UNITED
        STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON,
        D.C. 20549
  Form
        10-QSB
 
 (Mark
        One)
 
 x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
 THE
        SECURITIES EXCHANGE ACT OF 1934
 For
        the period ended June 30, 2005
 
 o TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
 SECURITIES
        EXCHANGE ACT OF 1934
 For
        the transition period from _______ to _______.
 
 Commission
        File Number 0-09358
 
 LIMELIGHT
        MEDIA GROUP, INC.
 (Exact
        name of small business issuer as specified in its charter)
 
 Nevada
              
              88-0441338(State
                  or other jurisdiction
              
              (I.R.S.
                  Employerof
                  (incorporation or organization)
              
              Identification
                  No.)
 
 1300
        North Northlake Way
 Seattle,
        WA 98103
 
 
 (206)
        633-1852
 
 
 8000
        Centerview Parkway, Suite 115
 Memphis,
        TN 38018
 
 
  Check
        whether the issuer (1) filed all reports required to be filed by Section
        13 or
        15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
        (or
        for such shorter period that the registrant was required to file such reports),
        and (2) has been subject to such filing requirements for the past 90 days.
        Yes x No o
 
 As
        of August 30, 2005, 246,628,494  shares
        of the issuer's common stock, $.001 par value per share, were
        outstanding.
 
 Transitional
        Small Business Disclosure Format (check one): Yes o No x
  
  
  When
        used in this Report, the words "believes",
        "anticipates", "expects" and similar expressions are intended to identify
        forward-looking statements. Such statements are subject to certain risks
        and
        uncertainties that could cause actual results to differ materially from those
        projected.
  *Our
        business and results of operations are affected by a wide variety of factors
        that could materially and adversely affect our company and our actual results,
        including, but not limited to: (1) the availability of additional funds to
        enable us to successfully pursue our business plan; (2) the uncertainties
        related to the effectiveness of our technologies and the development of our
        products and services; (3) our ability to maintain, attract and integrate
        management personnel; (4) our ability to complete the development of our
        proposed services in a timely manner; (5) our ability to effectively market
        and
        sell our services to current and new customers; (6) our ability to negotiate
        and
        maintain suitable strategic licenses and corporate relationships; (7) the
        intensity of competition; and (8) general economic conditions. As a result
        of
        these and other factors, we may experience material fluctuations in future
        operating results on a quarterly or annual basis, which could materially
        and
        adversely affect our business, financial condition, operating results and
        stock
        price.*
 
 *These
        forward-looking statements speak only as of the date hereof. We undertake
        no
        obligation to publicly release the results of any revisions to these
        forward-looking statements that may be made to reflect events or circumstances
        after the date hereof or to reflect the occurrence of unanticipated
        events.*
  
  PART
        I. FINANCIAL INFORMATION
 
 ITEM
        1.
        FINANCIAL STATEMENTS.
 LIMELIGHT
                    MEDIA GROUP, INC.BALANCE
                    SHEETJUNE
                    30, 2005(UNAUDITED)ASSETSCurrent
                    assetsCash
                
                $
                --Accounts
                    receivable, net
                
                
                546,031Inventory
                
                
                526,228Prepaid
                    expenses and other current assets
                
                
                10,302Total
                    current assets
                
                
                1,082,561Fixed
                    assets, net
                
                
                2,336,708Other
                    assets
                
                
                18,433Total
                    assets
                
                $
                3,437,702LIABILITIES
                    AND STOCKHOLDERS' DEFICITCurrent
                    liabilitiesBank
                    overdrafts
                
                $
                95,531Accounts
                    payable
                
                
                772,231Accrued
                    liabilities
                
                
                13,914Customer
                    deposits
                
                
                247,460Due
                    to related parties
                
                
                464,705Lines
                    of credit
                
                
                137,211Convertible
                    loan payable
                
                
                10,000Notes
                    payable - current portion
                
                
                375,327Notes
                    payable - related parties
                
                
                1,063,965Other
                    liabilities
                
                
                30,699Total
                    current liabilities
                
                
                3,211,043Note
                    payable - long-term portion
                
                
                493,204Total
                    liabilities
                
                
                3,704,247Commitments
                    and contingencies
                
                
                --Stockholders'
                    deficitCommon
                    stock - $.001 par value, 250,000,000 shares authorized, 246,628,494
                    shares
                    issued and outstanding
                
                
                246,628Additional
                    paid-in capital
                
                
                202,452Cash
                    equivalent credit paid in common stock
                
                
                (125,000
                )Accumulated
                    deficit
                
                
                (590,625
                )Total
                    stockholders' deficit
                
                
                (266,545
                )Total
                    liabilities and stockholders' deficit
                
                $
                3,437,702
  See
        Accompanying Notes to Financial Statements
  1
 LIMELIGHT
                    MEDIA GROUP, INC.STATEMENTS
                    OF OPERATIONS(UNAUDITED)For
                    the Three Months Ended June 30, 2005
                
                For
                    the Three Months Ended June 30, 2004
                
                For
                    the Six Months Ended June 30, 2005
                
                For
                    the Six Months Ended June 30, 2004RevenuesEquipment
                    Sales
                
                $
                850,251
                
                $
                681,699
                
                $
                1,734,037
                
                $
                1,549,495Consulting
                    And Design Services
                
                
                166,715
                
                
                5,052
                
                
                173,291
                
                
                13,774Total
                    Revenues
                
                
                1,016,966
                
                
                686,751
                
                
                1,907,328
                
                
                1,563,269Cost
                    of revenues
                
                
                613,125
                
                
                528,295
                
                
                1,311,573
                
                
                1,201,536Gross
                    profit
                
                
                403,841
                
                
                158,456
                
                
                595,755
                
                
                361,733General
                    and administrative expensesProfessional
                    and consulting
                
                
                27,341
                
                
                22,850
                
                
                59,257
                
                
                53,617Selling
                    and marketing
                
                
                31,213
                
                
                51,317
                
                
                69,632
                
                
                76,420Depreciation
                
                
                7,389
                
                
                2,964
                
                
                13,013
                
                
                5,928Wages
                    and salaries
                
                
                229,225
                
                
                171,091
                
                
                434,506
                
                
                356,944Rent
                    expense
                
                
                53,652
                
                
                55,014
                
                
                107,213
                
                
                107,738Other
                    general and administrative expenses
                
                
                32,560
                
                
                32,459
                
                
                75,584
                
                
                66,641Total
                    general and administrative expenses
                
                
                381,380
                
                
                335,695
                
                
                759,205
                
                
                667,288Income
                    (loss) from operations
                
                
                22,461
                
                
                (177,239
                )
                
                (163,450
                )
                
                (305,555
                )Other
                    income (expense)Other
                    income
                
                
                10,176
                
                
                15,293
                
                
                23,866
                
                
                29,822Interest
                    expense
                
                
                (5,845
                )
                
                (13,747
                )
                
                (21,208
                )
                
                (23,455
                )Income
                    (loss) before provision for income taxes
                
                
                26,792
                
                
                (175,693
                )
                
                (160,792
                )
                
                (299,188
                )Income
                    tax provisions
                
                
                --
                
                
                --
                
                
                --
                
                
                --Net
                    income (loss)
                
                $
                26,792
                
                $
                (175,693
                )
                $
                (160,792
                )
                $
                (299,188
                )Basic
                    earnings (loss) per common share
                
                $
                0.00
                
                $
                (0.00
                )
                $
                (0.00
                )
                $
                (0.00
                )Diluted
                    earnings (loss) per common share
                
                $
                0.00
                
                $
                (0.00
                )
                $
                (0.00
                )
                $
                (0.00
                )Basic
                    weighted average common shares outstanding
                
                
                100,565,233
                
                
                98,942,308
                
                
                99,758,254
                
                
                98,942,308Diluted
                    weighted average common shares outstanding
                
                
                100,598,200
                
                
                98,942,308
                
                
                99,758,254
                
                
                98,942,308
 
 See
          Accompanying Notes to Financial Statements
  2
 LIMELIGHT
                      MEDIA GROUP, INC.STATEMENT
                      OF STOCKHOLDERS' DEFICIT(UNAUDITED)Common
                      stockNumber
                      of Shares
                  
                  Amount
                  
                  Additional
                      Paid-in capital
                  
                  Cash
                      Equivalent Credit Paid in Common Stock
                  
                  Accumulated
                      Deficit
                  
                  Total
                      Stockholders' DeficitBalance,
                      December 31, 2004
                  
                  
                  98,942,308
                  
                  $
                  98,942
                  
                  $
                  260,193
                  
                  $
                  --
                  
                  $
                  (429,833
                  )
                  $
                  (70,698
                  )Issuance
                      of common stock for acquisition of assets from Ipoint Networks,
                      LLC
                  
                  
                  6,057,692
                  
                  
                  6,058
                  
                  
                  743,942
                  
                  
                  --
                  
                  
                  --
                  
                  
                  750,000Issuance
                      of common stock for acquisition of Impart, Inc.
                  
