**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-QSB**






QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15 (D)


OF
      THE
      SECURITIES EXCHANGE ACT OF 1934






**For
      the Quarterly Period Ended June 30, 2006**







Commission
      File No. 000-30486




**ACTIVECORE
      TECHNOLOGIES, INC** **.**


(Exact
      Name of Registrant as specified in its charter)




**NEVADA**
            
            **65-6998896**(State
                or Other Jurisdiction of
            
            (I.R.S.
                Employer Identification No.)Incorporation
                or Organization)




**156
      Front Street West, Suite 210, Toronto, Ontario, Canada M5J
      2L6**


(Address
      of principal Executive Offices)




**(416)
      252-6200**


(Registrant’s
      Telephone Number, Including Area Code)







Check
      whether the issuer: (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the preceding 12 months (or for such shorter
      period that the registrant was required to file such reports), and (2) has
      been
      subject to such filing requirements for the past 90 days.




Yes
                x
            No
                o


State
      the
      number of shares outstanding of each of the issuer’s classes of common equities
      as of the latest practicable date: as of August 14, 2006, there were 94,210,908
      outstanding shares of the issuer’s common stock. ,
      $0.001par value .





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










**ACTIVECORE
      TECHNOLOGIES, INC.**




**FORM
      10-QSB**





**TABLE
      OF CONTENTS**


**Page**PART
                  I FINANCIAL INFORMATION
              
              
              3ITEM
                  1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
              
              
              3ITEM
                  2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
                  OPERATION
              
              
              22ITEM
                  3. CONTROLS AND PROCEDURES
              
              
              32PART
                  II OTHER INFORMATION
              
              
              34ITEM
                  1. LEGAL PROCEEDINGS
              
              
              34PART
                  2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
                  PROCEEDS
              
              
              36ITEM
                  3. DEFAULTS UPON SENIOR SECURITIES
              
              
              36ITEM
                  4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
              
              
              36ITEM
                  5. OTHER INFORMATION
              
              
              36ITEM
                  6. EXHIBITS AND REPORTS ON FORM 8-K
              
              
              37SIGNATURES
              
              
              38OFFICER’S
                  CERTIFICATE PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF
                  2002
              
              
              39OFFICER’S
                  CERTIFICATE PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF
                  2002
              
              
              40CERTIFICATION
                  PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION
                  906 OF
                  THE SARBANES-OXLEY ACT OF 2002
              
              
              41CERTIFICATION
                  PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION
                  906 OF
                  THE SARBANES-OXLEY ACT OF 2002
              
              
              42




2





**PART
      I**




**FINANCIAL
      INFORMATION**




**Item
      1. Consolidated Financial Statements** ****




**ActiveCore
      Technologies, Inc.** **As
      of June 30, 2006**




**INDEX
      TO FINANCIAL STATEMENTS**




Page
            4
            Condensed
                Consolidated Balance Sheets as of June 30, 2006 (Unaudited) and December
                31, 2005Page
            5
            Condensed
                Consolidated Statements of Operations and Comprehensive Loss for
                the Three
                and Six Months Ended June 30, 2006 and 2005 (Unaudited)Page
            6
            Condensed
                Consolidated Statement of Stockholders' Equity for the Six Months
                Ended
                June 30, 2006 (Unaudited)Pages
            7
                -
                8
            Condensed
                Consolidated Statements of Cash Flows for the Six Months Ended June
                30,
                2006 and 2005 (Unaudited)Pages
            9
                -
                21
            Notes
                to Condensed Consolidated Financial Statements as of June 30, 2006
                (Unaudited)




3




**ACTIVECORE
      TECHNOLOGIES, INC.**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**





**ASSETS**June
                30, 2006 (Unaudited)
            
            
            December
                31, 2005**CURRENT
                ASSETS**Cash
            
            $
            89,999
            
            $
            109,789Accounts
                receivable, net
            
            
            2,923,655
            
            
            3,496,221Taxes
                recoverable
            
            
            131,196
            
            
            128,095Deferred
                consulting and financing expense
            
            
            376,117
            
            
            352,750Prepaid
                expenses and other current assets
            
            
            149,451
            
            
            130,252Current
                assets from discontinued operations
            
            
            -
            
            
            209,326Total
                Current Assets
            
            
            3,670,418
            
            
            4,426,433**CAPITAL
                ASSETS**
            
            
            307,366
            
            
            335,663**OTHER
                ASSETS**Goodwill
                and other intangible assets, net
            
            
            5,130,471
            
            
            5,100,982Deferred
                consulting and financing expense
            
            
            21,248
            
            
            125,505Other
                assets from discontinued operations
            
            
            -
            
            
            69,343Total
                Other Assets
            
            
            5,151,719
            
            
            5,295,830**TOTAL
                ASSETS**
            
            $
            9,129,503
            
            $
            10,057,926**LIABILITIES
                AND STOCKHOLDERS’ EQUITY****CURRENT
                LIABILITIES**Line
                of credit
            
            $
            1,344,225
            
            $
            1,274,486Accounts
                payable
            
            
            2,970,247
            
            
            2,141,769Accrued
                liabilities
            
            
            1,111,976
            
            
            1,050,872Taxes
                payable
            
            
            407,391
            
            
            484,008Leases
                payable, current portion
            
            
            19,605
            
            
            18,788Long-term
                debt, current portion
            
            
            432,015
            
            
            117,576Deferred
                tax liability
            
            
            322,736
            
            
            340,736Due
                to related parties
            
            
            87,182
            
            
            11,863Other
                current liabilities
            
            
            -
            
            
            42,794Current
                liabilities from discontinued operations
            
            
            -
            
            
            345,929Total
                Current Liabilities
            
            
            6,695,377
            
            
            5,828,821**LONG-TERM
                LIABILITIES**Long-term
                debt
            
            
            349,976
            
            
            231,939Leases
                payable, long-term portion
            
            
            30,622
            
            
            21,485Redeemable
                prefered shares
            
            
            281,250
            
            
            375,000Total
                Long-Term Liabilities
            
            
            661,848
            
            
            628,424**TOTAL
                LIABILITIES**
            
            
            7,357,225
            
            
            6,457,245**COMMITMENTS
                AND CONTINGENCIES****STOCKHOLDERS’
                EQUITY**Preferred
                stock, $.001 par value 50,000,000 shares authorized, 0 shares issued
                and
                outstanding
            
            
            -
            
            
            -Common
                  stock, $0.01 par value, 500,000,000 shares authorized, 94,210,908,
                  and
                  79,242,114 shares issued and
                  outstanding
                    as of June 30, 2006 and December 31, 2005, respectively
            
            
            942,108
            
            
            792,422Common
                stock to be issued
            
            
            857,669
            
            
            311,025Additional
                paid-in capital
            
            
            44,275,603
            
            
            43,137,898Accumulated
                deficit
            
            
            (43,672,339
            )
            
            (40,736,105
            )Accumulated
                other comprehensive income (loss)
            
            
            (340,398
            )
            
            312,441Treasury
                stock
            
            
            (25,478
            )
            
            (112,000
            )Deferred
                compensation
            
            
            (264,887
            )
            
            (105,000
            )Total
                Stockholders' Equity
            
            
            1,772,278
            
            
            3,600,681**TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY**
            
            $
            9,129,503
            
            $
            10,057,926





See
      accompanying notes to condensed consolidated financial statements.




4




**ACTIVECORE
      TECHNOLOGIES, INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**(Unaudited)**




For
                  the Three Months Ended June 30, 2006
              
              
              
              For
                  the Three Months Ended June 30, 2005
              
              
              
              For
                  the Six Months Ended June 30, 2006
              
              
              
              For
                  the Six Months Ended June 30, 2005**REVENUES**
              
              $
              1,582,317
              
              
              $
              1,409,104
              
              
              $
              3,037,441
              
              
              $
              1,553,777**COST
                  OF SALES**Direct
                  wages
              
              
              1,427,903
              
              
              
              995,350
              
              
              
              2,730,080
              
              
              
              1,013,923Amortization
                  of licensing agreements and other costs
              
              
              86,194
              
              
              
              73,635
              
              
              
              116,002
              
              
              
              155,191Total
                  Cost of Sales
              
              
              1,514,097
              
              
              
              1,068,985
              
              
              
              2,846,082
              
              
              
              1,169,114**GROSS
                  PROFIT**
              
              
              68,220
              
              
              
              340,119
              
              
              
              191,359
              
              
              
              384,663**OPERATING
                  EXPENSES**Salaries
                  and wages
              
              
              546,786
              
              
              
              432,657
              
              
              
              1,066,330
              
              
              
              683,743Consulting
                  fees
              
              
              156,754
              
              
              
              221,081
              
              
              
              301,457
              
              
              
              380,030Research
                  and development
              
              
              55,000
              
              
              
              55,000
              
              
              
              110,000
              
              
              
              110,000Legal
                  and accounting
              
              
              185,531
              
              
              
              246,841
              
              
              
              370,712
              
              
              
              320,133General
                  and administrative
              
              
              356,345
              
              
              
              328,882
              
              
              
              606,186
              
              
              
              617,640Financial
                  advisory fees
              
              
              106,223
              
              
              
              20,997
              
              
              
              125,026
              
              
              
              49,636Depreciation
                  & amortization of intangible assets
              
              
              110,182
              
              
              
              86,077
              
              
              
              220,064
              
              
              
              116,509**Total
                  Operating Expenses**
              
              
              1,516,821
              
              
              
              1,391,535
              
              
              
              2,799,775
              
              
              
              2,277,691**LOSS
                  FROM OPERATIONS**
              
              
              (1,448,601
              )
              
              
              (1,051,416
              )
              
              
              (2,608,416
              )
              
              
              (1,893,028
              )**OTHER
                  INCOME (EXPENSE)**Loss
                  on settlement of debt
              
              
              (110,463
              )
              
              
              -
              
              
              
              (110,463
              )
              
              
              -Interest
                  expense, net
              
              
              (229,300
              )
              
              
              (38,420
              )
              
              
              (377,903
              )
              
              
              (116,119
              )Foreign
                  exchange loss
              
              
              (32,780
              )
              
              
              (3,555
              )
              
              
              (67,426
              )
              
              
              (37,295
              )Total
                  Other Expense
              
              
              (372,543
              )
              
              
              (41,975
              )
              
              
              (555,792
              )
              
              
              (153,414
              )**LOSS
                  FROM CONTINUING OPERATIONS**
              
              
              (1,821,144
              )
              
              
              (1,093,391
              )
              
              
              (3,164,208
              )
              
              
              (2,046,422
              )Gain
                  (loss) from discontinued operations - net
              
              
              191,967
              
              
              
              (187,857
              )
              
              
              209,974
              
              
              
              (188,986
              )Loss
                  before income taxes
              
              
              (1,629,177
              )
              
              
              (1,281,248
              )
              
              
              (2,954,234
              )
              
              
              (2,235,428
              )Income
                  tax benefit
              
              
              9,000
              
              
              
              -
              
              
              
              18,000
              
              
              
              -**NET
                  LOSS**
              
              
              (1,620,177
              )
              
              
              (1,281,248
              )
              
              
              (2,936,234
              )
              
              
              (2,235,428
              )Preferred
                  stock dividends
              
              
              -
              
              
              
              12,500
              
              
              
              35,250
              
              
              
              23,592**NET
                  LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS**
              
              $
              (1,620,177
              )
              
              $
              (1,293,748
              )
              
              $
              (2,971,484
              )
              
              $
              (2,259,020
              )Foreign
                  currency translation
              
              
              (652,839
              )
              
              
              (262,843
              )
              
              
              96,447
              
              
              
              (322,224
              )**COMPREHENSIVE LOSS**
              
              $
              (2,273,016
              )
              
              $
              (1,556,591
              )
              
              $
              (2,875,037
              )
              
              $
              (2,581,244
              )**LOSS
                  PER COMMON SHARE FROM CONTINUING **OPERATIONS-BASIC
                  AND DILUTED****
              
              $
              (0.02
              )
              
              $
              (0.02
              )
              
              $
              (0.03
              )
              
              $
              (0.04
              )**GAIN
                    (LOSS) PER COMMON SHARE FROM DISCONTINUED **OPERATIONS
                    - BASIC AND DILUTED****
              
              $
              0.00
              
              
              $
              0.00
              
              
              $
              0.00
              
              
              $
              0.00**NET
                  LOSS PER COMMON SHARE - BASIC AND DILUTED**
              
              $
              (0.02
              )
              
              $
              (0.02
              )
              
              $
              (0.03
              )
              
              $
              (0.04
              )**WEIGHTED
                  AVERAGE NUMBER OF SHARES OUTSTANDING -****BASIC
                  AND DILUTED**
              
              
              **90,846,542**
              
              
              
              **59,290,926**
              
              
              
              **86,631,760**
              
              
              
              **53,176,114**


See
      accompanying notes to condensed consolidated financial statements.




