<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

     |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                 FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 2006

    |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE EXCHANGE ACT

               FOR THE TRANSITION PERIOD FROM ________ TO________

                        COMMISSION FILE NUMBER 333-108632

                                 NARROWSTEP INC.
             (Exact name of registrant as specified in its charter)

              DELAWARE                               33-1010941
    (State or other jurisdiction of               (I.R.S. Employer
    incorporation or organization)               Identification No.)

                                Battersea Studios
                              80 Silverthorne Road
                                 London SW8 3HE
                                 United Kingdom
                    (Address of principal executive offices)

                               011 44 20 7498 3377
               (Registrant's telephone number including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.

Yes |X| No

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

|_| 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 |X| No

    APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
                              PRECEDING FIVE YEARS

                                 Not applicable

                      APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares outstanding of the issuer's common stock as of August 31,
2006: 45,248,974 shares of common stock.



<PAGE>


PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
NARROWSTEP INC. AND SUBSIDIARIES
-----------------------------------------------------------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------
                                                                          THREE MONTHS ENDED                  SIX MONTHS ENDED
                                                                               AUGUST 31                          AUGUST 31
                                                                         2006             2005              2006             2005
                                                                           $                $                $                 $
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>                <C>            <C>                <C>
OPERATING REVENUE
      Narrowcasting and other                                          1,041,980          255,304        1,878,493          483,765
      Production services                                                526,387          462,681          834,397          626,471
------------------------------------------------------------------------------------------------------------------------------------
Total revenue                                                          1,568,367          717,985        2,712,890        1,110,236
------------------------------------------------------------------------------------------------------------------------------------
COSTS OF REVENUE:
      Direct costs                                                       585,294          460,317          930,591          803,887
      Software amortization                                               33,612           32,448           65,849           64,730
------------------------------------------------------------------------------------------------------------------------------------
Total costs of revenue                                                   618,906          492,765          996,440          868,617
------------------------------------------------------------------------------------------------------------------------------------
GROSS PROFIT                                                             949,461          225,220        1,716,450          241,619
------------------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
      Selling, general and administrative                              2,277,959          967,042        4,258,263        2,196,391
------------------------------------------------------------------------------------------------------------------------------------
Total operating expenses                                               2,277,959          967,042        4,258,263        2,196,391
------------------------------------------------------------------------------------------------------------------------------------
OPERATING LOSS                                                        (1,328,498)        (741,822)      (2,541,813)      (1,954,772)
Other income (expense), net                                               41,166               71           85,265              350
Currency exchange income (loss)                                            1,745              508            1,156          (22,890)
------------------------------------------------------------------------------------------------------------------------------------
NET LOSS                                                              (1,285,587)        (741,243)      (2,455,392)      (1,977,312)
====================================================================================================================================
NET LOSS PER COMMON SHARE - BASIC AND DILUTED                              (0.03)           (0.02)           (0.05)           (0.06)
WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED      45,248,974       31,809,656       45,192,724       30,878,929
====================================================================================================================================
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                                                               2
<PAGE>

<TABLE>
<CAPTION>
NARROWSTEP INC. AND SUBSIDIARIES
-----------------------------------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-----------------------------------------------------------------------------------------------------------
                                                                       AUGUST 31, 2006    February 28, 2006
                                                                              $                   $
-----------------------------------------------------------------------------------------------------------
ASSETS                                                                   (UNAUDITED)
<S>                                                                        <C>                 <C>
Current assets:
Cash and cash equivalents                                                  1,183,482           2,232,854
Short-term investments                                                     2,557,609           2,500,000
Accounts receivable, net of allowance for doubtful accounts of             1,334,984             418,394
  $255,619 on August 31, 2006 and $201,715 at February 28, 2006
Prepaid expenses and other current assets                                    209,247             135,542
--------------------------------------------------------------------------------------------------------
Total current assets                                                       5,285,322           5,286,790
--------------------------------------------------------------------------------------------------------
Property and equipment, net                                                  854,729             289,148
Software development costs, net                                              169,054             146,166
Goodwill                                                                   1,157,581           1,157,581
Intangible assets, net                                                        92,015             113,173
--------------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                               7,558,701           6,992,858
========================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current liabilities:
Unearned revenue                                                             391,085             176,628
Accounts payable                                                             868,702             504,919
Net obligations under capital leases, current                                 73,814              58,113
Accrued expenses and other current liabilities                               523,629             424,104
Total current liabilities                                                  1,857,230           1,163,764
Net obligations under capital leases - long-term                             128,634              43,997
--------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES                                                          1,985,864           1,207,761
--------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common stock, $0.000001 par value, 450,000,000 shares authorized,                 45                  45
  45,248,974 (unaudited) issued at August 31, 2006 and 45,136,474
  issued at February 28, 2006
Additional paid-in capital                                                16,470,026          16,443,374
Stock compensation                                                         4,031,494           3,267,997
Stock subscription receivable                                                      -          (1,410,000)
Accumulated deficit                                                      (14,949,451)        (12,494,059)
Accumulated other comprehensive income (loss)                                 20,723             (22,260)
--------------------------------------------------------------------------------------------------------
Total stockholders' equity                                                 5,572,837           5,785,097
--------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                 7,558,701           6,992,858
========================================================================================================
See Notes to Condensed Consolidated Financial Statements.
</TABLE>


