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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB


|X|   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934

                  For the quarterly period ended March 31, 2006

|_|   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934

             For the transition period from __________ to __________

                        Commission File Number: 000-29611

                          THE CHILDREN'S INTERNET, INC.
        -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


            Nevada                                          20-1290331
-------------------------------                          -------------------
(State or other jurisdiction of                            (IRS Employer
incorporation or organization)                           Identification No.)

            5000 Hopyard Rd., Suite 320, Pleasanton, California 94588
            ---------------------------------------------------------
                    (Address of principal executive offices)

                                 (925) 737-0144
                           ---------------------------
                           (Issuer's telephone number)


               ---------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.         Yes |X| No |_|

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).                                  Yes |_| No |X|

State the number of shares outstanding of each of the issuer's classes of common
equity: As of April 30, 2006, there were 26,858,138 post-split shares of common
stock issued and outstanding.

Transitional Small Business Disclosure Format (check one):        Yes |_| No |X|

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<PAGE>

                          THE CHILDREN'S INTERNET, INC

                                      INDEX


                                                                         Page
                                                                         Number

PART I - FINANCIAL INFORMATION                                             1

Item 1.  Financial Statements (Unaudited)                                  1

         Unaudited Balance Sheet - March 31, 2006                          1
         Unaudited Statements of Operations - For the three months
         ended March 31, 2006 and 2005, and the period from
         inception to March 31, 2006                                       2

         Unaudited Statements of Cash Flows - For the three months         3
         ended March 31, 2006 and 2005, and the period from
         inception to March 31, 2006

         Notes to Unaudited Financial Statements                           4

Item 2.  Management's Discussion and Analysis of Financial
         Conditions and Plan of Operation                                  11

Item 3.  Controls and Procedures                                           17


                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                 18
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds         20
Item 6.  Exhibits and Reports on Form 8-K                                  20

SIGNATURES                                                                 21


<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

                          THE CHILDREN'S INTERNET, INC.
                          (A Development Stage Company)
                                  BALANCE SHEET
                                 March 31, 2006
                                   (Unaudited)

                                     ASSETS
<TABLE>
<CAPTION>
Current Assets:
<S>                                                                         <C>
     Cash                                                                   $     3,014
     Deposit held in escrow                                                      37,378
                                                                            -----------
                Total Current Assets                                             40,392

Equipment:
     Equipment at cost                                                           12,196
     Accumulated depreciation                                                    (2,051)
                                                                            -----------
                Equipment, net                                                   10,145
                                                                            -----------
Other Assets:
     Deferred charges - Related company                                       5,670,000
     Deposit - State Board of Equalization                                        2,000
     Deferred tax asset (net of valuation allowance of
       of $713,372)                                                                  --
                                                                            -----------
TOTAL ASSETS                                                                $ 5,722,537
                                                                            ===========

                       LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
     Accounts payable and accrued expenses                                  $   205,886
     Accrued officers' compensation                                             246,774
     Payroll taxes payable                                                        8,313
                                                                            -----------
                Total Current Liabilities                                       460,973
Long-Term Liabilities:
     Due to parent company                                                      683,349
                                                                            -----------
TOTAL LIABILITIES                                                             1,144,322
                                                                            -----------

COMMITMENTS AND CONTINGENCIES (NOTES  1, 2 & 3)

STOCKHOLDERS' EQUITY
     Preferred stock, $0.001 par value; 10,000,000 shares
       authorized; zero shares issued and outstanding                                --
     Common stock, $0.001 par value; 75,000,000 shares
       authorized; 26,858,138 shares issued and outstanding                      26,858
     Additional paid-in capital                                               7,892,198
     Deficit accumulated during the development stage                        (3,340,841)
                                                                            -----------
TOTAL STOCKHOLDERS' EQUITY                                                    4,578,215
                                                                            -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                  $ 5,722,537
                                                                            ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements


                                       1
<PAGE>

                          THE CHILDREN'S INTERNET, INC.
                          (A Development Stage Company)
                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                  For the Three Months
                                                                                    Ended March 31,              From
                                                                              ---------------------------       Inception
                                                                                  2006             2005         to Date
                                                                              ------------    ------------    ------------
<S>                                                                           <C>             <C>             <C>
REVENUE                                                                       $         --    $         --    $         --

