UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549  FORM 10-QSB  [X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the Quarterly Period Ended August 31, 2006  [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from ___ to ____  Commission file number: 000-50374  INFE - HUMAN RESOURCES, INC. (name of small business issuer as specified in its charter)  Nevada 54-2013455 (State or other jurisdiction (IRS Employee Identification No.) of incorporation or organization)   67 Wall Street, 22nd Floor, New York, NY  10005-3198  (Address of principal executive offices)  Issuer's telephone number, including area code: (212) 859-3466  Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  [ ]      No  [ ]   APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS   Check whether the registrant filed all documents and reports required by Section 12, 13, or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes [ ] No  [ ]    APPLICABLE ONLY TO CORPORATE ISSUERS  State the number shares outstanding of each of the issuers classes of common stock, as of the latest practicable date: 13,892,974 shares outstanding as of October 24, 2006.  Transitional Small Business Disclosure Format. (check one) Yes [  ] No [X]  2   INFE-HUMAN RESOURCES, INC. FORM 10-QSB TABLE OF CONTENTS Page                         Part I  FINANCIAL INFORMATION  Item 1. FINANCIAL STATEMENTS (UNAUDITED). . . . . . . . . . . . . . . . . . . . . . . .4  Item 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4  Item 3. CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12  Part II  OTHER INFORMATION  Item 1. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14  Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14  Item 3. DEFAULTS UPON SENIOR SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . .14  Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15  Item 5. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15  Item 6. EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15  Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16  3   PART I  FINANCIAL INFORMATION  ITEM 1.  FINANCIAL STATEMENTS   CASH FLOW STATEMENT                    INFe- HUMAN RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2006 AND 2005   NOTE 1-  ORGANIZATION AND BASIS OF PRESENTATION  The unaudited interim financial information included have been prepared by INFe-Human Resources, Inc. (the Company) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted as allowed by such rules and regulations, and the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the November 30, 2005 audited consolidated financial statements and the accompanying notes thereto. While management believes the procedures followed in preparing these condensed consolidated financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year.  The management of the Company believes that the accompanying unaudited condensed consolidated financial statements contain all adjustments (including normal recurring adjustments) necessary to present fairly the operations for the periods presented.  INFe- Human Resources, Inc. and Subsidiary (the Company) was incorporated in the State of Nevada on March 31, 2000. The Company was a subsidiary of INFe, Inc. a publicly trading entity on the OTC BB (INFe) through October 31, 2003. The Company was organized to provide human resource administrative management, executive compensation plans and staffing services to client companies.  On October 21, 2003 the Company purchased all of the common stock of Daniels Corporate Advisory Company, Inc. (Daniels), a Nevada company formed on May 2, 2002. For accounting purposes, the transaction had been accounted for as a reverse acquisition, under the purchase method of accounting. Accordingly, Daniels will be treated as the continuing entity for accounting purposes and the historical financial statements presented will be those of Daniels.  On December 20, 2005 the Companys wholly owned subsidiary INfe Human Resources of New York purchased all of the outstanding shares of Monarch Human Resources and includes all transactions of this company as part of these consolidated statements.  On June 1, 2006 the Companys wholly owned subsidiary INfe Human Resources - Unity Inc. purchased Cosmo/Mazel Temps Corporations for the purpose of acquiring the rights to their current business activity and trade name.  The company did not agree to assume any liabilities and includes all of its transactions as part of these consolidated statements.   INFe- HUMAN RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2006 AND 2005    NOTE 2-  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Principles of Consolidation  The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.  Use of Estimates  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Cash and Cash Equivalents  For financial statement presentation purposes, short-term, highly liquid investments with original maturities of three months or less are considered to be cash and cash equivalents. The Company maintains it cash accounts at one (1) financial institution, and the funds are insured to the maximum limit of $100,000 set by the Federal Savings and Loan Association.  At August 31, 2006, the Company had a cash concentration risk of $40,819.  Financing Fees  The Company paid a fee in the amount of $350,000 in association with the convertible note payable (See Note 8).  