                                                                               3
<PAGE>

<TABLE>
<CAPTION>
NARROWSTEP INC. AND SUBSIDIARIES
----------------------------------------------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)
----------------------------------------------------------------------------------------------------------------------
                                                                                               SIX MONTHS ENDED
                                                                                                  AUGUST 31
                                                                                            2006              2005
                                                                                             $                  $
----------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                                                (2,455,392)        (1,977,312)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization                                                              255,126            281,963
Loss on disposal of property and equipment                                                       -              5,544
Stock-based compensation expense                                                           814,497            402,852
Interest on short-term investments                                                         (57,609)                 -
Changes in net cash attributable to changes in operating assets and liabilities:
Accounts receivable, net                                                                  (916,591)           (76,062)
Prepaid expenses and other current assets                                                  (73,705)            16,001
Unearned revenue                                                                           214,457            114,980
Accounts payable, accrued expenses and other current liabilities                           463,307           (266,974)
----------------------------------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES                                                   (1,755,910)        (1,499,008)
----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment                                                       (580,675)           (33,511)
Payments for  software development costs                                                   (79,001)           (77,345)
----------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES                                                     (659,676)          (110,856)
----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of common stock                                               1,379,403          2,152,342
Proceeds from exercise of stock options                                                      6,250                  -
Payments on capital leases                                                                 (33,537)           (63,176)
----------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                                1,352,116          2,089,166
----------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                    (1,063,470)           479,302
Effect of exchange rates on change in cash                                                  14,098             23,744
Cash and cash equivalents at the beginning  of period                                    2,232,854             58,791
----------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT THE END OF PERIOD                                           1,183,482            561,837
======================================================================================================================
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:


Property and equipment acquired under capital leases                                       133,875




</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                                                               4
<PAGE>


NARROWSTEP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
----------------------------------------------------------------


NOTE 1. PREPARATION OF INTERIM FINANCIAL STATEMENTS

     BASIS OF PRESENTATION. Throughout this document, Narrowstep Inc. is
     referred to as "Narrowstep," "we" or the "Company." The condensed
     consolidated financial statements have been prepared pursuant to the rules
     and regulations of the Securities and Exchange Commission ("SEC") that
     permit reduced disclosure for interim periods. We believe that these
     condensed consolidated financial statements include all adjustments
     (consisting only of normal recurring accruals) necessary to present fairly
     the results for the interim periods shown. The results for the interim
     periods are not necessarily indicative of results for the full year. The
     reader is referred to the audited consolidated financial statements and
     notes thereto for the year ended February 28, 2006 filed as part of
     Narrowstep Inc. and Subsidiaries (collectively, the "Company") form 10-KSB
     for such year.

     PRINCIPLES OF CONSOLIDATION. The condensed consolidated financial
     statements include the accounts of the Company and its wholly-owned
     subsidiaries. Our subsidiaries operate in the TV over the Internet services
     industry both domestically and internationally providing production and
     distribution services and equipment.

     All significant intercompany transactions have been eliminated in
     consolidation.

     USE OF ESTIMATES. The preparation of the interim condensed consolidated
     financial statements 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 condensed
     consolidated financial statements and the reported amounts of revenue and
     expenses during the reporting periods. Actual results could differ from
     those estimates.


NOTE 2. STOCK BASED COMPENSATION


     In December 2003, the Board of Directors adopted the Narrowstep Inc. 2004
     Stock Plan (the "Incentive Plan"). Effective March 1, 2006, the Company
     adopted the fair-value recognition provisions of Statement of Financial
     Accounting Standards ("SFAS") No. 123 revised, "Accounting for Stock-Based
     Compensation" (SFAS No. 123R) to expense stock-based compensation. Prior to
     the adoption of SFAS No. 123R, the Company accounted for stock options
     granted under the Incentive Plan under the recognition and measurement
     principles of Accounting Principles Board No. 25, "Accounting for Stock
     Issued to Employees" ("APB 25"), and related interpretations. The Company
     adopted SFAS No. 123R using the modified prospective method and,
     accordingly, financial statement amounts for prior periods presented in
     this Form 10-QSB have not been restated to reflect the fair value method of
     recognizing compensation cost relating to stock options. The fair value of
     each option award is estimated on the date of grant using the Black-Scholes
     option-pricing model.

     There was approximately $351,000 and $814,000 of compensation cost related
     to stock options recognized in operating results (included in selling,
     general and administrative expenses) in the three and six months ended
     August 31, 2006. No tax benefit has been recognized with respect to this
     expense as we have determined in our evaluation of our tax assets that it
     is more likely than not that we will not realize any benefit and have
     provided full valuation allowances.


                                                                               5
<PAGE>


NARROWSTEP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
----------------------------------------------------------------

     The fair value of options and warrants at date of grant was estimated using
     the Black-Scholes option-pricing model with the following weighted-average
     assumptions:

                       -------------------------------------------------------
                       Expected life in years                   2
                       Risk-free interest rate            4.72% to 4.96%
                       Volatility                               75%
                       Dividend yield                          Nil
                       -------------------------------------------------------

     The following table illustrates the effect on net loss and loss per share
     if the Company had applied the fair value recognition provisions of SFAS
     No. 123R for the three and six months ended August 31, 2005:

<TABLE>
<CAPTION>
(UNAUDITED)
-------------------------------------------------------------------------------------------------------
                                                                          SIX MONTHS       THREE MONTHS
                                                                            ENDED            ENDED
                                                                           AUGUST 31        AUGUST 31
                                                                             2005             2005
                                                                              $                 $
-------------------------------------------------------------------------------------------------------
<S>                                                                      <C>                <C>
Net loss as reported                                                     (1,977,312)        (741,243)
Add: Stock-based employee compensation included in reported net loss        402,853           13,524
Less: Pro forma stock based compensation expense                         (1,813,676)        (504,545)
-------------------------------------------------------------------------------------------------------
Pro forma net loss                                                       (3,388,135)      (1,232,264)
-------------------------------------------------------------------------------------------------------
Basic and diluted loss per common share as reported                           (0.06)           (0.02)
Pro forma basic and diluted loss per common share                             (0.11)           (0.04)
Weighted-average common shares outstanding                               30,878,925       31,809,656
</TABLE>


NOTE 3. COMPREHENSIVE LOSS

     The components of comprehensive loss for the three and six months ended
     August 31, 2006 and 2005 include net loss and adjustments to stockholders'
     equity for foreign currency translation adjustments. The foreign currency
     translation adjustment was due to exchange rate fluctuations in our foreign
     subsidiary's local currency, which is its functional currency.

