**WASHINGTON,        D.C. 20549**

**FORM        10-QSB**

**000-31451**

|  **Nevada**                                                                                       | ** 65-1000634**                                                         |
|--------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------|
|  (State                  or other jurisdiction of incorporation                  or organization) |  (I.R.S.                  Employer Identification                  No.) |

| ** 370                  Amapola Ave. # 202,                  Torrance, California** | ** 90501**                   |
|------------------------------------------------------------------------------------------|-----------------------------------|
|  (Address                  of principal executive office)                           |  (Zip                  Code) |

**1-800-288-3099**

**1**

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**Table            Of Contents**

**TABLE            OF CONTENTS**

**PART            I - FINANCIAL STATEMENTS**

| ITEM                      1.                               | FINANCIAL                      STATEMENTS                                                                                 | 3      |
|------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------|--------|
|                                                       |                                                                                                                      |   |
|                                                       | Consolidated                      Balance Sheets for the periods                      ended                               |   |
|                                                       | June                      30, 2006 and December 31, 2005                                                                  | 3      |
|                                                       |                                                                                                                      |   |   |
|                                                       | Consolidated                      Statements of Operations for the Three                      Months and Six Months  |   |
|                                                       | ended                      June 30, 2006 and 2005, and from inception of                      development                 |   |
|                                                       | stage                      January 1, 2005 to June 30,                      2006                                          | 4      |
|                                                       |                                                                                                                      |   |   |
|                                                       | Consolidated                      Statement of Stockholders'                      Equity                                  | 5      |
|                                                       |                                                                                                                      |   |
|                                                       | Consolidated                      Unaudited Statement of Cash Flows for                      the Six Months          |   |
|                                                       | ended                      June 30, 2006 and 2005, and from inception of                      development                 |   |
|                                                       | stage                      January 1, 2005 to June 30,                      2006                                          | 6      |
|                                                       |                                                                                                                      |   |   |
|                                                       | Notes                      to Consolidated Financial                      Statements                                      | 7      |
|                                                       |                                                                                                                      |   |
| ITEM                      2.                               | MANAGEMENT'S                      DISCUSSION & ANALYSIS OF FINANCIAL CONDITION                      AND               |   |
| RESULTS                      OF OPERATIONS                 | 13                                                                                                                        |
|                                                       |                                                                                                                      |   |
|                                                       |                                                                                                                      |   |
|  **PART                      II - OTHER INFORMATION** |
|                                                       |                                                                                                                      |   |
| ITEM                      6.                               | EXHIBITS                                                                                                                  | 16     |
|                                                       |                                                                                                                      |   |
| SIGNATURES                                                 | 17                                                                                                                        |

**2**

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**Table                Of                Contents**

