UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM 10-QSB  S QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For quarterly period ended June 30, 2006  £ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  Commission file number: 000-30245  IDI Global, Inc. (Exact name of small business issuer as specified in its charter)  Nevada87-0617040(State of incorporation)(I.R.S. Employer Identification No.)  462 East 800 North, Orem, Utah84097(Address of principal executive offices)(Zip code)  Issuers telephone number, including area code: (801) 224-4444  Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes S  No £  Indicate by check made whether the registrant is a shell company (as defined in rule 12b-2 of the exchange Act)   Yes £  No S  As of August 9, 2006, IDI Global, Inc., had 23,816,610 shares of common stock outstanding.  Transitional Small Business Disclosure Format: Yes £  No S     TABLE OF CONTENTS   PART I: FINANCIAL INFORMATIONItem 1. Financial Statements3Item 2. Managements Discussion and Analysis11Item 3. Controls and Procedures22PART II: OTHER INFORMATIONItem 1. Legal Proceedings23Item 2. Unregistered Sales of Equity Securities and Use of Proceeds24Item 3. Defaults upon Senior Securities25Item 5. Other Information25Item 6. Exhibits26Signatures27              2     PART I: FINANCIAL INFORMATION  ITEM 1.     FINANCIAL STATEMENTS  The following financial information depicting our consolidated statements of operations for the six-month periods ended June 30, 2006 and 2005 is unaudited.  This financial information, in the opinion of management, includes all adjustments consisting of normal recurring entries necessary for the fair presentation of such data.  The results of operations for the six-month period ended June 30, 2006, are not necessarily indicative of results to be expected for any subsequent period, as explained in Managements Discussion and Analysis below.    3       IDI Global, Inc. and Subsidiaries Condensed Consolidated Financial Statements  June 30, 2006    CONTENTS    Unaudited Condensed Consolidated Balance Sheets5Unaudited Condensed Consolidated Statements of Operations7Unaudited Condensed Consolidated Statements of Cash Flows8Notes to the Unaudited Condensed Consolidated Financial Statements10   4     IDIGlobal, Inc. and Subsidiaries(Debtor-in-Possession)Condensed Consolidated Balance SheetsASSETSJune 30,December 31,20062005(unaudited)Current AssetsCash$530,862$1,093,292Restricted Cash720,452710,685Accounts Receivable, net219,521123,561Employee Advances945-Inventory6,300-Prepaid expenses597,000-Total Current Assets2,075,0801,927,538Software Development and Equipment, Net145,695200,855Other AssetsDeposits31,53328,338Total Other Assets31,53328,338Total Assets$2,252,308$2,156,731         The balance sheet at December 31, 2005 was taken from the audited financial statements at that date and condensed.  The accompanying notes are an integral part of these condensed consolidated financial statements.  5     IDIGlobal, Inc. and Subsidiaries(Debtor-in-Possession)Condensed Consolidated Balance SheetsJune 30,December 31,20062005(unaudited)Liabilities Not Subject to CompromiseAccounts Payable$276,960$369,117Accrued Expenses-947,595Employee Advances83183Reserve for Refunds and Chargebacks-63,796Derivatives-40,271Other Payables--Notes Payable - Related Party-504,527Notes Payable1,750,0001,750,000Total Current Liabilities Not Subject to Compromise2,027,0433,675,489Liabilities Subject to CompromiseAccounts Payable199,825-Accrued Expenses1,059,108-Employee Advances100-Reserve for Refunds and Chargebacks63,796-Derivatives46,813-Other Payables--Notes Payable - Related Party504,527-Notes Payable--Total Current Liabilities Subject to Compromise1,874,169-Contingencies--Deferred Income Tax Liability--Total Liabilities3,901,2123,675,489Stockholders' EquityCommon Stock, Authorized 50,000,000 Shares,$.001 Par Value, Issued and Outstanding19,160,174 and 19,160,174, Respectively19,16019,160Additional Paid in Capital6,744,2686,744,268Retained Earnings (Deficit)(8,412,332)(8,282,186)Total Stockholders' Equity(1,648,904)(1,518,758)Total Liabilities and Stockholders' Equity$2,252,308$2,156,731  The balance sheet at December 31, 2005 was taken from the audited financial statements at that date and condensed.  The accompanying notes are an integral part of these condensed consolidated financial statements  6     IDIGlobal, Inc. and Subsidiaries(Debtor-in-Possession)Unaudited Condensed Consolidated Statements of OperationsFor the Three Months EndedFor the Six Months EndedJune 30,June 30,2006200520062005Revenues, NetProduct Sales$2,551,939$5,230,698$5,196,866$11,359,183Training Revenues324,985578,263665,5281,406,061Total Revenues2,876,9245,808,9615,862,39412,765,244Cost of SalesEmployee Advances1,394,0023,834,3313,103,0278,631,287Training Costs163,857291,561335,560708,938Total cost of sales1,557,8594,125,8923,438,5879,340,225Gross Profit (Loss)1,319,0651,683,0692,423,8073,425,019Operating ExpensesGeneral & Administrative1,254,3081,421,0572,398,8522,732,502Total Operating Expenses1,254,3081,421,0572,398,8522,732,502Net Operating Income (Loss)64,757262,01224,955692,517Other Income(Expense)Interest Income5,3763,3179,8335,102Interest Expense(43,883)(129,226)(172,588)(267,622)Gain on Valuation of Derivatives--(6,541)-Other Income (Expense)2,653(3,195)14,19521,912Total Other Income(Expense)(35,854)(129,104)(155,101)(240,608)Income (Loss) Before Income Taxes28,903132,908(130,146)451,909Income Tax ExpenseIncome Tax Expense----Deferred Income Tax(Benefit)Expense-9,990-23,567Total Income Tax Expense-9,990-23,567Net Income (Loss)$28,903$122,918$(130,146)$428,342Net Income (Loss) Per Share$0$0$(0)$0Weighted AverageShares Outstanding19,037,83418,960,17419,037,83418,960,174  The accompanying notes are an integral part of these condensed consolidated financial statements.  7     IDIGlobal, Inc. and Subsidiaries(Debtor-in-Possession)Unaudited Condensed Consolidated Statements of Cash FlowsFor the Six Months EndedJune 30,20062005Cash Flows from Operating Activities:Net Income (Loss)$(130,146)$428,342Adjustments to Reconcile Net Loss to Net CashProvided by Operations:Depreciation & Amortization55,16092,010Deferred Income Taxes-23,567Deposits(3,195)3,195Change in Operating Assets and Liabilities:Employee AdvancesAccounts Receivable(95,960)(55,625)Other Receivables(945)(550)Prepaid expenses(597,000)-Inventory(6,300)-Increase (Decrease) in:Accounts Payable107,668331,600Accrued Expenses111,51331,776Derivative Liability6,542-Reserved for Refunds and Chargebacks-(2,098)Net Cash Provided(Used) by Operating Activities(552,663)852,217Cash Flows from Investing Activities:Proceeds from Software and Equipment--Purchase of Software and Equipment-(78,975)Advances to related party-(20,000)Cash Paid for Acquisition of Subsidiary-(1,796,599)Cash Acquired from Acquisition of Subsidiary--Net Cash Provided (Used) by Investing Activities-(1,895,574)Cash Flows from Financing Activities:Proceeds from Issuance of Notes Payable-195,527Proceeds from Stock Issuance-899Principal Payments on Line of Credit-(23,079)Principal Payments on Notes Payable-(11,978)Net Cash Provided (Used) by Financing Activities-161,369Increase (Decrease) in Cash(552,663)(881,988)Cash and Cash Equivalents at Beginning of Period1,803,9772,786,425Cash and Cash Equivalents at End of Period$1,251,314$1,904,437  The accompanying notes are an integral part of these condensed consolidated financial statements.  8     IDIGlobal, Inc. and Subsidiaries(Debtor-in-Possession)Unaudited Condensed Consolidated Statements of Cash Flows (Continued)For the Six Months EndedJune 30,20062005Cash Paid For:Interest$-$-Income Taxes$-$-Non-Cash Investing and Financing Activities:Stock Issued for Services & Accrued Interest$-$-Stock Issued for Note Payable$-$-Employee Advances$-$-                   The accompanying notes are an integral part of these condensed consolidated financial statements.  9    IDI Global, Inc. and Subsidiaries Notes to the Condensed Consolidated Financial Statements June 30, 2006   GENERAL  IDI Global, Inc. and its Subsidiaries (the Company), have elected to omit substantially all footnotes to the consolidated financial statements for the six months ended June 30, 2006, since there have been no material changes (other than indicated in other footnotes) to the information previously reported by the Company in its Annual Report filed on Form 10-KSB for the fiscal year ended December 31, 2005.  UNAUDITED INFORMATION  The information furnished herein was taken from the books and records of the Company without audit.  However, such information reflects all adjustments which are, in the opinion of management, necessary to properly reflect the results of the interim period presented.  The information presented is not necessarily indicative of the results from operations expected for the full fiscal year.  BANKRUPTCY  On April 17, 2006, IDI Global, Inc., as well as two of its wholly owned subsidiaries, IDI Small Business, Inc., and Chief Financial, Inc., along with the wholly owned subsidiary of Chief Financial, Professional Consulting Services, Inc., (the Debtors), filed for petitions of relief under Chapter 11 of the federal bankruptcy laws in the United States Bankruptcy Court for the District of Utah (the Bankruptcy Court). Under Chapter 11, certain claims against the Debtor in existence prior to the filing of the petitions for relief under the federal bankruptcy laws are stayed while the Debtor continues business operations as Debtor-in possession. These claims are reflected in the June 30, 2006, balance sheet as liabilities subject to compromise. Additional claims (liabilities subject to compromise) may arise subsequent to the filing date as a result of the determination by the court of allowed claims for contingencies and other disputed amounts. The Companies anticipate that each entity will remain as debtor in possession, subject to the jurisdiction of the supervision and orders of the Bankruptcy Court.  