     The following are the components of comprehensive loss for the three and
     six months ended August 31, 2006 and 2005 (unaudited):

<TABLE>
<CAPTION>
                                                        ----------------------------------------------------------
                                                                SIX MONTHS                   THREE MONTHS
                                                                   ENDED                        ENDED
                                                                 AUGUST 31                    AUGUST 31
                                                            2006           2005          2006           2005
                                                              $             $              $              $
             -----------------------------------------------------------------------------------------------------
<S>                                                       <C>           <C>            <C>              <C>
             Net loss                                     (2,455,392)   (1,977,312)    (1,285,587)      (741,243)
             Foreign currency translation adjustment          42,983       (19,981)         6,219         (7,752)
             -----------------------------------------------------------------------------------------------------
             Comprehensive loss                           (2,412,409)   (1,997,293)    (1,279,368)      (748,995)
             =====================================================================================================
</TABLE>

                                                                               6
<PAGE>

NARROWSTEP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
----------------------------------------------------------------

NOTE 4.  SEGMENT INFORMATION

     Our segments are strategic business units that offer different products and
     services and are managed accordingly. We analyze our various operating
     segments based on segment income. Interest expense, interest income and
     other income (expense) - net are managed only on a total company basis and
     are, accordingly, reflected only in consolidated results. Therefore, these
     items are not included in the calculation of each segment's percentage of
     our consolidated results.

     Narrowstep Inc. manages its business as two main segments, "Narrowcasting",
     which is the provision of television channels to niche audiences globally,
     and "Production Services", which is the production of specialized
     programming, including sailing and extreme sport activities.

     Summarized information by segment for the three and six months ended
     August 31, 2006 and 2005 is as follows (unaudited):

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                  SIX MONTHS ENDED                                 THREE MONTHS ENDED
                             --------------------------------------------------  ---------------------------------------------------
                                    AUGUST 31, 2006          AUGUST 31, 2005           AUGUST 31, 2006         AUGUST 31, 2005
                             ------------------------  -----------------------   ------------------------  -------------------------
                             NARROWCASTING PRODUCTION  NARROWCASTING PRODUCTION  NARROWCASTING PRODUCTION  NARROWCASTING PRODUCTION
                               AND OTHER    SERVICES     AND OTHER    SERVICES     AND OTHER    SERVICES     AND OTHER    SERVICES
                                   $            $            $           $             $           $             $            $
------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>            <C>          <C>         <C>           <C>         <C>           <C>          <C>
REVENUE BY SEGMENT
Revenues from external
   customers                   1,878,493      834,397      483,765     626,471       1,041,980   526,387       255,304      462,681
------------------------------------------------------------------------------------------------------------------------------------
TOTAL REVENUE                  1,878,493      834,397      483,765     626,471       1,041,980   526,387       255,304      462,681
------------------------------------------------------------------------------------------------------------------------------------

Depreciation and amortization   (216,200)     (17,768)    (162,700)    (98,104)       (125,671)  (10,575)      (81,015)     (44,418)
Interest expense                  (4,271)        (153)      (5,705)     (2,464)         (2,955)     (153)       (3,928)      (1,508)
Interest income                   89,689            -            6         344          44,274         -             4           67
------------------------------------------------------------------------------------------------------------------------------------

OPERATING LOSS                  (882,893)    (289,239)    (818,015)   (144,434)       (300,798) (344,231)     (477,861)     (13,035)
====================================================================================================================================

PLANT, EQUIPMENT AND SOFTWARE    920,257      103,526      276,848      73,979         920,257   103,526       276,848       73,979
DEVELOPMENT
</TABLE>


Reconciliation of summarized information by segment to consolidated reported
losses from operations is as follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                                                                       SIX MONTHS ENDED               THREE MONTHS ENDED
                                                                          AUGUST 31                         AUGUST 31
                                                                    ----------------------            -------------------
                                                                    2006             2005              2006         2005
                                                                      $                $                 $            $
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>                <C>                <C>              <C>
Total reportable segments                                       (1,172,132)        (962,449)          (645,029)        (490,896)

Unallocated corporate expenses                                    (534,026)        (568,312)          (321,824)        (226,822)

Stock compensation charges                                        (814,497)        (402,852)          (351,066)         (13,524)
Amortization of intangible assets acquired in acquisition
  of Sportshow Television, Ltd.                                    (21,158)         (21,159)           (10,579)         (10,580)
--------------------------------------------------------------------------------------------------------------------------------
TOTAL REPORTED CONSOLIDATED LOSSES FROM OPERATIONS              (2,541,813)      (1,954,772)        (1,328,498)        (741,822)
================================================================================================================================
</TABLE>

                                                                               7
<PAGE>


NARROWSTEP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
----------------------------------------------------------------


NOTE 5. RELATED PARTY TRANSACTIONS

     OPTIONS GRANTED TO DIRECTORS. The Company has granted to both David McCourt
     and Jack Whyte, members of the Board of Directors, options to purchase
     300,000 shares at an exercise price of $0.67 per share. These options were
     granted and vested on June 7, 2006 and are exercisable until June 27, 2011.

