**UNITED
      STATES**


**SECURITES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-QSB**





**(Mark
      One)**





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


For
      the
      quarterly period ended **March
      31, 2006**





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


For
      the
      transition period from ________________________ to
      _____________________________


Commission
      file number:  **000-26703**





IMMEDIATEK,
      INC .


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





**Nevada**
            
            **86-0881193**(State
                or other jurisdiction of
            
            (IRS
                Employer Identification No.incorporation
                or organization)








**10488
      Brockwood Road**


**Dallas,
      Texas 75238**




(Address
      of principal executive offices)





**(972)
      852-2876**


(Issuer’s
      telephone number)








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





Check
      whether the issuer (1) filed all reports required to be filed by
      Section 13 or 15(d) of the Exchange Act during the past 12 months (or
      for such shorter period that the registrant was required to file such reports),
      and (2) has been subject to such filing requirements for the past
      90 days.  Yes o No þ





Indicate
      by check mark whether the registrant is a shell company (as defined in
      Rule 12b-2 of the Exchange Act)           Yes o No þ





As
      of
      March 31, 2006, the issuer had 32,394,655 shares of common stock outstanding.
      As
      of June 23, 2006, the issuer had 378,168 shares
      of
      common stock outstanding.





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











**IMMEDIATEK,
        INC.**
 
 **TABLE
        OF CONTENTS**
 
  **Page****Part
                  I - Financial Information**Item
                  1. Financial Statements
              
              
              1Condensed
                  Consolidated Balance Sheet at March 31, 2006 (unaudited)
              
              
              1Condensed
                  Consolidated Statements of Operations for the three monthsended
                  March 31, 2006 and 2005 (unaudited)
              
              
              2Condensed
                  Consolidated Statements of Cash Flows for the three monthsended
                  March 31, 2006 and 2005 (unaudited)
              
              
              3Notes
                  to Condensed Consolidated Financial Statements (unaudited)
              
              
              4Item
                  2. Management’s Discussion and Analysis or Plan of
                  Operation
              
              
              17Item
                  3. Controls and Procedures.
              
              
              24**Part
                  II - Other Information**Item
                  4. Submission of Matters to a Vote of Security Holders
              
              
              26Item
                  6. Exhibits
              
              
              26
 
 See
        accompanying notes to condensed consolidated
        financial statements.
 
 
 
  **PART
        I - FINANCIAL STATEMENTS**
 
 **Immediatek,
                    Inc****Condensed
                    Consolidated Balance Sheet****March
                    31, 2006****(Unaudited)**March
                    31,2006**Assets**Current
                    assets:Cash
                
                $
                82,521Accounts
                    receivable
                
                
                4,000Prepaid
                    expenses and other current assets
                
                
                111,265Total
                    current assets
                
                
                197,786Fixed
                    assets, net
                
                
                18,831Goodwill
                
                
                162,071**Total
                    Assets**
                
                $
                378,688**Liabilities
                    and Stockholders' Deficit**Current
                    liabilities:Accounts
                    payable
                
                $
                554,779Accrued
                    liablities
                
                
                488,154Accrued
                    Interest
                
                
                118,823Notes
                    payable
                
                
                530,000Notes
                    payable - related party
                
                
                330,000Convertible
                    notes payable
                
                
                580,749Total
                    current liabilities
                
                
                2,602,505Stockholders'
                    Deficit:Common
                    stock, $0.001 par value, 500,000,000 sharesauthorized,
                    32,394,655 shares issued and outstanding
                
                $
                32,395Additional
                    paid-in capital
                
                
                6,993,915Accumulated
                    Deficit
                
                
                (9,250,127
                )Total
                    Stockholders' Deficit
                
                
                (2,223,817
                )**Total
                    Liabilities and Stockholders' Deficit**
                
                $
                378,688
 See
      accompanying notes to condensed consolidated financial statements.  1
  **Immediatek,
                    Inc.****Condensed
                    Consolidated Statements of Operations****(Unaudited)**Three
                    months endedMarch
                    31,2006
                
                2005(RESTATED)Revenues
                
                $
                17,026
                
                $
                20,795Cost
                    of sales
                
                
                18,939
                
                
                22,409Gross
                    Margin
                
                
                (1,913
                )
                
                (1,614
                )Expenses:General
                    and administrative expenses
                
                
                65,716
                
                
                121,017Consulting
                    fees
                
                
                -
                
                
                17,836Professional
                    fees
                
                
                28,043
                
                
                37,916Administrative
                    salaries
                
                
                24,750
                
                
                112,097Non-cash
                    stock compensation
                
                
                3,410
                
                
                35,804Depreciation
                    and amortization
                
                
                1,337
                
                
                39,043Total
                    cost and expenses
                
                
                123,256
                
                
                363,713Net
                    operating loss
                
                
                (125,169
                )
                
                (365,327
                )Other
                    income expense:Loss
                    on extinguishment of debt
                
                
                -
                
                
                (46,000
                )Interest
                    expense
                
                
                (37,757
                )
                
                (34,801
                )Net
                    loss
                
                $
                (162,926
                )
                $
                (446,128
                )Weighted
                    average number ofcommon
                    shares outstanding - basic and fully diluted
                
                
                32,394,655
                
                
                30,623,188Net
                    loss per share - basic and fully diluted
                
                $
                (0.01
                )
                $
                (0.02
                )
 See
        accompanying notes to condensed consolidated
        financial statements.
  2
   **Immediatek,
                    Inc.****Condensed
                    Consolidated Statements of Cash
                    Flow****(Unaudited)**Three
                    months endedMarch
                    31,2006
                
                2005(RESTATED)**Cash
                    flows from operating activities**Net
                    loss
                
                $
                (162,926
                )
                $
                (446,128
                )Depreciation
                    and amortization
                
                
                1,337
                
                
                39,043Non-cash
                    interest expense
                
                
                9,371
                
                
                24,840Non-cash
                    consulting fees
                
                
                3,410
                
                
                37,680Non-cash
                    stock compensation
                
                
                -
                
                
                35,804Loss
                    on extinguishment of debt
                
                
                -
                
                
                46,000Adjustments
                    to reconcile net loss to netcash
                    used by operating activities:Accounts
                    receivable
                
                
                -
                
                
                73,281Prepaid
                    expenses
                
                
                (107,597
                )
                
                15,480Other
                    assets
                
                
                -
                
                
                (14,857
                )Accounts
                    payable
                
                
                66,268
                
                
                789Accrued
                    liabilities
                
                
                (19,922
                )
                
                12,108Accrued
                    interest
                
                
                28,206
                
                
                7,048Net
                    cash used by operating activities
                
                
                (181,853
                )
                
                (168,912
                )**Cash
                    flows from investing activities**Purchase
                    of fixed assets
                
                
                (1,569
                )
                
                -Net
                    cash used by investing activities
                
                
                (1,569
                )
                
                -**Cash
                    flows from financing activities**Cash
                    deficit
                
                
                (2,951
                )
                
                -Payments
                    on notes payable
                
                
                (18,606
                )
                
                (230,000
                )Proceeds
                    from notes payable
                
                
                287,500
                
                
                428,000Net
                    cash provided by financing activities
                
                
                265,943
                
                
                198,000Net
                    increase in cash
                
                
                82,521
                
                
                29,088Cash
                    - beginning
                
                
                -
                
                
                21,550Cash
                    - ending
                
                $
                82,521
                
                $
                50,638Supplemental
                    disclosures:Interest
                    paid
                
                $
                -
                
                $
                833Number
                    of common stock shares issued for services
                
                
                -
                
                
                264,000
 See
        accompanying notes to condensed consolidated
        financial statements.
  3
   
 **IMMEDIATEK,
        INC. AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **MARCH
        31, 2006**
 **(Unaudited)**
  **NOTE
        1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 **Correction
        of Errors in Prior Comparative Financial Statements:** Immediatek, Inc. (“Immediatek” or the “Company”) has restated its previously
        issued 2005 consolidated financial statements. The accompanying financial
        statements for the quarter ended March 31, 2005, have been restated to reflect
        the corrections. Additionally, the retained deficit at January 1, 2006 was
        increased by $1,891,601 as a result of adjustments to the previously reported
        amounts.
 
 The
                  following is a summary of the restatements for 2005:Increase
                  in non-cash consulting expense to recordcommon
                  stock issued for consulting services
              
              $
              431,906Increase
                  in interest expense to impute interest on non-interestbearing
                  notes
              
              
              33,288Increase
                  in non-cash compensation expense to recordstock
                  option granted on proper measurement date
              
              
              83,432Decrease
                  in non-cash consulting expense to record stockoption
                  granted on proper measurement date
              
              
              (18,822
              )Loss
                  on forgiveness of debt for common stock issuedin
                  exchange for release of lien on certain assets purchased
              
              
              46,000Increase
                  in non-cash compensation expense to properly record
                common
                  stock issued to employees for services rendered
              
              
              180,445Reclassification
                  of professional fees related to financingtransactions
                  as a reduction of proceeds
              
              
              (180,410
              )Unrecorded
                  liabilities for accrued mechanical and royalty fees
              
              
              34,281Adjustment
                  to increase liabilities recorded for payroll taxes
              
              
              382,864Adjustment
                  to increase liabilities for sales taxes
              
              
              60,947Warrants
                  issued for consulting services
              
              
              188,145Increase
                  in non-cash compensation expense to record shares issued
                  toemployees
                  and non-employees from shares owned by officers
              
              
              160,666Increase
                  in non-cash consulting expense to record warrants to
                  purchaseshares
                  of common stock owned by officers of the Companyissued
                  to consultants for services rendered
              
              
              48,860Loss
                  on extinguishment of debt in exchange for common stockmeasured
                  at fair market value
              
              
              439,999Total
                  increase in retained deficit
              
              $
              1,891,601
 
  4
  The
        effects on the Company’s previously issued consolidated balance sheet at
        December 31, 2005 are summarized as follows:
 
 *Balance
        Sheet as of December 31, 2005*
 
 **Previously**
                **Recorded**
              
              **Adjustment**
              
              
              
              **Restated**Accrued
                  liabilities
              
              $
              480,991
              
              $
              27,085
              
              
              
              
              $
              508,076Accrued
                  interest
              
              
              85,397
              
              
              5,220
              
              
              
              
              
              90,617Common
                  stock
              
              
              38,769
              
              
              (6,374
              )
              
              (1)
              
              
              32,395Additional
                  paid in capital
              
              
              5,115,463
              
              
              1,865,670
              
              
              (1)
              
              
              6,981,133Accumulated
                  deficit
              
              $
              7,195,600
              
              $
              1,891,600
              
              
              
              
              $
              9,087,200
  
 (1)
              See
                  Note 3 below for a discussion of the adjustment to common stock
                  relating
                  to the rescission of shares that were previously issued. The original
                  issuance of the shares in 2005 was recorded to common stock and
                  additional
                  paid in capital, thus there was no impact to accumulated deficit
                  in the
                  restated financial statements.
 