5




**ACTIVECORE
      TECHNOLOGIES, INC.**


**CONDENSED
      CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY**


**FOR
      THE SIX MONTHS ENDED JUNE 30, 2006**


**(UNAUDITED)**


**Common**
              ****
              ****
              **Common
                  Stock**
              ****
              ****
              **Common
                  Stock to be
                  Issued**
              ****
              ****
              **Treasury**
              ****
              ****
              ****
              **Additional
                  Paid-in**
              ****
              ****
              **Accumulated**
              ****
              ****
              ****
              **Accumulated
                  Other Comprehensive**
              ****
              ****
              **Deferred****Shares**
              
              
              **Amount**
              
              
              **Shares**
              
              
              **Amount**
              
              
              **Stock**
              
              
              
              **Capital**
              
              
              **Deficit**
              
              
              
              **Income
                  (Loss**)****
              
              
              **Compensation**
              
              
              **Total****Balance,
                  December 31, 2005**
              
              **79,242,114**
              
              **$**
              **792,422**
              
              
              **5,173,105**
              
              **$**
              **311,025**
              
              **$**
              **(112,000**
              **)**
              
              **$**
              **43,137,898**
              
              **$**
              **(40,736,105**
              **)**
              
              **$**
              **312,441**
              
              **$**
              **(105,000**
              **)**
              
              **3,600,681**Stock
                  issued for financing services
              
              250,000
              
              
              2,500
              
              
              -
              
              
              -
              
              
              -
              
              
              
              45,000
              
              
              -
              
              
              
              -
              
              
              -
              
              
              47,500Stock
                  issued upon conversion of prefered shares
              
              4,166,667
              
              
              41,667
              
              
              (4,166,667
              )
              
              (291,667
              )
              
              -
              
              
              
              250,000
              
              
              -
              
              
              
              -
              
              
              -
              
              
              -Stock
                  issued for employment and director services
              
              5,772,500
              
              
              57,725
              
              
              -
              
              
              -
              
              
              -
              
              
              
              554,550
              
              
              -
              
              
              
              -
              
              
              (612,275
              )
              
              -Stock
                  issued for consulting services
              
              2,791,521
              
              
              27,915
              
              
              -
              
              
              -
              
              
              86,522
              
              
              
              121,785
              
              
              -
              
              
              
              -
              
              
              -
              
              
              236,222Stock
                  issued for settlement of debt
              
              960,925
              
              
              9,607
              
              
              -
              
              
              -
              
              
              -
              
              
              
              125,393
              
              
              -
              
              
              
              -
              
              
              -
              
              
              135,000Stock
                  to be issued for settlement of debt
              
              -
              
              
              -
              
              
              6,575,180
              
              
              394,511
              
              
              -
              
              
              
              -
              
              
              -
              
              
              
              -
              
              
              -
              
              
              394,511Stock
                  to be issued in private placements
              
              -
              
              
              -
              
              
              8,917,778
              
              
              401,300
              
              
              -
              
              
              
              -
              
              
              -
              
              
              
              -
              
              
              -
              
              
              401,300Redemption
                  of prefered shares
              
              760,114
              
              
              7,601
              
              
              -
              
              
              31,250
              
              
              -
              
              
              
              30,324
              
              
              -
              
              
              
              -
              
              
              -
              
              
              69,175Prefered
                  stock dividend
              
              267,067
              
              
              2,671
              
              
              -
              
              
              11,250
              
              
              -
              
              
              
              10,653
              
              
              -
              
              
              
              -
              
              
              -
              
              
              24,574Deferred
                  cost recognized
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              
              -
              
              
              -
              
              
              
              -
              
              
              452,388
              
              
              452,388Net
                  loss for period
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              
              -
              
              
              (2,936,234
              )
              
              
              -
              
              
              -
              
              
              (2,936,234
              )Foreign
                  currency translation adjustment
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              
              -
              
              
              -
              
              
              
              (652,839
              )
              
              -
              
              
              (652,839
              )**Balance,
                  June 30, 2006**
              
              **94,210,908**
              
              **$**
              **942,108**
              
              
              **16,499,396**
              
              **$**
              **857,669**
              
              **$**
              **(25,478**
              **)**
              
              **$**
              **44,275,603**
              
              **$**
              **(43,672,339**
              **)**
              
              **$**
              **(340,398**
              **)**
              **$**
              **(264,887**
              **)**
              **$**
              **1,772,278**




See
      accompanying notes to condensed consolidated financial statements.




6




**ACTIVECORE
      TECHNOLOGIES, INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(Unaudited)**




For
                    the Six
                  Months
                    EndedJune
                    30, 2006
              
              
              For
                  the Six
                Months
                  EndedJune
                  30, 2005CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  loss
              
              $
              (2,936,234
              )
              $
              (2,235,428
              )Adjustments
                  to reconcile net loss from operations to net cash used
                  in operating activities:Depreciation
              
              
              111,976
              
              
              58,996Amortization
                  of intangible assets
              
              
              96,059
              
              
              232,579Amortization
                  of deferred consulting fees
              
              
              371,622
              
              
              172,471Deferred
                  taxes
              
              
              (18,000
              )
              
              --Bad
                debt expense
              
              
              150,000
              
              
              --Gain from
                disposition of discontinued operations
              
              
              (263,541
              )
              
              --Loss
                  on extinguishment of debt
              
              
              110,463
              
              
              --Amortization
                  of deferred compensation
              
              
              452,388
              
              
              24,000Changes
                  in operating assets and liabilities, net of effects of
                  acquisitions:Decrease in
                  accounts receivables
              
              
              401,881
              
              
              840,967(Increase)
                  decrease in prepaid expenses and other current assets
              
              
              (18,312
              )
              
              9,050Decrease
                  in other receivables
              
              
              --
              
              
              22,237Increase
                  (decrease) in accounts payable
              
              
              500,682
              
              
              (570,493
              )Increase
                  (decrease) in accrued liabilities
              
              
              5,715
              
              
              (123,031
              )(Decrease)
                  increase in taxes payable
              
              
              (61,671
              )
              
              22,171(Decrease)
                  increase in other current liabilities
              
              
              (100,923
              )
              
              178,611Discontinuned
                operations
              
              
              66,855
              
              
              --Net
                  Cash Used In Operating Activities
              
              
              (1,131,040
              )
              
              (1,367,870
              )CASH
                  FLOWS FROM INVESTING ACTIVITIES:Purchases
                  of capital assets
              
              
              (63,078
              )
              
              (6,846
              )Proceeds
                from sale of MDI
              
              
              226,752
              
              
              -Acquisition
                  of Cratos Technology Solutions, Inc.
              
              
              --
              
              
              (143,249
              )Acquisition
                  of Disclosure Plus
              
              
              --
              
              
              (89,600
              )Net
                  Cash Provided By (Used In) Investing Activities
              
              
              163,674
              
              
              (239,695
              )




7


**ACTIVECORE
        TECHNOLOGIES, INC.**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS**
 **(Unaudited)**






For
                    the Six
                  Months
                    Ended June 30, 2006
              
              
              For
                    the Six
                  Months
                    Ended June 30, 2005CASH
                  FLOWS FROM FINANCING ACTIVITIES:Net
                  proceeds from line of credit
              
              $
              91,751
              
              $
              1,483,698Proceeds
                  from loan payable
              
              
              385,528
              
              
              --Proceeds
                  from common shares to be issued
              
              
              401,300
              
              
              --Advance
                  of notes payable
              
              
              --
              
              
              (35,407
              )Proceeds
                  received from related parties
              
              
              75,319
              
              
              23,628Preferred
                  stock dividend
              
              
              --
              
              
              (23,592
              )Proceeds
                  from preferred shares subscription
              
              
              --
              
              
              150,000Payments
                  on leases
              
              
              (9,954
              )
              
              (13,276
              )Net
                  Cash Provided By Financing Activities
              
              
              943,944
              
              
              1,585,051FOREIGN
                  EXCHANGE GAIN
              
              
              --
              
              
              1,150DECREASE
                  IN CASH
              
              
              (19,790
              )
              
              (21,364
              )CASH
                  - BEGINNING OF PERIOD
              
              
              109,789
              
              
              53,736CASH
                  - END OF PERIOD
              
              $
              89,999
              
              $
              32,372Non-Cash
                  Transactions:Issuance
                  of common shares related to acquisition of Disclosureplus
              
              $
              --
              
              $
              176,000Issuance
                    of common shares related to acquisition of Cratos Technology
                    Solutions
              
              $
              --
              
              $
              1,947,787Issuance
                  of common shares to vendor
              
              $
              --
              
              $
              467,779Common
                  shares to be issued for conversion of preferred shares
              
              $
              291,667
              
              $
              --Issuance
                  of common shares for employment/director services
              
              $
              539,888
              
              $
              --Issuance
                  of common shares for consulting services
              
              $
              236,222
              
              $
              --Issuance
                  of common shares for settlement of other liabilities
              
              $
              135,000
              
              $
              --Issuance
                  of common shares for financing services
              
              $
              47,500
              
              $
              --Issuance
                  of common shares for conversion of prefered shares and
                  prefered share dividends
              
              $
              93,750
              
              $
              --Common
                  shares to be issued for settlement of debt
              
              $
              394,511
              
              
              --Note
                  received from sale of MDI
              
              $
              161,948
              
              $
              --






See
      accompanying notes to condensed consolidated financial statements.




8


**ACTIVECORE
        TECHNOLOGIES, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 AS
        OF JUNE 30,
        2006
 (Unaudited)


**NOTE
                  1**
              **SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION**


***Basis
      of Presentation and Going Concern***




The
      accompanying unaudited interim condensed consolidated financial statements
      have
      been prepared pursuant to the rules and regulations for reporting on Form
      10-QSB. Accordingly, certain information and disclosures required by generally
      accepted accounting principles for complete financial statements are not
      included herein. The interim statements should be read in conjunction with
      the
      financial statements and notes thereto included in the Company’s latest Annual
      Report on Form 10-KSB. The results for the three and six month periods may
      not
      be indicative of the results for the entire year. The condensed consolidated
      balance sheet information as of December 31, 2005 was derived from the audited
      consolidated financial statements included in the Company's Annual Report on
      Form 10-KSB. These interim condensed financial statements should be read in
      conjunction with that report.




Certain
      prior period amounts have been reclassified to
      conform to the current period's presentation.




Interim
      statements are subject to possible adjustments in connection with the annual
      audit of the Company’s accounts for the fiscal year 2006. In the Company’s
      opinion, all adjustments necessary for a fair presentation of these interim
      statements have been included and are of a normal and recurring nature.




The
      consolidated financial statements are expressed in United States dollars and
      have been prepared in accordance with accounting principles generally accepted
      in the United States of America.




The
      Company’s independent auditors have issued a going concern opinion on the
      Company’s consolidated financial statements as of December 31, 2005 that
      raises substantial doubt about the Company’s ability to continue as a going
      concern.




The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. The Company had a net loss of
      $2,936,234 and incurred negative cash flows from operations of $1,131,040 for
      the six months ended June 30, 2006 and has a working capital deficiency of
      $2,956,624 and an accumulated deficit of $43,672,339 at June 30, 2006. These
      matters raise substantial doubt about its ability to continue as a going
      concern. The condensed consolidated financial statements do not include any
      adjustments that might result from the outcome of this uncertainty. The
      Company’s ability to continue as a going concern is dependent on its ability to
      raise additional debt and equity financing and to implement its business plan
      to
      market and sell its various enterprise software and services. At the current
      time, management anticipates that it will be able to address its need for
      financing through the execution of private placements of the Company’s shares to
      both related and unrelated parties.