     TRANSACTIONS WITH COMPANIES IN WHICH SHAREHOLDERS HOLD AN INTEREST.
     Narrowstep Ltd. has developed a channel for LTR Consultancy. John
     Goedegebuure, a founder and shareholder of Narrowstep Inc., is the Managing
     Director and a shareholder of LTR Consultancy. For the years ended February
     28, 2006 and 2005, LTR Consultancy was billed $71,422 and $46,325,
     respectively, for services provided. These bills were not paid as of
     February 28, 2006 and accordingly the associated revenue was not
     recognized. In the year ended February 28, 2006, LTR Consultancy earned
     re-seller commissions of $9,752. This commission was settled by a reduction
     in the amount receivable from LTR Consultancy as at February 28, 2006, in
     the amount of $9,752. The net amount receivable from LTR Consultancy as at
     February 28, 2006 was $112,655. This amount was provided for in the
     allowance for doubtful accounts.

     In the quarter ended May 31, 2006, LTR Consultancy paid Narrowstep Ltd in
     full and this was recognized as revenue in the quarter ended May 31, 2006.
     Total revenue from LTR Consultancy in the period was $123,315 of which
     $3,931 was included in receivables as of May 31, 2006. In the quarter ended
     August 31, 2006, total revenue from LTR Consultancy was $22,948. The full
     amount is included in receivables as of August 31, 2006

     Pursuant to an Investor Relations Agreement with the Company, LTR
     Consultancy earned fees for investor relations services of $16,111 and
     $32,845, respectively, for the three and six months ended August 31, 2006.
     Of these fees, $5,700 was unpaid as of August 31, 2006.

     Shelly Palmer, a director of the Company, is the owner of a consulting
     company, SLP Productions Inc. Pursuant to an unwritten agreement between
     the parties, in each of the quarters ended August 31, 2006 and May 31,
     2006, SLP Productions billed the Company $9,000 for consultancy services.
     Consultancy fees and expenses of $3,000 were unpaid as of August 31, 2006.

     On December 2, 2005, the Company entered into a consultancy agreement with
     Roger L. Werner Jr. Pursuant to this agreement, on May 23, 2006, Mr. Werner
     was granted options to purchase 30,000 shares at an exercise price of $0.75
     per share, for consultancy services for the year ended February 28, 2006.
     Mr. Werner became a shareholder in the Company on February 22, 2006 and a
     director of the Company on March 28, 2006. Mr. Werner is entitled to a
     further option grant to purchase 20,000 shares, with an exercise price
     equal to the market price on the date of grant, for consultancy services
     provided in the three months ended May 31, 2006.

     On May 30, 2006, the Company entered into an advisory agreement with
     Granahan McCourt Advisors, LLC. David C McCourt is the beneficial owner of
     Granahan McCourt Advisors, LLC and Granahan McCourt Capital, LLC, a
     shareholder in the Company. Pursuant to this agreement, Granahan McCourt
     Advisors, LLC was issued 100,000 shares of common stock on May 30, 2006 and
     Mr. McCourt will receive warrants to purchase 6,000 shares, with an
     exercise price equal to the market price on the date of grant. These
     warrants will be granted promptly following the filing of this Quarterly
     Report on Form 10-QSB with the SEC for the second fiscal quarter. Mr.
     McCourt became a director of the Company on June 27, 2006.

     COMMISSION PAID TO SHAREHOLDERS. During the six months ended August 31,
     2006, the Company paid commissions of $150,000 to certain shareholders for
     raising funds during the quarter ended May 31, 2006 compared with $124,800
     during the six months ended August 31, 2005. No further commissions were
     paid during the quarter ended August 31, 2006, as compared with $328,124 in
     the quarter ended August 31, 2005.

NOTE 6. CONCENTRATIONS

     For the three months ended August 31, 2006, the largest three customers in
     aggregate accounted for $332,587 or 22% of revenues compared with $359,660
     or 50% for the three months ended August 31, 2005. For the six months ended
     August 31, 2006 the largest three customers accounted for $586,139 or 22%
     of revenues, compared with $459,276 or 41% for the six months ended
     August 31, 2005.

NOTE 7. RECLASSIFICATION

     Direct costs of revenue of $226,846 and $383,891 for the three and six
     months ended August 31, 2005, respectively, include salary and depreciation
     costs previously classified as selling, general and administrative costs in
     the Company's Quarterly Report on Form 10-QSB filed with the SEC on
     October 12, 2005.

                                                                               8
<PAGE>



NARROWSTEP INC. AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS
         -----------------------------------------------------------------------

For ease of reading, Narrowstep Inc. is referred to as "Narrowstep," "we" or the
"Company" throughout this document and the names of the particular subsidiaries
providing the services generally have been omitted. Narrowstep is a holding
company whose subsidiaries operate in the TV over the Internet services industry
both domestically and internationally providing production and distribution
services and equipment. You should read this discussion in conjunction with the
condensed consolidated financial statements, accompanying notes and management's
discussion and analysis of financial condition and results of operations
included in our Annual Report on Form 10-KSB for the year ended February 28,
2006.

CONSOLIDATED REVENUES increased $850,382, or 118%, for the three months ended
August 31, 2006 and $1,602,654 or 144% for the first six months ended August 31,
2006. The increase is due to growth in both business segments as follows:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                      SIX MONTHS ENDED                                            THREE MONTHS ENDED
                           AUGUST 31, 2006      AUGUST 31, 2005    INCREASE     AUGUST 31, 2006      AUGUST 31, 2005      INCREASE
                              REVENUES             REVENUES                         REVENUES             REVENUES
                             $        %          $         %                       $         %          $        %
-----------------------------------------------------------------------------------------------------------------------------------

<S>                      <C>          <C>      <C>         <C>    <C>           <C>          <C>      <C>        <C>      <C>
Narrowcasting and other  1,878,493    69       483,765     44     1,394,728     1,041,980    66       255,304    36       786,676

Production services        834,397    31       626,471     56       207,926       526,387    34       462,681    64        63,706
------------------------------------------------------------------------------------------------------------------------------------

TOTAL                    2,712,890   100     1,110,236    100     1,602,654     1,568,367   100       717,985   100       850,382
====================================================================================================================================
</TABLE>

NARROWCASTING AND OTHER REVENUES increased $786,676, or 308%, for the three
months ended August 31, 2006 as compared to the three months ended August 31,
2005 and $1,394,728 or 288% for the six months ended August 31, 2006 as compared
to the six months ended August 31, 2005. This increase in narrowcasting revenues
resulted primarily from additional customers paying recurring license fees.
Narrowcasting revenues also include one-time implementation fees, which will
continue to contribute to revenue as more customers are added.

