**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 June 30, 2006




OR




o
      TRANSITION REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE


**SECURITIES
      EXCHANGE ACT OF 1934**




For
      the Transition period from _____ to _____




**ENUCLEUS,
      INC.**


(Exact
      Name of Registrant as Specified in its Charter)


0-14039
              
              11-2714721(Commission
                  File Number)
              
              (IRS
                  Employer Identification
                  No.)




2850
      Golf
      Road


Rolling
      Meadows, IL 60008


(Address
      of Principal Executive Offices)





847-640-0909


(Registrant's
      telephone number, including area code)





Check
      whether the Registrant (l) filed all reports required to be filed
      by


Section
      13 or 15(d) of the Securities and Exchange Act during the past 12 months (or
      for
      such shorter periods 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 o





Check
      whether the Registrant filed all documents and reports required to be filed
      by
      Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
      under a plan confirmed by a court. Yes x   No o




As
      of
      August 17, 2006, the number of common stock shares outstanding is 49,860,503
      shares.





Transitional
      Small Business Disclosure Format (check
      one) Yes o   No x















**PART
      I -- FINANCIAL INFORMATION**




**ITEM 1.**
              **FINANCIAL
                STATEMENTS****CONDENSED CONSOLIDATED
                BALANCE SHEETS AS OF JUNE 30, 2006 (UNAUDITED) AND DECEMBER 31, 2005
                (AUDITED)**
              **3****CONDENSED CONSOLIDATED
                STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE MONTHS ENDED JUNE
                30,
                2006, AND JUNE 30, 2005, AND THE SIX MONTHS ENDING JUNE 30, 2006
                AND JUNE
                30, 2005**
              **4****CONDENSED CONSOLIDATED
                STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE
                30,
                2006 AND JUNE 30, 2005**
              **5****NOTES TO CONDENSED
                CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**
              **6****ITEM 2.**
              **MANAGEMENT'S DISCUSSION AND
                ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**
              **12****ITEM 3.**
              **CONTROLS AND
                PROCEDURES**
              **13**
 
 PART II -- OTHER
                INFORMATIONITEM 1.
              LEGAL PROCEEDINGS
              13ITEM 2.
              CHANGES IN SECURITIES AND USE OF
                PROCEEDS
              13ITEM 3.
              DEFAULTS UPON SENIOR SECURITIES
              14ITEM 4.
              SUBMISSION OF MATTERS TO A VOTE OF
                SECURITY
                HOLDERS
              14ITEM 5.
              OTHER INFORMATION
              14ITEM 6.
              CERTAIN RELATIONSHIPS AND RELATED
                  TRANSACTIONS
              15
  **ITEM 7**
              **EXHIBITS AND REPORTS ON FORM
                8-K**
              **16****FORM 10-QSB SIGNATURE
                PAGE**
              **16**




2





**eNucleus,
                  Inc.****Condensed
                  Consolidated Balance Sheets****June
                  30,**
                **2006**
              
              **December
                  31,**
                **2005****(unaudited)**
              
              **(audited)**ASSETSCurrent
                  Assets:Cash
              
              $
              45,611
              
              $
              11,558Accounts
                  receivable, net
              
              
              6,272,795
              
              
              3,308,490Prepaid
                  expenses
              
              
              91,438
              
              
              32,023Total
                  current assets
              
              
              6,409,844
              
              
              3,352,071Property
                  and equipment, net
              
              
              34,060
              
              
              40,418Other
                  assets:Due
                  from Applitech Solution, Ltd.
              
              
              262,731
              
              
              262,731Intangible
                  assets, net
              
              
              4,803,816
              
              
              5,594,860Total
                  other assets
              
              
              5,066,547
              
              
              5,857,591$
              11,510,451
              
              $
              9,250,080LIABILITIES
                  AND STOCKHOLDERS' EQUITYCurrent
                  Liabilities:Accounts
                  payable and accrued liabilities
              
              $
              3,768,139
              
              $
              2,083,501Notes
                  payable
              
              
              882,049
              
              
              232,465Deferred
                  revenue
              
              
              789,558
              
              
              454,092Total
                  current liabilities
              
              
              5,439,746
              
              
              2,770,058Long-term
                  liability:Note
                  payable - related party
              
              
              832,365
              
              
              822,3766,272,111
              
              
              3,592,434Stockholders'
                  equity:Preferred
                    stock, $0.001 par value, 20,000,000 sharesauthorized,
                    none issued and outstanding
              
              
              -
              
              
              -Common
                    stock, $0.001 par value, 100,000,000 shares authorized,
                    47,360,503 and 44,008,545 shares issued and
                    outstanding, respectively
              
              
              47,361
              
              
              44,009Additional
                  paid-in capital
              
              
              15,132,841
              
              
              14,891,036Accumulated
                  deficit
              
              
              (9,852,407
              )
              
              (9,277,399
              )Other
                  comprehensive income - translation gains and losses
              
              
              (89,455
              )
              
              -Total
                  stockholders' equity
              
              
              5,238,340
              
              
              5,657,646$
              11,510,451
              
              $
              9,250,080See
                  accompanying notes to condensed consolidated unaudited financial
                  statements.
  3




**eNUCLEUS,
                  INC.****CONDENSED
                  CONSOLIDATED STATEMENTS OF OPERATIONS****(UNAUDITED)**Three
                  Months Ended
                June
                  30,
              
              Six
                  Months Ended
                June
                  30,2006
              