9


**ACTIVECORE
              TECHNOLOGIES, INC.**
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 AS
              OF JUNE 30,
              2006
 (Unaudited)




**NOTE
                1**
            **SUMMARY
                OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION -
                (Continued)**





***Recent
      Accounting Pronouncements***





In
      December 2004 the FASB issued SFAS No. 123 (revised 2004), Shares - Based
      Payment, (“SFAS No. 123(R)”), which amends, “Accounting for Stock Based
      Compensation, and supersedes APB Opinion No. 25, Accounting for Stock Issued
      to
      Employees. SFAS No. 123(R) requires compensation expense to be recognized for
      all share based payments made to employees based on the fair value of the award
      at the date of grant, eliminating the intrinsic value alternative allowed by
      SFAS No. 123. Generally, the approach to determining fair value under the
      original pronouncement has not changed. However, there are revisions to the
      accounting guidelines established, such as accounting for forfeitures that
      will
      change our accounting for stock-based awards in the future.




SFAS
      No.
      123(R) was adopted in the annual period beginning January 1, 2006. The statement
      requires companies to adopt t he
      modified prospective method, which results in the recognition of compensation
      expense using SFAS 123(R) for all share-based awards granted after the effective
      date and the recognition of compensation expense using SFAS 123 for all
      previously granted share - based awards that remain unvested at the effective
      date.




The
      Company has evaluated SFAS 123(R) and has determined that incorporating it
      as
      part of its adoption of SFAS 123(R) did not have a material impact on its
      condensed consolidated financial statements. The Company does not currently
      have
      a stock option plan.




10


**ACTIVECORE
              TECHNOLOGIES, INC.**
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 AS
              OF JUNE 30,
              2006
 (Unaudited)


***Use
      of Estimates***


The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities and the disclosure of
      contingent assets and liabilities at the dates of the financial statements
      and
      the reported amounts of revenues and expenses during the reporting periods.
      Actual amounts could differ significantly from these estimates.




***Fair
      Value of Financial Instruments***


The
      fair
      value of a financial instrument is the amount at which the instrument could
      be
      exchanged in a current transaction between willing parties other than in a
      forced sale or liquidation.




The
      carrying amounts of the Company’s financial instruments, including cash,
      accounts receivable, other receivables accounts payable, due to related parties,
      accrued liabilities, taxes payable and other current liabilities approximate
      fair value because of their short maturities. The carrying amount of the
      Company’s lines of credit approximates fair value because the interest rates of
      the lines of credit are based on floating rates identified by reference to
      market rates. The carrying amounts of the Company’s loans and notes payable
      approximate the fair value of such instruments based upon management’s best
      estimate of interest rates that would be available to the Company for similar
      debt obligations.





***Net
      (Loss) Per Share***


Basic (loss) per
      share are computed by dividing net income (loss) by the weighted average number
      of common shares outstanding during the period. Diluted earnings per share
      are
      computed by dividing net income by the shares used in the calculation of basic
      net income per share plus the dilutive effect of common share equivalents,
      such
      as stock options, using the treasury stock method. Common share equivalents
      are
      excluded from the computation of diluted net income (loss) per share if their
      effect is anti-dilutive. Common share equivalents totaling 6,554,976 shares
      of
      common stock have not been included in the calculation of diluted loss per
      share
      for the periods presented as their effect would be anti-dilutive.




11


**ACTIVECORE
            TECHNOLOGIES, INC.**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 AS
            OF JUNE 30,
            2006
 (Unaudited)


**NOTE
                2**
            **DISCONTINUED
                OPERATIONS**





During
      2005, the Company disposed of Twincentric Limited, which was one of the
      components of its business which constituted a discontinued operation. In June
      2006, the Company disposed of its MDI business, which also represented a
      component of the Company’s business and which also constituted a discontinued
      operation.





The
      loss
      on the Company’s consolidated statements of operations for the three and six
      months ended June 30, 2006 and 2005 is summarized as follows:





3
                Months Ended June 30, 2006
            
            3
                  Months Ended June 30, 2005
            
            6
                  Months Ended June 30, 2006
            
            6
                  Months Ended June 30, 2005**Twincentric**Loss
                from discontinued operations
            
            $
            -
            
            $
            (209,831
            )
            $
            -
            
            $
            (160,525
            )**MDI**Gain
                on disposition
            
            
            263,541
            
            
            -
            
            
            263,541
            
            
            -Gain
                (loss) from discontinued operations
            
            
            (71,574
            )
            
            21,974
            
            
            (53,567
            )
            
            (28,461
            )191,967
            
            
            21,974
            
            
            209,974
            
            
            (28,461
            )Gain
                (loss) from discontinued operations - net
            
            $
            191,967
            
            $
            (187,857
            )
            $
            209,974
            
            $
            (188,986
            )








The
      net
      loss on the Company’s consolidated statements of operations for the three and
      six months ended June 30, 2005 for Twincentric is summarized as
      follows:





6
                Months Ended June 30, 2005
            
            
            3
                Months Ended June 30, 2005Revenue
            
            $
            466,632
            
            $
            283,387Salaries
                and wages
            
            
            179,443
            
            
            84,339Legal
                and accounting
            
            
            27,430
            
            
            22,147General
                and administrative
            
            
            408,286
            
            
            372,363Depreciation
                and amortization
            
            
            2,498
            
            
            1,698Interest
                expense
            
            
            9,500
            
            
            12,671627,157
            
            
            493,218Net
                loss
            
            $
            (160,525
            )
            $
            (209,831
            )





12


**ACTIVECORE
              TECHNOLOGIES, INC.**
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 AS
              OF JUNE 30,
              2006
 (Unaudited)


The
      net
      income (loss) on the Company’s consolidated statements of operations for the
      three and six months ended June 30, 2006 and 2005 for MDI is summarized as
      follows:





6
                Months Ended June 30, 2006
            
            
            6
                Months Ended June 30, 2005
            
            
            3
                Months Ended June 30, 2006
            
            
            3
                Months Ended June 30, 2005Revenue
            
            $
            379,304
            
            $
            413,390
            
            $
            180,397
            
            $
            218,300Direct
                wages
            
            
            258,283
            
            
            243,454
            
            
            155,356
            
            
            120,767Amortization
                of licensing agreements and other costs
            
            
            50,000
            
            
            45,632
            
            
            22,816
            
            
            22,816Salaries
                and wages
            
            
            98,107
            
            
            63,367
            
            
            62,372
            
            
            36,532Legal
                and accounting
            
            
            10,776
            
            
            -
            
            
            5,867
            
            
            -General
                and administrative
            
            
            8,915
            
            
            89,311
            
            
            5,444
            
            
            16,211Interest
                expense
            
            
            6,790
            
            
            87
            
            
            116
            
            
            -432,871
            
            
            441,851
            
            
            251,971
            
            
            196,326Net
                income (loss)
            
            $
            (53,567
            )
            $
            (28,461
            )
            $
            (71,574
            )
            $
            21,974





The
      gain
      on disposition of MDI is comprised as follows:




Cash
                and note receivable consideration
            
            $
            388,700Less:Tangible
                net assets
            
            
            102,242Intangible
                net assets
            
            
            22,917125,159Gain
                on disposition
            
            
            263,541




**NOTE
                  3**
              **ACCOUNTS
                  RECEIVABLE**


The
      components of accounts receivable, net, as of June 30, 2006 and December 31,
      2005 consist of:




2006
            
            
            2005Trade
                receivables
            
            $
            3,023,284
            
            $
            3,597,724Allowance
                for doubtful accounts
            
            
            (99,629
            )
            
            (101,503
            )Accounts
                receivable, net
            
            
            2,923,655
            
            $
            3,496,221









Trade
      receivables consist primarily of customer receivables for enterprise software
      and information technology services sold. An imputed interest discount is
      included in the value of accounts receivable.





As
      of
      June 30, 2006, accounts receivable included amounts due from Global Sterling
      Payments Systems Ltd. (“GSPS”), a related party, totaling $896,932 (December 31,
      2005 - $704,281). The Company's Chief Executive Officer is also the Chairman
      of
      Global Sterling Payments Systems Ltd. The Company signed a letter of intent
      to
      acquire all of the outstanding shares of GSPS during the quarter ended June
      30,
      2006.




13


**ACTIVECORE
              TECHNOLOGIES, INC.**
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 AS
              OF JUNE 30,
              2006
 (Unaudited)


**NOTE
                    4**
                **LONG-TERM
                    DEBT**


Long-term
      debt consists of the following:




June
                30, 2006
            
            
            December
                31, 2005Short
                term loans (1)
            
            $
            111,722
            
            $
            21,272Bank
                term loan, seven year term with monthly equal principal payments,
                bearing
                interest at the Canadian prime plus 3% (2)
            
            
            145,023
            
            
            152,805Bank
                term loan, three year term with monthly equal principal payments,
                bearing
                interest at the Canadian prime plus 1% (3)
            
            
            157,594
            
            
            175,438Term
                loan, two year term with equal monthly payments, bearing interest
                at 20%
                (4)
            
            
            367,652
            
            
            -781,991
            
            
            349,515Less
                current portion
            
            
            432,015
            
            
            117,576Long
                term portion
            
            $
            349,976
            
            $
            231,939






(1)
            During
                2004 and 2005, various related parties loaned the Company, on a short
                term
                basis, funds to assist with working capital. Certain of these loans
                were
                converted into equity during 2005. The balances outstanding at December
                31, 2005 and June 30, 2006 are due on demand and bear no
                interest.(2)
            On
                August 17, 2004 one of the Company’s Canadian subsidiaries obtained a term
                loan with a Canadian Chartered Bank in the amount of (CAD) $220,000.
                Under
                the terms of the agreement, the loan is repayable over a seven year
                term
                with principal and interest payments due monthly. Interest on the
                borrowings is the bank’s prime rate plus 3%, which as of June 30, 2006 was
                9%. This subsidiary’s assets have been pledged as security for this term
                loan.




(3)
            During
                2005 one of the Company’s Canadian subsidiaries obtained a term loan with
                a Canadian Chartered Bank in the amount of (CAD) $250,000. Under
                the terms
                of the agreement, the loan is repayable over a three year term with
                principal and interest payments due monthly. Interest on the borrowings
                is
                at prime plus 1% which as of June 30, 2006 was 7%. This subsidiary’s
                assets have been pledged as security for this term
                loan.




(4)
              During
                    2006, the Company entered into a two year term loan with an unrelated
                    party. The loan is repayable in equal monthly payments and the
                    interest
                    rate on the loan is 20%. In conjunction with this loan, the Company
                    issued
                    the lender 250,000 common shares of the Company, and placed 5,000,000
                    common shares into escrow as security for the lender. Also see
                    Note
                    10.


14


**ACTIVECORE
              TECHNOLOGIES, INC.**
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 AS
              OF JUNE 30,
              2006
 (Unaudited)




Future
      maturities of the Company’s debt as of June 30, 2006 are as follows for each of
      the twelve months periods ending June 30 of the respective years:




2007
            
            $
            432,0152008
            
            
            244,7712009
            
            
            34,1452010
            
            
            23,517Thereafter
            
            
            47,543$
            781,991





**NOTE
                    5**
                **DUE
                    TO RELATED PARTIES**


The
      Company's officers and directors have loaned various amounts to the Company
      and
      its subsidiaries to meet operating cash flow requirements. The amounts due
      to
      related parties are non-interest bearing and have no specific repayment terms.
      The balances due them were $87,182 and $11,863 as of June 30, 2006 and December
      31 2005, respectively, and are classified as current liabilities in the
      accompanying condensed consolidated balance sheets.





The
      Company has a master services agreement in place with Global Sterling Payment
      Systems Ltd. (“GSPS”), a related party. This agreement provides for the Company
      to provide services to GSPS and its wholly owned subsidiary, ePocket Inc. During
      the three and six month periods respectively, the Company provided services
      to
      GSPS totaling nil and $192,651, and these amounts are included in revenue
      in the Company’s consolidated statements of operations. No services were
      provided by the Company to GSPS for either the three or six month period ended
      June 30, 2005.








15




**ACTIVECORE
            TECHNOLOGIES, INC.**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 AS
            OF JUNE 30,
            2006
 (Unaudited)




**NOTE
                    7**
                **REDEEMABLE
                    PREFERRED
                    SHARES**





The
      Company has outstanding series C preferred shares which are mandatorily
      redeemable over 16 quarters through September 30, 2008. The initial value of
      these shares was $500,000, and the quarterly redemption values are $31,250.
      These preferred shares have been recorded as debt on the Company’s condensed
      consolidated balance sheets on the basis that these shares are manditorily
      redeemable by the Company. After a redemption of $93,750 during the six months
      ended June 30, 2006, $281,250 of these Series C preferred shares remain
      outstanding and were yet to be redeemed.