 **Going
        Concern:** These
        financial statements have been prepared on a going concern basis, which
        contemplates the realization of the assets of the Company and the satisfaction
        of its liabilities and commitments in the normal course of business. 
Management of the Company believes that, as a result of $3,000,000 in funding
        received in June 2006 (see Note 9), the Company has adequate resources to
        fund operations for fiscal 2006 based on its current business plan.  There
        can be no assurances, however, that there will not be delays or other unforeseen
        events that prevent the Company from achieving its current business
        plan.
  See
        Note
        2 for a discussion of the Company’s ability to continue as a going concern and
        its plans for addressing those issues.  The inability to obtain additional
        financing in the future, if and when needed, could have a material adverse
        effect on the Company.
  **Description
        of Business:** Immediatek, through its wholly-owned, operating subsidiary, DiscLive, Inc.,
        records live content, such as concerts and conferences, and makes the recorded
        content available for sale to attendees within fifteen minutes after the
        conclusion of the live event. The recorded content also is made available
        for
        sale on DiscLive’s website, www.disclive.com.
 
 **Basis
        of Presentation:** The
        condensed consolidated financial statements include the accounts of all
        wholly-owned subsidiaries of the Company, including DiscLive, Inc, which
        conducts primarily all of the Company’s operating activity.  All
        significant intercompany accounts and transactions have been eliminated in
        the
        condensed consolidated financial statements.
 
 The
        Company’s condensed consolidated balance sheet as of March 31, 2006, the
        condensed consolidated statements of operations for the three months ended
        March
        31, 2006 and 2005 (restated), and the condensed consolidated statements of
        cash
        flows for the three months ended March 31, 2006 and 2005 (restated), are
        unaudited. Certain accounts have been reclassified to conform to the current
        period’s presentation. In the opinion of management, these statements have been
        prepared on the same basis as the audited consolidated financial statements
        and
        include all adjustments necessary for the fair presentation of the Company’s
        financial position, results of operations and cash flows. Such adjustments
        were
        of a normal recurring nature, except as discussed above in “Correction of Errors
        in Prior Comparative Financial Statements.”  The results of operations for
        the three months ended March 31, 2006 are not necessarily indicative of the
        results that may be expected for the entire year. Additional information
        is
        contained in the Company’s Annual Report on Form 10-KSB for the fiscal year
        ended December 31, 2005, which was filed with the Securities and Exchange
        Commission (the “SEC”) and which should be read in conjunction with this
        quarterly report. However, see “Correction of Errors in Prior Comparative
        Financial Statements” above for a description of adjustments to be made to the
        reported amounts in the financial statements included in the Company’s Annual
        Report on Form 10-KSB for the fiscal year ended December
        31,2005.
  5
  
 The
        preparation of the condensed consolidated financial statements, in conformity
        with accounting principles generally accepted in the United States of America,
        requires management of the Company to make estimates and assumptions that
        affect
        the reported amounts of assets and liabilities, and the disclosure of contingent
        assets and liabilities, at the dates of the financial statements and the
        reported amounts of revenues and expenses during such reporting periods.
        Actual
        results could differ from these estimates.
  The
        Company is subject to a number of risks and can be affected by a variety
        of
        factors. For example, management of the Company believes that the following
        factors, as well as others, could have a significant negative effect on the
        Company’s future financial position, results of operations or cash flows:
        generating sufficient revenue from operating activity to support operations,
        obtaining sufficient contracts to record live content, achieving anticipated
        levels of sales of products, competition from a substantial competitor,
        maintaining a quality product in light of technological changes and upgrades,
        dependence on vendors and contractors and delays and disruptions in the delivery
        or shipment of the Company’s products.
 
 **Cash:** Cash
        consists principally of amounts held in demand deposit accounts and amounts
        invested in financial instruments with initial maturities of three months
        or
        less at the time of purchase.  There were no cash equivalents at the three
        months ended March 31, 2006.
 
 **Fair
        Value of Financial Instruments:** The fair
        value of financial instruments is determined by reference to various market
        data
        and other valuation techniques, as appropriate. Unless otherwise disclosed,
        the
        fair values of financial instruments approximate their recorded value due
        primarily to their short-term nature.
 
 The
        estimated fair value of financial instruments has been determined by the
        Company
        based on available market information and appropriate valuation methodologies.
        Considerable judgment is required, however, in interpreting market data to
        develop the fair value estimates. The estimates, therefore, may not be
        indicative of the amount the Company might realize in a current market
        exchange.
 
 **Fixed
        assets:** Fixed
        assets are stated at the lower of cost or estimated net recoverable amount.
        The
        cost of property, plant and equipment is depreciated using the straight-line
        method based on the lesser of the estimated useful lives of the assets or
        the
        lease term based on the following life expectancy:
 
 Computer
                  equipment
              
              5
                  yearsSoftware
              
              3
                  yearsOffice
                  furniture and fixtures
              
              7
                  years
 
 Repair
        and maintenance expenditures are charged to operations as incurred. Major
        improvements and replacements, which extend the useful life of an asset,
        are
        capitalized and depreciated over the remaining estimated useful life of the
        asset. When assets are retired or sold, the costs and related accumulated
        depreciation and amortization are eliminated and any resulting gain or loss
        is
        reflected in operations.
 
 **Revenue
        recognition:** The
        Company recognizes revenue from its sales based on the gross sale amount
        pursuant to the indicators outlined in EITF 99-19, as the Company is the
        primary
        obligator in the sale arrangement, establishes all pricing levels and has
        sole
        discretion with respect to supplier selection. All costs based upon each
        sale
        are expensed as costs of sales as revenue is recognized. Pursuant to EITF
        00-10,
        the Company will include all shipping and handling fees charged to its customers
        in gross revenue. All actual costs incurred by the Company for shipping and
        handling are immaterial in nature and are included as costs of sales. The
        Company will recognize a revenue transaction as being complete upon delivery
        of
        product and so record the revenue. The Company bases this recognition policy
        on
        the authoritative literature located in FAS-48, par 6.
 
 The
        Company sells its custom CD products at the venue and orders from its web
        site.
        All revenue generated from both types of sales is recognized upon delivery
        to
        the customer. In 2004, the Company added a feature to its website whereby
        its
        on-line customers have the ability to download pre-recorded music in the
        form of
        a proprietary file for use on various computer equipment. All sales generated
        from the download option are recognized upon each physical download. The
        download system is designed to require credit card processing and acceptance
        prior to allowing any download capabilities. At the point the credit card
        authorization has processed, the Company recognizes the revenue generated
        from
        that sale.
  6
  
 
 The
        cost
        of services, consisting of staff payroll, outside services, equipment rental,
        communication costs and supplies, is expensed as incurred.
 
 Revenue
        for the three months ended March 31, 2006 was $17,026 and cost of sales was
        $18,939. Revenue for the three months ended March 31, 2005 (restated) was
        $20,795 and costs of sales was $22,409.
 
 **Goodwill:** The
        Company evaluates the recoverability of goodwill whenever events or changes
        in
        circumstances indicate that an intangible asset’s carrying amount may not be
        recoverable. Such circumstances could include, but are not limited to:
        (1) a significant decrease in the market value of an asset, (2) a
        significant adverse change in the extent or manner in which an asset is used
        or
        (3) an accumulation of costs significantly in excess of the amount
        originally expected for the acquisition of an asset. The Company measures
        the
        carrying amount of the asset against the estimated undiscounted future cash
        flows associated with it. Should the sum of the expected future cash flows
        be
        less than the carrying value, the Company would recognize an impairment loss.
        At
        December 31, 2005, the Company reviewed the carrying value of goodwill and
        recognized an impairment loss in the amount of $162,071 as of December 31,
        2005 (restated).
 
 **Impairment
        of long-lived assets:** The
        Company reviews its long-lived assets periodically to determine potential
        impairment by comparing the carrying value of the long-lived assets with
        the
        estimated future cash flows expected to result from the use of the assets,
        including cash flows from disposition. Should the sum of the expected future
        cash flows be less than the carrying value, the Company would recognize an
        impairment loss. An impairment loss would be measured by comparing the amount
        by
        which the carrying value exceeds the fair value of the long-lived assets.
        The
        Company recognized impairment losses in the amount of $539,434 as of
        December 31, 2005 (restated).
 
 **Stock-Based
        Compensation:** For all
        periods presented, the Company has used the fair value based method of
        accounting for stock-based compensation, as defined in Statement of Financial
        Accounting Standards (“SFAS”) No. 123 “Accounting for Stock-Based
        Compensation.” Under this method, stock-based compensation expense is determined
        on the measurement date based on the estimated fair value of the award. Stock
        based compensation includes stock options and awards granted to both employees
        and consultants.
 
 **Net
        loss per share:** The net
        loss was used in the calculation of both basic and diluted loss per share.
        The
        weighted average number of common shares outstanding was also the same for
        calculating both basic and diluted loss per share. Options to purchase 612,500
        shares of common stock and warrants to purchase 3,742,249 shares of common
        stock
        in 2006, and options to purchase 450,000 shares of common stock and warrants
        to
        purchase 3,905,582 shares of common stock in 2005, were not included in the
        computation of diluted loss per share, as the effect of including the options
        and warrants in the calculation would be anti-dilutive.
  **Comprehensive
        Loss:** For all
        periods presented, comprehensive loss is equal to net loss.
  **Recently
        Issued Accounting Pronouncements:**
 
 *Accounting
        Changes and Error Corrections* .
        In
        May 2005, the Financial Accounting Standards Board (“FASB”) issued
        Statement of Financial Accounting Standards (“SFAS”) No. 154, “Accounting
        Changes and Error Corrections, a replacement of Accounting Principles Board
        (“APB”) Opinion No. 20 and FASB Statement No. 3” (“SFAS
        No. 154”). SFAS No. 154 requires retrospective application to prior
        periods’ financial statements of a voluntary change in accounting principle
        unless it is impracticable. APB Opinion No. 20, “Accounting Changes,”
previously required that most voluntary changes in accounting principle be
        recognized by including in net income of the period of the change the cumulative
        effect of changing to the new accounting principle. SFAS No. 154 became
        effective for the Company on January 1, 2006. The adoption of SFAS
        No. 154 did not have a material impact on the Company’s consolidated
        financial statements. The Company will continue to apply the requirements
        of
        SFAS No. 154 to any future accounting changes and error
        corrections.
 
  7
  *Share-Based
        Payment* .
        In
        December 2004, FASB issued SFAS No. 123 (revised 2004), “Share Based
        Payment” (“SFAS No. 123(R)”). SFAS No. 123(R) supersedes APB Opinion
        No. 25, “Accounting for Stock Issued to Employees,” and amends SFAS
        No. 95, “Statement of Cash Flows.” Generally, the fair value approach in
        SFAS No. 123(R) is similar to the fair value approach described in SFAS No.
        123. In 2005, the Company used the Black-Scholes formula to estimate the
        fair
        value of stock issued, and stock options granted, to employees. The Company
        adopted SFAS No. 123(R), using the modified-prospective method, beginning
        January 1, 2006. The Company also elected to continue to estimate the fair
        value of stock issued, and stock options granted, to employees using the
        Black-Scholes formula. In the first quarter of 2006, the adoption of SFAS
        No. 123(R) did not have a material impact on the Company’s first quarter
        stock-based compensation expense. Further, the Company believes that the
        adoption of SFAS No. 123(R) will not have a material impact on the
        Company’s future stock-based compensation expense. As of March, 31, 2006, there
        was no unrecognized compensation cost related to nonvested share-based
        compensation arrangements.
 