Additional disclosure for the statements of cash flows for the period ending June 30, 2006:  Operating Activities:  Interest received on cash accumulated because of the Chapter 11 proceeding $ 0.00.  Interest stayed to on note payable because of the Chapter 11 proceeding $ 85,167.  Professional fees paid for services rendered in connection with the Chapter 11 proceeding $0.00.  Investing Activities:  Proceeds from sale of software and equipment due to Chapter 11 proceeding $ 0.00.  Financing Activities:  Principal payments on pre-petition debt authorized by court $ 0.00.     10    In this report, references to IDI Global, we, us, and our refer to IDI Global, Inc. and its subsidiaries.  SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS  The Securities and Exchange Commission (SEC) encourages companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions.  This report contains these types of statements.  Words such as may, will, expect, believe, anticipate, estimate, project, or continue or comparable terminology used in connection with any discussion of future operating results or financial performance, identify forward-looking statements.  You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report.  All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.   We disclaim any obligation or intention to update any forward-looking statement contained in this Report.  ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS  CRITICAL ACCOUNTING POLICIES  The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in our consolidated financial statements and accompanying notes.  Critical accounting policies are defined as those which are most important to the portrayal of the financial condition and results of operations and which also require a company to make its most difficult and subjective judgments. Based on this definition, we have identified the critical accounting policies and judgments addressed below. Although we believe that our estimates, assumptions, and judgments are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments, or conditions.  Metrics:  As an internet retailer, we consider growth in revenue to be a key indicator of our overall financial performance. We examine our revenue by using several key metrics, including: overall change in net sales; gross margin percent; gross profit; and operating income.  Our strategy for growth includes not only increasing our market share by expanding sales in existing channels, but also taking advantage of strategic opportunities for acquisitions. Ensuring adequate financing is central to the success of our growth strategy.  As a result, we have entered into a variety of financing arrangements which we believe will contribute to the long-term success of IDI Global.  Reserves: The reserve for refunds and chargebacks is maintained at a level that, in managements judgment, is sufficient to absorb any anticipated refunds or chargebacks as of the balance sheet date. The reserve is not specifically associated with individual sales transactions, but is a general reserve set aside to accommodate any future refunds or disputed transactions with an original transaction date prior to December 31, 2004.  We review the appropriateness of the reserve quarterly and have developed what management believes is a reasonable methodology for projecting the needed reserve that is based on our historical refund and chargeback data.  Income Taxes:  We record a tax provision for the anticipated tax consequences of our reported results of operations. In accordance with SFAS No. 109, Accounting for Income Taxes, the provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. We record a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.  Goodwill:  We test goodwill for impairment annually as well as whenever events or circumstances make it more likely than not that impairment may have occurred, such as the occurrence of a significant adverse change in the business climate or a decision to sell or dispose of a reporting unit. Determining whether an impairment has occurred requires valuation of the respective reporting unit, which we estimate using a discounted cash flow method. In applying this methodology, we rely on a number of factors, including actual operating results, future business plans, economic projections and market data.  If this analysis indicates that goodwill is impaired, measuring the impairment requires a fair value estimate of each identified tangible and intangible asset.  Should this be the case, we will supplement the cash flow approach discussed above and make the appropriate changes.  11    Executive Overview  IDI Global is a holding company operating through its wholly owned subsidiaries, Internet Development, Inc. (Internet Development); Chief Financial, Inc. (Chief Financial); IDI Small Business (IDISB); IDI Technology (IDIT); and Sports Media International, Inc. (Sports Media).  Internet Development offers the tools to create a web site, including a merchant account, web development services, web hosting services, and consulting services, along with an inside sales and marketing center that sells these technologies complete with coaching, and sometimes other third-party educational tools.  In addition, Internet Development offers an Internet/extranet platform for large and small vertical businesses with a network of affiliates.  Chief Financial was originally acquired to provide administrative support to our sales centers, as well as trending reports, sales tracking, lead generation and new lead source opportunities.  Sports Media sells advertising and marketing programs for media companies.  IDISB manages our direct Marketing operations in St. George, Utah.  IDIT provides Internet-based lead generation offerings that produce a new stream of monthly residual income.  Internet Development  Internet Development is an application service provider offering web solutions and related business packages to companies and individuals in North America as well as globally.  Internet Development designs, develops and markets software applications for large organizations and small businesses to exploit the full capabilities of the Internet, including communications, marketing, information management, and e-commerce.  Its flagship products include ARRAY® and Quicksite Builder.  The ARRAY® technology enables large and small organizations to deploy, integrate and interact with a network of e-commerce enabled affiliate web sites, while maintaining a consistent, unified brand image for the organization as a whole.  In short, ARRAY® allows a company to provide a very high level of functionality and online business features to its representatives, while maintaining communication with the organization and control of the corporate image.  ARRAY® features include corporate administrative control, custom design options for the individual user, E-commerce and shopping cart capability, marketing tools, contact center (email, calendar, to-do list, and address book), online presentation manager, point and click website editor, message boards, and other business management features. The Quicksite Builder allows a small business or individual user to quickly, and without programming knowledge, build a functional, e-commerce enabled website.  Its features include auto-responders, advanced shopping cart utility, banners and email showcases, search engine marketing tools, domain name setup, detailed site traffic statistics, secure online ordering and transaction processing, and backend order tracking.  Array generates revenue primarily from hosting arrangements, but could also be considered to generate revenue from sale of software, and product sales depending on how it is described.  Sales of the Array software and related services generate revenue in three ways.  First, custom development of the software by Internet Developments programmers and designers, in order to fit the exact needs of a client, is bid on a per project basis, and payment is received in one-time fees for that work.  Second, the implementation of a particular Array software solution for a specific client is done within a hosting arrangement, where the end user or individual subscriber to the software pays a monthly fee, which is processed and collected by Internet Development in most cases; and Internet Development hosts the application and supports the software ongoing.  Third, some larger companies with thousands of representatives choose to license the software and pay Internet Development an annual license fee that is not tied as closely to the number of individual subscribers, and may or may not be hosted by Internet Development.  In this scenario, Internet Development does not process and collect end user payments; we simply invoice the corporate entity for the annual license due.  To date, Internet Development has never sold the software outright, a scenario in which the client would purchase the software fully and own the code, and would be responsible to maintain and support the application.  In the second scenario above, which is most common, Internet Development normally remits a portion of the collected revenues back to the corporate entity according to contractual agreements, as long as a minimum amount due each month to Internet Development has been met and satisfied.  Most Array contracts are established with the corporate entity on a term of 1-2 years, with a variety of performance measurements in place for Internet Development's software and services, such as 99.7% up-time for the subscriber websites.  