The fee is being amortized over the life of the loan.  Amortization in the amount of $52,500 and $0 was recorded for the nine months ended August 31, 2006 and 2005, respectively.  Revenue and Cost Recognition  The Company records its transactions under the accrual method of accounting whereby income gets recognized when the services are rendered and collection is reasonably assured.  INFe- HUMAN RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2006 AND 2005  NOTE 2-  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)  Income Taxes  The Company accounts for income taxes in accordance with the provisions of Statement of Financial Accounting Standards (FAS) No. 109 (the Statement), Accounting for Income Taxes. The Statement requires an asset and liability approach for financial accounting and reporting for income taxes, and the recognition of deferred tax assets and liabilities for the temporary differences between the financial reporting bases and tax bases of the Companys assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled.  Investments  In accordance with FAS No. 115,  Accounting for Certain Investments in Debt and Equity Securities, securities are classified into three categories: held-to-maturity, available-for-sale and trading. The Companys investments consist of equity securities classified as available-for-sale securities. Accordingly, they are carried at fair value in accordance with FAS No. 115. Further FAS No. 115 unrealized gains and losses for available-for-sale securities are excluded from earnings, and reported net of deferred income taxes, as a separate component of stockholders equity, unless the loss is classified as other than a temporary decline in market value.  Comprehensive Income (Deficit)  The Company has adopted FAS No, 130, Reporting Comprehensive Income (Deficit). FAS No. 130 requires the reporting of comprehensive income (deficit) in addition to net income (loss) from operations.  Comprehensive income (deficit) is a more inclusive financial reporting methodology that includes disclosure of information that historically has not been recognized in the calculation of net income.  Fair Value of Financial Instruments  The carrying amounts reported in the condensed consolidated balance sheets for cash, deposits, accounts receivable, accounts payable and accrued liabilities approximate fair value because of the immediate or short-term maturity of the financial instruments.    INFe- HUMAN RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2006 AND 2005  NOTE 2-   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)  Fair Value of Financial Instruments (continued)  The Company believes that its indebtedness approximates fair value based on current yields for debt instruments with similar terms.  Income (Loss) Per Share of Common Stock  Historical net loss per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents were not included in the computation of diluted earnings per share when the Company reported a loss because to do so would be anti-dilutive.  The following is a reconciliation of the computation for basic and diluted EPS for the nine months ended August 31, 2006 and 2005.  20062005Net Income (loss)$(222,427)$(63,227)Weighted-average common sharesoutstanding (Basic)13,248,88111,426,462Weighted-average common stockequivalentsStock options--Warrants1,200,000-Weighted-average common sharesoutstanding (Diluted)14,448,88111,426,462 There were no stock options available at August 31, 2006 and 2005.  The Company has warrants outstanding for 1,200,000 shares of the Companys common stock at August 31, 2006.  INFe- HUMAN RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2006 AND 2005  NOTE 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)  Recent Accounting Pronouncements  On December 16, 2004, the Financial Accounting Standards Board ("FASB") published FAS No. 123 (Revised 2004), Share-Based Payment ("FAS 123R").  FAS 123R requires that compensation cost related to share-based payment transactions be recognized in the financial statements.  Share-based payment transactions within the scope of FAS 123R include stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employee share purchase plans.  The provisions of FAS 123R are effective for small business issuers as of the first interim period that begins after December 15, 2005.  The implementation of this standard did not have a material impact on its financial position, results of operations or cash flows.  In March 2005, the FASB issued Statement of Financial Accounting Standards Interpretation Number 47 (FIN 47), Accounting for Conditional Asset Retirement Obligations.  FIN 47 provides clarification regarding the meaning of the term conditional asset retirement obligation as used in SFAS 143, Accounting for Asset Retirement Obligations.  FIN 47 is effective for the year ended December 31, 2005.  The implementation of this standard did not have a material impact on its financial position, results of operations or cash flows.  In May 2005, the FASB issued FAS 154, Accounting for Changes and Error Correctionsa replacement of APB Opinion No. 20 and FASB Statement No. 3.  FAS 154 changes the requirements with regard to the accounting for and reporting a change in an accounting principle.  