**NOTE
                    8**
                **LINE
                    OF CREDIT**


In
      conjunction with the close of the Cratos acquisition, in May 2005 the Company
      secured a line of credit with a one year term and annual renewals with a
      Canadian chartered bank. This line of credit allows for maximum borrowings
      of
      $1.5 million CAD and bears interest at the rate of prime plus 1%. Security
      for
      this facility is comprised of a general security agreement over all of the
      assets of the Company’s subsidiary which entered into this facility, as well as
      personal guarantees by two of the Company’s senior executives. Borrowings under
      this facility may not exceed 85% of specified receivables as defined in the
      respective credit agreement. As of June 30, 2006, no amounts were available
      under the Company’s line of credit. As of June 30, 2006, the interest rate on
      this facility was 6%.





Included
      in the line of credit are several overdraft facilities maintained by certain
      subsidiaries of the Company.




**NOTE
                    9**
                **COMMITMENTS
                    AND CONTINGENCIES**





**TPG
      Capital Corporation**




On
      March
      17, 2000, the Company entered into a consulting agreement with TPG Capital
      Corporation regarding an inactive reporting shell company that the Company
      acquired. The consulting agreement provides that one year after the execution
      of
      the agreement, (“reset date”), 350,000 common shares issued by the Company under
      the agreement would be increased or decreased based upon the average closing
      bid
      for the Company’s stock 30 days prior to the reset date, so the value of the
      shares issued will equal $500,000.




In
      December, 2005 an arbitrator determined that the Company was obligated to pay
      TPG Capital Corporation $448,000 to be issued in either common stock which
      must
      be registered by June, 2006 or in cash. The Company recorded an expense of
      this
      amount in its consolidated statement of operations for the year ended December
      31, 2005 and such amount is included in accrued liabilities at December 31,
      2005
      and June 30, 2006.




**Orchestral
      Corporation**




On
      June
      13, 2002, the Company canceled its “Power Audit” software distribution agreement
      with Orchestral (the “licensor”). In November 2002, the licensor commenced a
      proceeding in Ontario, Canada against the Company which was discontinued while
      the parties discussed a settlement. That proceeding alleged that the Company
      had
      infringed upon the copyright that the licensor maintained, and further that
      the
      Company had breached the distribution contract claiming damages of CAD
      $4,000,000. The licensor also claimed punitive and exemplary damages in the
      amount of CAD $1,000,000. When a settlement was not concluded, Orchestral
      commenced a second, identical action in August, 2003. The Company retained
      legal
      counsel to defend itself on the basis that there is no merit to the case and
      even if there was merit, the time frame in which to bring an action under the
      distribution agreement has expired.




16


**ACTIVECORE
            TECHNOLOGIES, INC.**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 AS
            OF JUNE 30,
            2006
 (Unaudited)




Orchestral
      commenced an Application before the Ontario courts to enforce a settlement
      which
      it alleged was reached with the Company during the negotiations between its
      first and second lawsuits. The court ordered that a settlement was enforceable
      and that $226,824 was owed by the Company to the licensor. The Company appealed
      this decision and in January 2006 the initial judgment was upheld.





During
      the six month period ended June 30, 2006, the Company reached a settlement
      with
      Orchestral in which it agreed to pay Orchestral the $226,824 which the court
      had
      previously ordered payable, along with interest from the date of that judgment
      totaling $57,224. The interest was recorded in the Company’s consolidated
      statement of operations for the six month period ended June 30, 2006.
      Additionally, Orchestral agreed to accept the Company’s common stock in
      consideration for settlement of this debt. The conversion price for the common
      stock was a 20% discount to price of the Company’s common stock for the trailing
      20 trading day prior to settlement. This settlement resulted in a loss of
      $110,463, which has been recorded in the Company’s consolidated statement of
      operations for the six month period ended June 30, 2006. The common stock to
      be
      issued by the Company pursuant to this settlement agreement has been recorded
      in
      common stock to be issued in the Company’s consolidated balance sheet at June
      30, 2006.




**Cesar
      Correia and InfoLink Technologies Ltd.**




From
      December 2003 to April 2004, the Company was engaged in discussions with certain
      major shareholders of Infolink Technologies Limited with regard to the potential
      acquisition of Infolink Technologies Ltd., a public company listed on the
      Toronto Stock Exchange venture board under the symbol “IFL”. During the course
      of discussions, an offer to purchase was rebuffed by Cesar Correia, the former
      Chairman of the Board, President and CEO, and 34% shareholder of Infolink.
      At
      the time, Mr. Correia was told that the Company would purchase another
      competitor to Infolink, C Comm Network Corporation. In May of 2004, the Company
      purchased C Comm. In July of 2004, an unrelated minority shareholder of Infolink
      commenced an action in Ontario alleging that Mr. Correia has mismanaged Infolink
      and amongst other things that he had inappropriately obtained funds from
      Infolink and converted them to his own purposes. The day prior to the court
      hearing with regard to the minority shareholder action against Infolink,
      Infolink Technology commenced a proceeding in the same Ontario court against
      the
      Company alleging unfair competition as a result of an alleged improper
      acquisition of confidential information from Infolink and numerous other causes
      of action. The Company has not yet had to file a defence to any of Infolink’s
      claims against the Company. Meanwhile, the court appointed a monitor and
      investigator to look into the allegations against Mr. Correia. The court
      appointed monitor and investigator issued an interim report in October 2004
      which found that several of the allegations against Mr. Correia were
      substantiated. Mr. Correia was removed from the position of Chairman, President
      and CEO of Infolink and is now an employee of Infolink. The Company believes
      that Infolink as a corporate entity will not proceed with any action against
      the
      Company as the Company believes that the action was commenced as a defensive
      move by Mr. Correia and, now that he has been removed from management of
      Infolink, there is little basis for the action to continue.





17




**ACTIVECORE
            TECHNOLOGIES, INC.**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 AS
            OF JUNE 30,
            2006
 (Unaudited)




**NOTE
                      10**
                  **ACQUISITIONS**
 **Cratos
        Technology Solutions, Inc.**
 
 In
        May,
        2005, the Company completed the acquisition of Cratos Technology Solutions
        Inc.,
        an Ontario corporation ("Cratos"), pursuant to a Share Purchase Agreement.
        Under
        the terms of the Share Purchase Agreement, the Registrant acquired from Andrew
        Wickett ("Wickett") and Debbie Gracie-Smith ("Gracie-Smith") all of the stock
        of
        Cratos in exchange for total consideration of approximately $2.1 million,
        comprised of cash, a promissory note due August 2005, and common stock of
        the
        Company. Cratos is a solutions-oriented organization specializing in
        international banking and financial transaction processing. The majority
        of
        Cratos' customers specialize in major credit card products and Loyalty-based
        products. The Company accounted for this acquisition using the purchase method
        of accounting in accordance with the provisions of SFAS No. 141, and began
        consolidating the results of Cratos from the acquisition date
        forward.
 
 Under
        the
        terms of the Share Purchase Agreement, the Company issued 9,021,030 shares
        (the
        "Purchaser Shares") of its common stock and paid cash in the amount of $79,560,
        and issued promissory notes in the amount of $79,560. The Company valued
        the
        common stock issued in accordance with this transaction based on a simple
        average of the closing share price of the Company for two days prior and
        subsequent to this transaction being announced. On this basis, the common
        stock
        issued in connection with this transaction was valued at $1,947,787. The
        share
        consideration was exchanged on May 6, 2005.
 
 The
        Company also issued 3,921,633 shares of its common stock to a supplier in
        consideration for discharging a pre-acquisition liability to that supplier
        as
        well as (i) the supplier entering into renewed agreements with Cratos, and
        (ii)
        the supplier terminating any existing security agreements between such party
        and
        Cratos as well as discharge any registered security and agree to subordinate
        any
        future security to that of any senior lender of the Company. These shares
        were
        valued using their fair market value as of the date they were delivered,
        and no
        gain or loss was recorded on this transaction.
 
 The
        purchase price allocation set forth below represents management’s best estimate
        of the allocation of the purchase price and the fair value of net assets
        acquired. The valuation of the acquired intangible assets and the assessment
        of
        their expected useful lives are based on a assessment undertaken by management.
  The
        following table summarizes the estimated fair values of the assets acquired
        and
        liabilities assumed as of the date of the Cratos acquisition:
 
 Current
                  assets
              
              $
              1,285,606Long
                  term assets
              
              
              125,392Customer
                  assets
              
              
              1,023,380Goodwill
              
              
              2,970,619Total
                  assets acquired
              
              
              5,404,997Total
                  liabilities assumed
              
              
              (3,298,090
              )Net
                  assets acquired
              
              $
              2,106,907
  18
 **ACTIVECORE
            TECHNOLOGIES, INC.**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 AS
            OF JUNE 30, 2006
 (Unaudited)
   The
        customer assets of $1,023,380 have been assigned a life of five years. The
        useful lives assigned represent management’s estimates and changes may occur
        from these estimates and these changes may be material. The Company also
        recorded a deferred tax liability of approximately
        $368,000 in respect of the temporary difference associated with this intangible
        asset.
  The
        portion of the purchase price allocated to goodwill was assigned to the
        Company’s Systems Integration and modernization reporting segment. Goodwill
        recorded in this transaction in not deductible for tax purposes.
   **DisclosurePlus
        Inc.**
 
 On
        February 25, 2005, the Company acquired all the outstanding common stock
        of
        DisclosurePlus Inc. (“DP”) a privately held Canadian corporation which provides
        publicly traded corporations with the foundation and tools to enhance the
        scope
        of corporate disclosure on-line with a standardized regulatory compliant
        web-based solution. Consideration for this acquisition represented 1,200,000
        shares of the Company’s restricted common stock valued at $264,000 in addition
        to $125,000 payable in cash. The Company also acquired intellectual property
        relating to the DP business in a concurrent transaction. The consideration
        above
        represents the total consideration for this entire acquisition. The value
        allocated to the common share consideration and was based on the weighted
        average share price of the Company’s common shares for the two trading days
        before, the day of, and the two days after the day the Company entered into
        the
        terms of the acquisition agreement. The Company accounted for this acquisition
        using the purchase method of accounting in accordance with the provisions
        of
        SFAS No. 141, and accordingly, DP’s operating results have been included in the
        Company’s consolidated statement of operations from February 25, 2005. The
        Company assumed net tangible liabilities of $29,000, though the transaction
        provided the Company with intellectual property, customers, and a set of
        employees who had operated this business prior to the acquisition. Goodwill
        recorded in connection with this business combination is not deductible for
        tax
        purposes.
 
 The
        purchase price allocation set forth below represents management’s best estimate
        of the allocation of the purchase price and the fair value of net assets
        acquired. The valuation of the acquired intangible assets and the assessment
        of
        their expected useful lives are based on a n
        assessment undertaken by management.
 
 The
        Company has accounted for the purchased goodwill in accordance with the
        provisions of SFAS 142. The entire balance of goodwill recorded on this
        transaction has been allocated to the Company’s Corporate Disclosure and
        Messaging segment.
 
 The
        Company’s purchase price allocation recorded for the acquisition of DP is as
        follows:
 
 Technology
                    assets
                
                $
                250,000Goodwill
                
                
                168,000Total
                    assets acquired
                
                
                418,000Liabilities
                    assumed
                
                
                (29,000
                )Net
                    assets acquired
                
                $
                389,000
 
 **Pro
        forma results**
 The
          following pro forma results of operations reflect the combined results
          of
          Activecore, and Cratos for the three and six month periods ended June 30,
          2006
          and 2005 as if the business combination occurred at the beginning of
          Activecore’s year. Pro forma financial information giving effect to the
          acquisition of DP has not been provided on the basis that its results of
          operations for the relevant periods would not be material to the
          Company.
   Three
                    Months Ended June 30, 2006
                
                Three
                    Months Ended June 30, 2005
                
                Six
                    Months Ended June 30, 2006
                
                SixMonths
                    Ended June 30, 2005Revenue
                
                $
                1,582,317
                
                $
                2,734,094
                
                $
                3,037,441
                
                $
                4,182,386Net
                    loss
                
                $
                (1,470,177
                )
                $
                (1,397,710
                )
                $
                (2,786,234
                )
                $
                (2,157,546
                )Net
                    lossper share, basic and diluted
                
                $
                (0.02
                )
                $
                (0.02
                )
                $
                (0.03
                )
                $
                (0.04
                )Shares
                    used
                    in basic and diluted loss per share calculation
                
                
                90,846,542
                
                
                59,846,795
                
                
                86,631,760
                
                
                57,910,163
  These
          pro
          forma results are not necessarily indicative of what would have occurred
          if the
          acquisitions had actually been completed as of the assumed dates and for
          the
          periods presented. The proforma effects of Disclosure Plus Inc are not
          material
          to the condensed consolidated financial statements.
  19
 **ACTIVECORE
              TECHNOLOGIES, INC.**
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 AS
              OF JUNE 30,
              2006
 (Unaudited)


**NOTE
                    11**
                **COMMON
                    AND PREFERRED SHARES**


**Common
      Shares**





On
      February 7, 2006, the Company issued 250,000 common shares to an unrelated
      party
      who provided the Company with a two-year term loan. The value of these shares
      was $47,500 and as of June 30, 2006 $37,605 is recorded in deferred consulting
      and financing charges.