                  
                  141,628,494
                  
                  
                  141,628
                  
                  
                  (801,683
                  )
                  
                  (125,000
                  )
                  
                  --
                  
                  
                  (785,055
                  )Net
                      loss
                  
                  
                  --
                  
                  
                  --
                  
                  
                  --
                  
                  
                  --
                  
                  
                  (160,792
                  )
                  
                  (160,792
                  )Balance,
                      June 30, 2005
                  
                  
                  246,628,494
                  
                  $
                  246,628
                  
                  $
                  202,452
                  
                  $
                  (125,000
                  )
                  $
                  (590,625
                  )
                  $
                  (266,545
                  )
 
 See
          Accompanying Notes to Financial Statements
  3
 LIMELIGHT
                      MEDIA GROUP, INC.STATEMENTS
                      OF CASH FLOWS(UNAUDITED)For
                      the Six Months Ended June 30, 2005
                  
                  For
                      the Six Months Ended June 30, 2004Cash
                      flows from operating activities:Net
                      loss
                  
                  $
                  (160,792
                  )
                  $
                  (299,188
                  )Adjustments
                      to reconcile net loss to net cash used by operating
                      activities:Depreciation
                  
                  
                  13,013
                  
                  
                  5,928Changes
                      in operating assets and liabilities net of acquired assets
                    and
                      liabilities due to reverse merger:Accounts
                      receivable
                  
                  
                  421,940
                  
                  
                  244,743Inventory
                  
                  
                  (25,632
                  )
                  
                  (221,118
                  )Prepaid
                      expenses and other current assets
                  
                  
                  100
                  
                  
                  2,714Accounts
                      payable
                  
                  
                  (362,810
                  )
                  
                  (42,643
                  )Accrued
                      liabilities
                  
                  
                  (40,335
                  )
                  
                  (155,470
                  )Customer
                      deposits
                  
                  
                  119,834
                  
                  
                  60,400Net
                      cash used by operating activities
                  
                  
                  (34,682
                  )
                  
                  (404,634
                  )Cash
                      flows from investing activities:Cash
                      acquired in reverse merger
                  
                  
                  1,968
                  
                  
                  --Purchase
                      of fixed assets
                  
                  
                  (1,468,401
                  )
                  
                  (3,196
                  )Net
                      cash used by investing activities
                  
                  
                  (1,466,433
                  )
                  
                  (3,196
                  )Cash
                      flows from financing activities:Net
                      change in bank overdraft
                  
                  
                  95,531
                  
                  
                  (71,808
                  )Change
                      in due to related parties
                  
                  
                  (10,250
                  )
                  
                  10,250Net
                      change in line of credit
                  
                  
                  11,494
                  
                  
                  108,243Proceeds
                      from notes payable
                  
                  
                  320,000
                  
                  
                  400,000Proceeds
                      from notes payable - related parties
                  
                  
                  1,063,965
                  
                  
                  --Principal
                      payments on loans payable
                  
                  
                  (16,102
                  )
                  
                  --Net
                      cash provided by financing activities
                  
                  
                  1,464,638
                  
                  
                  446,685Net
                      change in cash
                  
                  
                  (36,477
                  )
                  
                  38,855Cash,
                      beginning of period
                  
                  
                  36,477
                  
                  
                  --Cash,
                      end of period
                  
                  $
                  --
                  
                  $
                  38,855Supplementary
                      cash flow information:Cash
                      payments for income taxes
                  
                  $
                  --
                  
                  $
                  --Cash
                      payments for interest
                  
                  $
                  23,455
                  
                  $
                  21,208
 
 See
          Accompanying Notes to Financial Statements
  4
 LIMELIGHT
                      MEDIA GROUP, INC.STATEMENTS
                      OF CASH FLOWS (CONTINUED)(UNAUDITED)For
                      the Six Months Ended June 30, 2005
                  
                  For
                      the Six Months Ended June 30, 2004Schedule
                      of non-cash operating, investing and financing activities:Issuance
                      of common stock for acquisition of Impart, Inc. and for acquisition
                      of
                      Ipoint Networks, LLC's assetsLimelight
                      Media Group, Inc. net assetsInventory
                  
                  $
                  1,240
                  
                  $
                  --Fixed
                      assets
                  
                  
                  88,961
                  
                  
                  --Other
                      assets
                  
                  
                  13,700
                  
                  
                  --Cash
                      equivalent credit paid in common stock
                  
                  
                  125,000
                  
                  
                  --Accounts
                      payable
                  
                  
                  (359,770
                  )
                  
                  --Accrued
                      liabilities
                  
                  
                  (750
                  )
                  
                  --Due
                      to related parties
                  
                  
                  (464,705
                  )
                  
                  --Notes
                      payable
                  
                  
                  (25,000
                  )
                  
                  --Convertible
                      loan payable
                  
                  
                  (10,000
                  )
                  
                  --Other
                      liabilities
                  
                  
                  (30,699
                  )
                  
                  --Total
                      non-cash consideration related to Limelight
                  
                  $
                  (662,023
                  )
                  $
                  --Ipoint
                      Networks, LLC assetsFixed
                      assets
                  
                  $
                  732,899
                  
                  $
                  --Total
                      non-cash consideration related to Ipoint
                  
                  $
                  732,899
                  
                  $
                  --
 
 See
            Accompanying Notes to Financial Statements
  5
  LIMELIGHT
            MEDIA GROUP, INC.
 NOTES
            TO
            FINANCIAL STATEMENTS
 (UNAUDITED)
 
 1.
                  DESCRIPTION
                      OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
                      POLICIES
 
 Description
            of business -
            Limelight Media Group, Inc. (hereinafter referred to as the “Company” or
“Limelight”) sells dynamic media solutions consisting of monitors, computers,
            mounting systems, and associated technological hardware. Sales are made
            throughout the United States. While customers are in various industries,
            a
            significant portion of customers are in banking and retail.
 
 Limelight
            has also developed a digital out-of-home media network. The network is
            centrally
            managed and is applicable over the growing digital signage industry in
            any
            location where a message needs real time display. The Company focuses
            on two
            general markets: point of decisions and captive audience. The Company
            is
            currently developing digital networks in multiple vertical markets. By
            diversifying the markets the Company may realize revenue from multiple
            sources.
 
 Limelight
            has developed a system to digitally distribute advertisements, marketing
            messages and entertainment video content via broadband connection for
            viewing in
            public locations such as financial institutions, government buildings,
            mass
            transit locations and in retail locations such as grocery stores. The
            content
            management system facilitates digital video content to be transmitted
            in digital
            files, replacing the soon-to-be antiquated utilization of photographic
            slides,
            VCR tape and DVDs. Limelight has two types of clients, the “location partner,”
and the advertiser who wishes to reach the patrons that visit the location
            partners’ venues. A location partner can be a government agency, financial
            institution, theater owner, retail storeowner or whoever is charged with
            the
            marketing and management of a physical facility. Revenue may be derived
            from
            advertising sales, sponsorships, subscription agreements, equipment sales,
            maintenance and installation fees and content development fees. For the
            six
            months ended June 30, 2005 and 2004, the Company’s primary source of revenue was
            derived from equipment sales.
 
 Limelight
            provides a turn-key solution for businesses desiring digital signage
            systems for
            information display. Limelight contacts high traffic businesses such
            as banks,
            mass transit, governmental buildings, movie theaters, malls, restaurants
            and
            retail stores to determine if a digitally managed captive audience network
            is
            desired. Limelight installs all necessary servers and displays for its
            customers. Depending on the agreement, Limelight may provide the equipment
            at no
            cost to the location partner and share in the revenue or the partner
            may
            purchase the equipment and pay a monthly fee to Limelight for sales and
            administration. The system is connected via a telephone line or broadband
            internet to Limelight’s video and content management servers. Limelight may
            provide the programming and marketing of the network space to potential
            advertisers. Advertising revenues may be used to offset the cost of installation
            and administration of the network and programming. The location partner
            may
            receive a portion of the revenue generated from advertising sales on
            a
            negotiated basis depending on their level of involvement in the payment
            of the
            system.
 
 The
            content is presented on single or multiple screens installed by the company
            at
            the location. The displays are located in ideal locations to attract
            the
            attention of patrons who are entering and leaving the location.
 