              2005
              
              2006
              
              2005Revenues
              
              $
              1,859,517
              
              $
              2,386,524
              
              $
              3,658,119
              
              $
              3,407,440Expenses:Cost
                  of goods sold
              
              
              755,605
              
              
              963,894
              
              
              1,227,383
              
              
              963,894Operating
                  expenses
              
              
              1,420,027
              
              
              1,348,989
              
              
              2,869,932
              
              
              2,338,5042,175,632
              
              
              2,312,883
              
              
              4,097,315
              
              
              3,302,398Income
                  (loss) from operations
              
              
              (316,115
              )
              
              73,641
              
              
              (439,196
              )
              
              105,042Other
                  expenses:Interest
              
              
              110,462
              
              
              58,185
              
              
              135,812
              
              
              78,956Income
                  (loss) before provision for income taxes
              
              
              (426,577
              )
              
              15,456
              
              
              (575,008
              )
              
              26,086Provision
                  for income taxes
              
              
              -
              
              
              -
              
              
              -
              
              
              -Net
                  income (loss)
              
              $
              (426,577
              )
              $
              15,456
              
              $
              (575,008
              )
              $
              26,086Basic
                  net income (loss) per common share
              
              $
              (0.01
              )
              $
              0.00
              
              $
              (0.01
              )
              $
              0.00Diluted
                  net income (loss) per common share
              
              $
              (0.01
              )
              $
              0.00
              
              $
              (0.01
              )
              $
              0.00Weighted
                  average shares outstanding - basic
              
              
              47,360,503
              
              
              36,193,660
              
              
              46,562,748
              
              
              32,170,218Weighted
                  average shares outstanding - diluted
              
              
              47,360,503
              
              
              39,873,660
              
              
              46,562,748
              
              
              35,850,218See
                  accompanying notes to condensed consolidated unaudited financial
                  statements.





4




eNUCLEUS,
                  INC.CONDENSED
                  CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)Six
                  Months Ended
                June
                  30,2006
              
              2005Cash
                  flow from operating activitiesNet
                  income (loss)
              
              $
              (575,008
              )
              $
              26,086Adjustments
                    to reconcile net income (loss) to net cash used
                    in operating activities:Depreciation
                  and amortization
              
              
              799,005
              
              
              583,172Amortization
                  of debt discount
              
              
              119,867
              
              
              -Stock
                  option compensation
              
              
              117,907
              
              
              45,333Shares
                  issued for debt settlement
              
              
              -
              
              
              57,577Shares
                  issued for acquisitons
              
              
              -
              
              
              476,250Amortization
                  of deferred financing costs
              
              
              98,698
              
              
              -Translation
                  adjustment - other comprehensive loss
              
              
              (89,455
              )
              
              -Other
              
              
              9,590
              
              
              6,445Accrued
                  interest on notes payable
              
              
              10,927
              
              
              -Changes
                  in operating assets and liabilities:Deferred
                  revenue
              
              
              335,466
              
              
              176,556Due
                  from Applitech Solution, Ltd.
              
              
              -
              
              
              (50,223
              )Accounts
                  receivable
              
              
              (2,964,305
              )
              
              (2,687,143
              )Prepaid
                  expenses
              
              
              (59,415
              )
              
              (110,043
              )Payables
                  and accrued expenses
              
              
              1,684,638
              
              
              687,653Net
                  cash used in operating activities
              
              
              (512,085
              )
              
              (788,337
              )Cash
                  flow from investing activities:Purchase
                  of property and equipment
              
              
              (1,603
              )
              
              -Purchase
                  of intangible assets
              
              
              -
              
              
              (1,022,145
              )Net
                  cash used in investing activities
              
              
              (1,603
              )
              
              (1,022,145
              )Cash
                  flow from financing activities:Increase
                  in notes payable
              
              
              573,891
              
              
              295,296Payments
                  of notes payable
              
              
              (26,150
              )
              
              (164,587
              )Proceeds
                  from sale of common stock
              
              
              -
              
              
              2,187,533Net
                  cash provided by financing activities
              
              
              547,741
              
              
              2,318,242Net
                  increase in cash
              
              
              34,053
              
              
              507,760Cash,
                  beginning of period
              
              
              11,558
              
              
              45,800Cash,
                  end of period
              
              $
              45,611
              
              $
              553,560Supplemental
                  disclosures of cash flow information:Cash
                  paid during the period for:Income
                  taxes
              
              $
              -
              
              $
              -Interest
              
              $
              30,000
              
              $
              -Non-
                  cash financing activities:Deferred
                  financing costs
              
              $
              108,288
              
              $
              -Allocation
                  of note payable to warrants
              
              $
              127,250
              
              $
              -See
                  accompanying notes to condensed consolidated unaudited financial
                  statements.




5




**eNUCLEUS,
      INC.**




**NOTES
      TO CONDENSED CONSOLIDATED**


**FINANCIAL
      STATEMENTS (UNAUDITED)**




**JUNE
      30, 2006**




**NOTE
      1. NATURE OF OPERATIONS**




eNucleus,
      Inc. ("eNucleus" or the "Company") is a software and managed hosting company.
      The Company provides business process solutions that enable any organization
      to
      increase productivity and reduce costs through its suite of "off the shelf"
      Internet-based software products and services. eNucleus' business strategy
      is to
      acquire companies that have proprietary software applications that fulfill
      core
      and niche business processes.




On
      November 6, 2003, eNucleus received its final decree from the United States
      Bankruptcy Court for the Northern District of Illinois, successfully concluding
      the Company's restructuring and emergence from bankruptcy. Amounts due to settle
      known claims remaining upon emergence from bankruptcy are included in notes
      payable.