On
      March
      7, 2006, the Company issued 4,166,667 common shares to the former holders of
      its
      entire Class A and B preferred shares. In 2005, these former preferred
      shareholders agreed with the Company to convert their preferred shares to common
      shares, and as of December 31, 2005 these shares were included in common stock
      to be issued.





On
      March
      28, 2006, the Company issued 3,822,500 common shares to numerous employees
      in
      exchange for employment services having a fair value of $359,775. As of June
      30,
      2006, $287,388 of this amount was expensed and $72,387 was included in deferred
      consulting and financing expense.





On
      March
      28, 2006, the Company issued 960,000 common shares to two consultants of the
      Company who will provide services during 2006. These shares have a fair value
      of
      $67,200. As of June 30, 2006, $31,600 of this amount had been expensed and
      $35,600 was included in deferred consulting and financing expense.





On
      March
      28, 2006, the Company issued 782,353 common shares to two employees in
      consideration for unpaid wages. The fair value of these common shares was
      $125,000.





On
      January 9, 2006, the Company used 1,081,521 shares of Treasury stock with a
      value of $86,522 to pay a third party for investor relations
      services.





On
      April
      3, 2006, the Company issued 1,250,000 common shares to several employees in
      exchange for employment services having a fair value of $147,500. As of June
      30,
      2006, this entire amount was included in deferred consulting and finance
      expense.





On
      April
      3, 2006, the Company issued 700,000 shares to two independent directors of
      the
      Company having a fair value of $105,000. As of June 30, 2006, $60,000 of this
      amount had been expensed and $45,000 was included in deferred consulting and
      financing expense.





On
      April
      24, 2006, the Company issued 750,000 shares to a consultant of the Company
      having a fair value of $82,500. As of June 30, 2006, $55,000 of this amount
      had
      been expensed and $27,500 was included in deferred consulting and financing
      expense.





On
      April
      24, 2006, the Company issued 178,572 shares to the previous holders of the
      Company’s Class A and B preferred shares to settle some outstanding accrued
      dividend payments relating to the period prior to their conversion into common
      shares. These shares had a fair value of $10,000. This entire amount was applied
      to accrued interest expense on the Company’s consolidated balance
      sheet.





On
      April
      24, 2006, the Company issued 1,027,181 shares to the holder of the Company’s
      Class C preferred shares having a fair value of $85,000. Of this amount, $62,500
      related to the redemption of the preferred shares and the remaining $22,500
      related to mandatory dividends required on that class of shares.




For
        all
        stock issuances completed during the six month period ended June 30, 2006,
        fair
        value was determined using the closing value of the Company’s common shares on
        the date the shares were approved for issuance by the Company’s board of
        directors.




20


**ACTIVECORE
            TECHNOLOGIES, INC.**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 AS
            OF JUNE 30,
            2006
 (Unaudited)


The
      Company is authorized to issue three series of preferred shares:




***Series
      A and B***





On
      September 14, 2004, the board of directors authorized the issuance of 8,333,333
      Series A and 4,167,667 Series B preferred shares which had a purchase price
      of
      $0.03 and $0.06, respectively totaling $500,000. With respect to the Series
      A
      shares, the Company may force conversion if the trading price of the Company’s
      common shares exceeds $2.00 for 30 days. With regard to the Series B shares,
      the
      Company may force conversion if the trading price of the Company’s common shares
      exceeds $4.00 for 30 days. These shares have a right of redemption whereby
      if the stock is not converted within 5 years, the Company, at its option, shall
      have the right to redeem all outstanding but unconverted shares of series A
      (same for B) Preferred Stock held by such person by paying to the holder thereof
      $0.30 (for B, $0.60) per share plus all accrued but unpaid dividends thereon,
      if
      any. These shares are not manditorily redeemable. The preferred shareholders
      will be paid a dividend at the rate of 10% per annum. On December 21, 2005
      the
      Company reached an agreement with the holders of the Series A and B shares
      to
      convert their entire holdings of these classes of shares into common shares
      of
      the Company. The conversion price in this transaction was higher than the market
      price of the Company’s commons shares on the conversion agreement date.
      Specifically, the carrying value of the preferred shares prior to conversion
      exceeded the fair value of the common stock consideration by $208,333. As a
      result, and consistent with Emerging Issues Task Force Topic D-42. The Effect
      on
      the Calculation of Earnings per Share for the Redemption or Induced Conversion
      of Preferred Stock, the Company has added back this excess in determining net
      loss available to common shareholders in its consolidated statement of
      operations. Additionally, the Company has recorded this excess as an increase
      to
      additional paid-in capital in its consolidated balance sheet, consistent with
      the guidance provided in Staff Accounting Bulletin 5 T. In order to satisfy
      this
      conversion agreement, subsequent to December 31, 2005 the Company issued common
      shares to the former shareholders of the Series A and B preferred shares
      totaling 4,166,667. These shares were included in common stock to be issued
      at
      December 31, 2005, and were subsequently issued during the quarter ended March
      31, 2006.





***Series
      C***


In
      2004,
      the Company and the International Brotherhood of Electrical Worker’s Union (See
      Note 7) agreed to settle the outstanding loan of $500,000 into Series C
      convertible preferred shares. The terms of the Series C preferred stock require
      the Company to redeem the preferred shares over 16 quarters, commencing on
      December 31, 2004. The Company shall have the option of paying the quarterly
      redemptions in the form of cash or common shares. Also the preferred shares
      will
      have a 12% annual dividend rate payable quarterly based on the number of
      preferred shares outstanding at the end of the quarter. As of June 30, 2006
      the
      Company has an obligation to issue common shares with a value of $31,250 in
      order to satisfy the terms of its Series C Preferred Stock and this amount
      has
      been recorded as common shares to be issued within Shareholders'
      Equity.




The
        Company completed a series of private placements from May 10, 2006 through
        June
        8, 2006.  The total amount raised through these placements was
        $401,300.  Total consideration due by the Company in exchange for these
        private placements is 8,917,778 common shares as well as 2,972,593 warrants
        to
        purchase common shares of the Company.  The common shares are expected to
        be issued in the quarter ending September 30, 2006.  The warrants all have
        a one-year term, with an exercise price of $0.06.


21





**Item
      2. Management’s Discussion And Analysis Or Plan Of
      Operation**




***Forward-Looking
      Statements and Associated Risks.***  *This
      Report contains forward-looking statements. Such forward-looking statements
      include statements regarding, among other things, (a) the Company’s projected
      sales and profitability, (b) the Company’s growth strategies,
      (c) anticipated trends in the Company’s industry, (d) the Company’s future
      financing plans, (e) the Company’s anticipated needs for working capital, (f)
      the benefits related to ownership of the Company’s common stock. Forward-looking
      statements, which involve assumptions and describe the Company’s future plans,
      strategies, and expectations, are generally identifiable by use of the words
      “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,”
“intend,” or “project” or the negative of these words or other variations on
      these words or comparable terminology. This information may involve known and
      unknown risks, uncertainties, and other factors that may cause the Company’s
      actual results, performance, or achievements to be materially different from
      the
      future results, performance, or achievements expressed or implied by any
      forward-looking statements. These statements may be found under “Management’s
      Discussion and Analysis or Plan of Operations” as well as in this Report
      generally. You should not place undue reliance on our forward-looking
      statements. Further, any forward-looking statement speaks only as of the date
      on
      which it is made and, except as otherwise required by law, we undertake no
      obligation to update any forward-looking statement to reflect events or
      circumstances after the date on which it is made or to reflect the occurrence
      of
      anticipated or unanticipated events or circumstances. New factors emerge from
      time to time that may cause our business not to develop as we expect, and it
      is
      not possible to predict all of them. Actual events or results may differ
      materially from those discussed in forward-looking statements as a result of
      various factors, including, without limitation, the risks outlined under
“Certain Business Risk Factors” and matters described in this Report generally.
      In light of these risks and uncertainties, there can be no assurance that the
      forward-looking statements contained in this Report will in fact occur as
      projected.*




**Overview**





ActiveCore
      Technologies, Inc. (“ActiveCore” or the “Company”) is a Nevada registered
      Company with its head office in Toronto, Canada, and operations in Canada and
      the United States. The Company operates within the enterprise software and
      services market in a sector which has been described by the Gartner Group as
      that group of vendors of software and services that sell and install “Smart
      Enterprise Suites” and related products. The Company has organized itself into
      two distinct divisions to deliver its products and services. The Systems
      Integration and Migration (SIM) division focuses on large projects in the
      financial services, insurance, healthcare, education and manufacturing
      industries. These projects are aimed at protecting the customer’s investment in,
      improving the functionality of, and extending the life span of their existing
      information technology systems. The acquisition of Cratos Technologies Solutions
      Inc. (“Cratos”) during the quarter ended June 30, 2005 was completed in an
      effort to give this division critical mass. The Corporate Disclosure and
      Messaging (CDM) division is focused on working with these same and additional
      customers to provide them with a range of communication and information
      distribution based products that allow them to leverage existing corporate
      information and share it with their customers, employees and other stakeholders
      and facilitates their move towards a Smart Enterprise.




The
      Company’s products encompass application integration, application modernization,
      application migration, content management, vertical application portals, a
      corporate disclosure portal and an outbound corporate messaging portal. This
      product set gives ActiveCore the capability to deliver effective, efficient
      and
      economical integration, modernization, migration and corporate messaging
      services or complete solutions to clients seeking to enable or extend their
      existing systems to stakeholders and customers without wholesale changes to
      their systems. ActiveCore’s products are designed to enable the Company’s
      clients to extend the functions of their current systems, often called “legacy
      systems”, by using the Company’s integration, modernization and migration
      product sets that are sold and delivered by the SIM division. For organizations
      wanting to take the next step in achieving what ActiveCore terms “A Smart
      Enterprise” the Company offers its disclosure and messaging products that are
      sold and delivered by the CDM division. By concentrating on the improvement
      of
      the customers existing systems and providing an additional
      communication/messaging product layer the Company is able to offer its customers
      a cost effective way to rapidly improve the overall capability and extend the
      life of their existing information technology assets.




22








The
      SIM
      division derives its revenue from the sale of value added labor and software
      licenses. This division has repeat customers and maintenance revenue but to
      grow
      it must find new customers on a regular basis to replace revenue from completed
      projects. Projects in this division usually range from one to two years in
      length and can exceed one million dollars in value. These projects tend to
      have
      long sell cycles and are predominantly with large customers. The gross profit
      percentage of this division varies based on the mix of sales as product revenue
      tends to yield a higher margin than services revenue. The Company considers
      this
      division to be a “solutions provider”, therefore, there will always be a mix of
      both product and service revenue but normally the mix will be weighted towards
      services. In this division the Company competes with a variety of System
      Integration “SI” vendors but has the advantage of having ownership of most of
      the products it uses to develop client specific and industry specific
      solutions.




The
      CDM
      division of the Company derives its revenue from the sale of product based
      services and usually delivers these services via an Application Service Provider
      (ASP) model. The size of the individual sales in this division are much smaller
      than in the SIM division but the revenue generated by this division is recurring
      in nature. Contracts in this division can vary from a one time job to three
      years and the length is determined by the target customer. Customers that
      purchase the DisclosurePlus product set usually sign three year contracts that
      consist of an initial setup fee and monthly payments and once the customer
      has
      committed to use this product set they become long term customers. Customers
      that purchase the Messaging product set tend to sign shorter contracts or choose
      to use the service as required. This division has shorter sell cycles and
      employs both telephone and direct sales representatives. The contribution margin
      from this division will vary based on the mix of Messaging sales versus
      DisclosurePlus sales. DisclosurePlus sales will yield a higher margin once
      the
      division has reached a critical mass of repeat customers.