 History - The
            Company was incorporated as “Multinet International Corporation, Inc.” on May
            17, 1996 in the State of Nevada. On September 26, 2001, the Company consummated
            an agreement to acquire all of the outstanding capital stock of Limelight
            Media
            Group, Inc., a Nevada Corporation, in exchange for 18,000,000 shares
            of
            Multinet’s common stock (“Limelight Transaction”). At
            the
            time of the Limelight Transaction, Multinet was a non-operating public
            company
            with no operations or assets; and 2,431,000 shares of common stock issued
            and
            outstanding; and Limelight Media Group, Inc. was a privately-held company
            with
            assets being used for the development of its video-streaming technology.
 
 Prior
            to
            the Limelight Transaction, Multinet International Corporation, Inc. operated
            a
            convenience store through Nikky D Corporation, a wholly owned subsidiary.
            In
            September 2001, the Multinet divested itself of Nikky D. Corporation.
            Multinet
            International Corporation, Inc. accounted for this divestiture as a spin-off
            in
            accordance with Accounting Principles Board Statement No. 29. As a result
            of
            this divestiture, the Multinet became a non-operational public company.
  6
  LIMELIGHT
            MEDIA GROUP, INC.
 NOTES
            TO
            FINANCIAL STATEMENTS
 (UNAUDITED)
 
 During
            September 2002, the Company purchased all outstanding capital of Uniguest
            of
            Tennessee, Inc. (“UGT”), a Tennessee Corporation, in consideration of 500,000
            shares of the Company’s common stock. UGT installs and operates Public Internet
            Access Terminals primarily in hotels throughout the country. In October
            2003,
            the Company rescinded the purchase agreement.
 
 On
            June
            30, 2005, the Company formed a wholly owned subsidiary, Limelight Merger
            II
            Corp., a Washington corporation.
 
 On
            June
            30, 2005, through its wholly owned subsidiary, Limelight Merger II Corp.,
            Limelight Media Group, Inc. consummated an agreement to acquire all of
            the
            outstanding capital stock of Impart, Inc. (“Impart”) a Washington corporation,
            (“Impart Transaction”). Also, on June 30, 2005, concurrently with the Impart
            Transaction, Impart entered into an Agreement with Ipoint Networks, LLC,
            a
            Washington limited liability company (“Ipoint”) whereby Impart purchased the
            assets of Ipoint (“Ipoint Transaction”). The total consideration for these
            transactions was 162,500,000 shares (“Merger Consideration”) of Limelight’s
            common stock and a promissory note of $250,000.
 
 As
            Limelight Media Group, Inc. did not have a sufficient number of duly
            authorized
            shares on the date of the acquisition, the parties agreed to holdback
            57,500,000
            shares (“Holdback Shares”) of the 162,500,000 to be issued to owners of Impart
            and Ipoint not later than ten days following the later of (i) the effective
            date
            of a merger by Limelight with and into a Delaware corporation to be formed
            by
            the Limelight or (ii) Limelight’s receipt of audited financial statements of
            Impart. Prior to the Impart Transaction, Limelight was a public company
            with
            nominal operations, that had $105,868 in assets (including cash totaling
            $1,968); liabilities totaling $890,924, a cash equivalent credit valued
            at
            $125,000 previously purchased through the issuance of common stock and
            141,628,494 shares of common stock issued and outstanding. Impart was
            a
            privately held company that sells dynamic media solutions consisting
            of
            monitors, computers, mounting systems, and associated technological hardware.
            The following table reflects the stock issued in relation to the Impart
            Transaction and Ipoint Transaction:
  ImpartTransaction (1)
                    
                    IpointTransaction (2)
                    
                    TotalTotal
                        consideration
                    
                    
                    153,125,000
                    
                    
                    9,375,000
                    
                    
                    162,500,000Holdback
                        shares
                    
                    
                    (54,182,692
                    )
                    
                    (3,317,308
                    )
                    
                    (57,500,000
                    )Total
                        Common Stock issuance
                    
                    
                    98,942,308
                    
                    
                    6,057,692
                    
                    
                    105,000,000
 
 (1)
            The
            Impart Transaction is considered to be a capital transaction in substance,
            rather than a business combination. Inasmuch, the Impart Transaction
            is
            equivalent to the issuance of stock by a private company (Impart) for
            the net
            monetary assets of a public shell company (Limelight), accompanied by
            a
            recapitalization. Thus, the 98,942,308 shares (net of Holdback Shares)
            of common
            stock issued to the shareholders of Impart are retroactively applied.
            The
            accounting for the Impart Transaction is identical to that resulting
            from a
            reverse acquisition, except that neither goodwill nor other intangible
            assets
            will be recorded. Accordingly, these financial statements are the historical
            financial statements of Impart. Impart was incorporated on June 19, 1984
            in the
            State ofWashington.
 
 (2)
            The
            Ipoint Transaction resulted in the acquisition of certain assets including
            fixed
            assets in exchange for 6,057,692 shares (net of Holdback Shares) and a
            promissory note totaling $250,000. The note is unsecured, bearing interest
            at 8%
            per annum and is payable on the earlier of June 30, 2006 or the closing
            of a
            PIPE financing transaction by the Company.
 
 On
            June
            30, 2005, Impart entered into an Agreement with Media Sidestreet Support
            Corporation (“Media Sidestreet”) whereby Impart purchased the assets of Media
            Sidestreet in exchange for the issuance of notes in the aggregate principal
            amount of $1,027,965 to the owners of Media Sidestreet (“Media Sidestreet Asset
            Acquisition”). The notes are unsecured, with interest ranging from 6% to 10%
            (two notes include variable interest rates), and are payable on the earlier
            of
            June 30, 2006 or the closing of a PIPE financing transaction by the Company.
            Prior to the Impart Transaction, the majority owners of Impart were also
            owners
            in Media Sidestreet, thus a related party transaction.
  7
 
 LIMELIGHT
            MEDIA GROUP, INC.
 NOTES
            TO
            FINANCIAL STATEMENTS
 (UNAUDITED)
 
 Amended
            Articles of Incorporation - In
            October 2003, a Certificate of Amendment to the Articles of Incorporation
            changed the name of the Company to Limelight Media Group, Inc. During
            February
            2004, a Certificate of Amendment to the Articles of Incorporation increased
            the
            authorized shares of common stock from 25,000,000 to 100,000,000. During
            January
            2005, a Certificate of Amendment to the Articles of Incorporation increased
            the
            authorized shares of common stock from 100,000,000 to 250,000,000.
 
 Going
            concern - The
            accompanying financial statements have been prepared on a going concern
            basis,
            which contemplates the realization of assets and the satisfaction of
            liabilities
            in the normal course of business. The Company has incurred a net loss
            of
            approximately $161,000 and $299,000 for the six months ended June 30,
            2005 and
            2004, respectively. The Company's current liabilities exceed its current
            assets
            by approximately $2,128,000 as of June 30, 2005. The Company’s net cash used
            from operating activities approximated $35,000 during the six months
            ended June
            30, 2005.
 
 These
            conditions give rise to substantial doubt about the Company's ability
            to
            continue as a going concern. The Company's management plan to obtain
            additional
            financing through a combination of equity and debt financing.
 
 The
            ability of the Company to continue as a going concern is dependent on
            additional
            sources of capital and the success of the Company's plan. The financial
            statements do not include any adjustments that might be necessary if
            the Company
            is unable to continue as a going concern.
 
 Use
            of
            estimates - The
            preparation of financial statements in conformity with accounting principles
            generally accepted in the United States requires management to make estimates
            and assumptions that affect the reported amounts of assets and liabilities
            and
            disclosure of contingent assets and liabilities at the date of the financial
            statements and the reported amounts of revenue and expenses during the
            reporting
            period. Actual results could differ from those estimates.
 
 Inventory -
            Inventory is stated at the lower of cost or market. Cost is principally
            determined by using the average cost method. Inventory consists of raw
            materials
            as well as finished goods held for sale. The Company's management monitors
            the
            inventory for excess and obsolete items and makes necessary valuation
            adjustments when required.
 
 Fixed
            assets -
            Fixed
            assets are stated at cost less accumulated depreciation. Depreciation
            is
            provided principally on the straight-line method over the estimated useful
            lives
            of the assets, which are generally 3 to 10 years. The cost of repairs
            and
            maintenance is charged to expense as incurred. Expenditures for property
            betterments and renewals are capitalized. Upon sale or other disposition
            of a
            depreciable asset, cost and accumulated depreciation are removed from
            the
            accounts and any gain or loss is reflected in other income
            (expense).
 