The provisions of FAS 154 require, unless impracticable, retrospective application to prior periods presented in financial statements for all voluntary changes in an accounting principle and changes required by the adoption of a new accounting pronouncement in the unusual instance that the new pronouncement does not indicate a specific transition method.  FAS 154 also requires that a change in depreciation, amortization or depletion method for long-lived, non-financial assets be accounted for as a change in an accounting estimate, which requires prospective application of the new method.  FAS 154 is effective for all changes in an accounting principle made in fiscal years beginning after December 15, 2005.  The Company plans to adopt FAS 154 beginning January 1, 2006.  Because FAS 154 is directly dependent upon future events, the Company cannot determine what effect, if any, the expected adoption of FAS 154 will have on its financial condition, results of operations or cash flows.   INFe- HUMAN RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2006 AND 2005  NOTE 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Recent Accounting Pronouncements(continued)  In February 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (FAS) No. 155, Accounting for Certain Hybrid Financial Instruments. FAS No. 155 replaces FAS No. 133 Accounting for Derivative Instruments and Hedging Activities, and FAS No. 140 Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.  FAS No. 155 resolves issues addressed in Statement 133 Implementation Issue No. D1, Application of Statement 133 to Beneficial Interests in Securitized Financial Assets. This statement will be effective for all financial instruments acquired or issued after the beginning of an entitys fiscal year that begins after September 15, 2006. The Company is currently analyzing whether this new standard will have impact on its financial position and results of operations.   NOTE 3-    ACCOUNTS RECEIVABLE  Accounts receivable represent the funds due to the Company for services performed or to be performed.  Accounts receivable are evaluated for potential uncollectible amounts and are reduced for any existing bad debts. Accounts receivable, net of allowances was $656,044 and $0 at August 31, 2006 and 2005.  Accounts receivable as of August 31,20062005Accounts receivable :Less$656,044$-Allowance for doubtful accounts--Bad debt expense--$656,044$-  NOTE 4-    INVESTMENTS  The following is a summary of investments at August 31, 2006 at fair market value:  2006Portfolio of common stockstrading on the OTC: BBat fair market value$43,825    INFe- HUMAN RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2006 AND 2005 NOTE 4-    INVESTMENTS (CONTINUED)  The marketable securities depreciated $20,508 for the three months ended August 31, 2006.  There were sales of investments during the period, which resulted in a net realized loss of $42,019. Additionally, no amounts were reclassified out of accumulated other comprehensive income/(loss) for the periods presented.  NOTE 5-    DEPOSITS  The Company also has a $20,000 deposit on Key Man insurance for the President of the Company.  NOTE 6-    GOODWILL  In the acquisitions of Monarch Human Resources, the Company recorded goodwill in the amount of $691,773 and with the acquisition of Cosmo/Mazel the company recorded additional goodwill of $1,283,580.  The Company has performed an analysis of the goodwill amount, and has determined that goodwill at August 31, 2006 should be impaired by $499,871, to have goodwill stated at its fair value.  The goodwill will be tested annually for impairment.  NOTE 7-    DEFERRED REVENUE  The Company received a $55,000 contract to perform consulting services over a 14-month period beginning October 13, 2005 through December 14, 2006.  The Company earned $35,358 during the nine month period ended August 31, 2006.  The balance has been deferred until earned.  NOTE 8-    CONVERTIBLE NOTES PAYABLE  The Company executed a Securities Purchase Agreement to issue 8% secured convertible note payable in the amount of $3,000,000.  The note is convertible at anytime by the holder of the security into shares of common stock, par value $.001 per share.  In addition, the Company issued to the buyer warrants enabling them to purchase 1,200,000 shares of common stock at an exercise price of $1.50 per share.  These warrants were valued at $7,500 using the Black-Scholes pricing model.  They are an embedded feature of the convertible note and have been shown as a debt discount net of the convertible debt.  The Company has received $2,000,000 of the $3,000,000 available.  The note matures November 30, 2008.  The Company has paid $350,000 in related financing fees.  These fees will be amortized over the life of the loan (See Note 2).    INFe- HUMAN RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2006 AND 2005   NOTE 9-    LONG-TERM DEBT  The Company negotiated a note with North Fork Bank in the amount of $75,000.  The loan is a four-year loan with an interest rate of 8.75%.  The proceeds were used for operating expenses prior to the revenue stream realized with the acquisition of Monarch Human Resources.  The balance at August 31, 2006 was $52,266.  The Company has a loan outstanding with the former owner of Cosmo/Mazel.  The loan is twelve months loan without a stated interest rate.  The principle balance at August 31, 2006 was $333,580.  The Company has a loan outstanding with the former owner of Monarch Human Resources.  