General and administrative expenses                                                277,650         482,222       3,337,641
                                                                              ------------    ------------    ------------
Operating loss before provision for income taxes                                  (277,650)       (482,222)     (3,337,641)

Provision for income taxes                                                              --              --           3,200
                                                                              ------------    ------------    ------------
NET LOSS                                                                      $   (277,650)   $   (482,222)   $ (3,340,841)
                                                                              ============    ============    ============


Net loss per common share, after giving retroactive effect to 2 for 1 stock
   split on March 11, 2005
              - basic and diluted                                             $      (0.01)   $      (0.02)
                                                                              ============    ============

Weighted average number of common shares
   Outstanding
              - basic                                                           26,858,138      20,050,824
                                                                              ============    ============
              - diluted                                                         46,399,805      45,786,138
                                                                              ============    ============
</TABLE>

The accompanying notes are an integral part of these financial statements.


                                       2
<PAGE>

                          THE CHILDREN'S INTERNET, INC.
                          (A Development Stage Company)
                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                      For the Three Months
                                                                        Ended March 31,            From
                                                                  --------------------------    Inception
                                                                     2006            2005         to Date
                                                                  -----------    -----------    -----------
<S>                                                               <C>            <C>            <C>
CASH FLOWS USED IN OPERATING ACTIVITIES:

Net loss                                                          $  (277,650)   $  (482,222)   $(3,340,841)

Adjustments to reconcile net loss to net cash
     used in operating activities:

     Depreciation on equipment
                                                                        1,175             --          2,051
     Stock compensation to
     director                                                              --        315,000        315,000
     Stock compensation to
     President                                                         19,583             --         19,583
     Shares issued for services
                                                                           --         81,360        701,956
     Services performed as capital
     contribution                                                          --             --        595,000
     Expenses paid by former officer on behalf of
     company                                                               --             --          5,000
     Deposit - State Board of Equalization
                                                                       (2,000)            --         (2,000)
     Increase in current assets

         Deposit held in escrow
                                                                           --                       (37,378)
     Increase in current
     liabilities
         Accounts payable and accrued
         expenses                                                      29,942          3,507        214,199
         Accrued officers' compensation
                                                                       66,774             --        246,774
                                                                  -----------    -----------    -----------
Net cash used in operating
activities                                                           (162,176)       (82,355)    (1,280,656)
                                                                  -----------    -----------    -----------
CASH USED IN INVESTING ACTIVITIES:
     Acquisition of equipment
                                                                         (774)            --        (12,196)
                                                                  -----------    -----------    -----------
Net cash used in investing
activities                                                               (774)            --        (12,196)
                                                                  -----------    -----------    -----------
CASH PROVIDED BY FINANCING ACTIVITIES:
     Issuance of common stock
                                                                           --        456,912        612,517
     Advances from parent
     company                                                           62,115        129,635      1,140,261
     Parent company advances converted to common stock
                                                                           --       (456,912)      (456,912)
                                                                  -----------    -----------    -----------
Net cash provided by financing activities
                                                                       62,115        129,635      1,295,866
                                                                  -----------    -----------    -----------

Net change in cash and cash equivalents
                                                                     (100,835)        47,280          3,014

Cash and cash equivalents - Beginning of
period                                                                103,849             --             --
                                                                  -----------    -----------    -----------
Cash and cash equivalents - End of period                         $     3,014    $    47,280    $     3,014
                                                                  ===========    ===========    ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.


                                       3
<PAGE>

                          THE CHILDREN'S INTERNET, INC.
                          (A Development Stage Company)
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS
                                 March 31, 2006

NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Business

The Children's  Internet,  Inc. (the Company) was incorporated under the laws of
the State of Nevada on September  25, 1996 under the name D.W.C.  Installations.
At that date, 2,242,000 post-split shares were issued. The Company was primarily
inactive until July 2002.

On July 3, 2002,  Shadrack Films, Inc. (the Parent Company) purchased  2,333,510
newly  issued  post-split  shares  of our  common  stock for  $150,000,  thereby
obtaining a majority ownership  interest and becoming the parent company.  Total
issued and outstanding shares were increased to 4,575,510 post-split shares as a
result of this sale. Subsequently,  on December 27, 2002, the Company's name was
changed to The Children's Internet, Inc.