**NOTE
      2. BASIS OF PRESENTATION**




The
      accompanying interim condensed consolidated financial statements of eNucleus,
      Inc. and its wholly owned subsidiaries Financial ASPx, Inc., Alliance Net,
      Inc.,
      Education ASPx, Inc., eNucleus India, Inc., eNucleus Solutions India Pte.,
      and
      eNucleus Pte Ltd. are unaudited. All significant inter-company accounts and
      transactions have been eliminated. The statements have been prepared in
      accordance with generally accepted accounting principles in the United States
      for interim financial information, in the instructions to Form 10-QSB and
      Article 10 of Regulation S-X. Accordingly, they do not include all of the
      information and footnotes required by generally accepted accounting principles
      for complete financial statements.




Operating
      results for the six months and three months ended June 30, 2006 are not
      necessarily indicative of the results that may be expected for the fiscal year
      ending December 31, 2006. These financial statements should be read in
      conjunction with our audited consolidated financial statements and footnotes
      for
      the year ended December 31, 2005 that are included in our annual report on
      Form
      10-KSB.




**NOTE
      3. SIGNIFICANT ACCOUNTING POLICIES**




**USE
      OF ESTIMATES**




The
      preparation of consolidated 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 during the
      reporting period. Actual results could differ from those estimates.




**PROPERTY
      AND EQUIPMENT**




Property
      and equipment are stated at cost and depreciated on a straight-line basis over
      their respective estimated useful lives. Maintenance and repairs are charged
      to
      expense as incurred.




**INTANGIBLE
      ASSETS**




Intangible
      assets that have a finite life are recorded at cost and amortized over their
      estimated lives on a straight line basis. Intangible assets having lives that
      are not estimatable are reviewed annually for impairment. When evaluating
      whether such an intangible is impaired, the Company compares its fair market
      value to its' carrying amount. An impairment loss is recognized if the asset's
      carrying amount exceeds its' fair value.




**FAIR
      VALUE OF FINANCIAL INSTRUMENTS**




The
      fair
      values of the Company's financial instruments which consist of cash, accounts
      receivable, prepaid expenses, notes and accounts payable and deferred revenue,
      approximate their carrying value.




6




**CONCENTRATIONS
      OF CREDIT RISK**




**Major
      Customers**




Four
      customers totaled approximately 76% of sales for the three months ended June
      30,
      2006. Approximately 81% of the total accounts receivable at June 30, 2006 is
      due
      from six customers.




**Cash**




The
      Company maintains cash balances in banks, which, at times, may exceed the limits
      of the amount insured by the Federal Deposit Insurance Corporation limit. The
      Company has not experienced any losses to date as a result of this policy,
      and
      management believes that there is little risk of loss.




**Accounts
      Receivable**




Accounts
      receivable are reported net of an allowance for doubtful accounts. The allowance
      is based on management's estimate of the amount of receivables that will
      actually be collected. Management performs on-going credit evaluations of its
      customers and provides an allowance based on credit history and worthiness
      of
      its customers. Receivables are written off when deemed uncollectible.




**INCOME
      TAXES**




Deferred
      tax assets and liabilities are determined based on the difference between the
      financial statement and tax bases of assets and liabilities as measured by
      the
      enacted tax rates estimated to be in effect when these differences reverse.
      Deferred tax expense is the result of changes in deferred tax assets and
      liabilities.




**STOCK
      OPTION PLANS**




Stock-based
      compensation of employees and non-employees is accounted for using a fair value
      method of accounting. Under this method the estimated fair value of the
      stock-based compensation is recognized in earnings and compensation expense
      is
      calculated on the date that an option is granted, and recorded as an expense
      over the vesting period.




**FOREIGN
      CURRENCY TRANSLATION**




Foreign
      entities whose functional currency is not the United States dollar translate
      assets and liabilities at year-end rates and income and expense accounts at
      average exchange rates. Translation gains and losses are reflected in
      stockholders' equity.




**REVENUE
      RECOGNITION**




**Services**




The
      Company recognizes revenue upon providing a service or making delivery to its
      clients. Revenues related to billings made or payments received in advance
      of
      providing services are deferred until the period in which the services are
      provided. Certain contracts with customers may contain service level
      commitments, which may require the Company to provide credits if required
      service level commitments are not met. These amounts, if any, are accounted
      for
      in cost of sales.




**License
      Agreements and Sales of Source Code**




The
      Company recognizes revenue from license agreements each month over the term
      of
      the agreements. Support revenues from customers who purchase premium support
      offerings are recognized ratably over the term of the support contract.
      Consulting services and training revenues are accounted for separately from
      license and support revenues because these services have value to the customer
      on a standalone basis and there is objective and reliable evidence of the fair
      value of the undelivered elements. Consulting revenues are recognized upon
      completion of the contracts that are of short duration (generally less than
      60
      days) and as the services are rendered for contracts of longer duration. Revenue
      from sales of source codes is recognized in the period in which the obligations
      relating to the sale have been completed.




**Multi-Year
      Licenses**




Revenue
      from multi-year software licensing arrangements is accounted for as
      subscriptions, with billings recorded as unearned revenue and recognized as
      revenue ratably over the license coverage period. Revenue for retail packaged
      products, products licensed to original equipment manufacturers (OEMs), and
      select sales of certain source codes of software products are generally
      recognized as products are shipped. A portion of the revenue recorded as
      unearned are related to undelivered elements. Undelivered elements can include
      free post-delivery telephone support or the right to receive unspecified
      upgrades/enhancements on a when-and-if-available basis for a period of time.
      Unearned revenue due to undelivered elements is recognized ratably over the
      service period specified or estimated product life.




7




**Multiple
      Deliverables and Extended Payment Contracts**




Revenue
      is recognized only when all of the following conditions are satisfied: (1)
      there
      is persuasive evidence of an arrangement (as demonstrated by a signed agreement
      or by the existence of a purchase order or similar document related to the
      software) (2) the service or product has been provided to the customer, (3)
      The
      collection of fees is probable, and (4) the amount of fees to be paid by the
      customer is fixed or determinable.