The loan is an eighteen-month loan with an interest rate of 6%.  The principle balance at August 31, 2006 was $85,268.  Principal maturities of the debt over the next five years are as follows:   As of August 31,2007$449,618200864,445200917,0512010-2011-$531,114   NOTE 10-    LOAN PAYABLE -OFFICER  Since inception, Mr. Arthur Viola has contributed a net $130,555 for working capital purposes.  The loan is non-interest bearing, and has no specific repayment terms. However, Mr. Viola has assured the Company that he will not demand payment within the next 12 months.  As such, the loan has been classified as a long-term liability.       INFe- HUMAN RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2006 AND 2005  NOTE 11- STOCKHOLDERS EQUITY  The Company, has 20,000,000 authorized shares of preferred stock. There are no shares issued and outstanding.  The Company has 100,000,000 common shares authorized at August 31, 2006. There were 13,292,974 shares issued and outstanding at August 31, 2006.  The Company issued 239,250 shares of common stock in exchange for services rendered for the nine months ended August 31, 2006. The shares were issued at fair value. The total value assigned to these shares was $159,035.  NOTE 12- GOING CONCERN  The accompanying condensed consolidated financial statements have been presented in accordance with accounting principles generally accepted in the United States of America, which assume the continuity of the Company as a going concern. The Company has incurred cumulative net losses for the years ended August 31, 2006 and 2005, and has an accumulated deficit. However, the Company has realized its first revenue stream and emerged out of the development stage. Presently, with the acquisition subsequent to the close of the period end the Company has the revenue stream necessary to operate and develop its business. Since this is newly acquired business, we cannot currently ascertain the consistency of the revenue stream with any degree of certainty. This raises substantial doubt about its ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the eventual outcome of the risks and uncertainties described above.  Management believes that the Companys capital requirements will depend on many factors including the success of the Companys product development efforts. With the business plan being followed, management believes along with working capital being raised that the operations and sales will make the Company a viable entity over the next twelve months.  The financial statements do not include any adjustments relating to the recoverability or classification of recorded assets and liabilities that might result should the Company be unable to continue as a going concern.  NOTE 13- RELATED PARTY TRANSACTIONS  The Company has utilized office space at no charge from its President, Mr. Arthur Viola.    Item 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS  Certain statements in "Management's Discussion and Analysis and Plan of Operation" are forward-looking statements that involve risks and uncertainties. Words such as may, will, should, would, anticipates, expects, intends, plans, believes, seeks, estimates and similar expressions identify such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Company assumes no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements.  Overview  INFe- Human Resources, Inc. was incorporated in the State of Nevada on March 31, 2000. The Company was a subsidiary of INFe, Inc. a publicly trading entity on the over the counter bulletin board through October 31, 2003.  On October 21, 2003, the Company purchased all of the common stock of Daniels Corporate Advisory Company, Inc. (Daniels), a Nevada company formed on May 2, 2002. Daniels Corporate Advisory Company, Inc. has thereafter been a wholly owned subsidiary of Infe.  On December 14, 2005, we formed Infe-Human Resources of New York, Inc., in Nevada to operate a staffing services division.  Infe-Human Resources of New York, Inc. is a wholly owned subsidiary.  On January 19, 2006, we formed Infe-Human Resources-Unity, Inc. in Nevada to operate additional staffing services.  Infe Human Resources-Unity, Inc is a wholly owned subsidiary.  In addition, Monarch Human Resources, Inc. is a wholly owned subsidiary of Infe Human Resources of New York, Inc. and Empire Staffing, Inc. is a wholly owned subsidiary of Monarch Human Resources, Inc.   4   Through our wholly owned subsidiary, Daniels Corporate Advisory Company, Inc., we offer: (a) corporate financial consulting and (b) merchant banking. Our corporate financial consulting provides advisory services to client companies. We received a $55,000 contract to perform consulting services over a 14-month period beginning October 13, 2005 through December 14, 2006.  This contract represented the first revenues for these services. Our merchant banking plans include an in-house equity-funding program in which it intends to finance the growth of client and payroll service companies, as well as purchase equity in small public companies. The in-house equity funding program resulted in a gain of $103,577 from the sale of investment securities for the nine months ended August 31, 2006. As of October 24, 2006, the sole clients of our merchant banking division are our staffing subsidiaries, Infe Human Resources of New York, Inc., its subsidiaries, Monarch Human Resources, Inc. and Empire Staffing, Inc. and Infe Human Resources- Unity, Inc.  