On October 11, 2002,  8,948,000  newly issued  restricted  post-split  shares of
common stock were issued as a debt financing fee,  pursuant to an agreement with
five  shareholders  holding  a total of  2,237,000  freely  tradable  post-split
shares.  These shareholders  agreed to pay to Two Dog Net, Inc. (TDN), a related
party,  the  proceeds of the sales of an  unspecified  number of their shares to
third parties, and in return these shareholders or their designees received four
restricted shares for each of their original freely-tradable shares. TDN in turn
agreed to loan a portion of the proceeds to Shadrack Films,  Inc. to finance the
ongoing operations of the Company. TDN retained the remainder of the proceeds to
help fund  development  costs of The Children's  Internet  system,  which is the
product  the Company is bringing  to the  marketplace.  In view of the  $575,356
agreed upon value of the  newly-issued  shares given up by the Company to obtain
this  financing,  no interest is charged on the  amounts  loaned.  The total net
proceeds of the shares sold under this agreement was $2,228,292, and as of March
31, 2006, $1,140,261 had been loaned to the Company by Shadrack Films, Inc.

On February  15, 2005,  the Company 's Board of  Directors  authorized a 2 for 1
forward  split  of the  Company  's  issued  and  outstanding  common  stock  to
shareholders  of  record  on March  7,  2005,  to take the form of a 100%  stock
dividend.  The  effective  date of the forward split on the OTC:BB was March 11,
2005.

During the year ended  December 31, 2005,  an additional  13,334,628  restricted
post-split  shares of common  stock were  issued for  conversion  of debt and in
payment of investor relation services as explained in Notes 2, 3 and 5, bringing
the  total  of  the  Company's  issued  and  outstanding  post-split  shares  to
26,858,138 at March 31, 2006.


On January 1, 2006, the company adopted the stock-based  compensation provisions
of  SFAS  No.  123R,  which   establishes   standards  for  the  accounting  for
transactions in which an entity  exchanges its equity  instruments for goods and
services.  SFAS No.  123R  eliminates  the  ability to account  for  share-based
compensation  transactions using Accounting  Principles Board Opinion No. 25 and
generally   requires   that  such   transactions   be  accounted   for  using  a
fair-value-based method.


                                       4
<PAGE>

Development Stage Enterprise

The  Company is a  development  stage  enterprise  as defined  by  Statement  of
Financial  Accounting  Standards  (SFAS) No. 7,  "Accounting  and  Reporting  by
Development Stage  Enterprises."  All losses  accumulated since the inception of
the Company have been  considered  as part of the  Company's  development  stage
activities.  The Company is devoting the  majority of its efforts to  activities
focused  on  marketing  The  Children's  Internet(R)  service  and on  financial
planning,  raising  capital,  developing  sales  strategies  and  new  marketing
materials and  implementing its business plan. The Company is considered to be a
development  stage  company even though its planned  principal  operations  have
commenced, because there have been no significant revenues earned by the Company
to date.

Additionally, the Company is not a shell company as defined in Rule 12b-2 of the
Exchange Act.

Interim Financial Information

The accompanying  unaudited interim  financial  statements have been prepared by
the Company in accordance with accounting  principles  generally accepted in the
United  States of America  pursuant  to  Regulation  S-B of the  Securities  and
Exchange  Commission.  Certain  information  and footnote  disclosures  normally
included  in  financial   statements  prepared  in  accordance  with  accounting
principles  generally  accepted  in the  United  States  of  America  have  been
condensed or omitted. Accordingly,  these interim financial statements should be
read in conjunction with the Company's audited financial  statements and related
notes as contained in the Company's  Form 10-KSB for the year ended December 31,
2005. In the opinion of management, the interim financial statements reflect all
adjustments,   including  normal  recurring  adjustments,   necessary  for  fair
presentation of the interim periods presented. The results of operations for the
three months ended March 31, 2006 are not  necessarily  indicative of results of
operations to be expected for the full year.


Going Concern

The  accompanying  financial  statements  have been  prepared on a going concern
basis,  which  contemplates  the  realization  of assets and the  settlement  of
liabilities  and  commitments in the normal course of business.  As reflected in
the accompanying financial statements, the Company had net losses and a negative
cash flow from  operations  for the three  months  ended March 31,  2006.  These
factors  raise  substantial  doubt  about its  ability  to  continue  as a going
concern.  The ability of the Company to continue as a going concern is dependent
on the Company's  ability to raise  additional  funds and implement its business
plan.  The  financial  statements do not include any  adjustments  that might be
necessary if the Company is unable to continue as a going concern.


