capital Acceptance Corporation in respect of fiscal years 2005 and 2006 through
      October 4, 2006,  which
      obligations have not yet been definitively determined but are not expected
      to
      exceed, in the  aggregate
      with respect to both entities, approximately $1.6 million, plus gross-up amounts
      to cover the  additional
      taxes levied on the NC Shareholders in respect of such tax payments on their
      behalf. The tax  reimbursement
      note will be paid as and when such tax obligations are calculated, due and
      payable by the  NC
      Shareholders. In addition, the Company has issued a note to the NC Shareholders
      payable within thirty  days
      after closing to reimburse the NC Shareholders for loans made to Nice Cars,
      Inc.
      and Nice Cars  Capital
      Acceptance Corporation in the aggregate amount of approximately $625,000. In
      connection with  the
      closing of the acquisition of Nice Cars, Inc. and Nice Capital Acceptance
      Corporation, in addition to  payments
      made to the Lenders described above, the Company made payments to third  parties
      on behalf of the NC Shareholders in the amount of $250,000 and issued 62,500
      shares of the  Company’s
      common stock which was deemed to be within the total of $25 million and 6.25
      million shares  of
      Company common stock paid as consideration for the acquisition. In connection
      with the closing of the  acquisitions,
      the Company paid down in full and closed out the prior credit facilities
      utilized by the Nice  Cars,
      Inc. and Nice Capital Acceptance Corporation.







12


**MANCHESTER
      INC.**


**(A
      Development Stage Company)**





**NOTES
      TO INTERIM FINANCIAL STATEMENTS**





**AUGUST** **31, 2006 AND 2005**


**(Unaudited)**


**(Stated
      in U.S. Dollars)**








**8.**  **SUBSEQUENT
      EVENTS (continued)**





The
      NC
      Shareholders have been granted limited piggy-back registration rights in
      connection with the  shares
      of
      Company common stock issued to them in consideration for the acquisition of
      Nice
      Cars, Inc. and  Nice
      Cars
      Capital Acceptance Corporation.  The NC Shareholders do not have demand
      registration rights.





Following
      the effectiveness of the acquisition of Nice Cars, Inc., Nice Cars Operations
      AcquisitionCo, Inc.  filed
      a
      Plan and Agreement of Merger with the Secretary of State of Delaware and Nice
      Cars, Inc. was  merged
      out of existence, and a corresponding certificate of merger has been filed
      in
      Georgia and Tennessee  to
      the
      same effect. Following the effectiveness of the acquisition of Nice Cars Capital
      Acceptance  Corporation,
      Nice Cars Acceptance AcquisitionCo, Inc. filed a Plan and Agreement of Merger
      with the  Secretary
      of State of Delaware and Nice Cars Capital Acceptance Corporation was merged
      out
      of  existence,
      and a corresponding certificate of merger has been filed in Georgia and
      Tennessee to the same  effect.





In
      order to
      provide continuity with respect to retail marketing and branding, Nice
      Cars Operations  AcquisitionCo,
      Inc. has registered to do business in the States of Georgia and Tennessee as
      “Nice Cars,  Inc.”
and
      Nice Cars Acceptance AcquisitionCo, Inc. expects to register to do business
      in
      the States of  Georgia
      and Tennessee as “Nice Cars Capital Acceptance Corporation.”





***Further
      Information Regarding the Financing Commitment, the Loan and the Nice Cars
      Acquisitions***





The
      foregoing summary of the Company's Financing Commitment, the Loan and the
      acquisition of the  Nice
      Cars
      companies is not complete and is qualified in its entirety by reference to
      the
      Company's Form 8-  K
      filed
      with the U.S. Securities and Exchange Commission on October 11, 2006, including
      audited  financial
      statements of the acquired companies and pro forma financial statements
      pertaining to the  acquired
      companies.