However, Infe intends to pursue the growth of the merchant banking business within the next twelve months.  Infe does not intend to register under the Investment Company Act of 1940, but rather intends to operate its merchant banking division within allowable exemptions from registration.  Through our wholly owned subsidiary, Infe-Human Resources of New York, Inc., we conduct part of our employment-staffing services. The staffing services includes both temporary and permanent placement for both professional and non-professional employment.  Infe Human Resources of New York, Inc. operates through two wholly owned subsidiaries, Monarch Human Resources, Inc. and Empire Staffing, Inc.  Also, through our wholly owned subsidiary, Infe-Human Resources-Unity, Inc. we conduct additional employment staffing services.  On June 1, 2006 Infe-Human Resources-Unity, Inc. purchased the assets and business operations of Cosmo Temp, Inc. and Mazel Temp, Inc. both of which are employee-staffing companies.  The Company formed Infe Human Resources-Unity, Inc. to acquire Cosmo Temp and Mazel Temp, rather than utilize the already operating Infe Human Resources of New York, due to certain future performance based provisions related to the consideration to be paid for the assets and business operations of Cosmo Temp and Mazel Temp.  For the quarter ending August 31, 2006, the Company had Revenues of $2,741,519 versus $ 0  in the year earlier period.  And for the nine months ending, August 31, 2006 revenues were $4,487,264 versus $ - 0  in the corresponding year early period.  The Company believes that the management and guidance provided to the staffing subsidiaries including assistance in acquisitions, by Daniels Corporate Advisory Company, Inc. (Daniels) assisted the Company in generating this large change in revenues in a short period of time.  As is consistent with a Company with large growth and multiple acquisitions, the Company has had to incur a large increase in expenditures in a short period of time, and importantly, has had to make adjustments to goodwill associated with the acquisitions.  In accordance with generally accepted accounting principles, the Company is required to analyze for impairment and adjust goodwill associated with acquisitions on a yearly basis.  The Company recognized an impairment to goodwill for the three months ended August 31, 2006 of $499,871.  In accordance with generally accepted accounting principles, impairments to goodwill, like depreciation, are considered operating expenses.  Accordingly, the Company has a net loss of $266,133 for the three months ending August 31, 2006 and $262,427 for the nine months ending August 31, 2006.  5    However, the Company believes that through consolidation of general and administrative expenditures, and a decrease in non cash related adjustments, such as goodwill, the Company will be profitable based on its revenues.  From December 2005, through June 1, 2006, Daniels assisted the Company in executing three roll-up acquisitions and one add- on acquisition, to amass potential sales  on a yearly, run rate basis - of $10 Million.  The Daniels subsidiary brought the Company from Development Stage to a full-fledged operating entity, through its creation and management of a strategic growth plan that is expected to produce significant prospects for further growth  by internal and external means.  Daniels developed and implemented the Staffing Company Roll-up for its parent, INfe Human Resources, Inc., as a pilot project in order to advance and publicize in-house consulting and senior management expertise.  In general, Corporate Consulting Assignments have as a primary aim - for a client company to advance from the OTC:BB to the American Stock Exchange through a leveraged acquisition/roll-up strategy. Equity financing for acquisition down payment amounts  in some cases  comes through the placement of IFHR stock and the subsequent investment of these funds  by our in-house investment fund - into the client company.   6   It is our plan that the future profits from Corporate Consulting Assignments will be invested in the expansion of the wholly-owned Consolidated Staffing Companies through direct acquisition of additional, diversified companies in specific growth niches and through the development of add- on services that can be marketed down the same client/employee pipeline.   RESULTS OF OPERATIONS  THREE MONTHS ENDED AUGUST 31, 2006 COMPARED TO THREE MONTHS ENDED AUGUST 31, 2005  REVENUES  Revenues were $2,741,519 for the three months ended AUGUST 31, 2006, as compared to $0 for the three months ended AUGUST 31, 2005. The increase of revenues was due to the Company emerging from the development stage and conducting operations in its staffing subsidiaries.  Moreover, the Company recognized a portion of previously deferred revenue from its business consulting division during this period.  COST OF SALES  Cost of sales were $2,040,430 for the three months ended August 31, 2006 compared to $0 for the three months ended AUGUST 31, 2005.  OPERATING EXPENSES  Operating expenses for the three months ended AUGUST 31, 2006 were $1,350,951 compared to $0 for the three months ended AUGUST 31, 2005. This increase was primarily attributed to the Company emerging from the development stage and conducting operations in its staffing subsidiaries.  