 The
            Company periodically evaluates whether events and circumstances have
            occurred
            that may warrant revision of the estimated useful lives of fixed assets
            or
            whether the remaining balance of fixed assets should be evaluated for
            possible
            impairment. The Company uses an estimate of the related undiscounted
            cash flows
            over the remaining life of the fixed assets in measuring their
            recoverability.
 
 Fixed
            assets acquired through the Ipoint Asset Acquisition and the Media Sidestreet
            Asset Acquisition were recorded at a pro-rata reduction of their estimated
            fair
            value to the extent of the consideration given at the time of acquisition
            less
            accumulated depreciation from the time of acquisition.
  8
  LIMELIGHT
            MEDIA GROUP, INC.
 NOTES
            TO
            FINANCIAL STATEMENTS
 (UNAUDITED)
 
 Fair
            value of financial instruments - The
            carrying amounts and estimated fair values of the Company’s financial
            instruments approximate their fair value due to the short-term
            nature.
 
 Earnings
            (loss) per share - Basic
            earnings (loss) per share exclude any dilutive effects of options, warrants
            and
            convertible securities. Basic earnings (loss) per share are computed
            using the
            weighted-average number of outstanding common shares during the applicable
            period. Diluted earnings per share is computed using the weighted average
            number
            of common and common stock equivalent shares outstanding during the period.
            Common stock equivalent shares are excluded from the computation if their
            effect
            is antidilutive.
 
 Income
            taxes - The
            Company accounts for its income taxes in accordance with Statement of
            Financial
            Accounting Standards No. 109, which requires recognition of deferred
            tax assets
            and liabilities for future tax consequences attributable to differences
            between
            the financial statement carrying amounts of existing assets and liabilities
            and
            their respective tax bases and tax credit carryforwards. Deferred tax
            assets and
            liabilities are measured using enacted tax rates expected to apply to
            taxable
            income in the years in which those temporary differences are expected
            to be
            recovered or settled. The effect on deferred tax assets and liabilities
            of a
            change in tax rates is recognized in income in the period that includes
            the
            enactment date.
 
 As
            of
            June 30, 2005, the Company has available net operating loss carryforwards
            that
            will expire in various periods through 2025. Such losses may not be fully
            deductible due to the significant amounts of non-cash service costs and
            the
            change in ownership rules under Section 382 of the Internal Revenue Code.
            The
            Company has established a valuation allowance for the full tax benefit
            of the
            operating loss carryovers due to the uncertainty regarding
            realization.
 
 Comprehensive
            loss - The
            Company has no components of other comprehensive loss. Accordingly, net
            loss
            equals comprehensive loss for all periods.
 
 Segment
            information - The
            Company discloses segment information in accordance with SFAS No. 131,
            “Disclosures about Segments of an Enterprise and Related Information,” which
            uses the Management approach to determine reportable segments. As of
            June 30,
            2005, the Company operates under one segment as of June 30, 2005.
 
 Advertising
            costs - The
            Company recognizes advertising expenses in accordance with Statement
            of Position
            93-7 “Reporting on Advertising Costs.” Accordingly, the Company expenses the
            costs of producing advertisements at the time production occurs, and
            expenses
            the costs of communicating advertisements in the period in which the
            advertising
            space or airtime is used. Advertising costs are charged to expense as
            incurred. Advertising expenses were $695 and $1,247 for the three months
            ended June 30, 2005 and 2004, respectively.
 
 Research
            and development costs -
            Research and development costs are charged to expense when incurred.
            Costs
            incurred to internally develop software, including costs incurred during
            all
            phases of development, are charged to expense as incurred.
 
 Stock-based
            compensation - The
            Company applies Accounting Principles Board (“APB”) Opinion No. 25, “Accounting
            for Stock Issued to Employees, and Related Interpretations”, in accounting for
            stock options issued to employees. Under APB No. 25, employee compensation
            cost
            is recognized when estimated fair value of the underlying stock on date
            of the
            grant exceeds exercise price of the stock option. For stock options and
            warrants
            issued to non-employees, the Company applies SFAS No. 123, “Accounting for
            Stock-Based Compensation”. SFAS No 123 requires the recognition of compensation
            cost using a fair value based method whereby compensation cost is measured
            at
            the grant date based on the value of the award and is recognized over
            the
            service period, which is usually the vesting period. The Company uses
            the
            Black-Scholes pricing model to calculate the fair value of options and
            warrants
            issued to non-employees. Stock issued for compensation is valued using
            the
            market price of the stock on the date of the related agreement.
  9
  LIMELIGHT
            MEDIA GROUP, INC.
 NOTES
            TO
            FINANCIAL STATEMENTS
 (UNAUDITED)
 
 The
            Company granted warrants to purchase an aggregate of 3,000,000 shares
            of the
            Company’s common stock to two directors of Limelight for services rendered prior
            to the Impart Transaction. As these financial statements are the historical
            financial statements of Impart, Inc., no valuation has been included.
            The
            Company granted no other warrants or options to employees for compensation
            for
            the six months ended June 30, 2005 and 2004.
 
 Expenses
            of offering - The
            Company accounts for specific incremental costs directly to a proposed
            or actual
            offering of securities as a direct charge against the gross proceeds
            of the
            offering.
 
 Revenue
            recognition -
            Revenue from product sales are generally recognized when the Company’s products
            are shipped and/or the revenue is fully earned and ownership has passed
            to the
            customer. Revenue from design and installation contracts are recognized
            using
            the completed-contract method.
 
 New
            accounting pronouncements - In
            December 2004, the FASB issued SFAS 153, Exchanges of Nonmonetary Assets,
            an
            amendment of APB No. 29, Accounting for Nonmonetary Transactions. SFAS
            153
            requires exchanges of productive assets to be accounted for at fair value,
            rather than at carryover basis, unless (1) neither the asset received
            nor the
            asset surrendered has a fair value that is determinable within reasonable
            limits
            or (2) the transactions lack commercial substance. SFAS 153 is effective
            for
            nonmonetary asset exchanges occurring in fiscal periods beginning after
            June 15,
            2005. The Company does not expect the adoption of this standard to have
            a
            material effect on its financial position, results of operations or cash
            flows.
 
 In
            December 2004, the FASB issued Statement 123 (revised 2004) which is
            a revision
            of FASB Statement No. 123, Accounting for Stock-Based Compensation. This
            Statement supersedes APB Opinion No. 25, Accounting for Stock Issued
            to
            Employees, and its related implementation guidance. This Statement establishes
            standards for the accounting for transactions in which an entity exchanges
            its
            equity instruments for goods or services. It also addresses transactions
            in
            which an entity incurs liabilities in exchange for goods or services
            that are
            based on the fair value of the entity's equity instruments or that may
            be
            settled by the issuance of those equity instruments. This Statement focuses
            primarily on accounting for transactions in which an entity obtains employee
            services in share-based payment transactions. This Statement requires
            a public
            entity to measure the cost of employee services received in exchange
            for an
            award of equity instruments based on the grant-date fair value of the
            award
            (with limited exceptions). That cost will be recognized over the period
            during
            which an employee is required to provide service in exchange for the
            award--the
            requisite service period (usually the vesting period). The Company files
            as a
            small business issuer and must meet the requirements of this Statement
            for
            accounting periods after December 15, 2005. The Company is evaluating
            SFAS 123R
            and believes it may have a material effect on the Company’s financial
            statements.
 
 2.
                  ACCOUNTS
                      RECEIVABLE
 
 As
            of
            June 30, 2005 accounts receivable, consists of trade receivables related to
            equipment sales and total $546,031, which is net of allowance for doubtful
            accounts of $35,294.
 