| **CYBERADS,                INC**                         |
|----------------------------------------------------------|
| **(A                Development Stage Company)**         |
| **CONSOLIDATED                BALANCE SHEETS**           |
|                                                     |   |   |   |   |   |   |   |   |
|                                                     |   |   |   |   |   | June                30, |   | December                31, |
|                                                     |   |   |   |   |   | 2006 |   | 2005 |
|                                                     |   |   |   |   |   | (unaudited) |   |   |
| **ASSETS**                                               |   |   |   |   |   |   |   |   |
|                                                     |   |   |   |   |   |   |   |   |
|                                                     | **CURRENT                ASSETS** |   |   |   |   |
|                                                     |   | Loan                receivable | $ | 7,500                  | $ | 7,500                  |
|                                                     |   | Deposits |   | 15,000                  |   | 15,000                  |
|                                                     |   |   | Total                Current Assets |   | 22,500                  |   | 22,500                  |
|                                                     |   |   |   |   |   |   |   |   |
|                                                     | **TOTAL                ASSETS** | $ | 22,500                  | $ | 22,500                  |
|                                                     |   |   |   |   |   |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS' DEFICIT** |   |   |   |   |
|                                                     |   |   |   |   |   |   |   |   |
|                                                     | **CURRENT                LIABILITIES** |   |   |   |   |
|                                                     |   | Accounts                payable | $ | 1,180,483                  | $ | 1,063,251                  |
|                                                     |   | Bank                overdraft payable |   | 15,487                  |   | 15,108                  |
|                                                     |   | Accrued                liabilities |   | 796,008                  |   | 971,762                  |
|                                                     |   | Deferred                revenue |   | 174,453                  |   | 172,453                  |
|                                                     |   | Notes                payable |   | 294,192                  |   | 294,192                  |
|                                                     |   | Notes                payable - related parties |   | 1,264,161                  |   | 1,226,161                  |
|                                                     |   |   | Total                Current Liabilities |   | 3,724,784                  |   | 3,742,927                  |
|                                                     |   |   |   |   |   |   |   |   |
|                                                     | **COMMITMENTS                AND CONTINGENCIES** |   | -                  |   | -                  |
|                                                     |   |   |   |   |   |   |   |   |
|                                                     | **STOCKHOLDERS'                DEFICIT** |   |   |   |   |
|                                                     |   | Preferred                stock, $0.001 par value; 5,000,000 shares authorized |   |   |   |   |
|                                                     |   |   | Series                A - 835,660 shares issued and outstanding |   | 836                  |   | 836                  |
|                                                     |   |   | Series                B - 1,000,000 shares issued and outstanding |   | 1,000                  |   | 1,000                  |
|                                                     |   |   | Series              C - Shares to be issued  |   |  -   |   |  -   |
|                                                     |   | Common                stock, $0.001 par value; 500,000,000 shares authorized, |   |   |   |   |
|                                                     |   |   | 197,246,909                and 123,351,777 shares issued and oustanding, |   |   |   |   |
|                                                     |   |   | respectively |   | 197,247                  |   | 123,352                  |
|                                                     |   | Additional                paid-in capital |   | 24,756,636                  |   | 23,172,901                  |
|                                                     |   | Accumulated                deficit prior to current development stage |   | (19,234,546)  |  | (19,234,546)  |
|                                                     |   | Accumulated                deficit in development stage |   | (9,423,457)  |   | (7,783,970)  |
|                                                     |   |   | Total                Stockholders' Deficit |   | (3,702,284)  |   | (3,720,427)  |
|                                                     |   |   |   |   |   |   |   |   |
|                                                     | **TOTAL                LIABILITIES AND STOCKHOLDERS' DEFICIT** | $ | 22,500                  | $ | 22,500                  |

**3**

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**Table          Of Contents**

| **CYBERADS,                INC**                                        |
|-------------------------------------------------------------------------|
| **(A                Development Stage Company)**                        |
| **CONSOLIDATED                STATEMENTS OF                OPERATIONS** |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   | From |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   | Inception                of |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   | Development |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   | Stage |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   | (January                1, |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   | 2005) |
|                                                                    |   |   |   |   | Three                Months Ended |   | Six                Months Ended |   | to |
|                                                                    |   |   |   |   | June                30, |   | June                30, |   | June                30, |   | June                30, |   | June                30, |
|                                                                    |   |   |   |   | 2006 |   | 2005 |   | 2006 |   | 2005 |   | 2006 |
|                                                                    |   |   |   |   | (unaudited) |   | (unaudited) |   | (unaudited) |   | (unaudited) |   | (unaudited) |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **REVENUES**                                                            |   |   |   | $ | -                  | $ | -                  | $ | -                  | $ | -                  | $ | -                  |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **OPERATING                EXPENSES**                                   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    | General                and administrative |   |   | 672,118                  |   | 2,406,187                  |   | 844,211                  |   | 3,818,902                  |   | 1,525,942                  |
|                                                                    | Marketing                expenses |   |   | 379,349                  |   | 31,714                  |   | 592,774                  |   | 726,714                  |   | 6,198,387                  |
|                                                                    | Selling                expenses |   |   | 18,000                  |   | -                  |   | 164,856                  |   | -                  |   | 1,577,109                  |
|                                                                    |   | **TOTAL                OPERATING EXPENSES** |   |   | 1,069,467                  |   | 2,437,901                  |   | 1,601,841                  |   | 4,545,616                  |   | 9,301,438                  |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **LOSS                FROM OPERATIONS**                                 |   |   | (1,069,467) |   | (2,437,901) |   | (1,601,841) |   | (4,545,616) |   | (9,301,438) |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **OTHER                INCOME (EXPENSES)**                              |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    | Other                income |   |   | -                  |   | -                  |   | -                  |   | -                  |   | 5,430                  |
|                                                                    | Gain                on forgiveness of debt |   |   | -                  |   | -                  |   | -                  |   | -                  |   | 2,500                  |
|                                                                    | Interest                expense |   |   | (19,008) |   | -                  |   | (37,646) |   | -                  |   | (115,778) |
|                                                                    | Loss                on abandonment of assets |   |   | -                  |   | -                  |   | -                  |   | -                  |   | (14,171) |
|                                                                    |   | **TOTAL                OTHER INCOME (EXPENSES)** |   |   | (19,008) |   | -                  |   | (37,646) |   | -                  |   | (122,019) |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **LOSS                BEFORE TAXES**                                    |   |   | (1,088,475) |   | (2,437,901) |   | (1,639,487) |   | (4,545,616) |   | (9,423,457) |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **INCOME                TAXES**                                         |   |   | -                  |   | 800                  |   | -                  |   | 800                  |   | -                  |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **NET                LOSS**                                             |   | $ | (1,088,475) | $ | (2,438,701) | $ | (1,639,487) | $ | (4,546,416) | $ | (9,423,457) |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    | NET                LOSS PER COMMON SHARE, |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |   | BASIC                AND DILUTED |   | $ | (0.01) | $ | 0.07                  | $ | (0.01) | $ | 0.14                  |   |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    | WEIGHTED                AVERAGE NUMBER OF |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |   | COMMON                STOCK SHARES |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |   | OUTSTANDING,                BASIC AND DILUTED |   |   | 151,172,738  |   | 37,518,477                  |   | 140,106,932                  |   | 31,793,119 |   |   |