**Reclassifications**




Certain
      amounts in the 2005 financial statements have been reclassified to conform
      with
      the current year's basis of presentation.




**NOTE
      4. FINANCIAL RESULTS AND LIQUIDITY**




The
      Company's continued existence is dependent on its ability to maintain future
      profitable operations. The satisfaction of the Company's cash requirements
      hereafter will depend in large part on its ability to successfully generate
      revenues from operations. There can, however, be no assurance that sufficient
      cash will be generated from operations or that unanticipated events requiring
      the expenditure of funds within its existing operations will not
      occur.




**NOTE
      5. INTANGIBLE ASSETS**




The
      intangible assets are comprised of the following as of June 30, 2006:






Software
              (Useful life of 5 years)
            
            $
            6,402,151Customer
              list and contracts (Useful life 2 years)
            
            
            570,5496,972,700Less:
              Accumulated amortization
            
            
            (2,168,884
            )$
            4,803,816




**NOTE
      6. NOTES PAYABLE**




As
      of
      June 30, 2006 the Company had notes outstanding as follows:






Rotate
              Black (a)
            
            $
            832,365Duke-Weeks
              Realty (b)
            
            
            174,118Other
              notes payable (c)
            
            
            65,314Sigma
              Capital Partners(d)
            
            
            292,617Sigma
              Opportunity Fund(e)
            
            
            150,000J.
              Roebling Fund LP (f)
            
            
            200,0001,714,414Less:
              current portion
            
            
            (882,049
            )Long
              term liabilities
            
            $
            832,365




(a)
      The
      Company entered into a note payable with Rotate Black, LLC., who is a major
      stockholder and two of its members that were on the Company’s board of
      directors. Principal and unpaid interest are due November 2007. Interest accrues
      bi-annually at 10% annum. This note was entered into as a part of an agreement
      whereby Rotate Black, LLC agreed to assume liabilities to the Internal Revenue
      Service and other State revenue agencies.




(b)
      In
      November 2003, the Company entered into a 3 year note agreement with the
      previous landlord of the Company (when the Company was in bankruptcy) in the
      amount of its total allowed claim of approximately $142,000, due in monthly
      payments of $1,000 except for the first payment in each year which is $10,000.
      The final payment will include the remaining outstanding principal plus accrued
      interest at a rate of 10% annum. No payments have been made yet against this
      note.




(c)
      This
      note payable is to an unsecured claimant prior to the Company’s filing of
      bankruptcy, who in accordance with the Plan of Reorganization, elected to take
      a
      Junior Secured Note on the portion of the unsecured claim. Such note is payable
      in $10,000 installments and accrues interest at 12% annum. First payment of
      $10,000 was made in 2005. The final payment was due in May 2006, and as of
      June
      30, 2006 no payment has been made.




(d)
      On
      February 7, 2006 the Company entered into a Promissory Note for $300,000. In
      addition the Company issued to the lender a stock purchase warrant to purchase
      325,000 warrants at an exercise price of $0.26. The lender has a lien and
      security interest that is junior to two senior lenders. These warrants were
      valued at $44,298 using the Black Scholes model, assuming a life of five years,
      volatility of 60%, and a risk free borrowing rate of 4.5% and will be amortized
      and charged to interest expense over the six month term of the debt commencing
      February 2006.




8




(e)
      On
      April 4, 2006 the Company entered into additional Promissory Notes for $150,000.
      In addition, the Company issued to the lender a stock purchase warrant to
      purchase up to 151,500 shares of common stock of the Company at an exercise
      price of $0.20. The lenders have a lien and security interest that is junior
      to
      two other senior lenders. These warrants were valued at $45, 919 using the
      Black
      Scholes model, assuming a life of five years, volatility of 60%, and a risk
      free
      borrowing rate of 4.5% the discount on the note was amortized and charged to
      interest expense over the three month term of the debt commencing April
      2006.




(f)
      On
      April 4, 2006 the Company entered into additional Promissory Notes for $200,000.
      In addition, the Company issued to the lender a stock purchase warrant to
      purchase up to 228,571 shares of common stock of the Company at an exercise
      price of $0.20. The lenders have a lien and security interest that is junior
      to
      two other senior lenders. These warrants were valued at $37, 033 using the
      Black
      Scholes model, assuming a life of five years, volatility of 60%, and a risk
      free
      borrowing rate of 4.5% and were amortized and charged to interest expense over
      the three month term of the debt commencing April 2006.




**NOTE
      7. STOCKHOLDERS' EQUITY**




During
      the six months ended June 30, 2006, 3,351,955 shares were issued pursuant to
      the
      conversion of cashless warrants.




As
      of
      June 30, 2006, there are 5,926,616 common stock warrants outstanding; of which
      3,278,571 are exercisable at $0.20 per share, 2,298,045 at $0.35 per share
      and
      350,000 exercisable at $0.26 per share. Additionally, there are outstanding
      options to purchase 5,450,000 shares of eNucleus common stock at a weighted
      average price of $0.23 per share.




**NOTE
      8. ACQUISITIONS**




On
      February 9, 2004, the Company, completed an asset purchase of PrimeWire, Inc.
      ("PrimeWire"). PrimeWire's operations primarily focused on providing third
      party
      employee benefits administration via the Internet. The shareholders of PrimeWire
      received $50,000 upon closing and were to receive a three year earn out that
      provided for (i) quarterly cash payments of 10% of the net revenues generated
      by
      the PrimeWire assets and (ii)
      quarterly stock payments of 15% of the net revenues generated by the PrimeWire
      assets with the number of shares to be determined based upon the average closing
      price of the 20 day period prior to the end of each quarter. Additionally,
      PrimeWire had the ability to earn an additional 7% of Net Revenues generated
      by
      large license deals (license agreements in excess of $200,000 in the first
      12
      months of the contract) during the first year.PrimeWire
      results of operations have been included in the financial statements of the
      Company from the date of acquisition.