PRODUCTION SERVICES REVENUES increased $63,706, or 14%, for the three months
ended August 31, 2006 as compared to the three months ended August 31, 2005 and
$207,926, or 33%, for the six months ended August 31, 2006 as compared to the
six months ended August 31, 2005 primarily due to revenues from new customers
added over the past year and sales of previously recorded programming. This
business remains seasonal in nature and dependent on one-time assignments, such
that revenues in the first six months of the fiscal year, while encouraging, are
not necessarily indicative of the likely revenues for the full year.

GEOGRAPHICAL DISTRIBUTION OF REVENUES:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                                       SIX MONTHS ENDED                       THREE MONTHS ENDED
                                          AUGUST 31                                AUGUST 31
                                     2006          2005        Percent        2006           2005         Percent
                                      $             $          Change           $              $           Change
--------------------------------------------------------------------------------------------------------------------
<S>                                <C>           <C>                <C>       <C>           <C>                <C>
United States                      320,645       210,272            52%       239,773       117,337            104%

Europe, Middle-East and Africa   2,313,928       892,409           159%     1,307,826       598,336            119%

Asia Pacific                        59,866         2,590          2211%        20,465           (71)             -

Internet Sales                      18,451         4,965           272%           303         2,383            -87%
--------------------------------------------------------------------------------------------------------------------

TOTAL                            2,712,890     1,110,236           144%     1,568,367       717,985            118%
===================================================================================================================
</TABLE>

We expect ITV will roll out additional channels beginning in the third quarter
of fiscal 2007 which should commence to positively impact revenues in the third
quarter and in subsequent fiscal periods.

                                                                               9
<PAGE>


NARROWSTEP INC. AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS - CONTINUED
         -----------------------------------------------------------------------

COSTS AND EXPENSES increased $1,437,058, or 98%, for the three months ended
August 31, 2006 as compared to the three months ended August 31, 2005 and
$2,189,695, or 71%, for the six months ended August 31, 2006 as compared to the
six months ended August 31, 2005 as follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                          SIX MONTHS ENDED                                     THREE MONTHS ENDED
                                                                      INCREASE                                            INCREASE
                                AUGUST 31, 2006     AUGUST 31, 2005  (DECREASE)     AUGUST 31, 2006     AUGUST 31, 2005  (DECREASE)
                                 $          %         $         %         $           $          %        $          %        $
------------------------------------------------------------------------------------------------------------------------------------
TOTAL COSTS AND EXPENSES
<S>                            <C>          <C>     <C>         <C>     <C>         <C>          <C>    <C>          <C>    <C>
Direct costs of revenue        930,591      18%     803,887     26%     126,704     585,294      20%    460,317      32%    124,977
Sales and marketing            739,892      14%     178,828      6%     561,064     392,395      14%    106,718       7%    285,677
Software amortization           65,849       1%      64,730      2%       1,119      33,612       1%     32,448       2%      1,164
General, administrative,     2,682,716      51%   1,593,552     52%   1,089,164   1,523,919      53%    836,220      57%    687,699
  and other
Stock compensation expense     814,497      16%     402,852     13%     411,645     351,066      12%     13,524       1%    337,542
Amortization of intangibles     21,158       0%      21,159      1%          (1)     10,579       0%     10,580       1%         (1)
------------------------------------------------------------------------------------------------------------------------------------
TOTAL                        5,254,703     100%   3,065,008    100%   2,189,695   2,896,865     100%  1,459,807     100%  1,437,058
====================================================================================================================================
</TABLE>

DIRECT COSTS OF REVENUE, including the cost of bandwidth, direct labor,
sub-contracted labor, consulting fees and depreciation, were $585,294, an
increase of 27%, in the second quarter and $930,591, an increase of 16%, for the
first six months of 2006 primarily due to higher bandwidth costs, commensurate
with the additional channels in operation, offset in part by a reduction in
production costs as a percent of revenue.

Direct costs of revenue as a percentage of total revenue declined to 37% for the
quarter ended August 31, 2006 from 64% for the comparable period of 2005, and
declined to 34% for the six months ended August 31, 2006 from 72% for the
comparable period in 2005. This is due primarily to the growth of the higher
margin Narrowcasting business which accounted for 66% of total revenue in the
quarter ended August 31, 2006, compared to 36% in the quarter ended August 31,
2005 and increased to 69% for the six months ended August 31, 2006 from 44% for
the comparable period in 2005.

SALES AND MARKETING expenses, including employee compensation and related costs
for personnel engaged in marketing, customer service and sales and sales support
functions, as well as direct advertising, public relations and promotional
expenditures, were $392,395, an increase of 268% in the second quarter and
$739,892, an increase of 314%, for the first six months of 2006 when compared to
the second quarter and the first six months of 2005. This increase is primarily
due to increased marketing efforts and increased sales and marketing staffing.

GENERAL, ADMINISTRATIVE AND OTHER expenses, including employee compensation and
related costs for personnel engaged in administrative functions, legal and
accounting fees, amortization and depreciation and other items, were $1,523,919
for the quarter ended August 31, 2006, an increase of approximately $687,699, or
82%, compared to the quarter ended August 31, 2005 and were $2,682,716, an
increase of $1,089,164, or 68%, for the first six months of 2006. The increase
resulted primarily from an increase in the number of employees, as we continue
to expand and scale-up our operations, including additional executive officers,
together with increases in other items including insurance, investor relations
services, travel and recruitment costs. Overall the company staff level grew
from approximately 23 at February 28, 2006 to 45 by August 31, 2006.