**4**

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**Table          Of Contents**

| **CYBERADS,                INC**                                                  |
|-----------------------------------------------------------------------------------|
| **(A                Development Stage Company)**                                  |
| **CONSOLIDATED                STATEMENT OF STOCKHOLDERS'                DEFICIT** |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   | Additional |   |   |   |   |
|                                                                              |   |   | Convertible                Preferred Stock |   | Common                Stock |   | Paid-in |   | Deficit |   |   |
|                                                                              |   |   | Shares |   | Amount |   | Shares |   | Amount |   | Capital |   | Accumulated |   | Totals |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                December 31, 2004                                         |   | 835,660                  | $ | 836                  |   | 23,225,777                  | $ | 23,226                  | $ | 16,170,135                  | $ | (19,234,546) | $ | (3,040,349)  |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                issued for consulting expense                               |   | -                   |   | -                   |   | 99,626,000                  |   | 99,626                  |   | 6,846,766                  |   | -                   |   | 6,946,392                  |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                issued for debt                                             |   | -                   |   | -                   |   | 500,000                  |   | 500                  |   | 57,000   |   | -                   |   | 57,500                  |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                issued in exchange for compensation                         |   | 1,000,000                  |   | 1,000                  |   | -                   |   | -                   |   | 99,000                  |   | -                   |   | 100,000                  |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss for year ending December 31, 2005                         |   | -                   |   | -                   |   | -                   |   | -                   |   | -                   |   | (7,783,970) |   | (7,783,970)  |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                December 31, 2005                                         |   | 1,835,660                  | $ | 1,836                  |   | 123,351,777                  | $ | 123,352                  | $ | 23,172,901                  | $ | (27,018,516) | $ | (3,720,427)  |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                issued for management and consulting fees                   |   | -                   |   | -                   |   | 51,395,132                  |   | 51,395                  |   | 1,156,235                  |   | -                   |   | 1,207,630                  |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                issued for accrued liabilities                              |   |   |   |   |   | 22,500,000                  |   | 22,500                  |   | 427,500                  |   | -                   |   | 450,000                  |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss for period ending June 30, 2006                           |   | -                   |   | -                   |   | -                   |   | -                   |   | -                   |   | (1,639,487) |   | (1,639,487)  |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                June 30, 2006 (unaudited)                                 |   | 1,835,660                  | $ | 1,836                  |   | 197,246,909                  | $ | 197,247                  | $ | 24,756,636                  | $ | (28,658,003) | $ | (3,702,284)  |