The Company completed several staffing business acquisitions since December 2005.  The Companys largest expense is its compensation, which is generally associated with the staffing subsidiaries.  Moreover, the Company now incurs significant selling, general and administrative expenses.  In addition, the Company has increased professional fees associated with an operating business. Moreover, and significantly, the Company recognized a goodwill impairment in the amount of $499,871 in the three months ended August 31, 2006.  As is consistent with acquisitions, a portion of the acquisition price is attributed to goodwill.  In accordance with generally accepted accounting principles, the Company is required to analyze goodwill on a yearly basis for impairment. However, the Company believes that in the future through the consolidation of general and administrative expenditures, and a decrease in non cash related adjustments, such as goodwill, the Company will be profitable based on its revenues  7   LOSS FROM OPERATIONS  Loss from operations for the three months ended AUGUST 31, 2006 was $219,859 compared to a loss from operation of $76,121 for the three months ended AUGUST 31, 2005.  REALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES.  Loss from the sale of investment securities was ($42,018) for the three months ended August 31, 2006 compared to a gain of $1,114 for the three months ended August 31, 2005.  INTEREST EXPENSE  Interest expense was $4,285 and $0 for the three months ended AUGUST 31, 2006 and 2005, respectively. This was primarily attributable to interest on the Companys outstanding note with North Fork Bank and an outstanding note to the former owners of Monarch Human Resources, Inc., Cosmo Temp and Mazel Temp related to the Companys recent acquisitions.  INTEREST INCOME  Interest income was $29 and $0 for the three months ended AUGUST 31, 2006 and 2005 respectively.  NET LOSS APPLICABLE TO COMMON STOCK  Net loss applicable to Common Stock was $266,133 for the three months ended AUGUST 31, 2006, compared to $75,007 for the three months ended AUGUST 31, 2005. Net loss per common share was $.02 for the three months ended AUGUST 31, 2006 and $0.01 for the three months ended AUGUST 31, 2005.   NINE MONTHS ENDED AUGUST 31, 2006 COMPARED TO NINE MONTHS ENDED AUGUST 31, 2005   8   REVENUES   Revenues were $4,487,264 for the nine months ended AUGUST 31, 2006, as compared to $0 for the nine months ended AUGUST 31, 2005. The increase of revenues was due to the Company emerging from the development stage and conducting operations in its staffing subsidiaries.  The Company completed several staffing business acquisitions since December 2005.  In addition, the Company recognized $35,358 of previously deferred revenue from its business consulting division during this period.  COST OF SALES  Cost of sales were $3,501,218 for the nine months ended August 31, 2006 compared to $0 for the nine months ended AUGUST 31, 2005.   OPERATING EXPENSES  Operating expenses for the nine months ended AUGUST 31, 2006 were $1,350,951 compared to $115,121 for the nine months ended AUGUST 31, 2005. This increase was primarily attributed to the Company emerging from the development stage and conducting operations in its staffing subsidiaries.  The Company completed several staffing business acquisitions since December 2005.  The Companys largest expense is its compensation, which is generally associated with the staffing subsidiaries.  Moreover, the Company now incurs significant selling, general and administrative expenses.  In addition, the Company sustained large professional fees associated with the acquisitions, and with work associated with the Companys registration statement on form SB-2 which was initially filed February 3, 2006.   Moreover, and significantly, the Company recognized a goodwill impairment in the amount of $499,871 in the three months ended August 31, 2005.  As is consistent with acquisitions, a portion of the acquisition price is attributed to goodwill.  In accordance with generally accepted accounting principles, the Company is required to analyze goodwill on a yearly basis for impairment. Also significantly, the Company recognized a one time start up consulting fee of $207,700 for the nine months ended August 31, 2006. However, the Company believes that in the future through the consolidation of general and administrative expenditures, and a decrease in non cash related adjustments, such as goodwill, the Company will be profitable based on its revenues.  9   LOSS FROM OPERATIONS  Loss from operations for the nine months ended AUGUST 31, 2006 was $364,905 compared to $115,121 for the nine months ended AUGUST 31, 2005.  REALIZED GAIN FROM INVESTMENT SECURITIES.  Gain from the sale of investment securities was $103,577 for the nine months ended August 31, 2006 compared to a gain of $51,894 for the nine months ended August 31, 2005.  INTEREST EXPENSE  Interest expense was $11,766 and $0 for the nine months ended AUGUST 31, 2006 and 2005, respectively. This was primarily attributable to interest on the Companys outstanding note with North Fork Bank and an outstanding note to the former owners of Monarch Human Resources, Inc., and Cosmo Temp and Mazel Temp related to the Companys recent acquisitions.  