Individual subscribers agree to certain terms & conditions and may cancel at any time prior to the next anniversary date in which their next payment will be processed.  Most contracts with the corporate entity auto-renew at the end of the initial term in one-year increments, requiring 60 or 90 days' notice to terminate by either party.  Payments due to Internet Development by the corporate entity are given net 20 terms with a 1.5% late fee.   12    Within the Small Office/Home Office (SOHO) division, we enter into agreements for qualified leads of clients and potential clients who have shown a propensity for the products and services that Internet Development provides. We also generate our own leads. A lead is a qualified prospect seeking educational support in Real Estate Investing Education, Internet Technology, and Electronic Commerce Education (e.g., eBay or Web Site Business Integration), Stock Trading Education, and Professional Recruiting Strategies.  Customers of Internet Developments various products and services are obtained through an in-house sales & marketing operation that has participation at trade shows, conferences, and corporate-sponsored events, as well as through the networking of strategic partners that recommend the companys services.  IDI Orem inside sales and marketing center has a specific charge to sell and market our Small Office Home Office products.  These products include our ecommerce-enabled web technology, Quicksite Builder, and other training and educational products, some of which are out-sourced through third parties.  At times, Internet Development pays for custom development of products and services that better respond to the needs of these opt-in and highly qualified prospects. These joint-venture relationships, licensing agreements, and sometimes temporary outsourced solutions involve products and services related to educational support for these training fields, training specific products, marketing, and occasionally technology products.  During the initial contact with these prospects, before they have officially become a customer of Internet Development, all of the products that are sold are delivered via shipped collateral, downloads available in real-time, or at the point-of-sale at a live, on-site seminar. These products are immediately received and all performance obligations to the customers have been met with the exception of a product review period, which at the minimum is three days from receipt of the product to an occasional 30-day window.  Our performance obligations to our telesales clients are to deliver via shipping printed or packaged collateral precisely what has been outlined in their purchase agreement. Each order includes a detailed copy of the purchase agreement for written notification and clarification. In addition to the shipped products, we provide the exact training and/or seminar sessions that assist the client in providing the proper infrastructure for further development of successful strategies and greater product integration into those strategies.  At the point that a customer agrees to purchase a telesales package, he or she is then transferred to a compliance specialist. This is an administrative office and function that independently maintains the integrity of our sales processes and records detailed and specific information related to the customers understanding and commitment to the program the customer purchased. In return, the customer also gives his or her acceptance to the terms and conditions of the purchase agreement. The compliance call is scripted and recorded. The customer is also told by the compliance specialist that the call is being recorded.  The compliance call also ensures that the customer has not been promised anything other than trainings and materials to be delivered within a set or specific time period. The call also ensures that no earnings claims have been presented. The customer must also understand and accept the charges, verification of charge card and billing information, the finality of all sales, and the recognition that there are no refunds or money back guarantees after the specified grace period.  Within two business days, the customer is charged, and the sale is considered complete. In some instances, the client pays by check, in which case, the sale is considered complete upon receipt of the check. Within three business days of a completed sale, a client is shipped any physical product purchased (software or certificates), and they are called by our coaching and training department to schedule any training sessions purchased.  The customer answers questions regarding the professionalism of our sales staff to ensure that high-pressure tactics played no role in the decision making process. We also establish the necessary customer service and client retention personnel who are specifically assigned to that customer for issues, support, and clarification.  Our product base that is offered to our customers changes each month and we identify new product strategies that are a better customized fit for our customers. The general model that we follow for product development is as follows:  - Identify an outsource product that presents a recognizable advantage and solution over our current product offering. - Integrate a short-term testing and product integration strategy for that product and track the net success via client feedback and sales growth.  13    - Follow our standard migration strategy that delivers successful outsourced products and joint-venture products to an Internet Development acquisition, licensing, or development agreement.  Our products currently offered and under our development model by Internet Development and its subsidiaries, Hire Solutions, Chuck Mullaney and Pajama Executive, and Real Estate Trends, and other lead relationship programs are as follows:  Seminar Trainings and Mentoring  We offer live training sessions that educate customers on the strategies they have selected in the general business directions outlined above. These trainings are sometimes available on the web, in teleconferences, live trainings, or seminars, and we give follow up mentoring sessions and proactive customer service calls to our customers that are generally one-on-one and customer-specific.  We warrantee this portion of our product offering with service commitments to our customers that ensure our continued ongoing support for students in the program if they are fulfilling the assignments set forth through these training vehicles. Any continued obligation to students under these circumstances does not affect revenue or expense recognition since the obligations are fulfilled by standard Internet Development employees whose salaries or wages are already accounted for and expensed.  Web-Based Products, Software, and Tools  The web-based products, software, and tools offered to our customers complement our services and offer a very fluid component. Because of our presence as a leading provider of software and applications to companies like Tupperware, Avon, Shasta, and more, we are often directly approached by companies or individuals that would like us to test and/or integrate their products into our SOHO channels.  As outlined above, we have a defined process for reviewing, testing, and integrating products or services into our various channels.  Currently we offer the following as Internet Development products that have been reviewed, tested, and strategically integrated into short and long-term SOHO channels:  Search Engine Optimization, Traffic, and Advertising Tools and Products. These products are specifically designed to assist clients in generating exposure for their web-based businesses. Some of these products offer guaranteed percentages or numbers of visitors to a clients web sites, and our performance obligation continues until a defined percentage or number of visitors has been reached.  eBay Research Software and Tools  Our subsidiary IDI Small Business, Inc., has developed eBay and web-specific tools that are provided via CD-ROM that allow customers to extensively research online auctions, products, and other web products to determine pricing and marketing trends.  A standard tool offered for web-business automation is an auto-responder tool. These tools integrate with web sites, web builders, and other web-based software to collect by request a customers information in exchange for a free drawing, subscription to an email, or a newsletter.  VIP Members Only Support Access Forum  We have available a web-based support forum that allows clients immediate and continued access to our highest level expert help. We also post all of our live trainings, which are recorded, to this forum for repeated and unfettered access to students who are enrolled in the program. All of our on-demand training tools that we ship are also available through this web-portal so that system compatibility and mail delivery problems are completely mitigated.  Audio Training Courses, DVDs Training Supplements  Training sessions or other audio recordings are available to students on CD-Rom for strategic reinforcement of the core business and marketing ideas that fuel all our programs. Often these audio or DVD trainings are bundled and shipped as a group (e.g.,  three eBay training DVDs are shipped as the initial part of every eBay package that we sell, but those three DVDs are not available separately from the bundled package).   