NOTE 2 - RELATED PARTY TRANSACTIONS

Services Provided

On February 15, 2005,  the Company's  Board of Directors  resolved that starting
January 1, 2005,  all salary due and payable to the  Company's  Chief  Executive
Officer,  Chief  Financial  Officer,  and Director,  Sholeh  Hamedani,  would be
accrued when earned.  The decision  will be made at the end of each year whether
to make the payment in cash, shares of the Company's restricted common stock, or
a  combination  of both. As of the date of this report no decision has been made
what method of payment Ms.  Hamedani  will take and it  continues to be accrued.
For the three-month  period ended March 31, 2006 $45,000 was accrued and charged
to General and Administrative  Expense. In 2005, $45,000 was accrued on June 30,
2005 for the three-month period ended March 31, 2005.

                                       5
<PAGE>

Advances

As of the date of this  report,  all of the  Company's  funding has been through
Shadrack  Films,  Inc., the Parent Company.  The total amount  advanced  through
March 31, 2006 was  $1,140,261.  In February  2005,  the Company  owed  Shadrack
Films, Inc., our parent company,  approximately $457,000 representing loans made
by Shadrack to the Company since  activating  the  development  stage on July 3,
2002 when it agreed to fund all of the  Company's  operations.  On February  15,
2005, the Company's Board of Directors authorized and approved the conversion of
debt  totaling  $456,912  owed  by the  Company  to  Shadrack,  into  13,054,628
post-split  shares of the Registrant's  restricted  common stock at a conversion
price of $.035 per post-split share.

Shadrack  Films,  Inc. is an entity owned and controlled by the Company's  Chief
Executive  Officer,  Chief Financial  Officer and Chairman of the Board,  Sholeh
Hamedani,  who is the  sole  officer,  director  and  shareholder  of  Shadrack.
Shadrack also owned 2,333,510  post-split  shares of the Company's common stock,
of which it sold 1,277,150 of its restricted  shares in reliance on an exemption
from  registration  pursuant to Section 4 (1-1/2) of the Securities Act of 1933,
to  approximately  130  investors  between July 2004 and June 2005. In addition,
Shadrack paid for services  valued at $35,000 with 70,000  restricted  shares of
the Company's  common  stock.  Together with the  13,054,628  post-split  shares
issued upon  conversion  of the debt,  Shadrack  owns an aggregate of 14,040,988
post-split  shares of the Company's  common stock or 52.3% without giving effect
to any presently exercisable options.

Beneficial Ownership

The Company, Shadrack and Two Dog Net, Inc. (TDN), are related parties, in that,
the Company's Chief Executive Officer,  Chief Financial  Officer,  and Director,
Sholeh Hamedani,  is the sole shareholder of Shadrack which as of March 31, 2006
owns 52.3% of the  Company's  common  stock.  Ms.  Hamedani was President of TDN
until  she  resigned  on  August 1,  2002 and is a 10%  shareholder  of TDN.  In
addition,  the current President,  Chairman and Founder of TDN, Nasser Hamedani,
is the father of the Company's Chief Executive Officer, Chief Financial Officer,
and Director, Sholeh Hamedani.

Licensing Agreement

The Wholesale Sales and Marketing Agreement between the Company and Two Dog Net,
Inc., dated March 3, 2003, is an exclusive and renewable five-year agreement for
the  Company  to be the  exclusive  marketers  of TDN's  proprietary  and patent
pending secure  internet  service for children  pre-school to junior high called
The Children's Internet(R).  Under the terms of the agreement,  the agreement is
automatically  renewed for additional five year periods on the same terms unless
either party  terminates  by written  notice to the other party no less than one
year before the end of the term.


                                       6
<PAGE>

On February 15, 2005, the Company's  Board of Directors  authorized and approved
an amendment to the Wholesale Sales and Marketing  Agreement between the Company
and Two Dog Net,  Inc.,  dated  March 3, 2003.  The  amended  license  agreement
reduces the license fee for The Children's Internet(R) technology payable to TDN
from $3.00 to $1.00 per monthly subscription. In consideration for the reduction
of the fee, the Company granted TDN or its designees,  an option to purchase the
Company's currently restricted common stock as described below.