**5**

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**Table          Of Contents**

| **CYBERADS,                INC**                                        |
|-------------------------------------------------------------------------|
| **(A                Development Stage Company)**                        |
| **CONSOLIDATED                STATEMENTS OF CASH                FLOWS** |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   | From |
|                                                                    |   |   |   |   |   |   |   |   |   |   | Inception                of |
|                                                                    |   |   |   |   |   |   |   |   |   |   | Development |
|                                                                    |   |   |   |   |   |   |   |   |   |   | Stage |
|                                                                    |   |   |   |   |   |   |   |   |   |   | (January                1, |
|                                                                    |   |   |   |   |   |   |   |   |   |   | 2005) |
|                                                                    |   |   |   |   | Six                Months Ended |   |   | to |
|                                                                    |   |   |   |   | June                30, |   |   | June                30, |   |   | June                30, |
|                                                                    |   |   |   |   | 2006 |   |   | 2005 |   |   | 2006 |
|                                                                    |   |   |   |   | (unaudited) |   |   | (unaudited) |   |   | (unaudited) |
| **CASH                FLOWS FROM OPERATING ACTIVITIES:**                |   |   |   |   |   |   |   |
|                                                                    | Net                loss | $ | (1,639,487)  |   | $ | (4,546,416)  |   | $ | (9,423,457)  |
|                                                                    | Stock                issued for accrued wages |   | 450,000                  |   |   | -    |   |   | 550,000                  |
|                                                                    | Common                stock issued for compensation and services |   | 1,207,630                  |   |   | 4,473,279   |   |   | 8,154,022                  |
|                                                                    | Forgiveness                of debt |   | -                   |   |   | -                   |   |   | (2,500)  |
|                                                                    | Loss                on abandonment of assets |   |                  -    |   |   | -                   |   |   | 14,171                  |
|                                                                    | Provision                for doubtful accounts |   | -                   |   |   | 800                  |   |   | -                   |
|                                                                    | Adjustments                to reconcile net loss to net cash |   |   |   |   |   |   |   |   |
|                                                                    |   | used                by operating activities: |   |   |   |   |   |   |   |   |
|                                                                    | Increase                (decrease) in accounts payable |   | 117,232                  |   |   | (25,002)  |   |   | 311,261                  |
|                                                                    | Increase                in accrued liabilities |   | (175,754)  |   |   | -                   |   |   | 142,872                  |
|                                                                    | Increase                in deferred revenue |   | 2,000                  |   |   | 136,142                  |   |   | 174,453                  |
|                                                                    |   | Net                cash provided (used) by operating activities |   | (38,379)  |   |   | 38,803                  |   |   | (79,178)  |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| **CASH                FLOWS FROM INVESTING ACTIVITIES:**                |   |   |   |   |   |   |   |   |
|                                                                    | Increase                in loan receivable |   | -                   |   |   | -                   |   |   | (7,500)  |
|                                                                    | Increase                in deposits |   | -                   |   |   | -                   |   |   | (6,415)  |
|                                                                    | Purchase                of marketing rights |   | -                   |   |   | (210,000)  |   |   | -                   |
|                                                                    |   | Net                cash used by investing activities |   | -                   |   |   | (210,000)  |   |   | (13,915)  |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| **CASH                FLOWS FROM FINANCING ACTIVITIES:**                |   |   |   |   |   |   |   |   |
|                                                                    | Advances                from related parties |   | 38,000                  |   |   | -                   |   |   | 77,606                  |
|                                                                    | Increase                in bank overdrafts |   | 379                  |   |   | -                   |   |   | 15,487                  |
|                                                                    | Increase                in notes payable |   | -                   |   |   | 185,644                  |   |   | -                   |
|                                                                    |   | Net                cash provided by financing activities |   | 38,379                  |   |   | 185,644                  |   |   | 93,093                  |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Change                in cash                                           |   | -                   |   |   | 14,447                  |   |   | -                   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| **Cash,                beginning of period**                            |   | -                   |   |   | -                   |   |   |                  -    |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| **Cash,                end of period**                                  | $ | -                   |   | $ | 14,447                  |   | $ | -                   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| **SUPPLEMENTAL                CASH FLOW INFORMATION:**                  |   |   |   |   |   |   |   |   |
| Interest                paid                                            | $ | -                   |   | $ | -                   |   | $ | 5,502                  |
| Income                taxes paid                                        | $ | -                   |   | $ | -                   |   | $ | -                   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| **NON-CASH                INVESTING AND FINANCING ACTIVITIES:**         |   |   |   |   |   |   |   |   |
| Common                stock issued for debt                             | $ | -                   |   | $ | -                   |   | $ | 57,500                  |
| Common                stock issued for accrued wages                    | $ | 450,000                  |   | $ | -                   |   | $ | 550,000                  |