13


**Item
      2.**  **Management’s
      Discussion and Analysis of Financial Conditions and Results of
      Operations**




Explanatory
      Note:




This
      report on Form 10-Q presents financial statements
      (unaudited) and disclosures for the Company’s third-quarter ended August 31,
      2006 without giving effect to the Company’s financing and acquisition
      transactions described under Subsequent Events below.




**Forward
      Looking Statements**





The
      following discussion of the financial condition and plan of operations of
      Manchester Inc. (referred to herein as the “Company,” and “we”) should be read
      in conjunction with the financial statements and the related notes thereto included
      elsewhere in this quarterly report for the period ended August 31, 2006 (this
      "Report"). This Report contains certain forward-looking statements and the
      Company's future operating results could differ materially from those discussed
      herein. Certain statements contained in this Report, including, without
      limitation, statements containing the words "believes", "anticipates," "expects"
      and the like, constitute "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. Such forward-looking statements
      involve known and unknown risks, uncertainties and other factors which may
      cause
      the actual results, performance or achievements of the Company to be materially
      different from any future results, performance or achievements expressed or
      implied by such forward-looking statements. Given these uncertainties, readers
      are cautioned not to place undue reliance on such forward-looking statements.
      The Company disclaims any obligation to update any such factors or to announce
      publicly the results of any revisions of the forward-looking statements
      contained or incorporated by reference herein to reflect future events or
      developments.





**Plan
      of Operation**




The
      Company commenced operations as an exploration stage company.  The Company
      ceased pursuing opportunities in that field upon the lapse of certain mineral
      rights options in October 2004. The Company then changed its business plan.





During
      the period covered by this Report, the Company was involved in planning for
      the
      acquisition of a “Buy-Here Pay-Here” automobile dealership business. Subsequent
      to the period covered by this report, such a business was acquired.





**Liquidity**





At
      August
      31, 2006, the Company had cash of $34,781.





**Capital
      Resources**





At
      August
      31, 2006, the Company had total liabilities of $1,869,528, of which $1,636,019
      were notes payable. The Company is currently negotiating third-party financing
      for purposes of both expanding its business and re-paying these
      liabilities.





**Results
      of Operations for the three months ended August 31, 2006**





We
      did
      not earn any revenues during the three-month period ending August 31, 2006.
       We incurred net operating losses in the amount of $585,317 for the
      three-month period ended August 31, 2006, as compared to $6,541 of net operating
      losses for the comparable period of the last fiscal year. The increase in net
      losses in the amount of $578,776 resulted primarily from increases in
      compensation and benefits, professional fees and insurance expense. The
      compensation and benefits were incurred as the professional management personnel
      the Company secured during the three months ended May 31, 2006 to prepare the
      Company for the planned acquisitions of the “Buy-Here, Pay-Here” automobile
      dealership business received compensation and benefits for a full three-month
      period. Professional fees were incurred primarily to support the increased
      business activity and public filings related to the development of the
“Buy-Here, Pay-Here” automobile dealership business including due diligence
      expenses incurred by a third-party source for a senior secured revolving
      financing facility. Insurance expense increased due to the acquisition of an
      aggregate of $30 million of directors’ and officers’ insurance from a group of
      insurers during the three-month period.





14


Our
      operating expenses were comprised of compensation and benefits of $258,437,
      professional fees of $167,655, insurance expenses of $79,651, interest on notes
      payable of $27,220, consulting fees of $22,368, and total other expenses of
      $30,011.





At
      August
      31, 2006, we had total assets of $877,876, consisting of deferred acquisition
      costs of $292,444, prepaid expenses of $338,578, a refundable deposit of
      $175,011, cash of $34,781, other current assets of $25,170 and office equipment
      net of accumulated depreciation of $11,892. At the same date, our total
      liabilities were $1,869,528 of which $1,636,019 were notes payable.