The
      acquisition has been accounted for using the purchase method as
      follows:




Intangible
              assets (customers contracts)
            
            $
            792,893Software
            
            
            801,774Accounts
              receivable
            
            
            29,529Accounts
              payable
            
            
            (32,124
            )Deferred
              revenue
            
            
            (176,437
            )$
            1,415,635





The
      Company never made any payments of common stock to PrimeWire because it disputed
      the accuracy of the representations and warranties made to it by PrimeWire.
      In
      May of 2004, the Company notified PrimeWire of its intent to set-off amounts
      against the purchase price of the PrimeWire assets pursuant to several alleged
      breaches of the purchase agreement. On May 31, 2005, the Company settled all
      claims with PrimeWire. Under the terms of the settlement, the Company paid
      PrimeWire $400,000 and assigned certain accounts receivable, totaling $707,625
      to PrimeWire as full and final payment.




On
      May
      28, 2004, the Company acquired the operating assets and assumed the operating
      liabilities of TAK Acquisition Co, (“TAK”), a company that provides internet
      enabled solutions to suppliers, marketers and customers in the petroleum
      business. TAK results of operations have been included in the financial
      statements of the Company from the date of acquisition.




9




The
      acquisition has been accounted for using the purchase method as
      follows:




Software
            
            $
            352,005Equipment
            
            
            52,423Accounts
              receivable
            
            
            79,241Accounts
              payable and deferred salaries
            
            
            (102,839
            )$
            380,830




The
      Company paid for this acquisition by issuing common stock and common stock
      options having a fair value of $380,830. In addition, the former TAK owners
      earned an additional 150,000 shares valued at $67,500 which was included in
      software as the Company met certain milestones within the first twelve
      months..




On
      July
      1, 2004 the Company created a software and professional services company
      operating in India. This is a wholly owned subsidiary named eNucleus India,
      Inc.
      Pursuant to an asset acquisition, eNucleus India acquired an eGovernance
      software suite designed to meet the management and accounting requirements
      for
      government entities. Consideration paid consisted of 50,000 shares of eNucleus
      common stock valued at $25,000 and the assignment of a software contract having
      an estimated value of $450,000.




On
      August
      1, 2004, the Company purchased all of the issued and outstanding stock of
      Frontier Technologies Inc. (Technologies), a Singapore-based company, formerly
      owned and operated by Applitech Solution, Ltd. Technologies provides IT
      professional services and solutions for business. The results of operations
      for
      Technologies, since renamed eNucleus Pte. Ltd., has been included in the
      financial statements of the Company from the date of acquisition.




The
      acquisition has been accounted for using the purchase method as
      follows:




Property
&
Equipment
            
            $
            19,534Intangible
              assets
            
            
            447,904Accounts
              Payables
            
            
            (365,438
            )$
            102,000




The
      Company paid for this acquisition by issuing common stock having a fair market
      value of $102,000. Technologies former shareholders are also entitled to receive
      additional stock or cash, at the Company's option, based on an earn-out of
      three
      and a half times the 2005 net income of eNucleus Pte. Ltd. There were no
      additional amounts due as eNucleus Pte. Ltd. incurred losses in 2005 and
      2006.




In
      2004
      the Company entered into negotiations to acquire the customer contracts,
      accounts receivable and the software of Tender City, a business to government
      Internet-based procurement solution, from Applitech Solution, Ltd. (Applitech)
      in exchange for 250,000 shares of the Company's common stock. As the asset
      transfer could not be completed on a timely basis, the Company entered into
      a
      preliminary agreement on October 1, 2004 under which Applitech continued to
      operate Tender City using its' own resources and had agreed to remit half of
      the
      net income of Tender City to the Company and retain the other half up to a
      maximum of $2,000,000. No payments were due to the Company until January 31,
      2006. For the year ended December 31, 2004 the reported net income of Tender
      City was $489,904 and the amount due to the Company was $242,352. The
      arrangement was terminated as of April 30, 2005. As of June 30, 2006 Applitech
      owed eNucleus $262,731.




On
      May 4,
      2005, the Company entered into an asset purchase agreement with Applitech.
      This
      agreement supplemented the October 2004 Tender City agreement (see above) to
      acquire additional assets from Applitech , including customer contracts,
      accounts receivable and software. Applitech’s results of operations have been
      included in the Company’s financial statements from the date of acquisition. The
      purchase consideration consisted of one million shares of common stock (500,000
      common shares due at close of agreement and the remaining shares contingent
      upon
      achievement of certain revenue goals), a payment equal to one half the net
      earnings collected in 2005 up to $2.5 million, calculated and payable after
      the
      2005 10-KSB is filed with the Securities and Exchange Commission in 2006, and
      350,000 warrants.




In
      December of 2005, the Company agreed to amend its purchase agreement with
      Applitech whereby Applitech received an amended amount of 3,000,000 shares
      of
      eNucleus common stock valued at $870,000, all cash previously paid pursuant
      to
      the purchase agreement and the transfer of three million dollars in receivables,
      which were offset by amounts due to Applitech of approximately $1,952,000 as
      final payment due under the purchase agreement. The total cost to acquire
      Applitech was $4,191,000 which was attributed to intangible software
      costs.