INTEREST INCOME  Interest income was $10,667 and $0 for the nine months ended AUGUST 31, 2006 and 2005 respectively.  This was primarily attributed to interest earned on the Companys cash bank accounts.   NET LOSS APPLICABLE TO COMMON STOCK  Net loss applicable to Common Stock was $262,427 for the nine months ended AUGUST 31, 2006, compared to $63,227 for the nine months ended AUGUST 31, 2005. Net loss per common share was $0.02 for the nine months ended AUGUST 31, 2006 and $0.01 for the nine months ended AUGUST 31, 2005.   Liquidity and Capital Resources  Our financial statements are prepared on a going-concern basis, which assumes that we will realize our assets and discharge its liabilities in the normal course of business. However, our cash flows for 2006 are currently projected to be insufficient to finance projected operations, without funding from other sources.  10   These conditions raise substantial doubt as to our ability to continue as a going concern.  Management's plans for this uncertainty include increasing our revenue both internally and through acquisition, as well as by raising additional capital from external sources if necessary. Management may also liquidate some of the marketable securities that we own. There can be no assurance that management will be successful in these plans. Accordingly, the accompanying financial statements do not include any adjustments that may arise from the uncertainty surrounding our ability to continue as a going concern.  In addition, management intends to utilize accounts receivable financing and has been in negotiations with an entity to accomplish this goal.  During the nine months ended AUGUST 31, 2006, we used $836,244 of cash for operating activities. This was primarily due to our operations in the staffing business, including increased accounts receivable, prepaid expenses and deposits.  Cash used in investing activities amounted to $1,768,263 for the nine months ended AUGUST 31, 2006.  This was primarily due to cash used in acquisitions.  Our commitments for capital expenditures and leasing commitments include our month-to-month lease of our corporate office in New York, a month to month lease for a small office in New Jersey, which was the former Express Employment Agency office and a three year lease for offices in New Jersey which were the former Mazel Temp and Cosmo Temp offices.  In addition, the Company has obligations associated with its outstanding Secured Convertible Promissory Notes and Notes payable associated with its recent acquisitions.  We received $1,602,989 from financing activities for the nine months ended AUGUST 31, 2006.   As of AUGUST 31, 2006, we had cash or cash equivalents of $188,176 and had marketable securities of $43,825.   On June 1, 2006, we closed on the acquisition of the assets of Cosmo Temp, Inc. and Mazel Temp, Inc.  At closing we paid $950,000 and undertook the obligation to pay an additional $333,580 over the next twelve months payable $83,395 per quarter.  We believe that cash from operations will be sufficient to pay these obligations.  Management intends to set aside a reserve sufficient to meet the required payments.  We reported the foregoing acquisition on Form 8-k filed at the SEC on June 2, 2006.  11   Off-Balance Sheet Arrangements  We have not entered into any transaction, agreement or other contractual arrangement with an entity unconsolidated with us under which we have:  · an obligation under a guarantee contract; · a retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets; · an obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument; or · an obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by, and material to, us where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging, or research and development services with us.  ITEM 3. CONTROLS AND PROCEDURES  The Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, accumulated and communicated to the Companys management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.  Based upon their evaluation as of the end of the period covered by this report, the Companys chief executive officer and chief financial officer concluded that, the Companys disclosure controls and procedures are not effective to ensure that information required to be included in the Companys periodic SEC filings is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms.   12   A material weakness is a significant deficiency or a combination of significant deficiencies that result in a more than remote likelihood than a material misstatement of the annual or interim financial statements will not be prevented or detected.  Bagell, Josephs, Levine and Company, LLC, our independent registered public accounting firm, has advised management and the board of directors that it has identified the following material weaknesses in our internal controls:  A material weakness exists as of August 31, 2006 with regard to insufficient personnel in the accounting and financial reporting function due to the size of our company which prevents the ability to employ sufficient resources to have adequate segregation of duties within the internal control system.  This material weakness affects management's ability to effectively review and analyze elements of the financial statement closing process and prepare consolidated financial statements in accordance with U.S. GAAP.  