The
      Company has set up a “service bureau” operation under the product identity
“ActiveCast” to implement the Messaging ASP service whereby it offers broadcast
      services to customers on an outsourced basis using its own internal installation
      of ActiveLINK and DynaPortal. The Company is actively increasing the scope
      and
      revenue earning capacity of this operation by investing in fixed assets and
      personnel to grow the revenue and client base.




**Recent
      Developments**




During
      the quarter ended June 30, 2006, the Company signed a letter of intent to
      acquire all of the issued and outstanding ordinary shares of Global Sterling
      Payments Systems Ltd. (“GSPS”), a private U.K. company and a related party, in
      exchange for 100,000,000 common shares of the Company. The Company already
      owns
      a small minority interest of GSPS. GSPS is the parent company of ePocket, a
      wholly owned subsidiary. This acquisition is expected to close during the
      Company’s quarter ending September 30, 2006.





ePocket
      has developed the technology which delivers true electronic cash to the world
      for the first time, making purchases over the Internet completely secure and
      anonomous. ePocket enables banks to provide their customers with the ability
      to
      withdraw electronic cash in any currency from their regular deposit accounts,
      and send this electronic cash to merchants or other consumers in order to make
      payments. Cash created electronically is just like cash, except there are no
      coins, bills, or plastic cards. Just like cash, electronic cash does not require
      the identification of a payer. This provides privacy for consumers, and
      eliminates fraud and identity theft, making ePocket the most cost-effective
      payment solution for Internet commerce. ePocket payments cost merchants less
      than any other payment technologies. Their extraordinary cost effectiveness
      enables merchants to profitably accept very small payments of just one or two
      dollars. In contrast to other payment schemes, consumers do not have to open
      additional accounts with a payment intermediary. Consumers do not have to give
      up any identity or credit information in order to accomplish a payment. This
      makes ePocket payments completely secure and provides complete privacy for
      consumers.




23







In
      anticipation of closing the GSPS acquisition, the Company made the determination
      that it would divest itself of its MDI business, which was no longer deemed
      to
      be strategic given the fact that the Company was in the process of rebranding
      itself as a pure-play payment organization. Consequently, the Company sold
      the
      business towards the end of the quarter ended June 30, 2006, for cash
      consideration of $388,700.





**Critical
      Accounting Policies**




*Significant
      Accounting Policies and Critical Accounting Estimates*




The
      Company’s Consolidated Financial Statements are prepared in accordance with U.S.
      GAAP. The preparation of the Consolidated Financial Statements in accordance
      with U.S. GAAP necessarily requires the Company to make estimates and judgments
      that affect the reported amounts of assets, liabilities, revenues and expenses,
      and related disclosure of contingent assets and liabilities. On an on-going
      basis, the Company evaluates its estimates, including those related to revenues,
      bad debts, investments, intangible assets, income taxes, contingencies and
      litigation. The Company bases its estimates on historical experience and on
      various other assumptions that are believed at the time to be reasonable under
      the circumstances. Under different assumptions or conditions, the actual results
      will differ, potentially materially, from those previously estimated. Many
      of
      the conditions impacting these assumptions and estimates are outside of the
      Company’s control.




The
      Company believes the following critical accounting policies affect its more
      significant judgments and estimates used in the preparation of its Consolidated
      Financial Statements.




*Revenue:* A
      significant portion of all of the Company's net sales are derived from
      commercial software development and sales activities, which are subject to
      increasing competition, rapid technological change and evolving customer
      preferences, often resulting in the frequent introduction of new products and
      short product lifecycles. Accordingly, the Company's profitability and growth
      prospects depend upon its ability to continually acquire, develop and market
      new, commercially successful software products and obtain adequate financing.
      If
      the Company is unable to continue to acquire, develop and market commercially
      successful software products, its operating results and financial condition
      could be materially adversely affected in the near future.





The
      Company recognizes revenue for software sales in accordance with Statement
      of
      Position ("SOP") 97-2 "Software Revenue Recognition", as amended by SOP 98-9
      "Modification of SOP 97-2 Software Revenue Recognition with respect to Certain
      Transactions." SOP 97-2 provides guidance on applying generally accepted
      accounting principles in recognizing revenue on software transactions. SOP
      98-9
      deals with the determination of vendor specific objective evidence ("VSOE")
      of
      fair value in multiple element arrangements, such as maintenance agreements
      sold
      in conjunction with software packages. For 2005 and 2004 the Company does not
      have any multi-element arrangements that would require it to establish VSOE
      for
      each element, nor does the Company have any sales activity that requires the
      contract method of accounting. The Company's software transactions generally
      include only one element, the software under license. The Company recognizes
      revenue when the price is fixed and determinable, there is persuasive evidence
      of an arrangement, the fulfillment of its obligations under any such
      arrangement, and determination that collection is probable. Accordingly, revenue
      is recognized when the license or title and all risks of loss are transferred
      to
      the customer, which is generally upon receipt by customer.




24







The
      Company's payment arrangements with its customers provide primarily multi month
      terms unless the purchase price is relatively low. As a result of the
      multi-month terms, an imputed interest cost accounting for the net present
      value
      of the terms was deducted in determining the amount of revenue and receivable
      recognized.





The
      Company recognizes revenue in the period in which the service is performed
      and
      collection is reasonably assured.




*Allowance
      for Doubtful Accounts.* The
      Company maintains allowances for doubtful accounts for estimated losses
      resulting from the inability of its customers to make required payments. The
      Company performs ongoing credit evaluations of its customer’s financial
      condition and if the financial condition of the Company’s customers were to
      deteriorate, resulting in an impairment of their ability to make payments,
      additional allowances would likely be required. Actual collections could differ
      materially from our estimates.




*Income
      Taxes.* The
      Company has currently recorded a full valuation allowance against all of its
      deferred income tax assets as management believes it is more likely than not
      that all of the deferred income tax assets will not be realized. In making
      this
      determination, management has considered factors such as the reversal of
      deferred income tax liabilities, projected taxable income, the character of
      the
      income tax asset and tax planning strategies. A change to these factors could
      impact the estimated valuation allowance and income tax expense.




*Litigation.* The
      Company is a party, from time to time, in legal proceedings. In these cases,
      management assesses the likelihood that a loss will result, as well as the
      amount of such loss and the financial statements provide for the Company’s best
      estimate of such losses. To the extent that any of these legal proceedings
      are
      resolved and result in the Company being required to pay an amount in excess
      of
      what has been provided for in the financial statements, the Company would be
      required to record, against earnings, the excess at that time. If the resolution
      resulted in a gain to the Company, or a loss less than that provided for, such
      gain is recognized when received or receivable.




*Valuation
      of Intangible Assets.* The
      Company has a history of acquiring other businesses, and expects that this
      trend
      will likely continue in the future. As part of the completion of any business
      combination, the Company is required to value any intangible assets acquired
      at
      the date of acquisition. This valuation is inherently subjective, and
      necessarily involves judgments and estimates regarding future cash flows and
      other operational variables of the entity acquired. However, there can be no
      assurance that the judgments and estimates made at the date of acquisition
      will
      reflect future performance of the acquired entity. If management makes judgments
      or estimates that differ from actual circumstances, the Company may be required
      to write-off certain of its intangible assets. Similarly, in accordance with
      SFAS No. 142 *Goodwill
      and Other Intangible Assets* , the
      Company is required to annually test the value of its goodwill as well as its
      acquired intangible assets. This testing requires management to make estimates
      of the market value of its various operating segments. Changes in estimates
      could result in different conclusions for the value of goodwill. The Company
      performs its annual impairment testing on its goodwill at December
      31 st of each
      year, provided that circumstances don’t arise during the year that would
      necessitate an earlier evaluation.





25








**Results
      of Operations**




***Results
      of Operations for the Three and Six Month Periods Ended June 30, 2006 Compared
      to the Same Periods Ended June 30, 2005***




**Overview**




During
      the quarter ended June 30, 2006, the Company recorded revenues of $1.6 million,
      and a loss from continuing operations of $1.5 million. These amounts compare
      to
      revenue of $1.5 million during the quarter ended June 30, 2005, when a loss
      from
      continuing operations of $1.1 million was incurred. During the six month period
      ended June 30, 2006, the Company recorded revenues of $3.0 million, and a loss
      from continuing operations of $2.6 million. These amounts compare to revenue
      of
      $1.6 million during the six month period ended June 30, 2005, when a loss from
      continuing operations of $1.9 million was incurred. The most significant change
      from 2005 to 2006 from a revenue perspective was the fact that the Company
      closed its acquisition of Cratos during the quarter ended June 30, 2005. During
      this quarter, the Company began consolidating the results of Cratos effective
      May 1, 2005. As a result, there were two months in 2006 when the Company was
      recognizing revenue with respect to Cratos where there was no comparative
      balances during 2005.




**Revenues**




**Three
                months ended June 30**
            **Six
                months ended June 30****2006**
            **2005**
            **%
                Change**
            **2006**
            **2005**
            **%
                Change****1,582,317**
            **1,409,104**
            **12%**
            **3,037,441**
            **1,553,777**
            **95%**




During
      the three months ended June 30, 2006 the Company generated $1.6 million in
      revenue from the sale of products and services versus $1.4 million in revenue
      in
      the same three month period ended June 30, 2005. The increase in revenue during
      2006 was primarily a result of increased revenue from the Company’s ActiveCast
      division during 2006 as compared to 2005. During 2005 this division was still
      in
      its early stages and had fewer revenue producing employees than it did during
      2006. For the six month period ended June 30, 2006, total revenue was $3.0
      million, which represented a 100% increase from the $1.6 million recorded during
      the six month period ended June 30, 2005. From a revenue source perspective,
      the
      vast majority of the revenue recorded in both 2006 and 2005 was service related,
      while product related revenue represented only a small percentage of the total.
      The increase in the six month revenue in 2006 as compared to 2005 was a result
      of the fact that 2006 had 6 months of Cratos revenue, whereas in 2005 there
      were
      only 2 months given that the Cratos acquisition was completed May 1,
      2005.




26






**Cost
      of Sales**




**Three
                months ended June 30**
            **Six
                months ended June 30****2006**
            **2005**
            **%
                Change**
            **2006**
            **2005**
            **%
                Change****1,514,097**
            **1,068,985**
            **42%**
            **2,846,082**
            **1,169,114**
            **143%**




Cost
      of
      sales for the three month period ended June 30, 2006 were $1.5 million, which
      consisted primarily of direct wages paid to consulting services staff of $1.4
      million, and amortization of software licensing agreements of $0.1 million.
      These amounts are significantly higher than fiscal 2005 when the Company’s cost
      of sales totaled $1.1 million which was also principally comprised of direct
      wages for consulting staff. The increase in cost of sales for the three month
      period relates to the fact that most of the Company’s cost of sales during both
      periods relates to the Cratos consulting staff, and during 2005 this operation
      was consolidated for two month whereas in 2006 it was in the Company’s results
      of operations for three months. For the six month period ended June 30, 2006,
      cost of sales totaled $2.8 million, which represented an increase of 143% from
      the six month period ended June 30, 2005. The vast majority of the increase
      in
      cost of sales in 2006 as compared to 2005 relates the recent addition of Cratos,
      whose consulting staff’s costs are in the 2005 results for only 2 months whereas
      they are in the full six months ended June 30, 2006. Cratos is largely a
      services organization whose primary costs are its costs to deliver its revenue.
      The Company’s gross margin decreased from 24% to 8% from the three month period
      ended June 30, 2005 to the three month period ended June 30, 2006. This decrease
      was a result of the fact that during 2005 the Company’s Cratos division was
      working on larger projects than they have been during 2006, and those larger
      projects afforded the Company higher gross margins.




**Operating
      Expenses**




Total
      operating expenses for the three months ended June 30, 2006 were $1.5 million
      as
      compared to $1.4 million during the three months ended June 30, 2005. Operating
      expenses increased for the six month periods from $2.3 million in 2005 to $2.8
      million in 2006. After these expenses, the Company recognized a loss from
      operations of $1.4 million in the three months ended June 30, 2006 versus a
      loss
      from operations of $1.1 million in the same quarter ended June 30, 2005. For
      the
      six month period ended June 30, 2006, the Company incurred a loss from
      operations of $2.6 million as compared with a loss of $1.9 million in fiscal
      2005.