On
      May
      18, 2005, the Company acquired certain software and related assets from Acrux
      LLC, a Chicago-based technology company with software assets designed for the
      educational industry to assist with financial and student management. Acrux,
      LLC’s results of operations have been included in the financial statements of
      the Company from the date of acquisition. The purchase price included 375,000
      shares of the Company’s common stock valued at $131,250 plus a 10% earn out
      payment based upon the gross revenue from the purchased assets for a two year
      period (up to a maximum of $2,500,000). As of June 30, 2006, eNucleus was not
      liable to Acrux, LLC pursuant to the earn-out provision.




10




**NOTE
      9. INCOME (LOSS) PER SHARE**




Basic
      income (loss) per share is based on the weighted average of common shares
      outstanding during the period. Diluted income (loss) per share includes
      additional common shares that would have been outstanding if potential common
      shares with a dilutive effect had been issued. A reconciliation of the number
      of
      shares used for the basic and diluted income (loss) per share calculation is
      as
      follows:






For
                the six months ended
              June
                30,
            
            For
                the three months ended
              June
                30,2006
            
            2005
            
            2006
            
            2005Numerator
                for net income (loss) per
                share:Net
              income (loss)
            
            $
            (575,008
            )
            $
            26,086
            
            $
            (426,577
            )
            $
            15,456Denominator:Millions
              of sharesBasic
              weighted average common shares outstanding
            
            
            47
            
            
            32
            
            
            47
            
            
            36Dilutive
              effect of:Stock
                options
            
            
            --
            
            
            2
            
            
            --
            
            
            2Warrants
            
            
            --
            
            
            2
            
            
            --
            
            
            2Diluted
              weighted average common shares
              outstanding
            
            
            47
            
            
            36
            
            
            47
            
            
            40Basic
              and diluted income (loss) per
              share
            
            $
            (0.01
            )
            $
            0.00
            
            $
            (0.01
            )
            $
            0.00




Due
      to
      their anti-dilutive effect, the following potential common shares have been
      excluded from the computation of diluted earning per share:




2006
            2005Warrants
            5,926,616
            --Stock Options
            5,450,000
            --




**NOTE
      10. SEGMENT INFORMATION**




The
      following shows the information by reportable geographic segments for the six
      months ended June 30, 2006:




United
                States
            
            India
            
            Singapore
            
            ConsolidatedRevenues
            
            $
            423,760
            
            $
            3,165,131
            
            $
            69,228
            
            $
            3,658,119Interest
              expense
            
            
            135,812
            
            
            --
            
            
            --
            
            
            135,812Depreciation
              and amortization
            
            
            415,176
            
            
            272,306
            
            
            111,523
            
            
            799,005Segment
              income(loss)
            
            
            (
              1,822,051
            )
            
            1,435,501
            
            
            (188,458
            )
            
            (575,008
            )Segment
              assets
            
            
            4,657,715
            
            
            5,406,709
            
            
            1,446,027
            
            
            11,510,451




Geographic
      segment information for 2005 is not meaningful as foreign operations were not
      material in 2005.




11




**NOTE
      11. INCOME TAXES**




The
      Company accounts for income taxes using the liability method. Under the
      liability method, deferred tax assets and liabilities are determined based
      on
      the difference between the financial statement and tax basis, as measured by
      the
      enacted tax rates assumed to be in effect when these differences are expected
      to
      reverse. Currently the Company is undergoing an analysis of its net operating
      loss carry forwards and is in the process of filing its tax returns for the
      years 2000 to 2004. No income taxes were provided for the six months ended
      June
      30, 2006 and 2005.




In
      assessing the realizability of future tax assets, management considers whether
      it is more likely than not that some portion or all of the future tax assets
      will not be realized. The ultimate realization of future tax assets is dependent
      upon the generation of future taxable income during the periods in which those
      temporary differences become deductible. Management considers the scheduled
      reversal of future tax liabilities, projected future taxable income and tax
      planning strategies in making this assessment. Management has provided for
      a
      valuation allowance on all of its deferred tax assets as there is no assurance
      that future tax benefits will be realized.




We
      generally do not provide income taxes on undistributed earnings of non-United
      States subsidiaries because such earnings are intended to be reinvested
      indefinitely to finance foreign activities.




Deferred
      taxes consist primarily of net operating loss carryforwards. The deferred taxes
      are approximately $4,700,000 at June 30, 2006. A full valuation allowance was
      provided to offset the deferred taxes. Net operating loss carryforwards expire
      at various dates through 2020 .




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




The
      following discussion should be read in conjunction with the financial statements
      and related notes which are included under Item 1 and with the Management's
      Discussion and Analysis Of Financial Condition and Results Of Operations and
      the
      audited financial statements and related notes included in eNucleus' 2005 Form
      10-KSB, as filed with the Securities and Exchange Commission on June 2,
      2006.




This
      Form
      10-QSB contains forward-looking statements within the meaning of the Private
      Securities Litigation Reform Act of 1995, Section 21E of the Securities Exchange
      Act of 1934 and Section 27A of the Securities Act of 1933 that involve numerous
      risks and uncertainties. Forward-looking statements can be identified by the
      use
      of forward-looking terminology such as "estimates," "projects," "anticipates,"
      "expects," "intends," "believes," or comparable terminology or by discussions
      of
      strategy that involve risks and uncertainties. In addition, any statements
      which
      refer to expectations, projections or other characterizations of future events
      or circumstances are forward-looking statements. Actual results could differ
      from such forward-looking statements. We undertake no obligation to revise
      forward-looking statements. Readers are encouraged to review and consider
      carefully the various disclosures made by us in this report and our other
      reports filed with the Securities and Exchange Commission, including our Form
      10-KSB for the year ended December 31, 2005. Such risks and uncertainties
      include our ability to raise the funds necessary to finance our operations,
      general effects of our restructuring and emergence from Chapter 11
      reorganization, our ability to successfully execute on our business plan,
      competitive factors and attracting new customers.