Deferred
      acquisition costs consisted primarily of audit and legal fees paid in
      conjunction with the due diligence performed relative to potential acquisitions
      in the “Buy-Here, Pay-Here” automobile dealership business. Prepaid expenses is
      primarily related to the prepayment of insurance costs associated with the
      acquisition of an aggregate of $30 million of directors’ and officers’ insurance
      from a group of insurers during the three-month period. The original amount
      of
      the refundable deposit (the “Deposit”) was $250,000. The Company paid this
      amount to Surge Capital (“Surge”) for the purpose of assuring coverage of future
      fees, costs, expenses and disbursements expected to be incurred by Surge in
      connection with Surge’s consideration of providing the Company with a senior
      secured revolving financing facility (“Due Diligence Expenses”). Through the end
      of the third quarter, Surge had incurred a total of $74,989 of Due Diligence
      Expenses which Surge withdrew from the Deposit as such expenses were incurred.
      Prior to the end of the third quarter, the Company had decided to pursue
      alternative sources of senior secured revolving credit facilities. As the
      Company determined that it was more likely than not that it would ultimately
      use
      one of these alternative sources of senior secured revolving financing the
      Due
      Diligence Expenses incurred by Surge through the end of the third quarter were
      expensed in the quarter. The Company plans to request Surge to return the
      balance of any unused amounts from the Deposit to the Company.





**Off-Balance
      Sheet Arrangements**





The
      Company is not a party to any off-balance sheet arrangements.





**Tabular
      Disclosure of Contractual Obligations**


Payments
                  due by periodLess
              
              Greaterthan
                  1
              
              than
                  1Total
              
              year
              
              yearNotes
                  payable at November 30, 2005
              
              $
              90,926
              
              $
              90,926
              
              $
              -Notes
                  payable at August 31, 2006 (See note)
              
              $
              1,636,019
              
              $
              1,636,019
              
              $
              -





**Subsequent
      Events**





***$300
      Million Commitment***





On
      September 29, 2006, the Company executed a commitment letter dated September
      28,
      2006 (the “Commitment”) with Palm Beach Multi-Strategy Fund L.P. (the “Lender”)
      pursuant to which the Lender committed to provide up to $300 million in
      revolving warehouse financings for a roll up strategy to acquire captive
      subprime Buy-Here/Pay-Here auto receivables origination and collection
      businesses nationwide.





***$75
      Million Loan Agreement***





In
      connection with the Commitment described above, Nice Cars Funding, LLC, a
      wholly-owned Company subsidiary (the “Borrower”) entered into a loan agreement
      with the Lender. Pursuant to a Loan and Security Agreement which was entered
      into on September 28, 2006 (the “Loan Agreement”), the Lender has agreed to loan
      the Borrower an amount of up to $75 million. The Company has initially drawn
      approximately $54 million and may request additional draws on the basis of
      eligible collateralized receivables under the terms of the Loan Agreement.
      The
      Loan Agreement matures on September 28, 2009 unless terminated earlier in
      accordance with its terms.





15


***Acquisition
      of Nice Cars, Inc and Nice Cars Capital Acceptance Corporation***





On
      October 4, 2006, Manchester Inc. (the “Company”) entered into two agreements for
      the acquisition of a Buy-Here/Pay-Here used car sales enterprise. The
      transaction consisted of the acquisition of Nice Cars, Inc., a Buy-Here/Pay-Here
      car sales company and Nice Cars Capital Acceptance Corporation, an affiliate
      credit acceptance company (collectively, the “Nice Cars Acquisition”), utilizing
      funding provided by the Lender under the Loan Agreement.





On
      October 4, 2006, the Company paid an aggregate of $25 million and issued 6.25
      million shares of the Company’s common stock to acquire Nice Cars, Inc. and Nice
      Cars Capital Acceptance Corporation. As part of the purchase price, the Company
      also agreed to the assumption of certain obligations and
      liabilities. The
      Company intends to continue the business of Nice Cars, Inc. and Nice Cars
      Capital Acceptance Corporation through the Company’s wholly owned subsidiaries,
      as managed by the acquired companies’ former owners, Mr. Raymond Lyle and his
      spouse, Ms. Victoria E. Lyle.