27







**Salaries
      and Wages**




**Three
                months ended June 30**
            **Six
                months ended June 30****2006**
            **2005**
            **%
                Change**
            **2006**
            **2005**
            **%
                Change****546,786**
            **432,657**
            **26%**
            **1,066,330**
            **683,743**
            **56%**




Salaries
      and wages in 2006 represent the cost of administration and sales and marketing
      staff except for certain contractors who are shown as consulting costs. For
      the
      three month period ended June 30, 2006, salaries and wages were $0.5 million
      as
      compared with $0.4 million during the three month period ended June 30, 2005.
      For the six month period ended June 30, 2006, the increase in salaries and
      wages
      was 56%. The increase in the three month period is primarily a result of the
      fact that the throughout 2005 the Company made significant headcount additions
      to its ActiveCast business. As a result, the 2006 Activecast salaries and wages
      were higher than those incurred during 2005. The increase in the six month
      period is a result of both the increased expenditures in the Activecast business
      as well as the fact that stock compensation expense in 2006 was considerably
      higher than in 2005 as a result of stock compensation provided to both executive
      management and staff which was not provided in 2005.




**Consulting
      fees**




**Three
                months ended June 30**
            **Six
                months ended June 30****2006**
            **2005**
            **%
                Change**
            **2006**
            **2005**
            **%
                Change****156,754**
            **221,081**
            **(29%)**
            **301,457**
            **380,030**
            **(21%)**




For
      the
      three month period ended June 30, 2006, consulting fees decreased 29% to $0.2
      million from $0.2 million as compared to the three month period ended June
      30,
      2005. For the six month period ended June 30, 2006, this decrease was 21% given
      that consulting fees for the six month period ended June 30, 2006 were $0.3
      million as compared to $0.4 million during the six months ended June 30, 2005.
      Consulting expenses incurred during the three month period ended June 30, 2005
      included approximately $100,000 in one-time termination costs incurred to exit
      a
      consulting contract which the Company determined was no longer producing
      acceptable returns to the organization. Additionally, during the six month
      period ended June 30, 2005, approximately $50,000 of consulting expense relates
      to the amortization of deferred consulting costs which relate to assistance
      in
      securing certain financing transactions. The amortization of these costs expired
      later in 2005 and as a result have no comparable balance in consulting expense
      in 2006.




28







**Legal
      and Accounting**




**Three
                months ended June 30**
            **Six
                months ended June 30****2006**
            **2005**
            **%
                Change**
            **2006**
            **2005**
            **%
                Change****185,531**
            **246,841**
            **(25%)**
            **370,712**
            **320,133**
            **16%**




For
      the
      three month period ended June 30, 2006, legal and accounting expenses decreased
      25% to $185,531 from $246,841 during the three month period ended June 30,
      2005.
      For the six month period ended June 30, 2006, legal and accounting expenses
      increased slightly by 16% given that legal and accounting expenses for the
      six
      month period ended June 30, 2006 were $0.4 million as compared to $0.3 million
      during the six months ended June 30, 2005. Legal and accounting expenses
      included legal costs associated with using third party lawyers to act on behalf
      of the Company in current legal matters. Additionally, the Company has incurred
      significant legal costs over the past year in an attempt to gain control over
      Infolink. Accounting costs include audit fees and related costs as well as
      costs
      incurred to complete periodic regulatory filings. The Company experienced a
      decrease in its annual audit fees from 2005 to 2006 and this accounts for the
      decrease in legal and accounting costs during the three month period ended
      June
      30, 2006 as compared to the same period in 2005.




**General
      and Administrative**




**Three
                months ended June 30**
            **Six
                months ended June 30****2006**
            **2005**
            **%
                Change**
            **2006**
            **2005**
            **%
                Change****356,345**
            **328,882**
            **8%**
            **606,186**
            **617,640**
            **(2%)**




For
      the
      three month period ended June 30, 2006, general and administrative expenses
      increased 8% to $0.4 million from $0.3 million during the three month period
      ended June 30, 2005. For the six month period ended June 30, 2006, general
      and
      administrative expenses decreased 2%. General and administrative expenses
      include amounts spent to operate the Company’s various facilities, including
      rent, office expenses, insurance, and communications, as well as travel
      expenses. During both the three and six month periods ended June 30, 2006
      general and administrative expenses include a $150,000 write-off related to
      a
      long-term receivable which the Company determined to be
      uncollectible.




29








**Other
      Income/Expenses**




**Three
                months ended June 30**
            **Six
                months ended June 30****2006**
            **2005**
            **%
                Change**
            **2006**
            **2005**
            **%
                Change****Loss
                on settlement of debt**
            **(110,463)**
            **--**
            **100%**
            **(110,463)**
            **--**
            **100%****Interest
                Expense**
            **(229,300)**
            **(38,420)**
            **497%**
            **(377,903)**
            **(116,119)**
            **225%****Foreign
                Exchange Loss**
            **(32,780)**
            **(3,555)**
            **822%**
            **(67,426)**
            **(37,295)**
            **81%**







During
      the quarter ended June 30, 2006, the Company reached a settlement of its debt
      to
      Orchestral Corporation which involved discharging the majority of this liability
      through common stock of the Company. This transaction was completed using a
      value of the Company’s common shares which was discounted relative to its then
      current market price, and this discount resulted in the Company incurring a
      loss
      on settlement of debt. Also during the quarter ended June 30, 2006, the Company
      expended $229,300 in financial interest which was significantly higher than
      the
      $38,420 expensed in the quarter ended June 30, 2005. Interest expense for the
      six month period ended June 30, 2006 totaled $377,903 as compared with $116,119
      for the six month period ended June 30, 2005. The increase in interest expense
      in 2006 as compared with 2005 is a result of new interest bearing facilities
      which the Company put into place including a loan with a Canadian chartered
      bank, a term loan with a private institution, as well as interest incurred
      in
      relation to certain short-term loans the Company entered into towards the end
      of
      2005 and into 2006. In addition, the Company settled its litigation with
      Orchestral during the quarter ended June 2006 and agreed to pay interest costs
      on its outstanding liability and this resulted in a large charge in the three
      month period ended June 30, 2006.




Foreign
      exchange losses were $32,780 and $67,426 for the three and six month periods
      ended June 30, 2006 respectively as compared with $3,555 and $37,295 for the
      three and six month periods ended June 30, 2005 respectively. These losses
      are a
      result of the fluctuation of the U.S. dollar relative to the Canadian
      dollar.




**Discontinued
      Operations**




In
      the
      quarter ended June 30, 2006, the Company recorded discontinued operations with
      respect to its MDI business. The Company recorded a gain on the disposition
      of
      this business of $263,541. This gain was a result of the fact that the business
      was disposed of for cash and note receivable consideration totaling $388,700,
      and that these businesses had a net book value of $125,159 as of the date of
      disposition. During the quarter ended June 30, 2006, MDI recorded a loss from
      operations of $71,574. This compares to a profit of $21,974 during the quarter
      ended June 30, 2005. For the six month period ended June 30, 2006, the MDI
      business recorded a net loss of $53,567, compared to a loss of $28,461 for
      the
      same period in 2005.




The
      Company also had discontinued operations with respect to Twincentric for the
      2005 periods only. Twincentric was disposed of during the Company’s third
      quarter of 2005. For the three month period ended June 30, 2005, Twincentric
      recorded a loss from operation of $209,831, and for the six month period ended
      June 30, 2005 recorded a loss of $160,525.




30




**Liquidity
      and Capital Resources**




The
        accompanying consolidated financial statements have been prepared assuming
        that
        the Company will continue as a going concern. The company had a net loss
        of
        $2,936,234 and incurred negative cash flows from operations of $1,131,040
        for
        the six months ended June 30, 2006 and has a working capital deficiency of
        $2,956,624 and an accumulated deficit of $43,672,339 at June 30, 2006. These
        matters raise substantial doubt about its ability to continue as a going
        concern. The condensed consolidated financial statements do not include any
        adjustments that might result from the outcome of this uncertainty. The
        Company’s ability to continue as a going concern is dependent on its ability to
        raise additional debt and equity financing and to implement its business
        plan to
        market and sell its various enterprise software and services. At the current
        time management anticipates that it will be able to address its need for
        financing through the execution of private placements of the Company’s shares to
        both related and unrelated parties.




At
      June
      30, 2006, the Company’s need for cash included satisfying $6,627,042 of current
      liabilities. The Company’s ability to continue as a going concern is dependent
      on its ability to raise additional funding through expansion of its current
      bank
      facility, an equity injection, a convertible loan and increased sales revenue.
      Additional equity financing in particular is very important to the organization
      particularly if the Company is successful in acquiring GSPS, given that the
      Company expects that the investment required to bring the ePocket product into
      the marketplace will be significant. At June 30, 2006, the Company had $89,999
      of cash on hand. In addition, certain shareholders have also supported the
      Company by deferring the timing of certain payments from time-to-time or
      converting shareholders loans into equity. While there is no legal commitment
      for them to do so, the Company believes that certain shareholders will continue
      to support the Company in a similar manner.




As
      the
      Company is currently in the process of acquiring GSPS, its cash needs in the
      future will involve raising funds to complete this transaction, as well as
      raising funds to bring the ePocket product into the marketplace. The Company
      is
      currently in the process of raising additional financing, which it expects
      will
      be in the form of either common stock or a convertible debenture.




The
      failure of the Company to obtain additional debt and equity funding will have
      a
      material adverse effect on the Company’s business and may force the Company to
      reorganize, reduce its investment in, or otherwise divest of one or more of
      the
      Company’s operations, or to reduce the cost of all operations to a lower level
      of expenditure thereby reducing the Company’s expected revenues and net income
      in 2006 and beyond.




**Consolidated
      Statement of Cash Flows**




Cash
      on
      the consolidated balance sheet decreased from $109,789 at December 31, 2005
      to
      $89,999 at June 30, 2006.




**Net
      Cash Used in Operating Activities**




For
      the
      six months ended June 30, 2006, the net cash used in operating activities was
      $1,131,040 versus $1,367,870 in the six month period ended June 30, 2005. In
      the
      six months ended June 30, 2006, net cash used in operations was less than the
      Company’s net loss for the respective period, largely as a result of cash
      generated from accounts receivable of $551,881 and from accounts payable of
      $500,682 respectively as well ass $860,967 of non-cash items. During the six
      month period ended June 30, 2005, most of the difference between the Company’s
      net loss for the period and its use of cash flows from operations was a result
      of $860,967 generated from accounts receivable.




**Net
      Cash Provided by Investing Activities**




Net
      cash
      provided by investing activities was $163,674 for the six month period ended
      June 30, 2006. This period’s use of cash is a result of capital asset purchases
      which were more than offset by the proceeds received from the Sale of the
      Company's MDI business. For the six months ended June 30, 2005, the Company
      used
      $239,695 from investing activities, which was primarily a result of cash used
      to
      complete the acquisitions of both DisclosurePlus and Cratos.




**Net
      Cash Provided by Financing Activities**




Net
      cash
      provided by financing activities was $943,944 in the six months ended June
      30,
      2006. The source of funds was primarily a result of the Company receiving
      proceeds from a term loan of $385,528 and from the issuance of shares of
      $401,300 respectively. Which
      were more than offset by the proceeds received from the Sale of the Company’s
      MDI business. In the six month period ended June 30, 2005, the Company
      generated cash flows from financing activities of $1,585,051 which was primarily
      a result of the Company instituting a line of credit with a Canadian chartered
      bank which provided proceeds of $1,483,698.




31




**Certain
        Business Risk Factors**




A
      significant portion of the Company’s net sales are derived from data integration
      services and from the sale of enterprise software, which are subject to
      increasing competition, rapid technological change and evolving customer
      preferences, often resulting in the frequent introduction of new products and
      short product lifecycles. Accordingly, the Company’s profitability and growth
      prospects depend upon its ability to continually acquire, develop and market
      new, commercially successful software products and obtain adequate financing.
      If
      the Company is unable to continue to acquire, develop and market commercially
      successful software products, its operating results and financial condition
      could be materially adversely affected in the near future.