 3.
                  INVENTORY
 
 Inventory
            totaling $526,228 consists of finished goods as of June 30,
            2005.
  10
  LIMELIGHT
            MEDIA GROUP, INC.
 NOTES
            TO
            FINANCIAL STATEMENTS
 (UNAUDITED)
 
 4.
                  FIXED
                      ASSETS
 
 Fixed
            assets consist of the following as of June 30, 2005:
 
 Computer
                      and other equipment
                  
                  $
                  498,116Furniture
                      and fixtures
                  
                  
                  81,890Software
                  
                  
                  1,867,542Leasehold
                      equipment
                  
                  
                  3,6612,451,209Less:
                      accumulated depreciation
                  
                  
                  114,501Fixed
                      assets, net
                  
                  $
                  2,336,708
 
 5.
                  DUE
                      TO RELATED PARTIES
 
 Due
            to
            related parties totaling $464,705 as of June 30, 2005 consist of the
            following:
  Loan
                        payable to the Company’s CEO, secured by the Company’s assets bearing
                        interest at 9% per annum, payable in monthly installments
                        of interest
                        only, due on demand
                    
                    $
                    386,807Unreimbursed
                        expenses to the CEO, unsecured, bearing no interest and due
                        on
                        demand
                    
                    
                    42,891Unreimbursed
                        expenses to various stockholders, unsecured, bearing no interest
                        and due
                        on demand
                    
                    
                    10,600Accrued
                        interest on related party loans
                    
                    
                    24,407$
                    464,705
 
 6.
                  LINES
                      OF CREDIT
  As
                        of June 30, 2005, lines of credit consist of the
                        following:A
                        bank line of credit for borrowing up to $200,000, secured
                        by the Company’s
                        assets, bearing interest at 11% per annum payable in monthly
                        installments
                        of interest only, matures December 2006
                    
                    $
                    119,284An
                        American Express business capital line for borrowing up to
                        $54,000,
                        unsecured, bearing a variable interest rate (28.24% at June
                        30, 2005)
                        payable in monthly installments of interest only
                    
                    
                    17,927$
                    137,211
 
 7.
                  CONVERTIBLE
                      LOANS PAYABLE
 
 In
            August
            2003, the Company borrowed $10,000, unsecured and bearing interest at
            12% from
            an individual that matured during August 2004. As of June 30, 2005, the
            balance
            of $10,000 is in default and recorded as a current liability. The individual
            is
            entitled to convert all or a portion of the principal balance into shares
            of the
            Company’s common stock at a conversion price of $0.20 per share. Further, the
            individual has the option of receiving payment of accrued interest in
            cash or
            50,000 shares of the Company’s common stock.
  11
  LIMELIGHT
            MEDIA GROUP, INC.
 NOTES
            TO
            FINANCIAL STATEMENTS
 (UNAUDITED)
 
 8.
                  NOTES
                      PAYABLE
 
 As
            discussed in Note 16, pending in the State Court of Cherokee County,
            Georgia
            filed September 9, 2002, D&D Management, Inc. is alleging it entered into a
            loan agreement with the Company during February 2002 for $54,000 which
            has not
            been repaid. The Company is defending on the basis that it issued D&D
            Management, Inc. 89,000 shares of the Company’s common stock in consideration of
            repayment and for settlement. D&D Management, Inc. is responding that the
            shares were issued for consulting services. The Company denies services
            were
            rendered and is pursuing settlement negotiations. The Company has recognized
            a
            liability of $25,000, based on management’s estimate of negotiated
            terms.
 
 As
            discussed in Note 1, On June 30, 2005, concurrently with the Impart Transaction,
            Impart entered into an Agreement with Ipoint whereby Impart purchased
            the assets
            of Ipoint in exchange for the issuance of a promissory note of $250,000
            and
            9,375,000 shares of the Company’s common stock valued at $750,000. Impart
            allocated 6,057,692 shares of the Company’s common stock from the Merger
            Consideration to the sole member of Ipoint on June 30, 2005, with the
            remaining
            3,317,308 shares to be allocated from the Holdback Shares in accordance
            with the
            Impart Transaction. The note is unsecured, bearing interest at 8% per
            annum and
            is payable on the earlier of June 30, 2006 or the closing of a PIPE financing
            transaction by the Company.
 
 During
            June 2005, the Company entered into a promissory note with an entity
            totaling
            $20,000. The note is unsecured, bearing interest at 8.5% per annum and
            payable
            in June 2006.
 
 During
            June 2005, the Company entered into a promissory note with an individual
            totaling $50,000. The note is unsecured, bearing interest at 8% per annum
            and
            payable in June 2006.
 
 During
            November 2004, the Company entered into a promissory note with a lending
            institution. The note is secured by the Company’s assets and bears interest at
            8.5% per annum. The note requires 24 monthly principal and interest payments
            of
            $6,000 beginning December 2004, with a final payment of $484,249 to be
            made in
            December 2006. As of June 30, 2005, the current portion on the note from
            July 1,
            2005 through June 30, 2006 totals $30,327 and the long-term portion totals
            $493,204.
 
 9.
                  NOTES
                      PAYABLE - RELATED PARTIES
 
 As
            discussed in Note 1, on June 30, 2005, concurrently with the Impart Transaction,
            Impart entered into an Agreement with Media Sidestreet whereby Impart
            purchased
            the assets of Media Sidestreet in exchange for the issuance of a promissory
            note
            in the aggregate principal amount of $1,027,965 to the owners of Media
            Sidestreet. The notes are unsecured, with interest ranging from 6% to
            10% (two
            notes include variable interest rates), and are payable on the earlier
            of June
            30, 2006 or the closing of a PIPE financing transaction by the Company.
            Prior to
            the Impart Transaction, the majority owners of Impart were also owners
            in Media
            Sidestreet, thus a related party transaction.
  During
            April 2005, Limelight issued promissory notes to two Impart stockholders
            (prior
            to the Impart Transaction) whereby the Impart stockholders loaned Limelight
            $16,000 and $20,000 to pay for equipment purchased by Limelight from
            Impart. The
            notes are unsecured, bearing interest at 20% and 8.5% per annum, respectively,
            and are payable on maturity during April 2006. The two stockholders became
            officers of the Company concurrently with the Impart Transaction. As
            of June 30,
            2005, the remaining balance of the two notes remain at $36,000.
  12
  LIMELIGHT
            MEDIA GROUP, INC.
 NOTES
            TO
            FINANCIAL STATEMENTS
 (UNAUDITED)
 
 10.
                  CASH
                      EQUIVALENT CREDIT PAID IN COMMON
                      STOCK
 
 Effective
            December 10, 2004, the Limelight completed the sale of 5,000,000 shares
            of its
            common stock, which had a fair market value at that time of approximately
            $125,000, to American Marketing Complex, Inc. (“AMC”). Payment for this purchase
            by AMC was in the form of cash equivalent credits (“Credits”) with a face value
            of $1,500,000, which the Company can use or sell to others for the purchase
            of
            merchandise and services. The face value is not necessarily indicative
            of the
            ultimate fair value or settlement value of the credits. The credits were
            valued
            at the fair market value of the shares issued by the Company at $125,000
            and
            classified as cash equivalent credits paid in common stock, which is
            a separate
            component of stockholders' deficiency in the accompanying balance sheet
            as of
            December 31, 2004. The cash equivalent credits paid in common stock will
            be
            offset as the trade credits are used.
 
 11.
                  OTHER
                      LIABILITIES
 
 Common
            Stock Purchase Agreement - During
            October 2003, the Company entered into a Common Stock Purchase Agreement
            (“Purchase Agreement”) with an individual whereby the Company agreed to issue
            5,000,000 shares of its common stock in exchange for cash totaling $150,000.
            The
            Purchase Agreement also granted the individual an option to purchase
            an
            additional 3,333,000 shares of the Company’s common stock at $0.03 per share.
 
 During
            October 2003, the Company entered into a three-year employment agreement
            with
            this same individual, whereby the Company agreed to employ the individual
            as an
            operations manager for the term of three years. The individual was entitled
            to
            compensation of $15,000 per month with the option to receive payment
            in shares
            of the Company’s common stock. Such shares were to be equal to the closing bid
            price on the last day of the month preceding the date the salary was
            due. The
            Company, at its option has the right to terminate the agreement upon
            payment of
            the individual’s accrued salary, unreimbursed expenses, and all other
            compensation and benefits through the first six months or the termination
            date,
            whichever is greater.
 
 Also
            during October 2003, the Company entered into a three-year consulting
            agreement
            with this same individual whereby the individual would provide other
            services
            not set forth in the employment agreement in exchange for 1,000,000 shares
            of
            the Company’s common stock totaling $109,000.
 
 As
            of
            June 30, 2005, the individual paid the Company $30,699 of the total $150,000
            required under the Purchase Agreement. The Company rescinded all agreements
            with
            the individual as the individual did not pay the entire $150,000 as required
            by
            the Purchase Agreement and attempted to return the $30,699. The individual
            refused to accept the funds and filed a suit against the Company. The
            Company
            has recorded the $30,699 as an other liability totaling $30,699.
 