As a percentage of total revenue, general administrative and other expenses
decreased to 97 % of total revenue for the quarter ended August 31, 2006,
compared to 116% for the same period of 2005 and decreased to 99% of total
revenue for the first six months of 2006 from 144% for the comparable period in
2005. The breakdown of general, administrative and other expenses is as follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                          SIX MONTHS ENDED                                    THREE MONTHS ENDED
                                   AUGUST 31, 2006      AUGUST 31, 2005                 AUGUST 31, 2006   AUGUST 31, 2005
                                                                          INCREASE                                         INCREASE
                                     $          %        $          %    (DECREASE)       $         %        $        %   (DECREASE)
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>          <C>    <C>          <C>    <C>          <C>         <C>    <C>        <C>    <C>
TOTAL GENERAL, ADMINISTRATIVE
AND OTHER
Wages and Salaries                962,046      36%    566,974      35%    395,072      462,910     30%    322,028    38%    140,882
Legal, accounting and audit       534,026      20%    601,370      38%    (67,344)     321,824     21%    282,420    34%     39,404
Depreciation                       31,797       1%     44,215       3%    (12,418)      15,875      1%     24,524     3%     (8,649)
Other                           1,154,847      43%    380,993      24%    773,854      723,310     48%    207,248    25%    516,062
------------------------------------------------------------------------------------------------------------------------------------
TOTAL                           2,682,716     100%  1,593,552     100%  1,089,164    1,523,919    100%    836,220   100%    687,699
====================================================================================================================================
</TABLE>


                                                                              10
<PAGE>


NARROWSTEP INC. AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS - CONTINUED
         -----------------------------------------------------------------------

STOCK BASED COMPENSATION EXPENSE We recorded non-cash charges of approximately
$351,000, or an increase of 2496%, for the quarter ended August 31, 2006 and
$814,000, or an increase of 102%, for the six months ended August 31, 2006. The
quarter ending August 31, 2006 was inclusive of a charge of approximately
$300,000 relating to stock options granted to employees, the fair value of which
must be expensed over their vesting periods following the implementation of SFAS
No.123R. We also granted options to employees and directors and made payment in
shares and warrants to third parties for services rendered.

SOFTWARE DEVELOPMENT expenses consist primarily of compensation and related
costs for personnel responsible for the development of new products and
services, as well as significant improvements to existing products and services.
We currently capitalize our development costs and amortize a portion of them
each year. During the quarter ended August 31, 2006, we capitalized
approximately $44,000 of software development and amortized approximately
$34,000, an increase from the same period in 2005 of 4%. For the six months
ended August 31, 2005, approximately $79,000 of software development was
capitalized and approximately $66,000 was amortized, an increase from the same
period in 2005 of 2%.

INCOME TAXES We have not generated any taxable income to date, and therefore
have not had to pay any income tax or make any provision for income tax since
our inception. The Company's net operating loss carryforward, at the expected
tax rates for its operations, includes approximately $5,729,000 deductible
against future taxable income generated in the United Kingdom, which will remain
in place until utilized and approximately $3,051,000 deductible against future
taxable income generated in the United States, which will remain available until
utilized or begin to expire at various dates through February 28, 2025.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

We had $1,183,482 in cash and cash equivalents available at August 31, 2006,
short-term investments in the form of a certificate of deposit of approximately
$2.6 million, and available bank overdraft facilities of $57,000. Cash was used
to meet the needs of the business including, but not limited to, payment of
operating expenses, funding capital expenditures, dividends to stockholders,
debt repayments, and tax-related payments. We discuss many of these factors in
detail below.

We have financed our operations from inception through private equity financing.
From inception through August 31, 2006, we sold an aggregate of 45,248,974
shares of our common stock for gross proceeds of approximately $14.8 million. In
addition, we have granted options and issued shares in lieu of cash in payment
to third parties for services rendered and in connection with the acquisition of
Sportshows Television, Ltd. To a lesser extent, we have also used capital leases
to fund some of our equipment acquisitions. We have incurred significant losses
since our inception and, at August 31, 2006, had an accumulated deficit of
approximately $14.9 million.

Our current ratio (current assets divided by current liabilities) relates to our
ability to pay our short-term debts as they become due. At August 31, 2006, our
current ratio was 2.8, compared to 4.5 at February 28, 2006. Our current ratio
fluctuates primarily as we use cash to develop our business and raise additional
funds from private equity financing from time to time.

NET CASH USED IN OPERATING ACTIVITIES amounted to approximately $1,756,000 for
the six months ended August 31, 2006 and approximately $1,499,000 for the six
months ended August 31, 2005. The increase in cash used in operations was due
primarily to a significant increase in accounts receivable commensurate with the
increase in revenues.

NET CASH PROVIDED BY FINANCING ACTIVITIES was approximately $1,352,000 for the
six months ended August 31, 2006, resulting primarily from the receipt of
subscriptions for shares outstanding at February 28, 2006 and approximately
$2,089,000 for the six months ended August 31, 2005, resulting primarily from
the issuance of capital stock to our investors to support our operations.

NET CASH USED IN INVESTING ACTIVITIES was approximately $660,000, for the six
months ended August 31, 2006 and approximately $111,000 for the six months ended
August 31, 2005. The increase was due mainly to capital investment in our
network.