***Further
      Information Regarding the Financing Commitment, the Loan and the Nice Cars
      Acquisitions***





The
      Company filed a Form 8-K on October 11, 2006 with the U.S. Securities and
      Exchange Commission which contained detailed information and disclosures with
      respect to the financing Commitment and the acquisition of the Nice Cars
      companies, including audited financial statements of the acquired companies
      and
      pro forma financial statements pertaining to the acquired companies.





**Item
      3.**  **Quantitative
      and Qualitative Disclosing About Market Risk**





As
      of the
      end of the Company’s most recent fiscal year, the Company had no interest rate
      risk, foreign currency exchange rate risk, commodity price risk, or other
      relevant market risks.





**Item
      4.**  **Controls
      and Procedures**





As
      of the
      end of the period covered by this report, an evaluation was carried out under
      the supervision and with the participation of the Company’s management,
      including the Company’s Acting Principal Executive Officer and Acting Principal
      Financial Officer, of the effectiveness of the Company’s disclosure controls and
      procedures, as defined in Rule 13a-15(e) promulgated under the Securities and
      Exchange Act of 1934 (the “Exchange Act”). Based on their evaluation, the
      Company’s Acting Principal Executive Officer and Acting Principal Financial
      Officer have concluded that the Company’s disclosure controls and procedures are
      effective to ensure that information required to be disclosed by the Company
      in
      reports that it files or submits under the Exchange Act is accumulated and
      communicated to the Company’s management, including the Company’s Acting
      Principal Executive Officer and Acting Principal Financial Officer, to allow
      timely decisions on required disclosures and is recorded, processed, summarized
      and reported within the time periods specified in Securities and Exchange
      Commission rules and forms.





There
      have been no changes in the Company’s internal controls over financial reporting
      during the Company’s most recently completed fiscal quarter that have materially
      affected, or are reasonably likely to materially affect, our internal controls
      over financial reporting.





16


**PART
      II:**  **OTHER
      INFORMATION**





**Item
      1.**  **Legal
      Proceedings**





The
      Company is not, and has not been during the period covered by this report,
      a
      party to any legal proceedings.





**Item
      1A.**  **Risk
      Factors**





Not
      Applicable.





**Item
      2.**  **Unregistered
      Sales of Equity Securities and Use of Proceeds**





None.





**Item
      3.**  **Defaults
      Upon Senior Securities**





None.





**Item
      4.**  **Submission
      of Matters to a Vote of Security Holders**





None.





**Item
      5.**  **Other
      Information**





None.





**Item
      6.**  **Exhibits
      and Reports on Form 8-K**





Exhibit
                No.
            
            Description
                of ExhibitsExhibit
                10.6
            
            Amended
                and Restated Promissory Note, dated as of June 27, 2006, in the amount
                of
                $99,303.73, incorporated by reference to Exhibit 10.6 to the Company's
                Quarterly Report on Form 10-QSB filed with the Securities and Exchange
                Commission on July 17, 2006.Exhibit
                10.20
            
            Promissory
                Note, dated as of March 1, 2006, issued by Manchester Inc. to Brazos
                Equities LLC in the amount of $21,500, incorporated by reference
                to
                Exhibit 10.20 to the Company’s Report on Form 8-K filed with the
                Securities and Exchange Commission on October 11, 2006.Exhibit
                10.21
            
            Promissory
                Note, dated as of July 31, 2006, issued by Manchester Inc. to Brazos
                Equities LLC in the amount of $317,500, incorporated by reference
                to
                Exhibit 10.21 to the Company’s Report on Form 8-K filed with the
                Securities and Exchange Commission on October 11, 2006.Exhibit
                10.43
            
            Promissory
                Note, dated as of August 31, 2006, issued by Manchester Inc. to Brazos
                Equities LLC in the amount of $192,000.Exhibit
                31.1
            
            Certification
                of Acting Principal Executive Officer pursuant to Section 302 of
                the
                Sarbanes-Oxley Act of 2002.Exhibit
                31.2
            
            Certification
                of Acting Principal Financial Officer pursuant to Section 302 of
                the
                Sarbanes-Oxley Act of 2002.Exhibit
                32.1
            
            Certification
                of the Acting Principal Executive Officer pursuant to 18 U.S.C. Section
                1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
                of
                2002.Exhibit
                32.2
            
            Certification
                of the Acting Principal Financial Officer pursuant to 18 U.S.C. Section
                1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
                of
                2002.