The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities and disclosure of
      contingent assets and liabilities at the dates of the financial statements
      and
      the reported amounts of revenues and expenses during the reported periods.
      The
      most significant estimates and assumptions relate to the recoverability of
      capitalized software development costs and other intangibles, realization of
      deferred income taxes, and doubtful accounts. Actual amounts could differ
      significantly from these estimates.




**Item
      3. Controls and Procedures** ****




**(A)
      Evaluation of Disclosure Controls and Procedures**




As
      of the
      end of the period covered by this Quarterly Report on Form 10-QSB, the Company
      carried out an evaluation, under the supervision and with the participation
      of
      the Company’s Chief Executive Officer and Chief Financial Officer, of the
      effectiveness of the design and operation of the Company’s disclosure controls
      and procedures (as defined in Rules 13a - 15(e) promulgated under the Securities
      Exchange Act of 1934, as amended. The Company’s disclosure controls and
      procedures are designed to provide a reasonable level of assurance of achieving
      the Company’s disclosure control objectives.




**Limitations
      on the Effectiveness of Controls:**  The
      Company’s management,
      including the Company’s Chief
      Executive Officer and Chief
      Financial Officer ,
      does
      not expect that its disclosure controls or its internal controls over financial
      reporting will prevent all error and all fraud. Any Control system, no matter
      how well conceived and managed, can provide only reasonable assurance that
      the
      objectives of the control system are met. The design of a control system must
      reflect the fact that there are resource constraints, and the benefits of
      controls must be considered relative to their costs. Due to the inherent
      limitations in all control systems, no evaluation of controls can provide
      absolute assurance that all control issues and instances for fraud, if any,
      within the Company have been detected. These inherent limitations include the
      realities that judgments in decision-making can be faulty, and that breakdown
      can occur because of simple error or mistake. Additionally, controls can be
      circumvented by the individual acts of some persons, by collusion of two or
      more
      people, or by management override of the control. The design of any system
      of
      controls also is based in part upon certain assumptions about the likelihood
      of
      future events, and there can be no assurance that any design will succeed in
      achieving its stated goals under all potential future conditions; over time,
      control may become inadequate because of changes in conditions, or the degree
      of
      compliance with the policies or procedures may deteriorate. Because of the
      inherent limitations in a cost-effective control system, misstatements due
      to
      error or fraud may occur and not be detected.




**Conclusions:** The
      Company’s Chief Executive Officer has
      concluded that ,
      subject
      to the limitations noted above, the
      Company’s disclosure controls and procedures are effective at this reasonable
      assurance level as of the end of the period covered to
      timely alert management to material information relating to the
      Company .




32




**(B)
      Changes in Internal Controls Over Financial Reporting**




In
      connection with the evaluation of the Company’s internal controls during the
      Company’s quarter ended June 30, 2006, the Company’s Chief Executive Officer and
      Chief Financial Officer have determined that there are no changes to the
      Company’s internal controls over financial reporting that has materially
      affected, or is reasonably likely to materially effect, the Company’s internal
      controls over financial reporting.




33









**PART
      II**




**OTHER
      INFORMATION**




**Item
      1. Legal Proceedings** ****




**James
      Cassidy and TPG Corporation**




In
      March
      of 2000, the Company entered into an agreement (the “TPG Agreement”) with TPG
      Capital Corporation (“TPG”). Under the TPG Agreement, TPG provided advice and
      other services to ActiveCore with respect to the acquisition of Erebus
      Corporation (the “Erebus Acquisition”). The Company pursued the Erebus
      Acquisition to, among other things, maintain its listing eligibility on the
      Over
      the Counter Bulletin Board (“OTCBB”). TPG was the sole stockholder of Erebus
      Corporation and the Company believes that James Cassidy was a controlling
      stockholder of TPG.




Under
      the
      Erebus Acquisition, the Company purchased Erebus, a non-active entity with
      securities registered under the Securities Exchange Act of 1934, as amended,
      to,
      among other things, retain its listing status on the OTCBB.  At that time,
      the Company was at risk of losing its listing eligibility under a new national
      Association of Securities Dealers (“NASD”) listing requirement. Loss of listing
      eligibility would have resulted in the Company trading in the Pink Sheets. 
Management and the board of directors at that time determined that such a
      development would be detrimental to its stockholders and other investors. The
      Company consummated the Erebus Acquisition in March of 2000.




Under
      the
      TPG Agreement, the Company paid to TPG 200,000 shares of the Company’s common
      stock, then worth $500,000, and $200,000 in cash. In addition, the TPG Agreement
      contains a reset provision which obligates the Company to issue additional
      shares of its common stock so that the total number of shares issued to TPG
      under the TPG Agreement had a value of $500,000 as of the first anniversary
      of
      the effective date of the TPG Agreement. Based on the relative share prices
      of
      the Company’s common stock as of March of 2000 and March of 2001, if the Company
      was required to satisfy the reset provision, the Company would be required
      to
      issue to TPG an additional 3,028,378  shares
      of
      its common stock (“Reset Shares”).




The
      Company does not believe that TPG is entitled to the Reset Shares. Based on
      public records, in June of 2001, TPG and Mr. Cassidy reached a settlement
      agreement with the SEC with respect to securities fraud and disclosure
      violations alleged by the SEC in connection with transactions substantially
      similar to the Erebus Acquisition. Neither Mr. Cassidy nor TPG admitted or
      denied the allegations. A description of the settlement is contained in SEC
      Litigation Release No. 17023, dated June 4, 2001. Although the Company has
      maintained its listing status on the OTCBB, the Company has experienced
      significant regulatory problems in connection with the Erebus Acquisition that
      are related to the allegations underlying the settlement between TPG and Mr.
      Cassidy and the Securities and Exchange Commission. These problems have resulted
      in significant delays and expense to the Company.




In
      March
      of 2005, Mr. Cassidy, as assignee of TPG’s rights under the TPG Agreement, filed
      a claim in the Superior Court of the District of Columbia against the Company
      seeking, among other things, the Reset Shares. The Company has engaged a law
      firm to vigorously defend it against the claim. During the quarter ended June
      30, 2006 the action was withdrawn and the Company and Mr. Cassidy agreed to
      enter into arbitration on the matter and this is now in process with the
      arbitration board currently being established. No contingent liability has
      been
      allocated for any eventual loss on the action.




34







Pursuant
      to Rule 405 promulgated under the Securities Act of 1933, as amended, the
      Company believes that Mr. Cassidy may be deemed to be a “promoter” of the
      Company. The Company has no ongoing business relationship with Mr. Cassidy
      and
      he is not employed by the Company in any manner.




This
      case
      is proceeding to arbitration on August 26, 2006 which will take place in
      Washington, D.C.




**Orchestral
      Corporation**




Orchestral
      Corporation commenced a proceeding in Ontario court in January of 2003, which
      was subsequently placed into abeyance, then revived in August of 2003, against
      the Company and its Canadian subsidiary, ActiveCore Limited (formerly
      Springboard Technologies Inc.) to the effect that they had infringed upon the
      copyright that Orchestral maintained in PowerAudit and further that the Company
      had breached the distribution contract between Orchestral and the Company with
      respect to termination and non-payment of support costs with regard to the
      distribution of Power Audit. Orchestral has claimed punitive and exemplary
      damages of Canadian $4,000,000 and Canadian $1,000,000, respectively. The
      Company has retained counsel and is defending the action on the basis that
      the
      Company believes that there is no merit to the case and in the event that there
      was merit, the time frame in which to bring an action in the contract has
      expired.




Orchestral
      commenced an Application before the Ontario courts to enforce a settlement
      which
      it alleged was reached with the Company during the negotiations between its
      first and second lawsuits. The court ordered that a settlement was enforceable
      and that $226,824 was owed by the Company to the licensor. The Company appealed
      this decision and in January 2006 the initial judgment was upheld.





During
      the six month period ended June 30, 2006, the Company reached a settlement
      with
      Orchestral in which it agreed to pay Orchestral the $226,824 which the court
      had
      previously ordered payable, along with interest from the date of that judgment
      totaling $57,224. The interest was recorded in the Company’s consolidated
      statement of operations for the six month period ended June 30, 2006.
      Additionally, Orchestral agreed to accept the Company’s common stock in
      consideration for settlement of this debt. The conversion price for the common
      stock was a 20% discount to price of the Company’s common stock for the trailing
      20 trading day prior to settlement. This settlement resulted in a loss of
      $110,463, which has been recorded in the Company’s consolidated statement of
      operations for the six month period ended June 30, 2006. The common stock to
      be
      issued by the Company pursuant to this settlement agreement has been recorded
      in
      common stock to be issued in the Company’s consolidated balance sheet at June
      30, 2006.




**Cesar
      Correia and InfoLink Technologies Ltd.**




From
      December 2003 to April 2005, the Company was engaged in discussions with certain
      major shareholders of Infolink Technologies Limited with regard to the potential
      acquisition of Infolink Technologies Ltd., a public company listed on the TSX
      Venture Exchange under the symbol “IFL”. During the course of discussions, an
      offer to purchase was rebuffed by Cesar Correia, the former Chairman of the
      Board, President and CEO and 34% shareholder of Infolink. At the time, Mr.
      Correia was told that the Company would purchase another competitor to Infolink,
      C Comm Network Corporation. In May 2005, the Company purchased C Comm. In July
      2005, an unrelated minority shareholder of Infolink commenced an action in
      Ontario alleging that Mr. Correia has mismanaged Infolink and amongst other
      things that he had inappropriately obtained funds from the company and converted
      them to his own purposes. The day prior to the court hearing with regard to
      the
      minority shareholder action, Mr. Correia together with Infolink Technology
      commenced a proceeding in the same Ontario court alleging unfair competition
      as
      a result of an alleged improper acquisition of confidential information from
      Infolink and numerous other causes of action. Meanwhile, the court appointed
      a
      monitor and investigator to look into the allegations against Mr. Correia.
      The
      court appointed monitor and investigator issued an interim report in October
      2005 which found that several of the allegations against Mr. Correia were
      substantiated. Mr. Correia was removed from the position of Chairman, President
      and CEO of Infolink and is now an employee of Infolink with a reduced salary.
      The Company believes that Infolink as a corporate entity will not proceed with
      any action against the Company as the Company believes that the action was
      commenced as a defensive move by Mr. Correia and now that he has been removed
      from management of Infolink there is little basis for the action to continue.




35








**Part
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds**




On
      February 9, 2006, the board of directors authorized the issuance of 40,000
      restricted common shares of stock from treasury to unrelated parties (Shai
      Stern) and an additional 40,000 restricted common shares of stock from treasury
      to (Seth Farbman) of Vintage Filings, LLC in order to receive long term
      discounted pricing for issuance of ActiveCore press releases.




On
      February 9, 2006, the board of directors authorized the issuance 400,000
      restricted common shares of stock from treasury as board compensation to two
      independent members of the board. Stephen Lewis received 200,000 common shares
      and Steven Smith received 200,000 common shares.




Effective
      March 1, 2006, the Company completed a reverse split of the common shares on
      a 1
      for 10 ratio and this resulted in the issuance from treasury of the following
      share amounts in respect of “round-up” for beneficial owners of the common
      shares: (i) to Cede & Co of 49,995 common shares; (ii) to ADP Clearing of 9
      common shares; and (iii) to RBC Dominion Securities of 6 common
      shares.




**Item
      3. Defaults Upon Senior Securities**




None.




**Item
      4. Submission of Matters to a Vote of Security Holders**




None.




**Item
      5. Other Information**




None.




36








**Item
      6. Exhibits** **** **AND
      REPORT FOR FORM 8-K**




**(a)
      Exhibits:**




**Exhibit
                No.**
            
            
            **Description**
            
            
            **Location**31.1
            
            
            Certification
                by Chief Executive Officer pursuant to 15 U.S.C. Section 7241, as
                adopted
                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
            
            
            Provided
                herewith31.2
            
            
            Certification
                by Chief Financial Officer pursuant to 15 U.S.C. Section 7241, as
                adopted
                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
            
            
            Provided
                herewith32.1
            
            
            Certification
                by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
            
            
            Provided
                herewith32.2
            
            
            Certification
                by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
            
            
            Provided
                herewith





37





**SIGNATURES**




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






**ACTIVECORE
                TECHNOLOGIES, INC.**August
                14, 2006
            By: **
            */s/**Peter
              J. Hamilton*President
                and Chief Executive Officer




38