**RESULTS
      OF OPERATIONS**




**Revenue**




For
      the
      three months ended June 30, 2006, revenue decreased $527,007 or 28% to
      $1,859,517 from $2,386,524 for the three months ended June 30, 2005. The
      decrease was attributable to the lack of license fee revenue in the USA. For
      the
      six months ended June 30, 2006, revenues increased $250,679 or 7% to $3,658,119
      from $3,407,440 for the six months ended June 30, 2005. This increase was
      attributable to the acquisitions made and growth of business mainly in
      India.




**Cost
      of goods sold.**




For
      the
      three and six months ended June 30, 2006, cost of goods sold of $755,605 and
      $1,227,383 respectively, related to the purchase and customization of software
      sold. In 2005 we did not have any cost of goods sold for the first four
      months.




**Operating
      expenses.**




For
      the
      three months ended June 30, 2006, operating expenses increased $71,038 or 5%
      to
      $1,420,027 from $1,348,989 for the three months ended June 30, 2005. Operating
      expenses increased $531,428 or 22% to $2,869,932 from $2,338,504 for the six
      months ended June 30, 2005. The majority of the increase relates to the salaries
      and other operating expenses associated with the acquisitions and the addition
      of corporate personnel. Depreciation and amortization expense increased $60,757
      or 20% to $369,353 in the three months ended June 30, 2006 as compared to
      $308,596 for the three months ended June 30, 2005. For the six months ended
      June
      30, 2006 depreciation and amortization increased $215,833 or 37% to $799,005
      as
      compared to $583,172 for the six months ended June 30, 2005. This was
      attributable to the increase in amortization of intangible assets.




12




**Net
      Income.**




As
      of
      result of the items discussed in the preceding paragraphs, the Company’s net
      income decreased $601,094 to a net loss of $575,008 for the six months ended
      June 30, 2006, as compared to net income of $26,086 for the six months ended
      June 30, 2005 and $442,033 to a net loss of $426,577 for the three months ended
      June 30, 2006 as compared to net income of $15,456 for the three months ended
      June 30, 2005.




**LIQUIDITY
      AND CAPITAL RESOURCES**




The
      satisfaction of the Company's cash requirements hereafter will depend in large
      part on its ability to successfully generate revenues and net profits from
      operations and raise capital to fund operations. There can, however, be no
      assurance that sufficient cash will be generated from operations or that
      unanticipated events requiring the expenditure of funds within its existing
      operations will not occur. Management is aggressively pursuing additional
      sources of funds, the form of which will vary depending upon prevailing market
      and other conditions and may include high-yield financing vehicles, short or
      long-term borrowings or the issuance of equity securities. Capital raising
      activities in 2005 totaled $2.7 million compared to $1.5 million in 2004 and
      to
      date in 2006, we have obtained financing in the form of loans of $650,000.
      Our
      working capital has improved to $1 million at June 30, 2006 as compared to
      approximately $600,000 at December 31, 2005.




**QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**




The
      Company does not have significant exposure to changing interest rates or
      currency fluctuations. The Company does not undertake any specific actions
      to
      cover its exposure to interest rate risk and the Company is not party to any
      interest rate risk management transactions. The Company does not purchase or
      hold any derivative financial instruments. The Company will continue to monitor
      interest rate and currency fluctuation risks, and if it is deemed necessary
      it
      will take appropriate measures to mitigate such risks.




**ITEM
      3. CONTROLS AND PROCEDURES**




(a)
      Based
      upon an evaluation by our Chief Executive Officer and Principal Financial
      Officer within 90 days prior to the filing date of this Quarterly Report on
      Form
      10-Q he has concluded that our disclosure controls and procedures as
      defined in Rule 13a-14(c) under the Securities Exchange Act of 1934, as amended,
      are effective for gathering, analyzing and disclosing the information we are
      required to disclose in our reports filed under such Act. (b) There were no
      significant changes in our internal controls or in other factors that could
      significantly affect these controls subsequent to the date of the evaluation
      referred to above.




PART
      II -
      OTHER INFORMATION




**ITEM
      1. LEGAL PROCEEDINGS**




NONE




**ITEM
      2. CHANGES IN SECURITIES AND USE OF PROCEEDS**




Our
      common stock is traded on the NASDAQ OTC Bulletin Board (OTCBB) under the symbol
      ENUI. Prior to December 2003, our stock was traded under the symbol ENCU. A
      public trading market having the characteristics of depth, liquidity and
      orderliness depends upon the existence of market makers as well as the presence
      of willing buyers and sellers, which are circumstances over which we do not
      have
      control.




The
      Company's Certificate of Incorporation authorizes the issuance of 100,000,000
      shares of common stock, par value $.001 per share, and 20,000,000 shares of
      preferred stock, par value $.001 per share.




At
      the
      beginning of the year the Company had 44,008,545 common shares outstanding.
      During the six months ended June 30, 2006 3,351,958 shares were issued pursuant
      to the conversion of cashless warrants. As of June 30, 2006 the Company had
      47,360,503 common shares issued and outstanding. The Company has 5,926,616
      common stock warrants with 3,278,571 exercisable at $0.20 per share, 2,298,045
      exercisable at $0.35 per share, and 350,000 exercisable at $0.26 per share.
      Additionally, there are outstanding options to purchase 5,450,000 shares of
      eNucleus common stock at a weighted average price of $0.23 per share which
      vests
      over a period from November 2004 through April 2007  .