 As
            discussed in Note 16, during August 2005, the Company settled this liability
            for
            1,000,000 shares of common stock.
  13
  LIMELIGHT
            MEDIA GROUP, INC.
 NOTES
            TO
            FINANCIAL STATEMENTS
 (UNAUDITED)
 
 12.
                  STOCKHOLDERS’
                      DEFICIT
 
 Stock
            warrants - In
            connection with certain business transactions and debt or equity offerings,
            Limelight had granted various warrants to purchase common stock prior
            to the
            Impart Transaction. The following table summarizes activity relating
            to
            outstanding warrants from December 31, 2003 through June 30, 2005:
 
 Number
                      ofShares
                  
                  Weighted
                      AverageExercise PriceBalance,
                      December 31, 2003
                  
                  
                  1,570,000
                  
                  
                  0.69Warrants
                      granted and assumed
                  
                  
                  100,000
                  
                  
                  0.50Warrants
                      expired
                  
                  
                  --
                  
                  
                  --Warrants
                      canceled
                  
                  
                  --
                  
                  
                  --Warrants
                      exercised
                  
                  
                  --
                  
                  
                  --Balance,
                      December 31, 2004
                  
                  
                  1,670,000
                  
                  
                  0.68Warrants
                      granted and assumed
                  
                  
                  3,990,000
                  
                  
                  0.04Warrants
                      expired
                  
                  
                  100,000
                  
                  
                  .08Warrants
                      canceled
                  
                  
                  --
                  
                  
                  --Warrants
                      surrendered
                  
                  
                  990,000
                  
                  
                  0.75Warrants
                      exercised
                  
                  
                  990,000
                  
                  
                  0.00Balance,
                      June 30, 2005
                  
                  
                  3,580,000
                  
                  $
                  0.14
 
 The
            following table summarizes information about warrants outstanding at
            June 30,
            2005:
  ExercisePrice
                    
                    Number
                        Outstanding as of12/31/04
                    
                    Weighted
                        Average Remaining ContractualLife
                    
                    Number
                        Exercisable as of12/31/04$
                    0.05
                    
                    
                    3,000,000
                    
                    
                    3.00
                        years
                    
                    
                    3,000,0000.25
                    
                    
                    180,000
                    
                    
                    0.86
                        years
                    
                    
                    180,0000.50
                    
                    
                    200,000
                    
                    
                    0.42
                        years
                    
                    
                    200,0001.00
                    
                    
                    200,000
                    
                    
                    0.42
                        years
                    
                    
                    200,000$
                    0.14
                    
                    
                    3,580,000
                    
                    
                    
                    
                    
                    3,580,000
 
 The
            following table summarizes information about warrants granted during
            the six
            months ended June 30, 2005:
  Number
                          of Warrants GrantedDuring
                          2005
                      
                      Exercise
                          Price Equals, Exceeds or is Less Than Mkt. Price of Stockon
                          Grant Date
                      
                      Weighted
                          AverageExercise
                          Price
                      
                      Weighted
                          Range ofExercise
                          Price
                      
                      AverageFair
                          Value--
                      
                      
                      Equals
                      
                      $
                      --
                      
                      $
                      --
                      
                      $
                      ----
                      
                      
                      Exceeds
                      
                      $
                      --
                      
                      $
                      --
                      
                      $
                      --3,990,000
                      
                      
                      Less
                          Than
                      
                      $
                      0.04
                      
                      $
                      0.00-0.05
                      
                      $
                      0.053,990,000
                      
                      
                      
                      
                      $
                      0.04
                      
                      $
                      0.15
                      
                      $
                      0.05
 
 The
            Company estimates the fair value of warrants at the grant date by using
            the
            Black-Scholes option pricing-model with the following weighted-average
            assumptions used for grants in 2005; no dividend yield; expected volatility
            of
            225.55%; risk free interest rates of 2.24%; and expected lives of 1.13
            years.
            The warrants were granted by Limelight prior to the Impart Transaction.
            As these
            financial statements are the historical financial statements of Impart,
            Inc. as
            discussed in Note 1, no valuation has been included.
  14
  LIMELIGHT
            MEDIA GROUP, INC.
 NOTES
            TO
            FINANCIAL STATEMENTS
 (UNAUDITED)
 
 13.
                  EMPLOYEMENT
                      AGREEMENTS
 
 Pursuant
            to the Impart Transaction, the Company entered into the following Employment
            Agreements on June 30, 2005:
 
 David
            V.
            Lott (Former President and Chief Financial Officer of Limelight) - David
            V. Lott
            was appointed as Chief Executive Officer for the term of three years
            from June
            30, 2005, subject to termination provisions. Mr. Lott will receive an
            annual
            base salary totaling $120,000 plus benefits.
 
 Laird
            Laabs (President of Impart) - Laird Laabs was appointed as President
            for the
            term of three years from June 30, 2005, subject to termination provisions.
            Mr.
            Laabs will receive an annual base salary totaling $120,000 plus
            benefits.
 
 Joseph
            Martinez - Joseph Martinez was appointed as Chairman and Chief Financial
            Officer
            for the term of three years from June 30, 2005, subject to termination
            provisions. Mr. Martinez will receive an annual base salary totaling
            $120,000
            plus benefits.
 
 Steven
            Corey - Steven Corey was appointed as Chief Strategy Officer for the
            term of
            three years from June 30, 2005, subject to termination provisions. Mr.
            Corey
            will receive an annual base salary totaling $120,000 plus benefits.
 
 Thomas
            Muniz - Thomas Muniz was appointed as Chief Operating Officer and Chief
            Technology Officer for the term of three years from June 30, 2005, subject
            to
            termination provisions. Mr. Muniz will receive an annual base salary
            totaling
            $120,000 plus benefits.
 
 14.
                  LOCK-UP
                      AGREEMENTS
 
 Pursuant
            to the Impart Transaction, former Shareholders of Impart and David Lott
            of
            Limelight entered into a Lock-Up Agreement restricting the transfer,
            sale,
            assignment of Limelight shares of common stock from June 30, 2005 through
            June
            30, 2006 (with limited exceptions).
 
 15.
                  COMMITMENTS
                      AND CONTINGENCIES
 
 Legal - As
            discussed in Note 8, pending in the State Court of Cherokee County, Georgia
            filed September 9, 2002, D&D Management, Inc. is alleging it entered into a
            loan agreement with the Company during February 2002 for $54,000 which
            has not
            been repaid. The Company is defending on the basis that it issued D&D
            Management, Inc. 89,000 shares of the Company’s common stock in consideration of
            repayment and for settlement. D&D Management, Inc. is responding that the
            shares were issued for consulting services. The Company denies services
            were
            rendered and is pursuing settlement negotiations. The Company has recognized
            a
            liability of $25,000, based on management’s estimate of negotiated
            terms.
 
 During
            January 2005 Dierbergs Markets, Inc. (“Dierbergs”) filed a complaint against
            Interactive Graphic Solutions, LLC and Limelight Media Group, Inc. According
            to
            the complaint, Dierbergs entered into a license agreement with Interactive
            Graphic Solutions, LLC ("IGS") pursuant to which IGS granted Dierbergs
            a license
            to use IGS's system of motion media equipment for the purpose of showing
            certain
            advertising in retail stores. Further, the complaint asserts that IGS
            failed to
            pay approximately $72,000 to Hanenkamp Electric Company for its services
            relating to the installation of IGS's media system and that such amount
            was paid
            by to Hanenkamp by Dierbergs. In August 2004, Limelight acquired substantially
            all of the assets of IGS, including the license agreement with the Dierbergs.
            Dierbergs was seeking damages from the defendants in amount equal to
            $72,000
            plus attorneys' fees, costs, expenses and pre-judgment and post-judgment
            interest. In February 2005, the Company filed a motion to dismiss on
            the basis
            that the Company was neither a party to the license agreement nor, as
            Dierbergs
            asserted in the complaint, a permitted assignee. Dierbergs dismissed
            the motion
            against Limelight during August 2005.
  15
  LIMELIGHT
            MEDIA GROUP, INC.
 NOTES
            TO
            FINANCIAL STATEMENTS
 (UNAUDITED)
 
 During
            February 2002, Clickplay, Inc. filed suit on February 19, 2002 alleging
            claims
            against the Limelight for non-payment of deposits related to a consulting
            services agreement. The Company was unable to secure adequate financial
            backing
            to engage Clickplay, Inc. and no services were rendered by Clickplay,
            Inc.
            However, Clickplay, Inc. claims that deposits totaling $93,000 remain
            due. A
            default judgment was entered in favor of Clickplay, Inc. against the
            Company;
            however, execution of the judgment upon the Company has not occurred
            due to
            jurisdictional defects stemming from the misidentification of the Company
            as the
            defendant. Management believe the claims of Clickplay, Inc. are without
            merit
            and intend to aggressively defend against these claims. However, the
            Company is
            in negotiations with Clickplay with regard to a settlement of this
            matter.
 
 Leased
            facilities - The
            Company operates from leased facilities under two noncancellable operating
            leases. The first lease (related to Limelight) calls for a base monthly
            rent of
            $3,237 increasing to $3,642 during June 2005 through May 2006. The second
            lease
            (related to Impart) calls for a base monthly rent of $15,000 through
            November
            30, 2018. The facility is owned by certain stockholders.
 