**6**

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**Table                Of Contents**

**CYBERADS,            INC**

**(A              Development Stage Company)**

**CONDENSED              NOTES TO THE INTERIM FINANCIAL STATEMENTS**

**June              30, 2006**

----

**NOTE            1 - BASIS OF PRESENTATION**

**NOTE            2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES**

**7**

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**Table                Of Contents**

**CYBERADS,              INC**

**(A                Development Stage Company)**

**CONDENSED                  NOTES TO THE INTERIM FINANCIAL STATEMENTS**

**June                30, 2006**

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**8**

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**Table                Of Contents**

**CYBERADS,              INC**

**(A                Development Stage Company)**

**CONDENSED                  NOTES TO THE INTERIM FINANCIAL STATEMENTS**

**June                30, 2006**

----

**NOTE            3 - BANK OVERDRAFTS**

**NOTE            4 - CAPITAL STOCK **

**9**

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**Table                  Of Contents**

**CYBERADS,              INC**

**(A                Development Stage Company)**

**CONDENSED                  NOTES TO THE INTERIM FINANCIAL STATEMENTS**

**June                30, 2006**

----

**NOTE            5 - COMMITMENTS AND CONTINGENCIES**

**10**

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**Table                Of Contents**

**CYBERADS,              INC**

**(A                Development Stage Company)**

**CONDENSED                  NOTES TO THE INTERIM FINANCIAL STATEMENTS**

**June                30, 2006**

----

**NOTE            6 - NOTES PAYABLE**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | June                      30, 2006 |    | December                      31, 2005 |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|---------|----------------------------------------|
| Note                      payable; was due in installments of $5,000 on January 15, 2004                      and                      February 15, 2004 with final payment due March 15, 2004, plus                      interest at                      10% per annum; secured by all of the Company's accounts receivable,                      inventories, and computer hardware and software and is personally                      guaranteed by two former officers of the Company. In default. | $                                  | 109,000 |                                   | $ | 109,000 |
| Note                      payable to cellular phone service provider; due in installments                      of $92,596                      payable on January 2, 2005 and August 2, 2005, plus interest                      at libor                      index. In default.                                                                                                                                                                                                                        |                               | 185,192 |                                   |   | 185,192 |
| Total                      Notes Payable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                | $                                  | 294,192 |                                   | $ | 294,192 |

**NOTE            7 - RELATED PARTY TRANSACTIONS**

|                                                                                                                                                                                                 | June                      30, 2006 |      | December                      31, 2005 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|-----------|----------------------------------------|
| Advance                      due to a corporation owned by a former officer of the Company,                      accruing                      interest at libor index, due on demand and unsecured. | $                                  | 54,000    |                                   | $ | 54,000 |
| Advance                      due to a former officer of the Company, bearing interest at                      5% per annum,                      due on demand and unsecured                         |                               | 1,177,661 |                                   |   | 1,139,661 |
| Advance                      due to a current officer of the Company, bearing no interest,                      due on                      demand, and unsecured                                    |                               | 32,500    |                                   |   | 32,500 |
|                                                                                                                                                                                                 | $                                  | 1,264,161 |                                   | $ | 1,226,161 |

**11**

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**Table                Of Contents**

**CYBERADS,              INC**

**(A                Development Stage Company)**

**CONDENSED                  NOTES TO THE INTERIM FINANCIAL STATEMENTS**

**June                30, 2006**

----

**NOTE                  8 - ACQUISITION**

**12**

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**Table                Of Contents**