Stock Options Granted

As noted above,  on February 15, 2005,  the Company issued an option to purchase
up to 18,000,000  post-split shares of the Company's  restricted common stock at
an exercise price of $0.07 per share, and a fair value of $5,670,000. The Option
is  exercisable,  in whole or in part at any time and from  time to time,  for a
period of five years from the date of grant.  The Option also  provides TDN with
"piggyback"  registration  rights  for all shares  underlying  the Option on any
registration  statement  filed by the Company for a period of one year following
any exercise of the Option.

Also on February 15,  2005,  the  Company's  Board of  Directors  granted  Tyler
Wheeler,  the Company's Chief Software Architect  Consultant and a director,  an
option to purchase up to 1,000,000 post-split shares of the Company's restricted
common stock at an exercise  price of $0.07,  and a fair value of $315,000.  The
option  is  exercisable,  in whole or in part at any time and from time to time,
for a period of five years from the date of grant.

Both options to purchase Company shares were valued at $0.315 per share. Both of
the above  options were valued using the  Black-Scholes  option  pricing  model,
which was developed for estimating the fair value of traded options,  and taking
into account that all of the exercisable shares are restricted.

NOTE 3 - COMMITMENTS AND CONTINGENCIES

On November 24, 2004, Oswald & Yap, A Professional Corporation ("O&Y"), formerly
counsel to the Company,  filed a complaint in the Superior  Court of California,
County of Orange, Case No. 04CC11623,  against the Company, seeking unpaid legal
fees in the amount of $50,985 in connection with the legal representation of the
Company.  Subsequently  the amount  claimed of unpaid  legal fees was reduced to
$37,378  because it was discovered  that O&Y did not properly  credit all of the
payments  that were made by the  Company  to O&Y.  The  amount  of  $37,378  was
deposited  in an escrow  account by the Company on July 5, 2005.  The  complaint
includes  causes of action for breach of  contract.  The  Company  disputes  the
amounts claimed alleging that O&Y's services were otherwise  unsatisfactory.  On
May 5,  2005,  O&Y  submitted  an Offer to  Compromise  for a $0  payment by the
Company to O&Y in exchange for mutual releases which the Company rejected.

The Company  filed a  cross-complaint  against O&Y alleging  breach of contract,
professional negligence, negligent representation,  and breach of good faith and
fiduciary  duty.  The Company is seeking  damages in an  unspecified  amount for
costs,  legal fees and losses incurred.  O&Y has vigorously  disputed the claims
set forth in the  cross-complaint  and has  indicated its  intention,  should it
prevail in its defense, to institute a malicious  prosecution action against the
Company,  Nasser Hamedani,  Sholeh Hamedani and Company counsel. Trial is set in
the matter for November 13, 2006 in Department C16 of the Orange County Superior
Court.


                                       7
<PAGE>

The cross-claim was filed in the Superior Court of California, County of Orange,
Case No. 04CC11623 by TCI against O&Y, and the principal  allegation is that O&Y
was retained to assist its  predecessor  company in the purchase and acquisition
of  D.W.C.   Installations  with  the  expectation  that  D.W.C.  had  available
free-trading  shares  such  that TCI  could  immediately  raise  capital  on the
relevant  markets and that in advising TCI through the  purchase,  O&Y failed to
properly  advise  TCI as to the  status of D.W.C.  Installations  and its shares
which in fact were not  free-trading.  As a result of this conduct,  TCI alleges
damages  in  an  unspecified  amount  but  including  purchase  costs,  extended
operation costs, refiling costs, audit costs, legal fees, loan fees, lost market
share, and costs for registration.

There is a contingent  liability in connection  with a Stock Purchase  Agreement
executed on October 11, 2002  between  identified  Shareholders  and  identified
Purchasers.  Under the  terms of the  Stock  Purchase  Agreement,  a payment  of
$150,000 is due to be paid into escrow in part consideration for purchase of the
stock of D.W.C.  Installations,  Inc. The payment date is  designated as 90 days
from  the  date  that  the  Company's  [D.W.C.  Installations,  Inc.,  a  Nevada
Corporation]  shares  of common  stock  become  quoted  on the  over-the-counter
bulletin board system. The shares became quoted on the over-the-counter bulletin
board system on December 23, 2004.  If this payment is not made,  there could be
exposure in connection with the identified  shareholders' efforts to collect the
amounts allegedly due.