                                                                              11
<PAGE>


NARROWSTEP INC. AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS - CONTINUED
         -----------------------------------------------------------------------

As of August 31, 2006, our principal capital commitments consisted of
obligations outstanding under capital leases as shown in the table below:

-----------------------------------------------------------------------
                                                       SIX MONTHS ENDED
                                                        AUGUST 31, 2006
                                                                $
----------------------------------------------------------------------
Amounts payable:
Within 12 months                                              87,654
Between one and two years                                     79,004
Between two and three years                                   60,240
Total future commitment                                      226,898
Less: finance charges allocated to future periods           (24,450)
---------------------------------------------------------------------
PRESENT VALUE                                                202,448
=====================================================================


Our cash and cash equivalents as of August 31, 2006 were approximately $1.2
million and we had bank overdraft facilities of $57,000 as of that date. An
overdraft facility is a line of credit arrangement, negotiated with a bank and
usually reviewable on an annual basis, whereby the bank's customer is permitted
to take its checking account into a debit balance on a pre-agreed interest basis
up to an agreed amount. Amounts utilized under overdraft facilities are payable
on demand. At August 31, 2006 and February 28, 2006, the overdraft facilities
consisted of approximately $19,000 and $70,000, respectively, with Barclays Bank
PLC and $38,000 and $34,000, respectively, with National Westminster Bank PLC
(NatWest). Neither facility was utilized on August 31, 2006 or February 28,
2006. The interest rate on the Barclays facility is 5.25% above Barclays'
variable base rate (which base rate was 4.5% per annum as of August 31, 2006).
The interest rate on the NatWest facility is 4.5% above NatWest's variable base
rate (which base rate was 4.5% per annum as of August 31, 2006). The Barclays
facility was reduced to $18,000 at March 20, 2006. The NatWest overdraft
facility was renewed on May 31, 2006.

Based on our business plans and anticipated levels of operation and capital
expenditure, we have projected our cash requirement through February 2007 to be
approximately $2,500,000, which will be required to fund our growth and working
capital needs. Of this amount, we anticipate that approximately $1,000,000 will
be used for capital expenditures (primarily equipment purchases) necessary to
enhance our infrastructure and approximately $1,500,000 to cover our ongoing
need for working capital.

We plan to fund our 2006 financing activities primarily through cash on hand and
from operations. We will continue to assess funding growth opportunities through
other options as well.

OFF BALANCE SHEET ARRANGEMENTS We have no off-balance sheet arrangements that
have had 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.

                                                                              12
<PAGE>


NARROWSTEP INC. AND SUBSIDIARIES



ITEM 3. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, the Company's management,
with the participation of the Company's chief executive officer and interim
chief financial officer, evaluated the effectiveness of the Company's disclosure
controls and procedures (as such term is defined in Rule 13a-15(e) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based on such
evaluation, our chief executive officer and interim chief financial officer have
concluded that our disclosure controls and procedures were effective as of
August 31, 2006 to ensure that the information required to be disclosed by us in
the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Commission's rules and forms.

There have not been any changes in the Company's internal control over financial
reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act)
during the last fiscal quarter to which this report relates that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.

We will be documenting and testing our internal control procedures in order to
satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002.
Pursuant to Section 404, beginning with our fiscal year ending February 28,
2008, we will be required to include in our annual report on Form 10-KSB a
management assessment of the effectiveness of our internal controls over
financial reporting and a report by our independent registered public accounting
firm addressing these assessments. We are exposed to increased costs associated
with complying with these requirements and will be spending management time
and resources to document and test our internal controls in anticipation of
Section 404 reporting requirements. In addition, we cannot assure you that we
will not in the future identify material weaknesses or significant deficiencies
in our internal controls over financial reporting that we have not discovered to
date.

If we are not able to complete testing of all of our internal controls, or if
during the course of our testing we identify deficiencies that we are not able
to remediate in time, we and/or our independent registered public accounting
firm may not be able to complete our/its respective assessments before the
deadline for compliance with the requirements of Section 404 of the
Sarbanes-Oxley Act. If we fail to timely complete our evaluation and testing in
order to allow for the assessment by our management, or if our independent
registered public accounting firm cannot timely attest to our management's
assessment, we could be subject to regulatory scrutiny and a loss of public
confidence in our internal controls, which could harm our business and our stock
price. Further, if our independent registered public accounting firm is not
satisfied with our internal controls over financial reporting or with the level
at which they are documented, designed, operated or reviewed, it may decline to
attest to management's assessment or may issue a qualified report identifying a
material weakness in our internal controls. This could result in significant
additional expenditures responding to the Section 404 internal control audit, a
diversion of management attention and a decline in our stock price.



CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
----------------------------------------------------

This report contains forward-looking statements including, without limitation,
in the discussion under the caption "Management's Discussion and Analysis or
Plan of Operations." Any and all statements contained in this report that are
not statements of historical fact may be deemed forward-looking statements.
Terms such as may, might, would, should, could, project, estimate, pro forma,
predict, potential, strategy, anticipate, attempt, develop, plan, help, believe,
continue, intend, expect, future, and similar terms and terms of similar import
(including the negative of any of the foregoing) may be intended to identify
forward-looking statements. However, not all forward-looking statements may
contain one or more of these identifying terms. Forward-looking statements in
this report may include, without limitation, statements regarding (i) a
projection of revenues, income (including income/loss), earnings (including
earnings/loss) per share, capital expenditures, dividends, capital structure, or
other financial items, (ii) the plans and objectives of management for future
operations, including plans or objectives relating to our products or services,
(iii) our future financial performance, including any such statement contained
in a discussion and analysis of financial condition by management or in the
results of operations included pursuant to the rules and regulations of the
Securities and Exchange Commission, and (iv) the assumptions underlying or
relating to any statement described in subparagraphs (i), (ii), or (iii).