14    Business incorporation packages and tax strategies for new and/or small businesses are also available to our customers. These products are always represented and sold as a separate strategic partnership to Internet Development because this area of expertise is outside of Internet Developments core business model. We have no plans to incorporate these products directly into our base offering, but we maintain a management agreement with the companies that provide these services to ensure that the products remain consistent with our SOHO channels and their customer expectations.  Printed Materials and Training Manuals  In addition to web-based training, support tools, and software applications, we offer students comprehensive printed collateral that corresponds to their particular educational choices.  Our on-staff editor and ghost writer enables us to quickly create or edit printed solutions for Internet Development clients. We partner with experts and then undertake Internet Development-funded and controlled development projects to fill any gaps in print work or course material that is offered by Internet Development or its partners. Our programs generally include multi-binder training guides or coaching manuals that serve as a support mechanism to the live trainings, as well as a curriculum guide for the overall direction of the program. Effectively, these print solutions are a comprehensive syllabus with very detailed information and strategies that outline and define the courses.  Internet Development has continued to strengthen its relationships with several of the largest Internet media buyers in the country. By improving our ability to create Internet-generated leads, we will have better and more consistent lead sources. As a result, this consistent flow of leads will provide the company with higher profit margins than the company has experienced in previous quarters. Leveraging the ability to create leads has enabled the Company to secure partnerships with several of the top seminar speakers in the Real Estate industry.  IDI Small Business  On January 13, 2005, IDI Global incorporated IDI Small Business, Inc. (IDISB), as our wholly owned subsidiary in the state of Utah.  On January 14, 2005, IDI Small Business acquired the tangible assets, contract rights, claims, governmental authorizations, and other property related to the call center of Mentoring of America, LLC (Mentoring of America), a Utah limited liability company, and HG Marketing, Inc. (HG Marketing), a Nevada corporation.  IDISB assumed certain liabilities of the sales and marketing operation of Mentoring of America, paid $1,800,000 cash to HG Marketing, granted warrants to purchase up to 2,500,000 shares of IDI Global common stock to HG Marketing, and placed 4,356,436 shares of IDI Global common stock into an escrow account, to be released from the escrow upon the call centers attaining certain performance standards. On July 21st, 2005, IDISB entered into an agreement to purchase the assets of Hire Solutions, LLC (Hire), a business that provides training and other services regarding job placement opportunities and transactions.  IDISB purchased all of the assets utilized in the operation of the business, and obtained all rights and interests required to assume control and operation of the business.  IDISB also executed an employment agreement with the owner and founder of Hire for the continued executive leadership and development of the assets purchased in the above mentioned transaction.  The purchase price was 294,118 shares of IDI Global, Inc. stock. The Company also granted to Hire a put, in connection with which Hire could put the shares back to the Company in exchange for the purchase price to be paid in cash.  Pursuant to the Asset Purchase Agreement, if Hire exercises its put, the Company is not required to pay the purchase price in cash until the sales channel purchased has generated net income of at least $100,000.  On October 18, 2005, Hire exercised the put.  However, because as of the date of this report the sale channel had not yet generated at least $100,000 in net income, the Company was not yet required to pay the purchase price in cash.  On December 30, 2005, the Hire assets that were purchased by IDISB were incorporated into a new subsidiary company called Worldwide Recruiting Solutions Inc., a Nevada Corporation.  This subsidiary contains only the products and assets of Hire.  These products are sold by outside contract vendors as well as by IDIs Orem-based sales and marketing channel.  Currently there are two consultants / contractors that support the (WRS) Products.  Sports Media  Sports Media operates as a sports advertising and marketing company.  It is primarily engaged in the business of selling advertising and marketing programs for media companies, and has signed a preferred partnership agreement with ESPN Radio Sports Marketing and ABC Radio Sales.  The purpose of the preferred partnership agreement is to combine the efforts of these three companies in order to leverage sports marketing brands, media and promotional value for client campaigns. IDI Global has stopped any funding to this non-performing asset since February, 2005.  Additionally, IDI Global has taken a $1.5 million impairment loss for fiscal year 2005 over this transaction.  As of the date of this report, Sports Media was essentially a dormant operation.  It had not been able to execute it business plans.  As of the date of this report, Sports Media still held certain contracts and we have some hope that a small portion of these losses could be recouped at some point in the future.  We have not paid any expenses for Sports Media since February of 2005.  15     IDI Technology  We continue to focus on strategic alliances and efficiencies of our lead sources and sales centers in order to increase our margins and profitability.  IDI Technology, Inc. (IDIT), a Nevada Corporation and a wholly owned subsidiary of IDI Global, entered into an agreement for purchase and sale of assets on December 1, 2005, with Circle Tree Media, Inc. (Circle Tree), an Idaho corporation, and Ryan Riley and Jared Riley, Idaho residents and officers and directors of Circle Tree.  IDIT agreed to transfer to Circle Tree 250,000 shares of restricted common stock (the Shares) of IDI Global, at the closing.  Both parties agreed that if the Shares were not worth one dollar ($1.00) per share by December 31, 2006, then IDIT would pay to Circle Tree (or to Riley, if Circle Tree no longer exists) a True-Up Payment. For purposes of determining the value of the Shares at December 31, 2006, the parties agreed to examine the publicly reported share price of the Companys common stock over the last 60 trading days of 2006; if the closing share price equaled or exceeded one dollar ($1.00) on any day over that period of time, then the Shares would be deemed to be worth one dollar ($1.00), and IDIT would not be obligated to make the True-Up Payment.  The True-Up Payment was to be equal to $250,000 less 250,000 multiplied by the highest trading price of the Shares over the last 60 days of 2006, to be paid in restricted common stock to Circle Tree.  Circle Tree was acquired by IDIT to create a new lead generation model to assist in producing a new stream of monthly residual income.  We anticipate that this model will increase customer-satisfaction for products and services offered to the small office/home office market by creating web-enabled applications and educational services to aid customers in marketing their businesses, and enhancing their knowledge and understanding of how to succeed in establishing their own home-based business.  IDIT also provides programming and design services, which compliment their Web-based software applications  At the end of 2004, we converted $1.3 million in debt into shares of our common stock.  The conversion provided us with a twelve-month option, at our discretion, to repurchase the shares at $.53 cents a share.  In December 2004, we obtained additional financing to fund an asset purchase of HG Marketing, which will further expand our sales and marketing operations in St. George, Utah.  For the quarter ended June 30, 2006, we recorded total revenue on a consolidated basis of $2,876,924, compared to total revenue of $5,808,961 for the 2005 second quarter.  We recorded a net income of $28,903 for the second quarter of 2006 compared to net income of $122,918 for the second quarter of 2005.  The decreased revenue for the quarter ending June 30, 2006 was due to two factors: a $500,000 decrease resulting from the closing of the Salt Lake City sales floor, and a $2.3 million decrease resulting from the non-performance of the contract with Mentoring of America.  Management may investigate additional acquisitions in order to acquire new technology.  We cannot predict the manner in which we may complete future acquisitions, but Management will determine the method used based upon our thorough review of the opportunity and situation, relative to our negotiating strength.  Possible methods may include, but are not limited to, leases, purchase and sales agreements, licenses, joint ventures, asset purchase, and other contractual arrangements.  We may act directly or indirectly through an interest in a partnership, corporation, or other form of organization.  We may also choose to acquire a business opportunity through the issuance of common stock or other securities, if it makes economic sense.  Filing of Bankruptcy under Chapter 11  On April 17, 2006, IDI Global, Inc., as well as two of its wholly owned subsidiaries, IDI Small Business, Inc. and Chief Financial, Inc., along with the wholly owned subsidiary of Chief Financial, Professional Consulting Services, Inc., filed petitions in the United States Bankruptcy Court for the District of Utah (the Bankruptcy Court) seeking relief under Chapter 11 of the Bankruptcy Code, 11 U.S.C. § 101 et seq. The bankruptcy cases are being jointly administered by the Bankruptcy Court under the Case No. 06-21261, and the companies are debtors in possession, subject to the jurisdiction, supervision and orders of the Bankruptcy Court.  