On  February  25,  2005,  the Company  entered  into a one-year  agreement  with
Crosslink  Financial  Communications,   Inc.,  a  California  corporation,   for
consulting  services related to stockholder  communications and public relations
with existing shareholders, brokers, dealers and other investment professionals.
The principal shareholder of Crosslink is William L. Arnold. As compensation for
these services,  Crosslink received 200,000 restricted  post-split shares of the
Company's common stock valued at $0.33 per share,  monthly stock compensation of
8,000  restricted  post-split  shares of common stock, and $5,000 per month from
which Crosslink paid for complementary  services (e.g.,  other mailing services,
email services, data base extensions) of not less than $1,500 per month up to an
average of $2,500 per month. During the year ended December 31, 2005,  Crosslink
received a total of 280,000 restricted post-split shares of the Company's common
stock  under  this   agreement.   The   agreement   with   Crosslink   Financial
Communications, Inc. was terminated at the end of December 2005.

On December 30, 2005, William L. Arnold, the principal  shareholder of Crosslink
was  appointed  by the  Chairman to act as  President  of the  Company  under an
Executive  Employment  Agreement  with the same  date.  Compensation  includes a
monthly salary of $10,000, of which $2,500 per month is deferred with 9% accrued
interest  until January  2007.  The  agreement  also  includes a combination  of
nonqualified and qualified stock options (the Stock Option). The Stock Option is
for the  purchase of up to  1,000,000  post-split  shares at an option  price of
$0.55 per share,  and expires on December 31, 2010. One half of the Stock Option
vested immediately and the remaining 500,000 option shares will vest at the rate
of 1/36th each month until fully vested. Of the 500,000 option shares which vest
immediately,  360,000 are Incentive Stock Options (ISO's). The remaining 640,000
option  shares  are   non-qualified.   Additionally  the  agreement  includes  a
performance  bonus of up to 50% of the annual salary to be paid on or before the
sixtieth day following the close of the Company's fiscal year, provided that the
Employee meets the  performance  standards as established by Board of Directors.
Although the President and the CEO of the Company have mutually agreed to extend
the deadline to define the  "Performance  Standards" from March 31, 2006 to June
30,  2006,  $15,000 has been  accrued as an expense for the three  months  ended
March 31, 2006. If the stock-based  compensation provisions of SFAS No. 123R had
been  adopted  prior to January 1, 2006,  the fair value of the  500,000  shares
which  vested on  December  30,  2005  under the Stock  Option,  would have been
recorded at $235,000.


                                       8
<PAGE>

As  previously  disclosed by the Company on August 15, 2005,  November 15, 2005,
and January 3, 2006, that on July 19, 2005, the Company and its auditors and its
former auditors received notice from the Office of Enforcement of the Securities
and Exchange Commission stating that they had commenced an "informal inquiry" to
determine if there have been "any violations of the federal  securities laws" by
the  Company.  On  December  27,  2005,  the  Company  received  notice from the
Securities  and  Exchange  Commission  that  the  Commission  had  elevated  its
inquiries to a formal  investigation  for possible  violation of the  securities
laws  resulting from the Company's  restatement of its financial  statements for
fiscal years 2002 and 2003 and certain  interim  periods in fiscal year 2004. On
May 1, 2006,  the  Company was further  informed by the San  Francisco  District
Office of the Commission  that it is going to "recommend to the Commission  that
it authorize  the staff to file a civil  injunctive  action in the United States
District Court and/or  cease-and-desist  proceeding in an administrative  action
against The Children's Internet" and its C.E.O., Sholeh Hamedani. The Commission
will allege in its pleadings that the Company, its C.E.O. and other individuals,
violated  various  sections  and  rules  of the  Securities  Act of 1933 and the
Securities Exchange Act of 1934. The Commission "may seek injunctive relief or a
cease and desist order, disgorgement,  and civil monetary penalties" against the
Company as well as its C.E.O.  being barred from serving as either a director or
officer of the Company or of any public company in the future.