The forward-looking statements are not meant to predict or guarantee actual
results, performance, events, or circumstances and may not be realized because
they are based upon our current projections, plans, objectives, beliefs,
expectations, estimates, and assumptions and are subject to a number of risks
and uncertainties and other influences, many of which we have no control over.
Actual results and the timing of certain events and circumstances may differ
materially from those described by the forward-looking statements as a result of
these risks and uncertainties. Factors that may influence or contribute to the
inaccuracy of the forward-looking statements or cause actual results to differ
materially from expected or desired results may include, without limitation, our
inability to obtain adequate financing, insufficient cash flows and resulting
illiquidity, our dependence upon significant customers, our inability to expand
our business, government regulations, increased competition, changing customer
preferences, stock illiquidity, failure to implement our business plans or
strategies, and ineffectiveness of our marketing program and our acquisition
opportunities. A description of some of the risks and uncertainties that could
cause our actual results to differ materially from those described by the
forward-looking statements in this report appears under the caption "Risk
Factors" and


                                                                              13
<PAGE>

NARROWSTEP INC. AND SUBSIDIARIES


elsewhere in the most recent Registration Statement on Form SB-2 and Form 10-KSB
that we have filed with the Securities and Exchange Commission.

Because of the risks and uncertainties related to these factors and the
forward-looking statements, readers are cautioned not to place undue reliance on
the forward-looking statements. We disclaim any obligation to update these
forward-looking statements or to announce publicly the results of any revisions
to any of the forward-looking statements contained in this report to reflect any
new information or future events or circumstances or otherwise unless required
to do so under applicable federal securities laws.

Readers should read this report and the following discussion and analysis in
conjunction with the financial statements and the related notes contained in
this report and the other documents we file from time to time with the
Securities and Exchange Commission.


PART II - OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS
------------------------------------------------------------

100,000 shares of common stock were granted to Granahan McCourt Advisors, LLC on
May 30, 2006 pursuant to an investor relations agreement with Narrowstep Inc. of
the same date. The issuances were made in reliance on Section 4(2) of the
Securities Act.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-----------------------------------------------------------

Annual Meeting of Shareowners

(a)  The annual meeting of the shareowners of Narrowstep Inc. was held on
     September 28, 2006, in Roseland, New Jersey. Shareowners representing
     28,130,866, or 62%, of the common shares outstanding as of the August 14,
     2006 record date were present in person.

(b)  Election of Directors:
                                     VOTES
----------------------------------------------------
NOMINEE                      FOR           WITHHELD*
----------------------------------------------------
Stephen Beaumont          27,691,555        439,311
Dennis Edmonds            28,094,322         36,544
Shelly Palmer             27,686,822        444,044
Peter Siddall             27,691,555        439,311
Roger Werner              27,691,555        439,311
Jack Whyte                28,099,055         31,811
----------------------------------------------------
*Includes shares represented at the meeting by proxy where the shareowner
withheld authority to vote for the indicated director or directors, as well as
shares present at the meeting that were not voted for such director or
directors.

(c)  In addition to the Directors elected above, David McCourt, Cliff Webb, and
     Iolo Jones continue as Directors.

(d)  Holders of common shares voted at this meeting on the following matters,
     which were set forth in our proxy statement

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                                        %                       %
                                                         FOR           FOR      AGAINST      AGAINST      ABSTAIN     NON-VOTE
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>               <C>      <C>             <C>     <C>        <C>
Ratification of Rothstein Kass & Company, P.C. as
Independent Auditors (1)                              28,112,805        99       3,200           1       14,861     17,018,108

Amend Charter  of Incorporation to clarify
certain provisions concerning the election of
directors (2),                                        20,791,880        46      19,400           1     1,392,600     22,945,094
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Percentages are based on the total common shares voted

(2)  Percentages are based on the total number of common shares outstanding.
     Approval of this proposal required a seventy five percent majority of the
     outstanding shares of Narrowstep common stock.

ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPAL OFFICERS.

On September 28, 2006, the Board of Directors (the "Board") of the Company
approved the following:


                                                                              14
<PAGE>

(a) an increase in the number of directors which shall constitute the whole
Board from nine (9) directors to ten (10) directors. The newly created
directorship shall be for one additional Class III Director; and

(b) the appointment of Rajan Chopra as a Class III director of the Company to
fill the vacancy resulting from the increase of the Board from nine (9)
directors to ten (10) directors. Mr. Chopra will serve on the Board's audit
committee.












                                                                              15
<PAGE>


NARROWSTEP INC. AND SUBSIDIARIES


ITEM 6. EXHIBITS
----------------



     EXHIBIT 31.1       CERTIFICATION FILED PURSUANT TO EXCHANGE ACT RULES
                        13a-14 AND 15d-14 AS ADOPTED PURSUANT TO SECTION 302 OF
                        THE SARBANES-OXLEY ACT OF 2002

     EXHIBIT 31.2       CERTIFICATION FILED PURSUANT TO EXCHANGE ACT RULES
                        13a-14 AND 15d-14 AS ADOPTED PURSUANT TO SECTION 302 OF
                        THE SARBANES-OXLEY ACT OF 2002

     EXHIBIT 32.1       CERTIFICATION OF CHIEF EXECUTIVE OFFICER FURNISHED
                        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 CHIEF FINANCIAL OFFICER FURNISHED
                        PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT
                        TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



                                                                              16
<PAGE>



                                   SIGNATURES
                                   ----------

Pursuant to the requirement of Section 13 or 15(d) 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.

                                           NARROWSTEP INC.


                                           By: /s/ Stephen Beaumont
                                              ----------------------------------
    Dated:  October 16, 2006                       Stephen Beaumont
                                                   President and Chief
                                                   Executive Officer


                                           By: /s/ Jill Thoerle
                                              ----------------------------------
    Dated:  October 16, 2006                       Jill Thoerle
                                                   Interim Chief Financial
                                                   Officer



                                                                              17