 Future
            minimum rental payments for the leased facilities as of June 30, 2005,
            are as
            follows:
 
 July
                      31, 2005 through December 31, 2005
                  
                  $
                  111,8522005
                  
                  
                  198,2102006
                  
                  
                  180,0002007
                  
                  
                  180,0002008
                  
                  
                  180,0002009
                  
                  
                  180,000Thereafter
                  
                  
                  1,620,000$
                  2,650,062
 
 16.
                  SUBSEQUENT
                      EVENTS
 
 As
            discussed in Note 10, during August 2005, the Company settled an other
            liability
            totaling $30,699 for 1,000,000 shares of common stock.
 
 During
            July 2005, the Company entered into a sale-leaseback transaction with
            a leasing
            Company whereby the Company sold approximately $150,000 in fixed assets
            which it
            subsequently leased back under a capital lease. Under the terms of the
            lease,
            the Company is required to pay 48 monthly installments of $2,198, with
            2
            payments paid in advance. During August 2005, the Company paid $80,000
            toward
            this lease.
  After
            June 30, 2005, certain officers and directors
            holding approximately $1.7 million aggregate principal amount of promissory
            notes have agreed, in principle, to cancel such notes in consideration
            of the
            issuance of options to purchases an aggregate of 16,766,820 shares of
            our
            commons stock having an exercise price of $0.10 per share.
 16
 ITEM
        2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
 
 
 **General**
 
 The
        following discussion and analysis of the financial condition and results
        of
        operations should be read in conjunction with our financial statements and
        notes
        appearing elsewhere in this Report.
 
 **Recent
        Developments**
 
 As
        we
        previously reported in our Current Report on Form 8-K filed with the Securities
        and Exchange Commission on July 7, 2005, in the fiscal quarter ended June
        30,
        2005, we acquired all of the outstanding capital stock of Impart, Inc., a
        Washington corporation ("Impart"). Impart is a Seattle, Washington-based
        company
        that provides media displays and digital video signage services primarily through the installation and operation of plasma, LCD
        (liquid
        crystal display) and other digital components in retail, banking, mass transit
        and government office locations. In addition, Impart's proprietary software
        allows it to remotely deploy advertising content to any plasma or LCD screen
        on
        its network from a central operations center. The
        acquisition was effected pursuant to an Agreement and Plan of Merger, dated
        as
        of June 30, 2005, by and between our company, Limelight Merger II Corp.,
        a
        wholly-owned subsidiary of our company and Impart. The aggregate purchase
        price
        consisted of 162.5 million shares of our common stock of which approximately
        105
        million shares were issued at the closing and approximately 57.5 million
        shares
        will be issued following our re-incorporation under Delaware law. For financial
        reporting purposes, Impart was considered to be the acquirer in the transaction.
 
 As
        a
        result of the transaction described above, our historical financial statements
        for any period prior to June 30, 2005 are those of Impart, Inc.
 
 **Results
        of Operations - Three months ended June 30, 2005 compared to the three months
        ended June 30, 2004.**
 
 ***Revenue.***  For the three months ended June 30, 2005, we had revenues of $1,016,996 as
        compared to $686,751 for the three months ended June 30, 2004, respectively,
        representing an increase of $330,215, or 48.1%. Our revenues are derived
        primarily from a combination of (i) the recurring fees we receive for managing
        our customers' digital signage networks that we sell and/or operate, (ii)
        the
        sale price of hardware components and software products used in our proprietary
        digital signage network and (iii) the fees we received in connection with
        the
        delivery of consulting, maintenance and other digital signage services to
        our
        customers. The increase in our revenues for the three months ended June 30,
        2005
        as compared to the comparable period in 2004 was primarily due to the addition
        of two new customers in the fourth quarter of 2004. Furthermore, we believe
        that
        advertisers, such as financial institutions, grocery stores, retail mall
        operators and other businesses, are aggressively seeking new and more compelling
        advertising outlets than traditional advertising outlets such as network
        television, radio and print advertising. As a result, advertisers have recently
        increased their awareness and acceptance of the emerging "out of home" media
        and, specifically, the digital signage segment. Contributing to this acceptance,
        in our management's opinion, is the significant reduction in the cost of
        housing
        a digital signage network due to recent price declines in plasma and LCD
        screens
        and the proliferation of broadband, DSL (digital subscriber line) and satellite
        technologies that can more cost-effectively deliver media content that requires
        larger bandwith such as full-motion video. Provided that we can effectively
        implement our business strategy to meet this growing demand for digital signage
        services, our management anticipates greater revenues in future periods from
        each of its revenue models.
  17
  ***Cost
        of Revenue.*** For the three months ended June 30, 2005, the cost of sales was $613,125
        as
        compared to $528,295 for the three months ended June 30, 2004, representing
        an
        increase of $84,830, or 16.1%. The increase was primarily the result of
        increased sales during the three months ended June 30, 2005 as compared to
        the
        three months ended June 30, 2004, which was offset slightly by the reduced
        cost
        for plasma screens, LCD screens and other network digital components that
        we
        sell to our customers under our "turn-key" (or "full integration") model.
        In
        this model, we purchase standard, off-the-shelf hardware components that
        we
        integrate and custom configure before deployment to our customers and we
        earn a
        profit on the difference between the sale price and our cost, in addition
        to the
        fees we receive for integrating, installing and operating the customer's
        digital
        signage network.
 
 ***General
        and Administrative Expenses.*** For the three months ended June 30, 2005, we incurred general and administrative
        expenses of $381,380 as compared to $335,695 for three months ended June
        30,
        2004, an increase of $45,685, or 13.6%. This increase was primarily attributable
        to an increase of $58,134, or 34.0%, in the amount of wages and salaries
        we
        paid, to $229,225 for the three months ended June 30, 2005 from $171,091
        for the
        three months ended June 30, 2004. Such increased wages and salaries resulted
        primarily from the addition of three software developers in the first quarter
        of
        2005.
 
 ***Interest
        Expense.*** Interest expense was $5,845 for the three months ended June 30, 2005, as
        compared to $13,747 for the three months ended June 30, 2004, resulting in
        a
        decrease of $7,902, or 57.5%. This decrease was primarily due to the waiver
        or
        reduction of interest due under certain promissory notes held by our officers
        and directors during the three months ended June 30, 2005.
 
 ***Net
        Income (Loss).*** For the
        reasons described above, we had net income of $26,792 for the three months
        ended
        June 30, 2005 as compared to a net loss of $175,693 for the three months
        ended
        June 30, 2004.
 
 
 **Results
        of Operations - Six months ended June 30, 2005 compared to six months ended
        June
        30, 2004.**
 
 ***Revenue.***  For the six months ended June 30, 2005, we had revenues of $1,907,328 as
        compared to $1,563,269 for the six months ended June 30, 2004, representing
        an
        increase of $344,059, or 22.0%.  This increase was primarily due to the
        reasons discussed above.
 
 ***Cost
        of Revenue.*** For the six months ended June 30, 2005, the cost of sales was $1,311,573
        as
        compared to $1,201,536 for the six months ended June 30, 2004, representing
        an
        increase of $110,037, or 9.2%. This increase was primarily due to the reasons
        discussed above.
 
 ***General
        and Administrative Expenses.*** For the six months ended June 30, 2005, we incurred general and administrative
        expenses of $759,205 as compared to $667,288 for six months ended June 30,
        2004,
        an increase of $91,917, or 13.8%. This increase was primarily attributable
        to an
        increase of $77,562, or 21.7%, in the amount of wages and salaries we paid,
        to
        $434,506 for the six months ended June 30, 2005 from $356,944 for the six
        months
        ended June 30, 2004. This increase was primarily due to the reasons discussed
        above.
  18
  ***Interest
        Expense.*** Interest expense was $21,208 for the six months ended June 30, 2005, as compared
        to $23,455 for the six months ended June 30, 2004, resulting in a decrease
        of
        $2,247, or 9.6%. This decrease was primarily due to the reasons discussed
        above.
 
 ***Net
        Income (Loss).*** We
        incurred a net loss of $160,792 for the six months ended June 30, 2005 as
        compared to a net loss of $299,188 for the six months ended June 30, 2004.
 
 
 **Liquidity
        and Capital Resources**
 
 At
        June
        30, 2005, we had a cash balance of $0. Since 2002, our principal sources
        of
        liquidity have been the issuance of debt and equity securities, primarily
        to
        related parties, and borrowings from lending institutions. Our current cash
        levels, together with the cash flows we generate from operating activities,
        are
        not sufficient to enable us to continue our operations at current levels.
        We
        believe that anticipated cash flows from recent and near-term scheduled
        deployments of our digital signage network will allow us to achieve ‘break-even"
        during the first quarter of 2006. As a result, we intend to seek additional
        capital through the sale of shares of our common stock to institutional
        investors or other ‘accredited investors' in private placements in order to
        provide us with sufficient working capital to sustain operations until such
        time
        and to allow us to pay off our existing credit facility.
 