**Management’s          Discussion and Analysis of Financial Condition and Results          of Operations**

**RESULTS          OF OPERATIONS (3 mos.)**

|    |   | Three                    months ended June 30                        |   | Increase                                                                                         |   |
|---------|--------|----------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------|--------|
|    |   | 2006                                                                 |   | 2005                                                                                             |   | Amount |   | % |   |
| Revenue |   |  $         -  |   |   $                               -  |   |   $                               -  |   |  - |   |

|                             |   | Three                    months ended June 30 |   | Decrease                           |   |
|----------------------------------|--------|-----------------------------------------------|--------|------------------------------------|--------|
|                             |   | 2006                                          |   | 2005                               |   | Amount |   | % |   |
|  General&administrative |   | $672,118                                      |   |   $2,406,187   |   |  (1,734,069) |   |  72% |   |

**13**

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**Table              Of Contents**

|                                          |   | Three                      months ended June 30 |   | Increase |   |
|-----------------------------------------------|--------|-------------------------------------------------|--------|----------|--------|
|                                          |   | 2006                                            |   | 2005     |   | Amount |   | % |   |
| Selling&Mrktg.                    Expense |   | $397,349                                        |   | $31,714  |   | $365,635 |   | 11.5% |   |

|                                |   | Three                      months ended June 30 |   | Increase                                                 |   |
|-------------------------------------|--------|-------------------------------------------------|--------|----------------------------------------------------------|--------|
|                                |   | 2006                                            |   | 2005                                                     |   | Amount |   | % |   |
| Interest                    Expense |   | $19,008                                         |   | $         0 |   | $19,008 |   | n/a |   |

**RESULTS          OF OPERATIONS (6 mos.)**

|    |   | Three                    months ended June 30            |   | Increase                                                 |   |
|---------|--------|----------------------------------------------------------|--------|----------------------------------------------------------|--------|
|    |   | 2006                                                     |   | 2005                                                     |   | Amount |   | % |   |
| Revenue |   | $         0 |   | $         0 |   | $         0 |   | - |   |

|                             |   | Six                    months ended June 30 |   | Decrease   |   |
|----------------------------------|--------|---------------------------------------------|--------|------------|--------|
|                             |   | 2006                                        |   | 2005       |   | Amount |   | % |   |
|  General&administrative |   | $844,211                                    |   | $3,818,902 |   | ($2,974,691) |   |  78% |   |

**14**

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**Table              Of Contents**

|                                        |   | Six                    months ended June 30 |   | Increase |   |
|---------------------------------------------|--------|---------------------------------------------|--------|----------|--------|
|                                        |   | 2006                                        |   | 2005     |   | Amount |   | % |   |
| Selling&Mrktg.                  Expense |   | $757,630                                    |   | $726,714 |   | $30,916 |   | 4% |   |

|                              |   | Six                    months ended June 30 |   | Increase                                                 |   |
|-----------------------------------|--------|---------------------------------------------|--------|----------------------------------------------------------|--------|
|                              |   | 2006                                        |   | 2005                                                     |   | Amount |   | % |   |
| Interest                  Expense |   | $37,646                                     |   | $         0 |   | $37,646 |   | n/a |   |

**FINANCIAL          POSITION & LIQUIDITY AND CAPITAL RESOURCES**

|   |   | Six                    months ended June 30              |   | Decrease |   |
|--------|--------|----------------------------------------------------------|--------|----------|--------|
|   |   | 2006                                                     |   | 2005     |   | Amount |   | % |   |
| Cash   |   | $         0 |   | $14,447  |   | $14,447 |   | (100%) |   |

**ACQUISITION          OF SUBSIDIARY**

**15**

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**Table              Of Contents**

**PART            II - OTHER INFORMATION**

**ITEM            6. EXHIBITS**

| **Exhibit                      Number** | **Description                      of Document**                                 |
|-----------------------------------------|----------------------------------------------------------------------------------|
|                                    |                                                                             |
| 10.1*                                   | Share                      Exchange Agreement And Plan Of Reorganization         |
| 31.1                                    | Rule                      13a-14(a)/15d-14(a)                      Certification |
| 32.1                                    | Section                      1350                      Certification             |

**16**

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**Table                Of Contents**

**SIGNATURES**

| Date:                      August 21, 2006 | CYBERADS,                      INC.                                                                                       |
|--------------------------------------------|---------------------------------------------------------------------------------------------------------------------------|
|                                       |                                                                                                                      |
|                                       | By:                      /s/                      JEFF CRISWELL                        Jeff Criswell, President |