The United States trustee has appointed a Committee of Unsecured Creditors in the case of IDI Global, which is comprised of three unsecured creditors.  The companies have obtained Bankruptcy Court approval of a centralized cash management system, and of the employment of all of their professionals, including LECG, which will serve as a forensic accountant to assist with contract dispute litigation described below in the Legal Proceedings section.    16    Liquidity and Capital Resources  We are currently able to support our recurring day-to-day cash operating expenses with recurring cash inflows and existing cash balances.  However, we are unable to satisfy our total current liabilities with cash on hand.  Also, we are dependent on the efforts of our subsidiaries and other third parties to increase sales and, thus, increase our cash balances.  Our revenues are primarily from product sales, Internet applications, and website hosting and training services.  Our monthly cash outflow is mostly related to cost of sales (product cost) and general and administrative expenses.  Net cash provided (used) by operations for the 2006 six-month period was $(552,663) compared to net cash by operating activities of $852,217 for the 2005 six-month period.  The decrease in net cash provided by operations was mainly due to a prepaid expenses for $597,000.  Net cash provided by investing activities was $0.00 for the 2006 six-month period compared to $(1,895,574) for the 2005 six-month period.  The 2005 six-month period investing activities included an Asset Purchase Agreement with Mentoring of America, a Utah limited liability company, and HG Marketing, Inc., a Nevada corporation.  Pursuant to the agreement, IDI Small Business acquired the sales and marketing assets of HG Marketing.  IDI Small Business assumed certain liabilities of the sales and marketing operation, and paid $1,800,000 in cash.  Financing  Net cash provided by financing activities was $0.00 for the 2006 six-month period compared to net cash provided by financing activities of $161,369 for the 2005 six-month period.  Proceeds from notes payable and stock issuances were the sources of the financing activities for the 2005 six-month period.  We used the proceeds from our financing activities to complete the asset purchase of HG Marketing.  IDI Global entered into a Term Credit Agreement (the Credit Agreement), dated December 24, 2004, with Hong Kong League Central Credit Union, a Hong Kong corporation, and SBI Advisors, LLC (SBI Advisors), a California limited liability company.  As of the date of this report, we were negotiating an extension or other arrangement in connection with this Credit Agreement.  As of March 2006 we were in default with this agreement..  Commitments and Contingent Liabilities  Our principle commitments consist of operating leases for office space in Orem, Utah, and repayment of the Credit Agreement and our total current liabilities.  The total monthly lease payment for the Orem office is $14,635.50.  As of June 30, 2006, we owed $1,750,000, plus 2% interest, or an aggregate of $1,804,833.39, under the Credit Agreement.  At June 30, 2006, we had total current liabilities of $3,901,212, and had notes payable totaling $2,254,527, which included notes payable of $1,750,000 to SBI Brightline, a third party, and $504,527 in notes payable to Kevin R. Griffith, IDI Globals CEO.  At June 30, 2006, our total current liabilities also included accrued expenses of $1,059,108, primarily related to deferred compensation, accrued interest, and payroll liabilities.  Accounts payable of $476,785 and reserves for refunds and charge-backs of $63,796 added to our total current liabilities.  Off-balance Sheet Arrangements -None  17    Results of Operations  The following discussions are based on the consolidated financial statements of IDI Global, and its subsidiaries: Internet Development, Sports Media, IDISB, and Chief Financial.  These discussions summarize our financial statements for the six-month periods ended June 30, 2005 and 2006, and should be read in conjunction with the financial statements, and notes thereto, included with this report at Item I, Part I, above.  Summary Comparison of 2005 and 2006 Three and Six month Periods  Three months endedSix months endedJune 30, 2005June 30, 2006June 30, 2005June 30, 2006Total revenue$5,808,961$2,876,924$12,765,244$5,862,394Total cost of sales4,125,8921,557,8599,340,2253,438,587Gross profit1,683,0691,319,0653,425,0192,423,807Total operating expenses1,421,0571,254,3082,732,5022,398,852Net operating income (loss)262,01264,757692,51724,955Total other income (expense)(129,104)(35,854)(240,680)(155,101)Total income tax
expense9,9900.0023,5670.00Net income122,91828,903428,342(130,146)Net earnings (loss) per share$0.01$0.00$0.02$(0.01)  Total revenues decreased from $12,765,244for the six month period ended June 30, 2005, to $5,862,397 for the six month period ended June 30, 2006. This change was a decrease of approximately $6.9 million, due, in part, to the nonperformance of Mentoring of America on the management contract, the increase of revenues on the Orem Sales floor of $300,000, and the closing of the Salt Lake floor, resulting in a decrease in revenues by $1.2 million.  Cost of sales decreased along with total revenues for the six month period ended June 30, 2006.  Cost of sales includes commissions for outsourced sales and our in-house sales force, costs of merchant accounts, fulfillment, and other third party products and services.  For 2006, total cost of sales was 59.0% of total revenues, compared to 73.0% of total revenues for 2005.  As a result of decreased revenues, our gross profit decreased to $2,423807 for the six month period ended June 30, 2006 from $3,425,019 for the six month period ended June 30, 2005.  Total operating expenses include salaries and benefits, rental of office space, professional fees, and other general office expenses.  These operating expenses decreased to $2,398,852 for the six-month period ended June 30, 2006, from $2,732,502 for six-month period ended March 31, 2005. This decrease was due, in part, to the closing of the Salt Lake sales floor.  Total other income and expense for 2006 was primarily related to interest expenses from the SBI note.  We had a net loss of $(130,146) for the six-month period ended June 30, 2006 as compared to a net profit of $428,342 for the six-month period ended June 30, 2005. This is the result of the loss of income from Mentoring of America.  Net income per share was $(0.01) per share for the six-month period ended June 30, 2006 compared to $0.02 net income per share for the six month period ended June 30, 2005.  The following chart and related discussions summarize our consolidated balance sheet for the years ended December 31, 2005, and the six-month period ended June 30, 2006, and should be read in conjunction with the financial statements and notes to the financial statements.  18    Summary of Balance Sheet  December 31, 2005June 30, 2006(Unaudited)Cash$1,093,292$530,862Total current assets1,927,5382,075,080Total assets2,156,7312,252,308Total current liabilities3,675,4893,901,212Total liabilities3,675,4893,901,212Retained earnings (deficit)(8,282,186)(8,405,791)Total stockholders equity$(1,518,758)$(1,648,904)  We increased the total current assets at June 30, 2006, compared to the year ended December 31, 2005, due to a pre-payment of expenses of $597,000.  Total current liabilities and total liabilities increased at June 30, 2006, compared to the year ended December 31, 2005, primarily due to increases in accounts payable and accrued expenses.   Factors Affecting Future Performance  We may need additional external capital and may be unable to raise it.  Our success will depend upon our ability to access equity capital markets as needed and borrow on terms that are financially advantageous to us.  However, we may not be able to obtain additional funds if necessary on acceptable terms.  If we fail to obtain funds on acceptable terms, then we might be forced to delay or abandon some or all of our business plans, or may not have sufficient working capital to develop products, finance acquisitions, or pursue business opportunities.  If we borrow funds, we could be forced to use a large portion of our cash reserves to repay principal and interest on those funds.  If we issue our securities for capital, the interests of investors and shareholders could be diluted.  We are subject to intense competition from large and small companies, which limits our ability to obtain market share.  We face competition in the overall Internet software market, as well as in the web site development market.  We expect competition to persist, increase, and intensify in the future as the markets for our products and services continue to develop, and as additional competitors enter our market.  Our success in obtaining market share will depend upon our ability to build name brand recognition and to provide cost-effective, high-quality products and services to our customers.  We have developed our products to meet the needs of both small and large businesses in a targeted way, and we believe the generality of our competitors services may inadequately address our potential customers needs.  In addition, many of our current or potential competitors have broad distribution channels that they may use to bundle competing products directly to end-users or purchasers.  