 *Inventory
        Costs.* In
        November 2004, FASB issued SFAS No. 151, “Inventory Costs, an
        amendment of Accounting Research Bulletin No. 43, Chapter 4” (“SFAS
        No. 151”). SFAS No. 151 requires that abnormal amounts of idle
        facility expense, freight, handling costs and wasted materials (spoilage)
        be
        recorded as current-period charges and that the allocation of fixed production
        overheads to inventory be based on the normal capacity of the production
        facilities. SFAS No. 151 became effective for our Company on
        January 1, 2006. The adoption of SFAS No. 151 did not have a material
        impact on our consolidated financial statements.
 
 **NOTE
        2 - GOING CONCERN**
 
 As
        shown
        in the accompanying financial statements, as of March 31, 2006, the Company
        has
        accumulated net losses from operations totaling $9,250,127, the Company’s
        current liabilities exceeded its current assets by $2,404,719 and its total
        liabilities exceeded its total assets by $2,223,817. These factors raise
        substantial doubt about the Company’s ability to continue as a going
        concern.
 
 As
        a
        result of the Company’s inability to generate sufficient cash from operating
        activities to sustain its operations, additional financing was required.
        The
        Company has been attempting to raise adequate capital to be able to continue
        its
        operations and implement its business plan. Management has had to devote
        a
        significant amount of time to raising capital rather than to operations.
        Due the
        lack of adequate funds, management of the Company took certain steps in late
        2005 and the first quarter of 2006 to reduce cash expenditures while pursuing
        additional financing. In January 2006, the Company entered into the Securities
        Purchase Agreement with Radical Holdings LP, which provided the Company with
        an
        aggregate of $3.0 million of funds in June 2006 (see Note 9). These
        proceeds are required to be used to pay all outstanding liabilities, including,
        among others, accounts payable and indebtedness. After satisfying all of
        the
        Company’s liabilities, management of the Company estimates that it will have
        $750,000 of operating funds, which management anticipates will sustain the
        Company’s operations for fiscal year 2006. At the end of fiscal year 2006, the
        Company will be required to obtain additional funds if it does not generate
        sufficient cash from operating activities to fund its future operating
        activities.
  The
        accompanying financial statements have been prepared on a going concern basis,
        which contemplates the realization of assets and the satisfaction of liabilities
        in the normal course of business. These financial statements do not include
        any
        adjustments to the recoverability and classification of recorded asset amounts
        or the amount and classification of liabilities that might be necessary should
        the Company be unable to continue as a going concern.
 
 **NOTE
        3 - COMMON STOCK**
 
 On
        March
        2, 2006, Zach Bair and Paul Marin agreed with the Company to rescind 3,000,000
        shares and 2,275,000 shares, respectively, of Company common stock issued
        to
        them in September 2005 effective as of the date of issue. The certificates
        evidencing these shares were returned to the transfer agent and cancelled
        in
        March 2006.
  8
  
 
 On
        March
        2, 2006, Gary Blum agreed with the Company to rescind 500,000 shares of Company
        common stock issued to him in September 2005 effective as of the date of
        issue.
        The certificate evidencing these shares was returned to the transfer agent
        and
        cancelled in March 2006.
 
 Effective
        September 2005, Mr. Marin returned to the transfer agent 600,000 shares of
        Company common stock that were issued to him in error.
 
 **NOTE
        4 - WARRANTS**
 
 The
        following table summarizes the information with respect to warrants for the
        three months ended March 31, 2006 and 2005:
 **2006**
              
              **2005****Number
                  of Shares**
                **Underlying
                  Warrants**
              
              **Weighted
                  Average Exercise Price**
              
              **Number
                  of Shares**
                **Underlying
                  Warrants**
              
              **Weighted
                  Average Exercise Price**Balance,
                  beginning of year
              
              3,875,582
              $
              0.24
              
              4,555,582
              $
              0.34Warrants
                  granted
              
              -
              
              -
              
              -
              
              -Warrants
                  expired
              
              133,333
              $
              0.01
              
              650,000
              $
              0.14Warrants
                  exercised
              
              -
              
              -
              
              -
              
              -Balance,
                  March 31
              
              3,742,249
              $
              0.23
              
              3,905,582
              $
              0.24Exercisable,
                  March 31
              
              3,742,249
              $
              0.23
              
              3,905,582
              $
              0.24
 
 The
        exercise prices of the warrants outstanding at March 31, 2006 ranged from
        $0.15
        to $0.75, and the weighted average remaining contractual life of these warrants
        was 1 year.
 
 **NOTE
        5 - STOCK OPTIONS**
 
 On
        February 14, 2006, the Company terminated its consulting relationship with
        a
        consultant to whom it granted an option to purchase 650,000 shares of Company
        common stock. Pursuant to the agreement evidencing the option, shares vested
        in
        36 equal monthly installments at the end of each calendar month, commencing
        in
        May 2005, so long as the consulting arrangement was in effect. As a result
        of
        the termination of this consulting arrangement and in accordance with the
        option
        agreement, the shares acquirable pursuant to the options ceased to vest after
        nine monthly installments, which resulted in 162,500 vested shares under
        this
        option. The term of this option for vested shares expires in May
        2008.
 
  9
  The
        following table summarizes the information with respect to stock options
        for the
        three months ended March 31, 2006 and 2005:
 
 **2006**
              
              **2005****Number
                  of Shares**
                **Underlying
                  Options**
              
              **Weighted
                  Average Exercise Price**
              
              **Number
                  of Shares**
                **Underlying
                  Options**
              
              **Weighted
                  Average Exercise Price**Balance,
                  beginning of year
              
              1,100,000
              $
              0.35
              
              450,000
              $
              0.65Options
                  granted
              
              -
              
              -
              
              -
              
              -Options
                  expired
              
              487,500
              
              0.07
              
              -
              
              -Options
                  exercised
              
              -
              
              -
              
              -
              
              -Balance,
                  March 31
              
              612,500
              $
              0.52
              
              450,000
              $
              0.65Exercisable,
                  March 31
              
              612,500
              $
              0.52
              
              -
              
              -
 
 The
        exercise prices of the options outstanding at March 31, 2006 ranged from
        $0.15
        to $0.65, and the weighted average remaining contractual life of these options
        was 14 months.
 
 **NOTE
        6 - NOTES PAYABLE**
 
 Pursuant
        to the Securities Purchase Agreement, or Purchase Agreement, between Radical
        Holdings LP, or Radical, and the Company, Radical may, from time to time,
        in its
        sole discretion, prior to the closing of the transactions evidenced by the
        Purchase Agreement, loan funds to the Company to pay outstanding liabilities,
        accounts payable or other obligations and to provide necessary funds to operate
        the Company’s business. Any funds loaned to the Company are required:
 
 (i)  to
        be
        applied in strict accordance with the uses approved by Radical;
 (ii)  if
        the
        closing of the purchase and sale of the Series A Convertible Preferred
        Stock occurs under the Purchase Agreement, to be fully credited towards the
        aggregate purchase price of the Series A Convertible Preferred Stock; and
 (iii)  if
        the
        Purchase Agreement is terminated for any reason whatsoever, to be repaid
        in full
        to Radical, without interest and without deduction thereon, within thirty
        (30) days following the date of the termination of the Purchase Agreement.
 
 In
        the
        event that any funds loaned to the Company are not repaid pursuant to item
        (iii) immediately above, the Company will make in favor of Radical a
        non-interest bearing note in the aggregate amount loaned by Radical to the
        Company and grant Radical a security interest in all of the Company’s assets to
        secure the repayment of all the amounts due and payable under such note or
        notes. The note or notes shall have a term of ninety (90) days, and the
        note or notes and security agreement shall be in a form reasonably satisfactory
        to Radical. As of March 31, 2006, Radical had loaned the Company an
        aggregate of $287,000.
 
 Effective
        January 31, 2006, the Company made an Amended and Restated Consolidated Secured
        Convertible Promissory Note in the aggregate principal amount of $330,749
        in
        favor of a noteholder. This note revised the conversion terms of the Secured
        Convertible Promissory Notes previously made by the Company in favor of the
        noteholder and consolidated all of the Secured Convertible Promissory Notes
        previously made by the Company in favor of the noteholder and advances to
        the
        Company previously made by the noteholder.
 
 The
        following table describes the Company’s outstanding short-term debt as of March
        31, 2006. The Company had no long-term debt as of March 31, 2006.
 
 10
 Amended
                  & Restated Consolidated Secured Convertible Promissory Note, bearing
                  interest at 10%
                per
                  annum, due on June 30, 2006
              
              $
              330,749
              (1)Secured
                  Convertible Promissory Notes, bearing interest at 10% per annum,
                  due on
                  April 1, 2006)
              
              
              175,000
              (2)Secured
                  Convertible Promissory Note, bearing interest at 10% per annum,
                  due on
                  April 1, 2006
              
              
              25,000
              (3)Secured
                  Promissory Note, bearing interest at 10% per annum, due April 1,
                  2006
              
              
              425,000Secured
                  Convertible Promissory Note, bearing interest at 10% per annum,
                  due on
                  April 1, 2006
              
              
              50,000
              (3)Unsecured
                  note from a related party bearing no interest and due on
                  demand
              
              
              43,000Promissory
                  Note, bearing interest at 7% per annum, due on April 1,
                  2006
              
              
              100,000Promissory
                  Note, bearing no interest, due on April 1, 2006
              
              
              5,000Note
                  payable to Radical Holdings LP
              
              
              287,000**Total
                  Short-term debt**
              
              $
              1,440,749
  (1)
              
              Pursuant
                  to the Amended and Restated Consolidated Secured Convertible Promissory
                  Note, $300,500 aggregate principal amount of this note is convertible
                  into
                  Company common stock at a conversion price of $0.125 per share
                  of common
                  stock. The conversion price is subject to adjustment for stock
                  splits,
                  combinations and similar events. Pursuant to a Waiver and Release
                  from
                  this noteholder, the noteholder agreed to waive any and all accrued
                  but
                  unpaid interest on this note The Waiver and Release, as amended,
                  however,
                  is subject to termination in the event the transaction between
                  Radical
                  Holdings LP and the Company is not consummated (See Note 9 - Subsequent
                  Events).(2)
              
              Pursuant
                  to a Note Conversion Agreement, Waiver and Release, as amended,
                  with this
                  noteholder, the noteholder has agreed to convert $150,000 aggregate
                  principal amount of the note into Company common stock at a conversion
                  price of $0.125 per share of common stock (subject to adjustment
                  for stock
                  splits, combinations and similar events) and waive any and all
                  accrued but
                  unpaid interest. The Note Conversion Agreement, Waiver and Release,
                  as
                  amended, however, is subject to termination in the event the transaction
                  between Radical Holdings LP and the Company is not consummated
                  (See Note 9
                  - Subsequent Events).(3)
              
              Pursuant
                  to the Note Conversion Agreement, Waiver and Release, as amended,
                  with
                  these noteholders, the noteholders have agreed to convert all aggregate
                  principal amount of their respective notes into Company common
                  stock at a
                  conversion price of $0.125 per share of common stock (subject to
                  adjustment for stock splits, combinations and similar events) and
                  waive
                  any and all accrued but unpaid interest. Each Note Conversion Agreement,
                  Waiver and Release, as amended, however, is subject to termination
                  in the
                  event the transaction between Radical Holdings LP and the Company
                  is not
                  consummated (See Note 9 - Subsequent
                  Events).
 