13




**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**




NONE




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




NONE




**ITEM
      5. OTHER INFORMATION**




On
      Ju ly
      14,
      2006, Dhru Desai resigned as officer and director of the Company. John Paulsen
      resigned as a director of the Company but continues as the Principal Financial
      and Accounting Officer. Al Case was appointed Chairman of the Board of Directors
      and Executive Officer of the Company.




On
      July
      28, 2006 Prakash Tambe was terminated as Chief Information Officer.




Name
            Age
            PositionRandy Edgerton
            53
            Director, Chief Executive Officer and
              PresidentRaymond Pirtle, Jr.
            65
            DirectorAugustine N. Esposito
            52
            DirectorAl Case
            51
            Chairman of the Board and Executive
              OfficerEd
                Skoldberg
            57
            Director




14




**Executives:**




Randy
      Edgerton, is currently a director and our Chief Executive Officer and President.
      Mr. Edgerton is responsible for the management of eNucleus' operations as well
      as sales and marketing. Mr. Edgerton transitioned from our Executive Vice
      President. Prior to joining eNucleus, Mr. Edgerton was at TAK Industrial
      Corp/Tak Acquisition DBA - TAK Group serving as President from 1996 to
      2004.




**Board
      of Directors:**




Our
      board
      of directors consists of five members, namely, Randy Edgerton, Raymond Pirtle,
      Jr., Augustine N. Esposito, Al Case and Ed Skoldberg.




Al
      Case,
      currently Chairman of the Board and Executive Officer, is the president and
      Chief Executive Officer of Stamford Research, a technology and management
      research firm based in Stamford, CT, where he has maintained such position
      since
      April 2003. His 30 year career includes having been division president of a
      NYSE-listed company, CEO of a small technology company, and an industry analyst
      for Gartner Group, where he managed their software, investor research, and
      benchmarking divisions. He currently serves on several boards for both public
      and private companies. From January 2000 through April 2003, Mr. Case was
      president of Gartner Matrix Division and senior vice president of Investor
      Research.




Raymond
      Pirtle, Jr., currently a director, is a veteran of the financial services
      industry, having spent the past three decades in a variety of senior roles
      in
      corporate finance, institutional sales, investment banking, and equity research,
      notably with J. C. Bradford & Co., Equitable Securities/SunTrust Equitable,
      and Avondale Partners, LLC. Ray has corporate board experience with both public
      and private companies, both in the financial services sector and beyond, and
      has
      served on Compensation, Audit, Nominating, and Employee Stock Options
      committees. >From April 2005 to the present, Mr. Pirtle was President of
      Claridge Company LLC; from June 2001 to April 2005, Mr. Pirtle was managing
      partner of Avondale Partners Inc.; and prior to 2001, Mr. Pirtle was a managing
      director of Equitable Securities Corp.




Augustine
      N. Esposito, currently a director, is an experienced entrepreneur and
      information technology expert. He has more than twenty years of experience
      raising capital for start-ups, consulting to IT Services companies, and managing
      public and private entities, notably with NetSearch, ANE Enterprises, and SNE,
      Inc. He is currently serving on the boards of several high-tech start-up
      companies. From April 2000 until November 2000, Mr. Esposito was President
      of
      NetSearch LLC.




Ed
      Skoldberg, currently a director, is a seasoned executive with over 30 years
      experience in the financial services and manufacturing sectors, with a focus
      on
      strategic planning, project management, and systems design, notably with Empire
      Blue Cross and Blue Shield, American Medical Security, Conseco Medical
      Insurance, and KT Holdings, Inc. Skoldberg's entrepreneurial experience also
      includes raising capital on Wall Street and managing billon dollar revenue
      companies. >From 2003 to 2005, Mr. Skoldberg was President and Chief
      Operating Officer at KT Holdings, Inc.; from 2001 to 2002, Mr. Skoldberg was
      President and Chief Executive Officer at AMPLAS; from 2001 to 2002 Mr. Skoldberg
      was Chief Operating Officer at Stone Street Financial; and from 1999 to 2001,
      Mr. Skoldberg was Chief Operating Officer at Conseco Medical Insurance
      Company.




**ITEM
      6. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**




During
      2005, the Company entered into a transaction, whereby it sold two of their
      subsidiaries, Financial ASPx and Supply Chain ASPx, Inc., to Rotate Black
      Investment Fund 1, LLC (“Rotate Black”) which agreed to assume liabilities to
      the Internal Revenue Service and certain other state revenue agencies, in
      exchange for a note from the Company. The Companies sold to Rotate Black had
      only liabilities recorded, but had the right to enter into a long term license
      for software applications, which had limited use and could be replicated for
      approximately $75,000. These licenses were never issued to Rotate Black and
      the
      application to the venture for which they were to be used, has been
      abandoned.




The
      amount of the note payable to Rotate Black totaling $832,365 as of June 30,
      2006
      accrues interest at 10% annum and unpaid interest and principal are due in
      November 2007.




Rotate
      Black is a major shareholder of the Company and one of its members was a
      director and shareholder of the Company and the spouse of the other member
      was
      also a director and shareholder of the Company.




15




**ITEM
      7. EXHIBITS AND REPORTS ON FORM 8-K**




(A)
      Exhibits.




31
      -
      Certification of Chief Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.




32
      -
      Certification of Chief Executive Officer and Principal Accounting Officer
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.




**SIGNATURES**




In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersi0gned, thereunto duly
      authorized.




Signature
              
              Title
              
              Date/s/   Randy
                Edgerton
              
              President/Chief Executive
                Officer
              
              August 17, 2006Randy
                  Edgerton/s/    John
                Paulsen
              
              Principal Financial
                and
                Accounting Officer
              
              August 17, 2006John
                  Paulsen




16