If these competitors were to bundle competing products for their customers, it could adversely affect our ability to obtain market share and may force our prices down.   19    We are dependent upon certain relationships with third parties, the loss of which may result in loss of customers.  We are dependent upon certain merchant and banking relationships, as well as strategic relationships with third parties, who provide payment processing to all our customers.  Failure of these financial institutions and third parties to continue to provide services in a satisfactory way to our customers could result in our loss of the business of the merchants to whom we sell products and services.  If these financial institutions and third parties do not continue to provide services to our customers, we may not be able to find other third party service providers.  In that scenario, our customers may terminate their agreements with us and move their business to our competitors, which could adversely affect our revenues and earnings.  Our sales may suffer if we lose certain referral sources.  We have historically relied on close to 90% of our customer referrals from outside sources.  With the acquisition of our subsidiaries in January 2004, we have begun trending toward reliance on our internal sources for close to 50% of our referrals. These external and internal referral sources have been cyclical in volume and quality over the past years.  There are typical lows in late spring and late fall.  While we do not believe that these sources are irreplaceable, the loss of these referral sources could have a material adverse effect on our revenues.  We are in the process of limiting our reliance upon outside sources for customer referrals; however, we anticipate that referrals will be generated by these sources for the foreseeable future.  Our research and development efforts could result in increased costs that could reduce our operating profit, a loss of revenue if promised new products are not delivered to our customers in a timely manner, or a loss of revenue and possible claims for damages if new products and services do not perform as anticipated.  The electronic commerce, web hosting and merchant processing markets in which we compete are characterized by technological change, new product introductions, evolving industry standards and changing customer needs.  In order to remain competitive, we may be required to engage in a number of research and development projects, which carry the risks associated with any research and development effort, including cost overruns, delays in delivery and performance problems.  In our core Internet-based services, these risks are even more acute.  These projects could result in increased research and development costs in excess of historical levels, as well as the loss of revenues, or we could lose customers if the new products and services do not perform as intended or are not acceptable in the marketplace.  Any delay in the delivery of new products or services could render them less desirable by our customers, or possibly even obsolete.  In addition, the products and services we deliver to the small business market are designed to process critical transactions, including key reports and other information associated with those transactions, all at very high volumes and processing speeds.  Any performance problems that arise with a new product or service could result in significant processing or reporting errors.  If competitive practices prevent our ability to pass along all increased merchant fees to our customers in the future, we would have to absorb all or a portion of these increases, thereby increasing our operating costs and reducing our profit margin.  From time to time VISA and MasterCard increase the fees that they charge processors.  We may attempt to pass these increases along to our merchant customers, but this could result in the loss of those customers to our competitors who do not pass along the increases.  Our revenues from merchant account processing are dependant upon our continued merchant relationships, which are highly sensitive and can be canceled if customer charge-backs escalate and generate concern - even if we have held back sufficient funds in reserve accounts to cover these charge-backs.  Cancellation by our merchant providers would most likely result in the loss of new customers and lead to a reduction in our revenues.   20    We rely on co-marketing alliances to generate clients, end-users, and revenue, and these agreements might hinder us from directly contacting potential clients in certain industries.  We have key co-marketing arrangements with strategic partners in order to use their industry and marketing expertise.  Some of these arrangements may provide or allow co-marketing partners some exclusive rights to co-market our services in a particular industry, which will limit our right to contact potential clients in that industry.  Also, if a co-marketing relationship is terminated, we may be unable to replace that relationship with other alliances that have comparable customer bases and user demographics.  This limitation may affect our revenues because we expect that revenues generated from the sale of our products and services through these strategic co-marketing arrangements will account for a significant portion of our revenues for the foreseeable future.  However, there can be no assurance that these arrangements will be successful in generating meaningful revenue.  We may experience software defects that may damage customer relations.  Despite rigorous testing, our software may nevertheless contain undetected bugs, errors or experience failures when introduced, or when the volume of services provided to end users increases substantially.  Any material errors could damage the reputation of our service or software, as well as damage our customer relations.  We have detected errors, defects, and bugs in the past and have corrected them as quickly as possible.  Correcting any defects or bugs we may discover in the future could require us to make significant expenditures of capital and other resources.  We believe that we follow industry-standard practices relating to the identification and resolution of errors, defects, or bugs encountered in the development of new software and in the enhancement of existing features in our products.  As of this date, we have not experienced any material adverse effect by reason of an error, defect, or bug.  We may experience breakdowns in our hosting services, infrastructure or payment processing systems, which may expose us to liabilities and cause customers to abandon our products and services.  We would be unable to deliver our payment processing services or hosting services if our system infrastructures break down or are otherwise interrupted.  Events that could cause system interruptions include, but are not limited to, the following:  § fire,  § earthquake, § power loss, § terrorist attacks, § telecommunications failure, § unauthorized entry or other events.  Although we regularly back up data from operations, and take other measures to protect against loss of data, there is still always some inherent risk of these losses.  Despite the security measures we maintain, our infrastructure may be vulnerable to computer viruses, hackers, rouge employees or similar sources of disruption.  Any problem of this nature could result in significant liability to customers or financial institutions and also may deter potential customers from using our services.  We attempt to limit this sort of liability through back-up systems, contractual provisions, insurance coverage, and other security measures.  However, we cannot assure that these contractual limitations on liability would be enforceable, or that our insurance coverage would be adequate to cover any liabilities we might sustain.  Also, a breach of our e-commerce security measures could reduce demand for our services.  The e-commerce industry is intensely focused on the need for Internet security, particularly with respect to the transmission and storage of confidential personal and financial data.  Any compromise or elimination of our security could erode customer confidence in our systems, and could result in decreased demand for our services, as well as possible litigation.   21    We depend upon our proprietary rights, none of which can be completely safeguarded against infringement.  We rely upon trade secrets with respect to our source code and functionalities and other non-patented proprietary information in our product development activities.  We seek to protect trade secrets and proprietary knowledge in part through confidentiality agreements with our employees, resellers, and collaborators.  These agreements may not effectively prevent disclosure of our confidential information and may not provide us with an adequate remedy in the event of unauthorized disclosure of this information.  In addition, if employees or collaborators develop products independently that may be applicable to our products under development, then disputes may arise about ownership of proprietary rights to those products or services.  Protracted and costly litigation could be necessary to enforce and determine the scope of our proprietary rights.  It would be impossible to predict whether litigation might be successful.  IDISBs marketing approach is subject to federal regulations, which, if changed, could restrict or eliminate its operations.  The Federal Trade Commission and Federal Communications Commission establish direct marketing regulations which govern how direct marketing companies perform their marketing activities.  Promotion and advertising groups that supply customer information to IDI Small Business are required to comply with SPAM legislation.  