 Interest
        expense totaled $37,757 and $34,801 for the three months ended March 31,
        2006
        and 2005, respectively.
 
 **NOTE
        7 - ACCOUNTS PAYABLE**
 
 As
        of
        March 31, 2006, the Company had outstanding accounts payable in the amount
        of
        $554,779, of which $372,152 had been outstanding over 90 days. The carrying
        value of accounts payable approximates fair value due to the short-term nature
        of the obligations.
   11
  **NOTE
        8 - COMMITMENTS AND CONTINGENCIES**
 
 On
        January 23, 2006, the Company and Jess Morgan & Company, or JSM,
        entered into the Agreement, Settlement and Release, or the JSM Release. In
        accordance with the JSM Release, the Company will amend the warrant previously
        issued to JSM to remove provisions contained in the warrant that granted
        the
        Company rights to call the warrant upon certain events. Additionally, under
        the
        JSM Release, the Company will, after the consummation of the one hundred-for-one
        reverse stock split and prior to the closing of the purchase and sale of
        the
        Series A Convertible Preferred Stock under the Purchase Agreement, issue to
        JSM a total of 94,157 shares of Company common stock, or such other amount
        as is
        necessary to result in JSM holding 25% of the outstanding Company common
        stock
        immediately prior to the closing of the purchase and sale of the Series A
        Convertible Preferred Stock. In consideration for the above waiver and issuance,
        JSM has agreed, upon receipt of those shares and subject to the closing of
        the
        transaction between Radical Holdings LP and the Company (See Note 9 - Subsequent
        Events), to terminate all agreements, other than the warrant, between it
        and the
        Company, including, without limitation, the Proposal of Terms and a letter
        agreement regarding operation guidelines, and forever waive and release any
        and
        all rights, claims and other matters that JSM may have. In the event that
        the
        closing of the purchase and sale of the Series A Convertible Preferred
        Stock does not occur on or prior to July 1, 2006, the JSM Release will terminate
        (See Note 9 - Subsequent Events).
 
 On
        January 23, 2006, the Company and Phil McMorrow entered into an agreement
        that contains the same material terms as the JSM Release. Pursuant to this
        agreement, however, Phil McMorrow will be issued 9,416 shares of Company
        common
        stock, or such other amount as is necessary to result in Mr. McMorrow being
        issued 10% of the aggregate number of shares of Company common stock issued
        to
        JSM after the date thereof but immediately prior to the closing of the purchase
        and sale of the Series A Convertible Preferred Stock (See Note 9 -
        Subsequent Events).
 
 The
        Company also has entered into agreements with holders of instruments evidencing
        Company indebtedness to convert $195,000 aggregate principal amount of
        outstanding Company indebtedness into Company common stock after consummation
        of
        the one hundred-for-one reverse stock split at a conversion price of $12.50
        per
        share of Company common stock. Any of this outstanding indebtedness not
        converted into shares of Company common stock will be paid by the Company
        upon
        the closing of the purchase of the Series A Convertible Preferred Stock.
        Pursuant to those agreements, the holders waived any interest payable on
        that
        indebtedness, will release their security interests in the assets securing
        the
        repayment of that indebtedness prior to the closing of the purchase and sale
        of
        the Series A Preferred Stock and agreed to forever waive and release any
        and all rights, claims and other matters that they may have. In the event
        that
        the closing of the purchase and sale of the Series A Convertible Preferred
        Stock does not occur on or prior to July 1, 2006, these agreements will
        terminate (See Note 9 - Subsequent Events).
 
 **NOTE
        9 - SUBSEQUENT EVENTS**
 
 **Advances
        by Radical Holdings LP**
 
 Since
        January 1, 2006, Radical Holdings LP has loaned an aggregate of $347,000
        to the
        Company pursuant to the Securities Purchase Agreement, as amended, of which
        $60,000 was loaned subsequent to March 31, 2006.
 
 **Amended
        and Restated Articles of Incorporation and Reverse Stock
        Split**
 
 On
        June 5, 2006, the Company filed Amended and Restated Articles of
        Incorporation of the Company with the Secretary of State of the State of
        Nevada,
        which became effective upon its filing. The Amended and Restated Articles
        of
        Incorporation of the Company amended the articles of incorporation as
        follows:
 
 ·
              removed
                  the ability of stockholders to exercise preemptive rights with
                  respect to
                  issuances that occur subsequent to filing of the Amended and Restated
                  Articles of Incorporation; and
 ·
              to
                  provide the Board of Directors of the Company with the authority
                  to
                  determine the rights, attributes and preferences of any preferred
                  stock to
                  be issued by the Company. As a result, authorized but unissued
                  shares of
                  the preferred stock may be issued at such times, for such purposes
                  and for
                  such consideration as the Board of Directors may determine to be
                  appropriate without further authority from the Company’s stockholders,
                  except as otherwise required by applicable corporate law, terms
                  of
                  outstanding preferred stock or stock exchange
                  policies.
  12
  
 
 Additionally,
        the Amended and Restated Articles of Incorporation effected a 100-for-1 reverse
        stock split of the then outstanding Company common stock., which occurred
        at the
        close of business on June 6, 2006. Each stockholder of record immediately
        prior to the reverse split now holds one-hundredth of the shares they held
        before the split. All fractional shares were rounded up to the next whole
        number. In connection with the reverse stock split, the Company’s stock symbol
        on the Over-the-Counter Bulletin Board changed from “ITEK” to
“IMKI.”
 
 **Certificate
        of Designation for Series A Convertible Preferred Stock**
 
 On
        June 5, 2006, the Company filed a Certificate of Designation, Rights and
        Preferences with the Secretary of State of the State of Nevada, which became
        effective upon its filing. The Certificate of Designation, Rights and
        Preferences established the Series A Convertible Preferred Stock consisting
        of 4,392,286 shares. The Board of Directors of the Company, pursuant to the
        Amended and Restated Articles of Incorporation of the Company, has the authority
        to issue in one or more series up to five million shares of preferred stock.
        The
        following is a summary of the material terms of the Series A Convertible
        Preferred Stock issued to Radical (as described below) and established pursuant
        to the Certificate of Designation, Rights and Preferences:
 
 *Dividends* .
        The
        holders of the Series A Convertible Preferred Stock are not entitled to any
        preferential dividends. Holders of the Series A Convertible Preferred
        Stock, however, are entitled to participate on an as-converted basis in any
        cash
        dividends declared and paid on shares of Company common stock.
 
 *Liquidation* .
        Upon
        the liquidation, dissolution or winding up of the Company, an acquisition
        of the
        Company that results in the sale of more than 50% of the outstanding voting
        power of the Company, or the sale or exclusive license of all or substantially
        all of the assets of the Company, the holders of the Series A Convertible
        Preferred Stock are entitled to receive, out of the legally available funds
        and
        assets of the Company, before any payment is made to any shares of Company
        common stock or other junior stock, an amount per share equal to the greater
        of:
 
 ·
              $0.683015632
                  per share of Series A Convertible Preferred Stock;
                  and
 ·
              The
                  amount that the holder of that share of Series A Convertible
                  Preferred Stock would have received had the holder converted that
                  share
                  into shares of Company common stock immediately prior to the liquidation
                  event.
 
 If
        the
        legally available funds and assets of the Company are insufficient to pay
        the
        holders of shares of the Series A Convertible Preferred Stock the full
        amount to which they are entitled, the holders of the shares of Series A
        Convertible Preferred Stock and the holders of capital stock of the Company
        that
        is on a parity with the Series A Convertible Preferred Stock will share
        ratably in any distribution of the remaining legally available funds and
        assets
        of the Company.
 
 *Ranking* .
        The
        Series A Convertible Preferred Stock shall, with respect to rights on
        liquidation, winding up, corporate reorganization and dissolution, rank senior
        to the shares of Company common stock and other junior stock.
 
 *Conversion* .
        The
        shares of Series A Convertible Preferred Stock are convertible into that
        aggregate number of full shares of Company common stock representing 95%
        of the
        total voting power of all outstanding shares of capital stock of the Company,
        including outstanding Company common stock, after giving effect to the
        conversion. Accordingly, in the event the Company should issue additional
        capital stock before conversion of the Series A Convertible Preferred
        Stock, the conversion price per share is subject to downward adjustments
        in
        order to cause the holders of the Series A Convertible Preferred Stock,
        collectively, to own 95% of the outstanding shares of Company common stock
        upon
        conversion of all Series A Convertible Preferred Stock. The conversion
        price of a share of Series A Convertible Preferred Stock into shares of
        Company common stock also is subject to adjustment, from time to time, for,
        among other reasons, stock splits, combinations, dividends and
        distributions.
  13
  
 
 *Voting* .
        The
        holders of the shares of Series A Convertible Preferred Stock are entitled
        to vote on all matters required or permitted to be voted upon by the
        stockholders of the Company. Each holder of a share of Series A Convertible
        Preferred Stock is entitled to the number of votes equal to the largest number
        of full shares of Company common stock into which all shares of Series A
        Convertible Preferred Stock held by that holder could be converted. Except
        as
        required by law on matters requiring class voting, the holders of the
        Series A Convertible Preferred Stock and Company common stock will vote
        together as a single class.
 