17


Reports
      on Form 8-K





June
      21, 2006





The
      Company filed a Report on Form 8-K on June 21, 2006 disclosing that on June
      20,
      2006 the Company secured an aggregate of $30 million of directors’ and officers’
insurance from a group of insurers.





July
      25, 2006





The
      Company filed a Report on Form 8-K on July 25, 2006 disclosing that on July
      20,
      2006 the Company appointed Mr. Herbert Hirsch as a Director.





On
      September 28, 2006, Mr. Hirsch resigned from the Board of Directors for personal
      reasons.





**Subsequent
      Events**





***$300
      Million Commitment***





On
      September 29, 2006, the Company executed a commitment letter dated September
      28,
      2006 (the “Commitment”) with Palm Beach Multi-Strategy Fund L.P. (the “Lender”)
      pursuant to which the Lender committed to provide up to $300 million in
      revolving warehouse financings for a roll up strategy to acquire captive
      subprime Buy-Here/Pay-Here auto receivables origination and collection
      businesses nationwide.





***$75
      Million Loan Agreement***





In
      connection with the Commitment described above, Nice Cars Funding, LLC, a
      wholly-owned Company subsidiary (the “Borrower”) entered into a loan agreement
      with the Lender. Pursuant to a Loan and Security Agreement which was entered
      into on September 28, 2006 (the “Loan Agreement”), the Lender has agreed to loan
      the Borrower an amount of up to $75 million. The Company has initially drawn
      approximately $54 million and may request additional draws on the basis of
      eligible collateralized receivables under the terms of the Loan Agreement.
      The
      Loan Agreement matures on September 28, 2009 unless terminated earlier in
      accordance with its terms.





***Acquisition
      of Nice Cars, Inc and Nice Cars Capital Acceptance Corporation***





On
      October 4, 2006, Manchester Inc. (the “Company”) entered into two agreements for
      the acquisition of a Buy-Here/Pay-Here used car sales enterprise. The
      transaction consisted of the acquisition of Nice Cars, Inc., a Buy-Here/Pay-Here
      car sales company and Nice Cars Capital Acceptance Corporation, an affiliate
      credit acceptance company (collectively, the “Nice Cars Acquisition”), utilizing
      funding provided by the Lender under the Loan Agreement. The Company paid an
      aggregate of $25 million and issued 6.25 million shares of the Company’s common
      stock to acquire Nice Cars, Inc. and Nice Cars Capital Acceptance Corporation.
      As part of the purchase price, the Company also agreed to the assumption of
      certain obligations and liabilities. The Company intends to continue the
      business of Nice Cars, Inc. and Nice Cars Capital Acceptance Corporation through
      the Company’s wholly owned subsidiaries, as managed by the acquired companies’
former owners, Mr. Raymond Lyle and his spouse, Ms. Victoria E. Lyle. See,
      "Management’s Discussion and Analysis of Financial Condition and Results of
      Operations" above.





18


***Further
      Information Regarding the Financing Commitment, the Loan and the Nice Cars
      Acquisitions***





The
      Company filed a Form 8-K on October 11, 2006 with the U.S. Securities and
      Exchange Commission which contained detailed information and disclosures with
      respect to the financing Commitment and the acquisition of the Nice Cars
      companies, including audited financial statements of the acquired companies
      and
      pro forma financial statements pertaining to the acquired companies.









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**SIGNATURES**




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.





**MANCHESTER
                INC.**
              (Registrant)Date: October
              20, 2006
            By:
            /s/ Richard
              D. GainesName:Richard
                D. Gaines
              Title:Acting
                Principal Executive Officer
              Acting
                Principal Financial Officer
              Secretary
                and Director








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