IDI Small Business relies, in part, on companies that provide and generate qualified sales leads, and many of these companies are subject to SPAM legislation.  In the event that a company that provides sales leads to our subsidiaries violates the SPAM legislation, our subsidiaries likely would have to find another source of leads to replace those lost.  In addition, Cardholder Information Security Policy requirements, which went into effect March 1, 2005, add complexity and cost to the merchant account process.  These requirements are measures designed to provide greater security to credit card holders.  Major credit card companies and regulatory and legislative bodies imposed these measures to protect and safeguard confidential cardholder information contained in databases such as those maintained by IDI Small Business.  Further regulation in this area could cause processing delays or disruptions that could be damaging to our business.  Alternatively, additional regulations could further restrict our operations, effectively curtailing or eliminating the marketing approach of these subsidiaries.   ITEM 3.      CONTROLS AND PROCEDURES    In accordance with Exchange Act Rules 13a-15 and 15d-15, Kevin Griffith, IDI Globals Chief Executive Officer, and Steven Weatherly, a consultant performing certain services typically performed by a chief financial officer, have conducted an evaluation of our disclosure controls and procedures as of the end of the period covered by this report.  Based on that evaluation, Mr. Griffith and Mr. Weatherly concluded that our disclosure controls and procedures were effective as of June 30, 2006, to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms.  Management determined that there were changes made and corrective actions to be taken related to our internal control over financial reporting during the period covered by this report, as discussed below.  On April 20, 2006, we completed and filed our Annual Report for the year ended December 31, 2005 (the 2005 Annual Report), including the audit report by the Companys independent accounting firm, Chisholm, Bierwolf & Nilson  (CBN).  Following the filing of the 2005 Annual Report, CBN informed the Company that there had been a mis-communication, and that CBN had not completed its audit procedures nor issued its final audit report.  Management of the Company reviewed the 2005 Annual Report and determined that certain figures in the financial statements had not been finalized.  As such, management concluded that the Companys audited financial statements for the year ended December 31, 2005, which were included in the 2005 Annual Report, could no longer be relied upon.  On May 1, 2006, the Company filed an amendment to the 2005 Annual Report, which included the corrections required and the audit report of CBN.  22    Management has evaluated the controls and procedures which led to the premature filing of the 2005 Annual Report, including historical practices and communications between management and CBN.  While management does not believe that the premature filing of the 2005 Annual Report was the result of a significant deficiency or a material weakness in our internal controls, management intends to revise its procedures with respect to finalization and filing of our periodic reports as follows:  - Management will obtain written, rather than verbal, approval from our independent accounting firm prior to filing our periodic reports via EDGAR.  Management will continue to implement this new written approval requirement in connection with the filing of this Quarterly Report, and will continue to apply this procedure for future filings.   PART II: OTHER INFORMATION  ITEM 1.     LEGAL PROCEEDINGS  In March 2005, two former employees, Ryan Romero and Jeremy Hall, filed suit against IDI Global in the 4th Judicial District Court, Provo Department, State of Utah.  The suit alleges that Romero and Hall are entitled to options that were allegedly promised to them in connection with the termination of their employment. We filed our answer and discovery is proceeding. We deny these allegations, and intend to defend vigorously against this suit.  This matter has been stayed in connection with the bankruptcy proceedings discussed below.  On June 24, 2004, Independent Marketing, Inc. filed a lawsuit in the Third District Court for Salt Lake County, State of Utah, against Internet Development, Inc.  The allegations in the suit relate to the alleged hiring of three employees who were bound by a non-competition agreement with Independent Marketing, Inc.  However, we believe the three employees were not hired by Internet Development, Inc., and intend to vigorously defend this suit.   This matter has been stayed in connection with the bankruptcy proceedings discussed below.  On April 1, 2004, Ascendiant Capital Group, LLC, filed a complaint against IDI Global in the Superior Court of the State of California for the County of Orange - Central Justice Center.  The complaint alleges that IDI Global breached a consulting agreement with Ascendiant Capital Group, and that Ascendiant Capital Group is entitled to damages in excess of $25,000.  We intend to defend against the claims, and on May 11, 2004, we filed a cross-complaint alleging breach of contract by Ascendiant Capital Group.  This case has been stayed pending the outcome of the Mercator litigation discussed below.  On March 12, 2004 Mercator Momentum Fund, L.P. and Mercator Momemtum Fund III, both California limited partnerships, and Mercator Advisory Group, L.L.C., a California limited liability company, filed a complaint against IDI Global, Inc. in the Superior Court of the State of California for the County of Los Angeles.  The complaint alleges that IDI Global breached a Securities Purchase Agreement by refusing to accept $3,500,000 in consideration for promissory notes in the amount of $3,500,000 with 3.5% interest, warrants to purchase 1,312,500 shares of IDI Global common stock at an exercise price of $1.20, a $175,000 due diligence fee, and failure to register the shares of common stock.  We intend to defend against the claims.  Newave, Inc., vs. IDI Global, Inc., Chief Financial, Inc., et al., Superior Court for the State of California, in and for the County of Santa Barbara, Case No.  1167126.  Plaintiff Newave, Inc., filed a lawsuit against IDI Global and Chief Financial for breach of contract and unjust enrichment.  The lawsuit relates to a Lead Marketing Agreement between Newave and Chief Financial.  We dispute that we are a party to the Lead Marketing Agreement, and have filed our answer.  The case began trial on April 17, 2006, but was stayed in connection with the bankruptcy proceedings discussed below.  On August 8, 2005, Paul Watson, a former employee of the Company brought suit against the Company and Kevin Griffith in the 4th Judicial District Court for Utah County, State of Utah.  Mr. Watson brought claims for breach of contract, false light, and wrongful discharge, and seeks back pay and loss of income.  The Company and Mr. Griffith filed an answer and counterclaim against Mr. Watson, bringing claims of defamation, intentional and negligent interference with prospective economic relations, breach of fiduciary duty, breach of contract, conversion, and unjust enrichment.  The Company and Mr. Griffith dispute the claims brought by Mr. Watson and intend to vigorously pursue this action.   This matter has been stayed in connection with the bankruptcy proceedings discussed below.  23    On or about February 21, 2006, Presson Airport, LLC served an amended complaint asserting claims against Chief Financial, Inc. and Internet Development, Inc., in the Third Judicial District Court, State of Utah. Plaintiff seeks to recover approximately $46,000 for unpaid rent plus continuing rent and other charges in the amount of $9,800 per month based on allegations of breach of a lease and guaranty.  The Company and its subsidiaries dispute this liability and intend to vigorously defend these claims.   This matter has been stayed in connection with the bankruptcy proceedings discussed below.  HG Marketing, Inc., and Mentoring of America, Inc., vs. IDI Global, Inc., IDI Small Business, Inc., and Kevin Griffith, District Court, Clark County, Nevada, Case No. A518002.  Plaintiffs HG Marketing and Mentoring of America filed this lawsuit claiming breach of contract, conversion, fraud, and constructive trust.  The lawsuit relates to the asset purchase agreement between the parties relating to the call center located in St. George, Utah.  Plaintiffs filed a motion for a temporary restraining order, which was denied, and also sought a preliminary injunction, which was also denied.  We filed an answer, counterclaim, and third party complaint against the plaintiffs and their principals on April 10, 2006.  Discovery is proceeding in the matter.  We intend to defend and proceed vigorously with our claims in this action.   This matter has been stayed in connection with the bankruptcy proceedings discussed below.  Filing of Bankruptcy under Chapter 11  On April 17, 2006, IDI Global, Inc., as well as two of its wholly owned subsidiaries, IDI Small Business, Inc. and Chief Financial, Inc., along with the wholly owned subsidiary of Chief Financial, Professional Consulting Services, Inc., filed petitions in the United States Bankruptcy Court for the District of Utah (the Bankruptcy Court) seeking relief under Chapter 11 of the Bankruptcy Code, 11 U.S.C. § 101 et seq. The bankruptcy cases are being jointly administered by the Bankruptcy Court under the Case No. 06-21261, and the companies are debtors in possession, subject to the jurisdiction, supervision and orders of the Bankruptcy Court.  