 *Protective
        Provisions* .
        Unless
        the directors designated by the holders of the shares of the Series A
        Convertible Preferred Stock originally issued under the Purchase Agreement
        control the Board of Directors of the Company with respect to all actions,
        for
        so long as any shares of the Series A Convertible Preferred Stock
        originally issued under the Purchase Agreement remain outstanding, except
        where
        the vote or written consent of the holders of a greater number of shares
        of the
        Company is required by law or by the Company’s articles of incorporation, and in
        addition to any other vote required by law or by the Company’s articles of
        incorporation, the Company shall not, and the Company shall cause its
        subsidiaries not to, as applicable, without the prior vote or written consent
        of
        the holders of at least 75% of the shares of the Series A Convertible
        Preferred Stock originally issued under the Purchase Agreement then
        outstanding:
 
 (a)
        amend
        the articles or bylaws in any manner that would alter or change any of the
        rights, preferences, privileges or restrictions of the Series A Convertible
        Preferred Stock or the shares issuable upon conversion of the Series A
        Convertible Preferred Stock;
  (b) reclassify
        any outstanding securities into securities having rights, preferences or
        privileges senior to, or on a parity with, the Series A Convertible
        Preferred Stock;
  (c) authorize
        or issue any additional shares of capital stock (other than to holders of
        the
        Series A Convertible Preferred Stock);
  (d) merge
        or consolidate with or into any corporation or other person;
  (e) sell
        all or substantially all their respective assets in a single transaction
        or
        series of related transactions;
  (f) license
        all or substantially all of their respective intellectual property in a single
        transaction or series of related transactions;
  (g) liquidate
        or dissolve;
  (h) alter
        any rights of the holders of the Series A Convertible Preferred Stock or
        change the size of the Board of Directors;
  (i) declare
        or pay any dividends (other than dividends payable to the Company or its
        subsidiaries) on or declare or make any other distribution, directly or
        indirectly, on account of any shares of Company common stock now or hereafter
        outstanding;
  (j) repurchase
        any outstanding shares of capital stock;
  (k) approve
        or modify by 10% or more the aggregate amount of any annual or other operating
        or capital budget, or approve or modify by 50% or more any single line item
        of
        any such operating or capital budget;
  (l) increase
        the salary of any officer or employee or pay any bonus to any officer, director
        or employee not contemplated in a budget or bonus plan approved by directors
        designated by the holders of the shares of the Series A Convertible
        Preferred Stock originally issued under the Purchase Agreement then outstanding;
  (m) retain,
        terminate or enter into any salary or employment negotiations or employment
        agreement with any employee or any future employee;
  (n) incur
        indebtedness (other than trade payables) or enter into contracts or leases
        that
        require payments in excess of $5,000 in the aggregate;
   14
  
  (o) make
        or incur any single capital expenditure;
  (p) award
        stock options, stock appreciation rights or similar employee benefits or
        determine vesting schedules, exercise prices or similar features;
  (q) make
        any material change in the nature of its business or enter into any new line
        of
        business, joint venture or similar arrangement;
  (r) pledge
        its assets or guarantee the obligations of any other individual or entity;
  (s) recommend
        approval of any new equity incentive plan;
  (t) form
        or acquire any subsidiary, joint venture or similar business entity; or
  (u) directly
        or indirectly enter into, or permit to exist, any material transaction with
        any
        affiliate of the Company, any director or officer or any affiliate of a director
        or officer, or transfer, pay, loan or otherwise obligate the Company to give
        cash, services, assets or other items of value to affiliates, officers or
        directors or any affiliate of a officer or director or commit to do any of
        the
        preceding after the date hereof, except for employee compensation or for
        reimbursement of ordinary business expenses.
 
 *Board
        of Directors* . For so
        long as any shares of the Series A Convertible Preferred Stock originally
        issued under the Purchase Agreement remain outstanding, the holders of a
        majority-in-interest of the shares of the Series A Convertible Preferred
        Stock originally issued under the Purchase Agreement then outstanding shall
        have
        the right to designate all the persons to serve as directors on the Board
        of
        Directors of the Company and its subsidiaries. If the holders of the shares
        of
        the Series A Convertible Preferred Stock originally issued under the
        Purchase Agreement then outstanding choose not to designate any directors,
        the
        holders of a majority-in-interest of the shares of the Series A Convertible
        Preferred Stock originally issued under the Purchase Agreement then outstanding
        may appoint a designee to serve as an observer at all meetings of the Company’s
        or its subsidiaries’ Board of Directors and committees thereof.
 
 **Issuances
        of Shares pursuant to Settlements and Debt Conversion**
 
 On
        June
        7, 2006, the Company issued 98,783 and 9,879 shares of Company common stock
        to
        Jess Morgan & Co. and Phil McMorrow, respectively, under their respective
        Agreement, Settlement and Release with the Company. Additionally, pursuant
        to a
        convertible note or conversion agreements, the Company issued an aggregate
        of
        42,040 shares of Company common stock to noteholders upon the conversion
        of
        $525,500 aggregate principal amount of outstanding indebtedness.
 
 **Sale
        of Series A Convertible Preferred Stock**
 
 On
        June 8, 2006, the Company, issued and sold, and Radical Holdings LP
        purchased, 4,392,286 shares of Series A Convertible Preferred Stock of the
        Company for an aggregate purchase price of $3.0 million (including advances
        made prior to June 8, 2006 by Radical to the Company), or $0.68 per share
        of
        Series A Convertible Preferred Stock, pursuant to the Purchase
        Agreement.
  In
        connection with, and as a condition to, the purchase and sale of the
        Series A Convertible Preferred Stock, the Company, Radical, Zach Bair and
        Paul Marin entered into an Investor’s Rights Agreement. The Investor’s Rights
        Agreement grants Radical certain demand, piggy-back and shelf registration
        rights and sets forth the procedures pursuant to which those rights may be
        exercised and effected. The Investor’s Rights Agreement also grants Radical
        rights of first refusal to purchase any or all of the securities of the Company
        that Messrs. Bair or Marin propose to sell or otherwise transfer on the
        same terms and conditions as the proposed sale or transfer by them. In addition,
        the Investor’s Rights Agreement provides that Messrs. Bair and Marin are
        prohibited from selling or otherwise transferring any securities of the Company
        owned by them for a period of three years. After three years, they can sell
        or
        otherwise transfer only half of the securities owned by them. If, however,
        Messrs. Bair or Marin is terminated for a reason other than cause, upon his
        termination he can sell a total of 10% of the securities owned by him in
        any
        given month.
 
 Further,
        in the Investor’s Rights Agreement, the Company covenanted with Radical as to
        certain matters, including the following:
  15
  
 
 *Protective
        Provisions* .
        Unless
        the directors designated by the holders of the shares of the Series A
        Convertible Preferred Stock originally issued under the Purchase Agreement
        control the Board of Directors of the Company with respect to all actions,
        for
        so long as any shares of the Series A Convertible Preferred Stock
        originally issued under the Purchase Agreement remain outstanding, except
        where
        the vote or written consent of the holders of a greater number of shares
        of the
        Company is required by law or by the Company’s articles of incorporation, and in
        addition to any other vote required by law or by the Company’s articles of
        incorporation, the Company shall not, and the Company shall cause its
        subsidiaries not to, as applicable, without the prior vote or written consent
        of
        the holders of at least 75% of the shares of the Series A Convertible
        Preferred Stock originally issued under the Purchase Agreement then outstanding:
 
 (a)
        amend
        the articles or bylaws in any manner that would alter or change any of the
        rights, preferences, privileges or restrictions of the Series A Convertible
        Preferred Stock or the shares issuable upon conversion of the Series A
        Convertible Preferred Stock;
  (b)
        reclassify any outstanding securities into securities having rights, preferences
        or privileges senior to, or on a parity with, the Series A Convertible
        Preferred Stock;
  (c)
        authorize or issue any additional shares of capital stock (other than to
        holders
        of the Series A Convertible Preferred Stock);
  (d)
        merge
        or consolidate with or into any corporation or other person;
  (e)
        sell
        all or substantially all their respective assets in a single transaction
        or
        series of related transactions;
  (f)
        license all or substantially all of their respective intellectual property
        in a
        single transaction or series of related transactions;
  (g)
        liquidate or dissolve;
  (h)
        alter
        any rights of the holders of the Series A Convertible Preferred Stock or
        change the size of the Board of Directors;
  (i)
        declare or pay any dividends (other than dividends payable to the Company
        or its
        subsidiaries) on or declare or make any other distribution, directly or
        indirectly, on account of any shares of Company common stock now or hereafter
        outstanding;
  (j)
        repurchase any outstanding shares of capital stock;
  (k)
        approve or modify by 10% or more the aggregate amount of any annual or other
        operating or capital budget, or approve or modify by 50% or more any single
        line
        item of any such operating or capital budget;
  (l)
        increase the salary of any officer or employee or pay any bonus to any officer,
        director or employee not contemplated in a budget or bonus plan approved
        by
        directors designated by the holders of the shares of the Series A
        Convertible Preferred Stock originally issued under the Purchase Agreement
        then
        outstanding;
  (m)
        retain, terminate or enter into any salary or employment negotiations or
        employment agreement with any employee or any future employee;
  (n)
        incur
        indebtedness (other than trade payables) or enter into contracts or leases
        that
        require payments in excess of $5,000 in the aggregate;
  (o)
        make
        or incur any single capital expenditure;
  (p)
        award
        stock options, stock appreciation rights or similar employee benefits or
        determine vesting schedules, exercise prices or similar features;
  (q)
        make
        any material change in the nature of its business or enter into any new line
        of
        business, joint venture or similar arrangement;
  (r)
        pledge its assets or guarantee the obligations of any other individual or
        entity;
   16
  
  (s)
        recommend approval of any new equity incentive plan;
  (t)
        form
        or acquire any subsidiary, joint venture or similar business entity; or
  (u)
        directly or indirectly enter into, or permit to exist, any material transaction
        with any affiliate of the Company, any director or officer or any affiliate
        of a
        director or officer, or transfer, pay, loan or otherwise obligate the Company
        to
        give cash, services, assets or other items of value to affiliates, officers
        or
        directors or any affiliate of a officer or director or commit to do any of
        the
        preceding after the date hereof, except for employee compensation or for
        reimbursement of ordinary business expenses.
 
 *Board
        of Directors* . For so
        long as any shares of the Series A Convertible Preferred Stock originally
        issued under the Purchase Agreement remain outstanding, the holders of a
        majority-in-interest of the shares of the Series A Convertible Preferred
        Stock originally issued under the Purchase Agreement then outstanding shall
        have
        the right to designate all the persons to serve as directors on the Board
        of
        Directors of the Company and its subsidiaries. If the holders of the shares
        of
        the Series A Convertible Preferred Stock originally issued under the
        Purchase Agreement then outstanding choose not to designate any directors,
        the
        holders of a majority-in-interest of the shares of the Series A Convertible
        Preferred Stock originally issued under the Purchase Agreement then outstanding
        may appoint a designee to serve as an observer at all meetings of the Company’s
        or its subsidiaries’ Board of Directors and committees thereof.
 
 **Item
        2.**  **Management’s
        Discussion and Analysis or Plan of Operation**
 
 **Overview**
 
 Unless
        the context otherwise indicates, the words “we,” “our,” “ours,” “us” and the
“Company” refer to Immediatek, Inc., or ITEK, and its subsidiaries, including
        DiscLive, Inc., or DiscLive, collectively.
 