 We
        are
        currently in preliminary discussions with an institutional lender to obtain
        a
        loan in the amount of $1.5 million. We anticipate that the closing of such
        financing will be contingent upon, among other conditions, the recapitalization
        of our company to increase our number of authorized but unissued common stock,
        which we intend to effect in October 2005. There can be no assurance that
        we
        will be able to consummate the proposed financing transaction, or that any
        such
        transaction will be consummated on terms favorable to us.
 
 Even
        if
        we successfully obtain such financing, we will still require additional capital
        to execute our growth strategy of expanding our digital signage network and
        acquiring other digital signage companies that we believe are financially
        accretive with our company, of which there can be no assurance.
 
 On
        June
        30,2005, we acquired software assets useful in the delivery of digital media
        from two companies, iPoint Technologies, Inc. and Media SideStreet Corporation,
        in consideration for an aggregate of 9,375,000 shares of our common stock
        and
        the issuance of  $1,275,965 agreegate principal amount of promissory
        notes.
 
 At
        June
        30, 2005, we had liquid assets of $1,072,259, consisting of cash, accounts
        receivable derived from operations and inventory. Long-term assets of $469,166
        consisted primarily of computer servers and video display equipment used
        in
        operations.
 
 Current
        liabilities of $3,211,043 at June 30, 2005 consisted primarily of $2,211,523
        of
        accounts payable and notes payable, including related party amounts. After
        June
        30, 2005, certain of our officers and directors holding $1.7 million aggregate
        principal amount of promissory notes agreed to cancel such notes in
        consideration of the issuance of an aggregate of 16,766,820 shares of our
        common
        stock. After June 30, 2005, certain officers and directors
        holding approximately $1.7 million aggregate principal amount of promissory
        notes have agreed, in principle, to cancel such notes in consideration of
        the
        issuance of options to purchases an aggregate of 16,766,820 shares of our
        commons stock having an exercise price of $0.10 per share.
 
 Our
        working capital deficit was $2,128,482 as of June 30, 2005 for the reasons
        described above.
  19
  During
        the six months ended June 30, 2005, we used net cash of $34,682 in operating
        activities.
 
 During
        the six months ended June 30, 2005, we used net cash of $1,466,433 in investing
        activities, primarily for the purchase of digital signage hardware inventory
        and
        for the purchase of proprietary software from iPoint Technologies, Inc. and
        Media SideStreet Corporation.
 
 Financing
        activities, consisting primarily of proceeds from the sale and issuance of
        notes, provided net cash of $1,464,638 during the six months ended June 30,
        2005.
  
 ITEM
        3. CONTROLS AND PROCEDURES.
 
 DISCLOSURE
        CONTROLS AND PROCEDURES. Our management, with the participation of our chief
        executive officer and chief financial officer, has evaluated the effectiveness
        of our disclosure controls and procedures (as such term is defined in Rules
        13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended
        (the "Exchange Act")) as of the end of the period covered by this report.
        Based
        on such evaluation, our chief executive officer and chief financial officer
        have
        concluded that, as of the end of such period, our disclosure controls and
        procedures are effective in recording, processing, summarizing and reporting,
        on
        a timely basis, information required to be disclosed by us in the reports
        that
        it files or submits under the Exchange Act.
 
 INTERNAL
        CONTROL OVER FINANCIAL REPORTING. There have not been any changes in our
        internal control over financial reporting (as such term is defined in Rules
        13a-15(f) and 15d-15(f) under the Exchange Act) during the period
        covered by this report that have materially affected, or are reasonably likely to materially affect,
        our internal control over financial reporting.
  PART
        II. OTHER INFORMATION
 
 ITEM
        1. LEGAL PROCEEDINGS
 
 On
        August 16, 2005, we entered into a Release and Settlement Agreement with
        the
        plaintiffs in case
        #
        CT-006990-03, styled *Terrance
        Lall, Lester Hall and Heath Wilson vs., Limelight Media Group, Inc, formerly
        known as Showintel Networks, Inc, David V. Lott and the David V. Lott Living
        Trust,* filed
        on
        December 16, 2004. Under
        the terms of the settlement, the parties agreed to release and discharge
        the
        other party from all existing claims, damages liabilities and actions and
        we
        agreed to issue Mr. Lall 1 million shares of our common stock, which were
        valued
        at $0.03 per share on the date of issuance.
 
 On
        August 10, 2005, Dierbergs Markets, Inc. withdrew its complaint against us
        in case
        #
        05CC-000359, styled *Dierbergs
        Markets, Inc. vs. Interactive Graphic Solutions, LLC and Limelight Media
        Group,
        Inc,* filed
        in
        January 2005. Dierbergs
        informed us that it would not pursue further legal proceedings with regard
        to
        the subject matter of the proceeding.
 
 20
 
 ITEM
        2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
 
 In
        the
        quarter ended June 30, 2005, we issued an aggregate of 500,000 shares of
        our
        common stock, at $0.06 per share, to an employee as a sign-on bonus in
        connection with his employment with our company. Such shares were issued
        in
        reliance upon the exemption from registration provided by Section 4(2) of
        the
        Securities Act of 1933, as amended, on the basis that such issuance did not
        involve a public offering, no underwriter fees or commissions were paid in
        connection with such issuance and such person was an ‘accredited investor' as
        defined in Regulation D under the Securities Act of 1933, as
        amended.
 
 In
        the
        quarter ended June 30, 2005, we issued an aggregate of 290,000 shares of
        our
        common stock to two consultants for services rendered pursuant to their
        consulting agreements, which services were valued at $14,500 in the aggregate.
        Such shares were issued in reliance upon the exemption from registration
        provided by Section 4(2) of the Securities Act of 1933, as amended, on the
        basis
        that such issuance did not involve a public offering, no underwriter fees
        or
        commissions were paid in connection with such issuance and such persons were
        ‘accredited investors' as defined in Regulation D under the Securities Act
        of
        1933, as amended.
 
 In
        the
        quarter ended June 30, 2005, we issued 4,800,000 shares of our common stock
        to
        two employees for settlements pursuant to terms and conditions of the employment
        agreements of such employees. Such shares were valued at an aggregate amount
        of
        $240,000 and were issued in reliance upon the exemption from registration
        provided by Section 4(2) of the Securities Act of 1933, as amended, on the
        basis
        that such issuance did not involve a public offering, no underwriter fees
        or
        commissions were paid in connection with such issuance and such persons were
        ‘accredited investors' as defined in Regulation D under the Securities Act
        of
        1933, as amended.
 
 In
        the
        quarter ended June 30, 2005, we issued an aggregate of 1,796,830 shares of
        our
        common stock to a total of eight investors in a private placement for an
        aggregate purchase price of $126,000. Such shares were issued in reliance
        upon
        the exemption from registration provided by Section 4(2) of the Securities
        Act
        of 1933, as amended, on the basis that such issuance did not involve a public
        offering and such persons were ‘accredited investors' as defined in Regulation D
        under the Securities Act of 1933, as amended.
  
 ITEM
        6. EXHIBITS.
 
 The
        exhibits required by this item are listed on the Exhibit Index attached
        hereto.
  21
  SIGNATURES
 
 In
        accordance with the requirements of the Exchange Act, the registrant has
        caused
        this report to be signed on its behalf by the undersigned, thereunto duly
        authorized.
 
 Dated:
                  August 31, 2005
              LIMELIGHT
                  MEDIA GROUP, INC.By:
              /s/
                  David V. LottDavid
                  V. LottChief
                  Executive Officer(principal
                  executive officer)By:
              /s/
                  Joseph MartinezJoseph
                  MartinezChief
                  Financial Officer(principal
                  financial officer)
 22
  **EXHIBIT
        INDEX**
 
 
 31.1
              Certification
                  of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted
                  pursuant
                  to Section 302 of the Sarbanes-Oxley Act of
                  2002.
 
 31.2
              Certification
                  of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted
                  pursuant
                  to Section 302 of the Sarbanes-Oxley Act of
                  2002.
 
 32.1
              Certification
                  of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted
                  pursuant
                  to Section 906 of the Sarbanes-Oxley Act of
                  2002.
 
 32.2
              Certification
                  of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted
                  pursuant
                  to Section 906 of the Sarbanes-Oxley Act of
                  2002.






23