In addition, a material weakness exists as of August 31, 2006, in controls over closing procedures due to a number of adjust-ments made at the end of the year period.  There were deficien-cies in the analysis and reconciliation of general ledger ac-counts which were indicative of a material weakness on controls over closing procedures, including the (a) recognition of ex-penses in appropriate periods, and (b) the accounting and re-porting of capital transactions.  In addition, a  material weakness exists as of August 31, 2006, with regard to our design and maintenance of adequate controls over the preparation, review, presentation and disclosure of amounts included in our Consolidated Balance Sheet and Statement of Cash Flows, which resulted in misstatements therein.  The proceeds of secured convertible notes and related financing costs were not appropriately classified as liabilities and other assets on the Consolidated Balance Sheet and the related financing cash inflows and outflows on the Statement of Cash Flows.  In addition, net realizable gains from the sale of securities were not appropriately reported as operating cash flows in our Consolidated Statement of Cash Flows.  In order to remediate these material weaknesses in our internal control over financial reporting, management is in the process of designing and implementing and continuing to enhance controls to aid in the correct preparation, review, presentation and disclosures of our Consolidated Financial Statements.  We are continuing to monitor, evaluate and test the operating effectiveness of these controls.  Other than indicated above, there were no changes in the Companys internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.   Limitations on the Effectiveness of Controls  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies and procedures may deteriorate.  13   PART II  OTHER INFORMATION  ITEM 1. LEGAL PROCEEDINGS  We are not a party to, and our properties are not the subject of, any material pending legal proceeding nor to our knowledge, are any such legal proceedings threatened against us.   ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS  None  Item 3. DEFAULTS UPON SENIOR SECURITIES  We are currently in default on our obligations related to our 8% convertible Notes, AJW Partners, LLC, AJW Offshore, Ltd, AJW Qualified Partners, LLC and New Millennium Capital Partners II, LLC.  In particular, under the registration rights agreement, if the registration statement on Form SB-2 is not declared effective by the SEC within 120 days of March 30, 2006, Infe is obligated to pay a registration default fee to the 8% callable secured convertible debenture holders equal to the principal of the Convertible Notes outstanding multiplied by .02 multiplied by the sum of the number of months that the registration statement is not yet effective, on a pro rata basis.  For example, if the registration statement had become effective July 30, 2006, we would pay $5,000 for each $250,000 debenture outstanding.  If thereafter, sales could not be made pursuant to the Registration Statement for an additional period of one (1) month, the Company would pay an additional $5,000 for each $250,000 of Outstanding Principal Amount.   Although the Holders of the Convertible Notes have not notified Infe of a default to date, this failure to notify us does not act as a waiver of the default.  Accordingly, the Companys failure to make this registration effective could result in the assessment of liquidated damages in the amount of $40,000 per month against Infe beginning July 30, 2006.   14   Furthermore, a breach of the representations and warranties contained in the Securities Purchase Agreement related to the 8% convertible Notes, exposes us to liquidated damages in the amount of, three percent (3%) of the outstanding amount of the Notes per month plus accrued and unpaid interest on the Notes, prorated for partial months, in cash or shares at the option of the Company.  Section 3.x of the Securities Purchase Agreement contains a representation that the Company did not receive a qualified opinion from its auditors with respect to its most recent fiscal year end.  The report dated January 13, 2006 of our auditor contains a qualified opinion and accordingly we are in default of this provision.  Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.  None  Item 5. OTHER INFORMATION  On February 3, 2006, we filed with the SEC a Registration Statement on Form SB-2 whereby we registered for resale certain securities purchased by various investors pursuant to the Securities Purchase Agreement dated November 30, 2005.  On August 1, 2006 we filed the third Amended Registration Statement on Form SB-2.  On August 31, 2006 we received SEC comments and are currently working on the fourth Amended Registration Statement.  Item 6. EXHIBITS  Exhibit Number Description of Document ------ -----------------------   31.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to Sarbanes-Oxley Section 302  32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Sarbanes-Oxley Section 906   15   SIGNATURES  In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.  Date:  October 24, 2006   INFE-Human Resources, Inc.   By: /s/ Arthur Viola ------------------------------ Name:    Arthur Viola Title:   Chief Executive Officer, Sole Director and Principal Financial Officer  16