 The
        following Management’s Discussion and Analysis, or MD&A, is intended to aid
        the reader in understanding us, our operations and our present business
        environment. MD&A is provided as a supplement to, and should be read in
        conjunction with, our condensed consolidated financial statements and the
        notes
        accompanying those financial statements, which are included in this Quarterly
        Report on Form 10-QSB. Additionally, MD&A should be read in conjunction with
        our Annual Report on Form 10-KSB for the year ended December 31, 2005. However,
        see “Correction of Errors in Prior Comparative Financial Statements” in Note 1
        accompanying our condensed consolidated financial statements appearing in
        this
        Quarterly Report on Form 10-QSB for a description of adjustments to be made
        to
        the reported amounts in the financial statements included in the Company’s
        Annual Report on Form 10-KSB for the fiscal year ended December 31,2005.
        MD&A includes the following sections:
 
 ·
              Our
                  Business - a general description of our business; our objectives,
                  our
                  areas of focus; and the challenges and risks of our
                  business.
 ·
              Critical
                  Accounting Policies and Estimates - a discussion of accounting
                  policies
                  that require critical judgments and
                  estimates.
 ·
              Operations
                  Review - an analysis of our consolidated results of operations
                  for the
                  periods presented in our condensed consolidated financial statements
                  included in this Quarterly Report on Form
                  10-QSB.
 ·
              Liquidity,
                  Capital Resources and Financial Position - an analysis of our cash
                  flows
                  and debt and contractual obligations; and an overview of our financial
                  position.
 
 **Our
        Business**
 
 ***General***
 
 ITEK,
        through its operating subsidiary, DiscLive, records live content, such as
        concerts and conferences, and makes the recorded content available for sale
        to
        attendees within fifteen minutes after the conclusion of the live event.
        The
        recorded content also is made available for sale on our website,
        www.disclive.com. The content is delivered primarily via CD or DVD, but also
        is
        available for download via iPod®.
  17
  
 
 DiscLive
        has recorded live events for Billy Idol, Jefferson Starship, the Pixies,
        The
        Fixx, George Clinton (DVD) and Vertical Horizon, among others. During the
        three
        months ended March 31, 2006, we recorded **** nine
        live
        events and sold, or delivered under contract, approximately 900 recordings
        of
        those events and prior events.
 
 ***History
        of Operating Losses***
 
 We
        incurred a net loss of $162,926 and $446,128 and used cash in operations
        of
        $181,853 and $168,912 for the three months ended March 31, 2006 and 2005,
        respectively. In addition, we are highly leveraged. At March 31, 2006, our
        current liabilities exceeded current assets by $2.4 million and our
        stockholders’ deficit was $2.2 million. Our existence and operations are
        dependent upon our ability to obtain the necessary capital, primarily through
        the issuance of additional equity. *See* “Recent
        Developments and Change in Control” below.
 
 The
        reports of our independent registered public accounting firm on our financial
        statements for the years ended December 31, 2005 and 2004, included an emphasis
        paragraph, in addition to their audit opinion, stating that our recurring
        losses
        from operations and working capital deficiency raise substantial doubt about
        our
        ability to continue as a going concern. The financial statements do not include
        any adjustments to reflect the possible effects on recoverability and
        classification of assets or the amounts and classification of liabilities
        that
        may result from our inability to continue as a going concern.
 
 We
        funded
        our operations during the three months ended March 31, 2006 primarily through
        borrowings from Radical Holdings LP. During the three months ended March
        31,
        2006, we borrowed $287,000 aggregate principal amount to cover operations
        and
        repay indebtedness. *See* “Liquidity
        and Capital Resources and Financial Position” below.
 
 ***Recent
        Developments and Change in Control***
 
 On
        January 24, 2006, we entered into a Securities Purchase Agreement, or Purchase
        Agreement, with Radical Holdings LP, or Radical, which was subsequently amended
        on March 3, 2006. Upon the satisfaction of conditions precedent contained
        in the
        Purchase Agreement, Radical purchased 4,392,286 shares of Series A Convertible
        Preferred Stock of the Company for an aggregate purchase price of $3.0 million,
        or $0.68 per share of Series A Convertible Preferred Stock, on June 8, 2006.
        The
        Series A Convertible Preferred Stock is convertible, at the option of, and
        at
        any time by, the holders of the Series A Convertible Preferred Stock, into
        that
        number of full shares of our common stock representing 95% of our outstanding
        common stock after giving effect to the conversion. With the purchase of
        the
        Series A Convertible Preferred Stock of the Company by Radical pursuant to
        the Purchase Agreement, as amended, a change in control of the Company occurred,
        as Radical beneficially owns 95% of the outstanding securities of the Company
        entitled to vote on matters required or permitted to be submitted to the
        stockholders of the Company.
 
 ***Our
        Objectives***
 
 Our
        objective is to utilize our assets - brand name, unique concept, trade secrets,
        intellectual property and people - to increase live recordings and sales
        of
        those recordings. Our vision to achieve that objective includes:
 
 ·
              Increase
                  in Recordings: Market and expand our services to a number of live
                  events
                  in order to increase the sales of our product. Management is now
                  able to
                  devote its time to this endeavor instead of securing capital to
                  continue
                  operations with consummation of the transaction evidenced by the
                  Purchase
                  Agreement.
 ·
              Profit:
                  Maximizing our profit on live events by controlling costs and utilizing
                  our assets efficiently.
 
  18
  ***Areas
        of Focus***
 
 *Revitalizing
        the Company.* We
        are
        focused on revitalizing the Company using the proceeds from the sale of the
        Series A Convertible Preferred Stock. In anticipation of receipt of those
        funds,
        we hired three new employees, one in sales, one in accounting and one for
        customer assistance and general matters. With these new employees, we believe
        that we will have the necessary people to support and manage our operations.
        Further, utilizing the proceeds from the sale of the Series A Convertible
        Preferred Stock to repay all of our outstanding liabilities, which is required
        by the Purchase Agreement, we believe that we will have better relationships
        with vendors and more creditability with customers.
 
 *Realizing
        on Our Business Plan and Potential.* Our
        management is now able to direct substantially all of its attention to
        implementing the business plan and to operations rather than attempts to
        secure
        additional funding to continue operations with the consummation of the
        transaction evidenced by the Purchase Agreement. We further believe that
        our
        existing employees, together with our new employees, will be able to better
        market our products, expend more time analyzing and procuring contracts to
        record live events and better manage costs and assets in performing under
        those
        contracts.
 
 ***Challenges
        and Risks***
 
 Operating
        in this industry provides unique opportunities; however, challenges and risks
        accompany those opportunities. Our management has identified the following
        material challenges and risks that will require substantive attention from
        our
        management.
 
 *Utilizing
        the new funds in a manner that is accretive* .
        If we
        do not manage our assets aggressively and apply the additional capital, if
        received, judicially, we may not generate sufficient cash from our operating
        activities to fund our operations going forward, which would require us to
        seek
        additional funding in the future.
 
 *Obtaining
        Contracts to Record Live Content that are Profitable* .
        While
        obtaining contracts to record live events creates challenges in itself, our
        ability to obtain contracts to record live events that generate sufficient
        sales
        of our products is even more challenging. Prior to entering into recording
        contracts, we perform an analysis of the costs to be incurred and the amount
        of
        our product that we estimate will be sold. These analyses contain many
        assumptions, many of which are beyond our control. If our analysis of a number
        of recording contracts proves to be incorrect, we will not generate sufficient
        cash from our operating activities to sustain operations and, therefore,
        will
        require additional funding to continue our business.
 
 *Competing
        with a Substantial Competitor.* Our
        major competitor, Instant Live, which is a division of Live Nation, formerly
        part of Clear Channel Entertainment, Inc., has substantial more resources
        than
        us, both financially and in the industry. According to Live Nation, for the
        year
        ended December 31, 2005, it promoted, produced or hosted over 29,500
        events, including music concerts, theatrical performances, specialized motor
        sports and other events, with total attendance nearing 60 million, and as
        of December 31, 2005, it owned or operated 119 venues, consisting of 77
        domestic and 42 international venues, which include 37 amphitheaters,
        61 theaters, 15 clubs, four arenas and two festival sites. As a result of
        Live Nation’s ownership of the venues and production of the events, we believe
        that Instant Live has a substantial competitive position to us in obtaining
        live
        event recording contracts.
 
 *Maintaining
        a Quality Product.* Our
        product is relatively new and continues to evolve. In early 2004, the speed
        of
        compact disc duplicators increased to a point where our product could be
        produced efficiently. As technology improves and better quality recordings
        are
        necessary, we will be required to improve our products to maintain a market
        for
        our products and compete with our competitors. In that regard, we have already
        transitioned to multi-track recording, which provides a more quality
        product.
 
 Additionally,
        see “Risk Factors” in Part I of our Annual Report on Form 10-KSB for the year
        ended December 31, 2005 concerning other risks and uncertainties facing
        us.
  19
  
 
 Challenges
        and risks, including those described above, if not properly addressed or
        managed, may have a material adverse effect on our business. Our management,
        however, is endeavoring to properly manage and address these challenges and
        risks.
 
 **Critical
        Accounting Policies and Estimates**
 
 Our
        condensed consolidated financial statements are prepared in accordance with
        generally accepted accounting principles in the United States, which requires
        management to make estimates, judgments and assumptions that the amounts
        reported in the consolidated financial statements and in the notes accompanying
        the financial statements. Certain information and footnote disclosures normally
        included in financial statements prepared in accordance with generally accepted
        accounting principles, however, have been condensed or omitted pursuant to
        rules
        and regulations promulgated by the Securities and Exchange Commission. We
        believe that the most critical accounting policies and estimates relate to
        the
        following:
 
 ·
              **Recoverability
                  of Non-Current Assets.**The Company has certain non-current assets, including goodwill
                  and
                  tangible fixed assets. Management considers the life of goodwill
                  on an
                  annual basis and is assessed for recoverability if events occur
                  that
                  provide indications of impairment. An assessment of recoverability
                  involves comparing the carrying value of the asset with its recoverable
                  amount, typically its value in use. If the value in use of a non-current
                  asset were determined to be less than its carrying value, an impairment
                  would be charged to the income
                  statement.
 ·
              **Revenue
                  Recognition.**The Company recognizes revenue from its sales based on the gross
                  sale
                  amount pursuant to the indicators outlined in EITF 99-19, as the
                  Company
                  is the primary obligator in the sale arrangement, establishes all
                  pricing
                  levels and has sole discretion with respect to supplier selection.
                  All
                  costs based upon each sale are expensed as costs of sales as revenue
                  is
                  recognized. Pursuant to EITF 00-10, the Company will include all
                  shipping
                  and handling fees charged to its customers in gross revenue. All
                  actual
                  costs incurred by the Company for shipping and handling are immaterial
                  in
                  nature and are included as direct costs of revenue. The Company
                  will
                  recognize a revenue transaction as being complete upon delivery
                  of product
                  and so record the revenue. The Company bases this recognition policy
                  on
                  the authoritative literature located in FAS-48, par
                  6.
 
 While
        our
        estimates and assumptions are based on our knowledge of current events and
        actions we may undertake in the future, actual results may ultimately differ
        from those estimates and assumptions. For a discussion of our significant
        accounting policies, see Note 1 of Notes to Consolidated Financial Statements
        commencing on page 4.
 
 ***Recent
        Accounting Standards and Pronouncements***
 
 Refer
        to
        Note 1 of the condensed consolidated financial statements commencing on page
        4
        for a discussion of recent accounting standards and pronouncements.
 