The United States trustee has appointed a Committee of Unsecured Creditors in the case of IDI Global, which is comprised of three unsecured creditors.  The companies have obtained Bankruptcy Court approval of a centralized cash management system, and of the employment of all of their professionals, including LECG, which will serve as a forensic accountant to assist with contract dispute litigation described below.  IDI Global and IDI Small Business are parties to several prepetition executory contracts with HG Marketing, Inc. and Mentoring of America, LLC (the "Mentoring Parties") related to, in relevant part, the Mentoring Parties' operation and management of a Call Center located in St. George, Utah, that is owned by Professional Consulting Services.  The Mentoring Parties maintain that these contracts terminated pre-petition, and based on this allegation, have taken numerous actions adverse to the bankruptcy estates, including but not limited to, withholding the companies' income and revenues generated at the Call Center, and in violation of the automatic stay in the bankruptcy cases, attempting to cease operations at the Call Center and terminate the companies' employees' employment.  The companies moved for emergency relief to prevent any interruption of the Call Center operations, and the Bankruptcy Court entered an order holding that the Mentoring Parties' actions were a violation of the automatic stay.  This order has been appealed by the Mentoring Parties to the United States District Court for the District of Utah.  The companies intend to seek damages against the Mentoring Parties for their stay violations.  In the order holding the Mentoring Parties to be in violation of the automatic stay, the Bankruptcy Court also held, contrary to the Mentoring Parties' contentions, that contracts with the Mentoring Parties did not terminate prior to the companies' petition date and, therefore, they are property of the bankruptcy estates of IDI Global and IDI Small Business.  IDI Global and IDI Small Business have moved to assume the contracts with the Mentoring Parties, and the Mentoring Parties, despite the Bankruptcy Court's ruling, have moved for relief from the automatic stay to terminate the contracts.  The Mentoring Parties have also removed a lawsuit that had been filed in state court in Nevada to the United States District Court for the District of Nevada, and they have moved for relief from the automatic stay to litigate that suit in the Nevada District Court.  A hearing on all of these matters has been scheduled by the Bankruptcy Court for August 18, 2006.  ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS  Sale of Unregistered Securities  The following discussion describes all securities sold by IDI Global without registration during the third quarter of 2004 through a recent date which have not been previously reported.   24    On July 28, 2005, the Company entered into an Asset Purchase Agreement with Hire Solutions, LLC (Hire) for all related assets, products, and training services in an all-stock transaction. The Company agreed to issue 294,118 shares of IDI common stock (representing a purchase price amount of $100,000), and to place such shares into escrow.  The Company also granted to Hire a put, in connection with which Hire could put the shares back to the Company in exchange for the purchase price to be paid in cash.  Pursuant to the Asset Purchase Agreement, if Hire exercises its put, the Company is not required to pay the purchase price in cash until the sales channel purchased has generated net income of at least $100,000.  On October 18, 2005, Hire exercised the put.  However, because as of the date of this report the sale channel had not yet generated at least $100,000 in net income, the Company was not yet required to pay the purchase price in cash. The Company relied on an exemption from the registration requirements provided by Section 4(2) of the Securities Act and regulations promulgated thereunder in connection with the issuance of the securities.  On September 28, 2004, we issued 150,000 shares as part of the settlement of a law suit brought by Gary Winterton.  We relied on an exemption from the registration requirements provided by Section 3(10) of the Securities Act.  In December 2004, an entity that had loaned money to the Company pursuant to convertible promissory notes in the aggregate amount of approximately $1,294,182, converted those notes into shares of our common stock at a conversion rate of $0.50 per share.  The Company issued 2,588,364 shares of our common stock.  We relied on an exemption from the registration requirements provided by Section 4(2) of the Securities Act and regulations promulgated thereunder.  ITEM 3.     DEFAULTS UPON SENIOR SECURITIES  IDI Global entered into a Term Credit Agreement (the Agreement) on December 24, 2004 with Hong Kong League Central Credit Union, a Hong Kong corporation, and SBI Advisors, LLC (SBI Advisors), a California limited liability company.  Under this Agreement, IDI Global received a term loan in the principal amount of $1,750,000, with interest of 2.0% per month.  The loan was extended up to March 31, 2006, at which time IDI Global did not make the required payment.  On April 17, 2006, IDI Global filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code.  The filing of the Voluntary Petition creates an automatic stay that enjoins and restrains certain acts and proceedings pertaining to the collection of this loan pursuant to 11 U.S.C. § 362.  ITEM 5.     OTHER INFORMATION  Filing for Bankruptcy Chapter 11 Bankruptcy Protection  As discussed above in the Legal Proceedings section, on April 17, 2006, IDI Global, Inc., as well as two of its wholly owned subsidiaries, IDI Small Business, Inc. and Chief Financial, Inc., along with the wholly owned subsidiary of Chief Financial, Professional Consulting Services, Inc., filed petitions in the United States Bankruptcy Court for the District of Utah (the Bankruptcy Court) seeking relief under Chapter 11 of the Bankruptcy Code, 11 U.S.C. § 101 et seq. The bankruptcy cases are being jointly administered by the Bankruptcy Court under the Case No. 06-21261, and the companies are debtors in possession, subject to the jurisdiction, supervision and orders of the Bankruptcy Court.  The United States trustee has appointed a Committee of Unsecured Creditors in the case of IDI Global, which is comprised of three unsecured creditors.  The companies have obtained Bankruptcy Court approval of a centralized cash management system, and of the employment of all of their professionals, including LECG, which will serve as a forensic accountant to assist with contract dispute litigation.  Amendment of 2005 Annual Report  Subsequent to March 31, 2006, we completed and filed our Annual Report for the year ended December 31, 2005 (the 2005 Annual Report), including the audit report by the Companys independent accounting firm, Chisholm, Bierwolf & Nilson  (CBN), on April 20, 2006.  Following the filing of the 2005 Annual Report, CBN informed the Company that there had been a mis-communication, and that CBN had not completed its audit procedures nor issued its final audit report.  Management of the Company reviewed the 2005 Annual Report and determined that certain figures in the financial statements had not been finalized.  As such, management concluded that the Companys audited financial statements for the year ended December 31, 2005, which were included in the 2005 Annual Report, could no longer be relied upon.  On May 1, 2006, we filed an amendment to the 2005 Annual Report, which included the corrections required and the audit report of CBN.   25    ITEM 6.     EXHIBITS  Part I Exhibits 31.1 Section 302 Certification 31.2 Section 302 Certification 32.1 Section 1350 Certification  Part II Exhibits 2.1 Agreement and Plan of Merger between IDI Global and Sports Media International, Inc. and Integrated Communication Systems, Inc., dated October 3, 2003 (Incorporated by reference to exhibit 2.1 for Form 8-K, filed October 15, 2003) 2.2 Agreement and Plan of Reorganization between IDI Global and Chief Financial, Inc., dated January 8, 2004 (Incorporated by reference to exhibit 2.3 for Form 10-KSB, filed March 29, 2004) 3.1 Articles of Incorporation, as amended (Incorporated by reference to exhibit 3.1 for Form 10-KSB, filed January 31, 2002) 3.2 Restated bylaws of IDI Global, Inc. (Incorporated by reference to exhibit 3.2 for Form 10-KSB, filed January 31, 2002) 10.1 Lease Agreement between Internet Development Inc. and Stratford Park, L.C., dated July 7, 2000 (Incorporated by reference to exhibit 10.1 for Form 10-QSB, as amended, filed May 22, 2002) 10.2 Employment agreement between Internet Development and Kevin R. Griffith, dated April 1, 2002 (Incorporated by reference to exhibit 10.2 for Form 10-QSB, as amended, filed August 15, 2002) 10.3 Secured Convertible Promissory Note between idiglobal.com and Kevin R. Griffith, as amended (Incorporated by reference to exhibit 10.3 for Form 10-KSB, filed January 31, 2002) 10.4 Consultant Agreement between IDI Global, Inc. and Summit Resource Group, Inc., dated July 31, 2002 (Incorporated by reference to exhibit 10.2 for Form 10-QSB, as amended, filed August 15, 2002)  26     SIGNATURES  In accordance with the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.   IDI GLOBAL, INC.     Date: August 21, 2006 By: /s/    Kevin R. Griffith Kevin R. Griffith President, Chief Executive Officer, Principal Executive Officer  Date: August 21, 2006 By: /s/    Steven D. Weatherly Steven D. Weatherly Consultant performing certain services for the Company commonly performed by a Chief Financial Officer       27