 **Operations
        Review**
 
 ***Three
        Months Ended March 31, 2006 Compared to Three Months Ended March 31,
        2005***
 
 *Revenues* .
        For the
        three months ended March 31, 2006, revenue was $17,026, compared to $20,795
        for
        the three months ended March 31, 2005, or a decrease of $3,769. The decrease
        in
        revenue was primarily due to **** one
        time
        special event for a lump sum amount, which was offset by an increase in online
        sales .
 
 We
        expect
        revenues to increase in the next six to nine months as we ramp up our
        operations, which were limited in fiscal 2005 and the first three months
        of
        fiscal 2006 due to the lack of necessary operating funds.
 
  20
  *Cost
        of Sales* .
        For the
        three months ended March 31, 2006, cost of sales was $18,939, compared to
        $22,409 for the three months ended March 31, 2005, or a decrease of $3,470.
        The
        decrease in cost of sales is attributable to the decline in revenues as well
        as
        a decline in costs incurred in recording a non-revenue event during the three
        months ended March 31, 2005.
 
 *Gross
        Margin.* For
        the
        three months ended March 31, 2006, gross margin was ($1,913) as compared
        to
        ($1,614) for the three months ended March 31, 2005. The increase in the negative
        gross margin is attributable to a one time event in 2005 that produced higher
        gross margins than expected. If we generate more revenue in the next six
        to nine
        months, we expect that cost of sales will increase proportionately with that
        increase.
 
 *General
        and Administrative Expense* .
        For the
        three months ended March 31, 2006, general and administrative expense was
        $65,716, as compared to $121,017 for the three months ended March 31, 2005.
        This
        decrease is attributable to: $21,000
        reduction in office rent, a decrease in travel expense of approximately $12,000,
        a decrease in insurance expense of approximately $11,000 and a decrease in
        consulting expense of approximately $14,000. These decreases were offset
        by
        incremental increases in other general and administrative expenses of
        approximately $3,000.
 
 We
        anticipate general and administrative expense will increase over year 2006
        due
        the new office space we leased in February 2006 at a rate of $2,000 per month,
        the increase in the number of total employees from two to five and costs
        of new
        procedures and policies, which are being implemented to assist us in operating
        more efficiently and may be required by the Sarbanes-Oxley Act of 2002, or
        Sarbanes Oxley.
 
 *Consulting
        Fees.* Consulting service expenses were $17,836 for the three months ended March
        31,
        2005. There were no consulting service expenses for the three months ended
        March
        31, 2006 as the Company did not use the services of consultants due to the
        lack
        of necessary operating funds.
 
 During
        the remainder of the 2006 fiscal year, we expect to have an increase in
        consulting expense, as we use, or have retained, consultants to assist us
        with
        accounting and tax matters. We may be required to retain a consultant to
        review
        and implement internal controls required by Sarbanes-Oxley. The Securities
        and
        Exchange Commission, however, is considering relief under this requirement
        for
        small business issuers, but has not published its conclusions as of yet.
        As a
        result, we are unable to determine what costs will be required to be incurred
        in
        order to meet these requirements.
 
 *Professional
        Fees* .
        Professional fees were $28,043 for the three months ended March 31, 2006,
        as
        compared to $37,916 for the three months ended March 31, 2006. This decrease
        of
        $9,873 is primarily due reduction of legal expense for the pursuit of
        intellectual property rights.
 
 We
        anticipate that professional fees for the remainder of year 2006 will increase.
        These anticipated increases will be attributable to increases in audit fees
        resulting from implementation of the Sarbanes-Oxley requirement for the audit
        of
        our internal controls, and other professional fees incurred as we ramp up
        our
        operations. We anticipate that these increases will be partially offset by
        decreases in accounting and book-keeping fees, as we have hired an employee
        to
        perform this function.
 
 *Administrative
        Salaries* .
        Administrative salary expense decreased $87,347 from the comparative period.
        This decrease in administrative salaries resulted reductions in compensation
        paid our employees due to lack of available funds.
 
 Administrative
        salaries will be approximately $388,000 during year 2006 due to the addition
        of
        three new employees. Other than the foregoing, we do not expect any further
        increases in administrative salaries expense during year 2006.
 
 *Other
        Income (Expense)* .
        Other
        expense of $80,801 for the three months ended March 31, 2005, consisted of
        $46,000 of loss on conversion of notes payable to common stock based upon
        fair
        market value and $34,801 of interest expense. Other expense of $37,757 for
        the
        three months ended March 31, 2006 consisted entirely of interest
        expense.
  21
  
 
 *Income
        Taxes.* There
        was
        no Federal income tax expense recorded for the three months ended March 31,
        2006
        and 2005, due a net loss in each period.
 
 **Liquidity
        and Capital Resources and Financial Position**
 
 Our
        cash
        was $82,521 at March 31, 2006. This represents an increase of $85,202 from
        the
        cash deficit position at December 31, 2005.  The increase was the result of
        the $287,500 advances in the form of notes payable received from Radical
        Holdings LP and an additional investor. The increase was offset by $181,853
        of
        net funds used in operations and the repayment of notes payable to a commercial
        bank of $18,606.
 
 As
        a
        result of our inability to generate sufficient cash from operating activities
        at
        this time to sustain our operations, additional financing was required. In
        that
        regard, we entered into the Purchase Agreement with Radical, which provided
        us
        with $3.0 million of funds at the sale of the Series A Convertible Preferred
        Stock in accordance with, and subject to, the terms of the Purchase Agreement
        on
        June 8, 2006. The proceeds are required to be used to pay all outstanding
        liabilities, including, among others, accounts payable and indebtedness.
        After
        satisfying all of our liabilities, we estimate that we will have $750,000
        of
        operating funds, which we anticipate will sustain our operations for fiscal
        year
        2006. At the end of fiscal year 2006, we will be required to obtain additional
        funds if we do not generate sufficient cash from operating activities to
        fund
        our future operating activities.
 
 *Operating
        Activities.* Cash
        used
        in operating activities was $181,853 and $168,912 for the three months ended
        March 31, 2006 and 2005, respectively. The increase in cash used resulted
        primarily from the decline in the net loss offset by the deferral of amounts
        due
        for accounts payable and accrued expenses. Additionally, the Company utilized
        prepaid assets during 2006 which contributed to the increase in the net cash
        used for the quarter .
 
 *Investing
        Activities.* Cash
        used in investing activities was $1,569 for the three months ended March
         31, 2006. There were no investing activities for the three months ended
        March 31, 2005. The cash used in investing activities consisted entirely
        of
        purchases of fixed assets.
 
 *Financing
        Activities* .
        Cash
        from financing activiti **es** was
        $265,943 for the three months ended March 31, 2006, and $198,000 for the
        three months ended March 31, 2005. This increase resulted primarily from
        the
        proceeds from the advances from Radical Holdings LP in the amount of $287,000
        offset by a net decrease of proceeds from other notes payable and a payment
        of
        approximately $19,000 on a commercial bank note.
 
  22
  *Indebtedness*
 
 We
        have
        no long-term debt, but have significant short-term debt. As a result, we
        are
        highly leveraged. At December 31, 2005, our current liabilities exceeded
        our
        current assets by $2.4 million and our stockholders’ deficit was $ 2.2 million.
        The following table is a summary of our short-term debt as of March 31,
        2006.
 
 **Short-Term
                  Debt**
              **Balance
                  at**
                **March
                  31, 2006**
              **(1)**Amended
                  and Restated Consolidated Secured Convertible Promissory
                Note,
                  effective January 31, 2006, bearing interest at 10% per
                annum,
                  due June 30, 2006
              $
                  330,749
              (2)Secured
                  Promissory Note, dated April 8, 2005, bearing interest at 10%
                per
                  annum
              425,000
              (3)Secured
                  Convertible Promissory Notes, dated November 29, 2004,
                bearding
                  interest at 10% per annum, due April
              250,000
              (3)Promissory
                  Note in favor of Chief Executive Officer, bearing no
                  interest
              43,000Promissory
                  Note, dated Feb. 28th,
                  2005, bearing interest at 7% per annum
              100,000
              (3)Promissory
                  Note, dated Sept. 9th,
                  2004, bearing no interest
              5,000
              (3)Note
                  payable to Radical Holdings LP
              287,000**Total
                  Short-Term Debt**
              $1,440,749
 
 (1)
              Except
                  as otherwise described in the following footnotes, we are required
                  to use
                  the proceeds from the sale of the Series A Convertible Preferred
                  Stock to
                  repay all amounts outstanding under this short-term indebtedness
                  after
                  giving effect to the conversion of indebtedness to our common stock
                  as
                  described in the following
                  footnotes.
 (2)
              Pursuant
                  to the terms of this note, $300,500 aggregate principal amount
                  of this
                  note converted into shares of our common stock at $12.50 per share
                  (post-100-for-1 reverse stock split) immediately prior to the sale
                  of the
                  Series A Convertible Preferred Stock. Pursuant to a Waiver and
                  Release by
                  and between this noteholder and the Company, this noteholder agreed
                  to
                  waive all accrued but unpaid interest on the note at
                  conversion.
 (3)
              The
                  holder of this note has agreed to waive the payment of all accrued
                  but
                  unpaid interest on this note upon payment in full of the outstanding
                  principal amount of the note.
 
 
 *Accounts
        Payable*
 
 At
        March
        31, 2006, we had $554,779 of accounts payable outstanding, 67% of which had
        ages
        over 90 days. See “Liquidity” below. The proceeds from the sale of the Series A
        Convertible Preferred Stock under the Purchase Agreement are required to
        be
        utilized to satisfy all of our accounts payable.
 
  23
  *Contractual
        Obligations and Commercial Commitments*
 
 The
        following table highlights, as of March 31, 2006, our contractual obligations
        and commitments by type and period:
 
 **Payments
                  due by Period****Contractual
                  Obligations**
              
              **Total**
              
              **Less
                  than 1 Year**
              
              **1-3
                  Years**Short-Term
                  Debt(1)
              
              $
              1,440,749
              
              $
              1,440,749
              
              
              -Guaranty(2)
              
              
              585,749
              
              
              585,749
              
              
              -Lease
              
              
              22,000
              
              
              22,000
              
              
              -**Total:**
              
              $
              2,048,498
              
              $
              2,048,498
              
              
              -
  
 (1)
              This
                  short-term indebtedness is required to be paid with the proceeds
                  from the
                  sale of the Series A Convertible Preferred Stock pursuant to the
                  Purchase
                  Agreement, unless otherwise converted into Company common stock
                  as
                  provided in the table of short-term indebtedness, which precedes
                  this
                  table.
 (2)
              This
                  is a guaranty by DiscLive of the obligations under those certain
                  secured
                  notes.
 
 *Liquidity*
 
 We
        will
        require approximately $750,000 of funds to operate our business at the desired
        level during year 2006. We presently do not generate sufficient cash from
        operations to fund our operating activities and, until recently, limited
        operations to that which we deemed to be critical.
 
 Radical
        may, from time to time, in its sole discretion, prior to the closing of the
        purchase and sale of the Series A Convertible Preferred Stock, loan funds
        to us to pay outstanding liabilities, accounts payable or other obligations
        and
        to provide necessary funds to operate our business. Any funds loaned to us
        are
        required:
 
 (i)  to
        be
        applied in strict accordance with the uses approved by Radical;
 (ii)  if
        the
        closing of the purchase and sale of the Series A Convertible Preferred
        Stock occurs, to be fully credited towards the aggregate purchase price of
        the
        Series A Convertible Preferred Stock; and
 (iii)  if
        the
        Purchase Agreement is terminated for any reason whatsoever, to be repaid
        in full
        to Radical, without interest and without deduction thereon, within thirty
        (30) days following the date of the termination of the Purchase
        Agreement.
 
 In
        the
        event that any funds loaned to us are not repaid pursuant to item
        (iii) immediately above, we will make in favor of Radical a non-interest
        bearing note in the aggregate amount loaned by Radical to us and grant Radical
        a
        security interest in all of our assets to secure the repayment of all the
        amounts due and payable under such note or notes. The note or notes shall
        have a
        term of ninety (90) days, and the note or notes and security agreement
        shall be in a form reasonably satisfactory to Radical. As of June 23, 2006,
        Radical has loaned us an aggregate of $347,000.
 
 We
        believe that the consummation of the sale of the Series A Convertible Preferred
        Stock on June 8, 2006, will provide us with the necessary funds to operate
        our
        business for year 2006.
  **Item
          3.**  **Controls
          and Procedures**
 
 Our
          chief
          executive officer and chief financial officer are responsible for establishing
          and maintaining disclosure controls and procedures (as defined in Rules
          13a−15(e) and 15d−15(e) promulgated under the Securities Exchange Act of 1934)
          for the Company. Accordingly, our chief executive officer and chief financial
          officer designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under their supervision,
          to
          ensure that material information relating to the Company, including our
          consolidated subsidiaries, is made known to our chief executive officer
          and
          chief financial officer by others within those entities. We regularly evaluate
          the effectiveness of disclosure controls and procedures and report our
          conclusions about the effectiveness of the disclosure controls quarterly
          on our
          Forms 10-QSB and annually on our Forms 10−KSB. Based upon the evaluation for the
          period ended March 31, 2006, for the reasons described below, our chief
          executive officer and chief financial officer concluded that our disclosure
          controls and procedures were not effective, as of the end of the period
          covered
          by this Report (March 31, 2006), in ensuring that material information
          relating
          to the Company required to be disclosed by the Company in reports that
          it files
          or submits under the Exchange Act is recorded, processed, summarized and
          reported within the time periods specified in the SEC’s rules and forms and that
          such information is accumulated and communicated to management, including
          the
          chief executive officer and the chief financial officer, as appropriate,
          to
          allow timely decisions regarding required disclosure. Notwithstanding the
          material weaknesses described below, the Company’s management has concluded that
          the condensed consolidated financial statements included in this Report
          on Form
          10-QSB fairly state, in all material respects, the Company’s financial
          condition, results of operations and cash flows for the periods presented
          in
          conformity with generally accepted accounting principles.
  24
  
 
 
 Based
        on
        the definition of “material weakness” in the Public Company Accounting Oversight
        Board’s Auditing Standard No. 2, An Audit of Internal Control Over Financial
        Reporting Performed in Conjunction With an Audit of Financial Statements,
        restatement of financial statements in prior filings with the SEC is a strong
        indicator of the existence of a “material weakness” in the design or operation
        of internal control over financial reporting. The Company has concluded that
        it
        did not maintain effective controls. The Company determined that because
        effective controls were not in place, the recognition of certain items was
        inconsistent with its accounting policies and that a material weakness existed
        in the Company’s internal control over financial reporting, and disclosed this
        to the Board of Directors and to the independent registered public accountants.
        In addition, the Company has determined that a material weakness exists in
        the
        Company’s internal controls over financial reporting related to the limited
        number of accounting personnel in the Company. The Company disclosed this
        to its
        Board of Directors and to its independent registered public
        accountants.
 
 **Plan
        for Remediation of Material Weaknesses**
 
 The
        Company is in the process of instituting new policies that substantially
        improve
        these controls. Also, the Company has retained qualified personnel for its
        accounting.
 
 **Changes
        in Internal Controls**
 
 Changes
        in our internal controls are currently being designed and will be implemented
        on
        an ongoing basis as designed.
 
 **Limitations
        on the Effectiveness of Controls**
 
 Our
        management, including our chief executive officer and chief financial officer,
        does not expect that our disclosure controls and internal controls will prevent
        all error and all fraud. A control system, no matter how well conceived and
        operated, can provide only reasonable, not absolute, assurance that the
        objectives of the control system are met. Further, the design of a control
        system must reflect the fact that there are resource constraints, and the
        benefits of controls must be considered relative to their costs. Due to the
        inherent limitations in all control systems, no evaluation of controls can
        provide absolute assurance that all control issues and instances of fraud,
        if
        any, within the Company have been detected. These inherent limitations include
        the realities that judgments in decision making can be faulty, and that
        breakdowns can occur because of simple error or mistake. Additionally, controls
        can be circumvented by the individual acts of some persons, by collusion
        of two
        or more people, or by management override of the control.
 
 The
        design of any system of controls is also based in part upon certain assumptions
        about the likelihood of future events occurring. There can be no assurance
        that
        any design will succeed in achieving its stated goals under all potential
        future
        conditions; over time, a control may become inadequate because of changes
        in
        conditions, or the degree of compliance with the policies or procedures may
        deteriorate. Due to the inherent limitations in a cost−effective control system,
        misstatements due to error or fraud may occur and not be detected.
 
  25
  **PART
        II — OTHER INFORMATION**
 
 **Item
        4,**  **Submission
        of Matters to a Vote of Security Holders** .
 
 On
        March
        3, 2006, stockholders representing 51.1% of the votes entitled to be cast
        at a
        meeting of the Company’s stockholders, consented in writing to the following
        actions:
 
 ·
              Authorizing
                  the Company to enter into a Securities Purchase Agreement by and
                  among the
                  Company, Radical Holdings LP and the other parties thereto and
                  the First
                  Amendment to Securities Purchase Agreement and the transactions
                  contemplated thereby;
 ·
              Effecting
                  a one hundred-for-one reverse stock split of the outstanding Company
                  common stock;
 ·
              An
                  amendment to the Company’s articles of incorporation to remove preemptive
                  rights of stockholders; and
 ·
              An
                  amendment to the Company’s articles of incorporation to allow the board of
                  directors of the Company to designate the series and to determine
                  the
                  attributes and preferences of each issue of preferred
                  stock.
 
 The
        foregoing actions by the stockholders did not become effective until
        twenty days from the date the Company mailed an Information Statement to
        its stockholders, or June 1, 2006.
 
 **Item
        6.**  **Exhibits**
 
 The
        following exhibits are filed in accordance with the provisions of Item 601
        of Regulation S-B.
 
 **Exhibit**
                **Number**
              
              **Description
                  of Exhibit**3.1
              
              Amended
                  and Restated Article of Incorporation.4.7
              
              Certificate
                  of Designation, Rights and Preferences of Series A Convertible
                  Preferred
                  Stock4.8
              
              Form
                  of Stock Certificate of Series A Convertible Preferred
                  Stock10.9.3
              
              Second
                  Amendment to Agreement, Settlement and Release, dated as of May 15,
                  2006, by and between the Registrant and Jess Morgan &
                  Company.10.10.3
              
              Second
                  Amendment to Agreement, Settlement and Release, dated as of May 15,
                  2006, by and between the Registrant and Phil McMorrow.10.11.3
              
              Form
                  of Second Amendment to Note Conversion Agreement, Release and Waiver,
                  each
                  dated as of May 15, 2006, by and between the Registrant and each of
                  the Barnett Family Partnership II, Broad Street Ventures, LLC,
                  Doman
                  Technology Capital, Inc. and Osias Blum.10.13.1
              
              First
                  Amendment to Waiver and Release, dated March 17, 2006, by and between
                  the
                  Registrant and Gary Blum.10.17
              
              Investor’s
                  Rights Agreement, dated as of June 8, 2006, by and among the Registrant,
                  Radical Holdings LP, Zach Bair and Paul Marin.31.1
              
              Certification
                  of Chief Executive Officer pursuant to Rule 13a-14(a) of the
                  Securities Exchange Act.31.2
              
              Certification
                  of Chief Financial Officer pursuant to Rule 13a-14(a) of the
                  Securities Exchange Act.32.1
              
              Certification
                  Required by 18 U.S.C. Section 1350 (as adopted pursuant to
                  Section 906 of the Sarbanes-Oxley Act of
                  2002).
 
  26
  **SIGNATURES**
 
 In
        accordance with the requirements of the Exchange Act, the registrant caused
        this
        report to be signed on its behalf by the undersigned, thereunto duly
        authorized.
 
 
 Date:
                  June 26, 2006
              **IMMEDIATEK,
                INC.**a
                Nevada corporationBy:
              /s/
                  ZACH BAIRName:
              Zach
                  BairTitle:
              President
                  and Chief Executive Officer(On
                  behalf of the Registrant and as PrincipalExecutive
                  Officer)
 
  27
   **INDEX
        TO EXHIBITS**
 
 **Exhibit**
                **Number**
              
              **Description
                  of Exhibit**3.1
              
              Amended
                  and Restated Article of Incorporation.4.7
              
              Certificate
                  of Designation, Rights and Preferences of Series A Convertible
                  Preferred
                  Stock4.8
              
              Form
                  of Stock Certificate of Series A Convertible Preferred
                  Stock10.9.3
              
              Second
                  Amendment to Agreement, Settlement and Release, dated as of May 15,
                  2006, by and between the Registrant and Jess Morgan &
                  Company.10.10.3
              
              Second
                  Amendment to Agreement, Settlement and Release, dated as of May 15,
                  2006, by and between the Registrant and Phil McMorrow.10.11.3
              
              Form
                  of Second Amendment to Note Conversion Agreement, Release and Waiver,
                  each
                  dated as of May 15, 2006, by and between the Registrant and each of
                  the Barnett Family Partnership II, Broad Street Ventures, LLC,
                  Doman
                  Technology Capital, Inc. and Osias Blum.10.13.1
              
              First
                  Amendment to Waiver and Release, dated March 17, 2006, by and between
                  the
                  Registrant and Gary Blum.10.17
              
              Investor’s
                  Rights Agreement, dated as of June 8, 2006, by and among the Registrant,
                  Radical Holdings LP, Zach Bair and Paul Marin.31.1
              
              Certification
                  of Chief Executive Officer pursuant to Rule 13a-14(a) of the
                  Securities Exchange Act.31.2
              
              Certification
                  of Chief Financial Officer pursuant to Rule 13a-14(a) of the
                  Securities Exchange Act.32.1
              
              Certification
                  Required by 18 U.S.C. Section 1350 (as adopted pursuant to
                  Section 906 of the Sarbanes-Oxley Act of
                  2002).


28