The Company is continuing to seek  resolution  of the staff's  investigation  by
virtue of  settlement.  A  potential  settlement  likely may include the Company
and/or its Chief Executive Officer consenting,  without admitting or denying the
allegations,  to  a  judgment  alleging  negligent,  reckless,  and  intentional
violations  of the  federal  securities  laws,  and  other  sanctions  including
substantial  penalties.  These  penalties  could range from the Chief  Executive
Officer being barred from serving as either a director or officer of the Company
to also including financial penalties and disgorgement of all profits derived by
the  Company  and/or  its  Chief  Executive  Officer  who  raised  approximately
$2,722,000  through  sale of Company  stock by their  nominees to third  parties
and/or sales by certain  individuals of  approximately  $215,000 and/or sales by
Shadrack who subsequently directly sold 1,277,150 shares for $753,000.

From  inception,  Shadrack,  the parent  company,  has  advanced  to the Company
approximately  $1.1  million  for  operations.  While  the  exact  amount of the
disgorgement of profits and/or  penalties cannot be determined at this time, the
ability to pay them by the Company or the Chief  Executive  Officer is a serious
question.  Any proposed settlement will be subject to the Commission's approval.
The  Company  cannot  predict the outcome of any  settlement  negotiations,  the
staff's investigation, or the ultimate Commission action should these settlement
negotiations fail. The Company does not yet have a settlement offer.  Management
and counsel to the Company are currently waiting to see if they will receive one
from  the  Commission's  staff.  Additionally,  there is no  assurance  that the
Company will receive a settlement  offer.  Moreover,  there is no assurance that
their  settlement  offer  (if any) will be  acceptable  to the  Company  and the
prospect  of  litigation  could  ensue  which  could  seriously  compromise  the
Company's ability to achieve its goals.


                                       9
<PAGE>

On April 7, 2005, the Company entered into an agreement with Convergys  Customer
Management  Group Inc.  of  Cincinnati,  Ohio to provide  subscriber  management
services,   including   inbound  telephone   coverage  24/7,   capturing  caller
information,  providing  toll-free  numbers  and daily  reporting  of orders and
leads. The term of the agreement begins on April 7, 2005 and continues until the
expiration of 30 days after either party gives the other party written notice of
its intent to terminate.  Under this agreement,  inbound live phone services are
billed at $0.75 per minute for the first million  minutes  annually,  $0.732 for
the  second  million  minutes  and $0.714 per  minute  thereafter.  The  minimum
purchase  commitment is $2,500 per month,  which is waived for the first year of
service. The Convergys relationship is established,  but their services will not
commence until the Infomercial marketing begins.

On August 23, 2005, the Company signed a client services  agreement with Mercury
Media  of  Santa  Monica,  CA to  exclusively  manage  the  distribution  of the
Company's television  infomercials.  Mercury Media is an advertising agency that
specializes  in  purchasing  airtime  for  different  types of  direct  response
advertising. The term of the contract is annual until terminated by either party
by written  notice of not less than 30 days.  For media time bookings under this
contract,  the Company will pay a 10%  commission on the gross amount charged by
broadcast,  satellite or cable television outlets. At the time of this report no
media time has been booked. The Mercury Media  relationship is established,  but
their services will not commence until the Infomercial marketing begins.


NOTE 4 - COMMON STOCK

On February  15, 2005,  the  Company's  Board of Directors  authorized a 2 for 1
forward  split  of  the  Company's  issued  and  outstanding   common  stock  to
shareholders  of record on March 7, 2005, in the form of a 100% stock  dividend.
The  effective  date of the  forward  split on the NASDAQ  OTC: BB was March 11,
2005.

NOTE 5 - NON-MONETARY TRANSACTIONS

Deferred Charge

As explained in Note 2, the  Company's  Board of Directors  granted an option to
Two Dog Net, Inc. to purchase  currently  restricted common shares.  This option
was valued at $5,670,000. This amount has been recorded as a deferred charge and
will be amortized  into expense as  subscription  revenues  are  recognized.  As
subscription income becomes effective, this asset will be evaluated periodically
by  management  to  determine  if any  adjustment  for  impairment  of  value is
required.

Conversion of Debt to Common Stock

As explained in Note 2, on February 15, 2005,  the Company's  Board of Directors
authorized  and  approved  the  conversion  of debt  totaling  $456,912  owed to
Shadrack Films, Inc., the Parent Company,  into 13,054,628  post-split shares of
the  Company's  restricted  common  stock at a  conversion  price  of $.035  per
post-split share.

Non-employee Compensation

As explained in Note 2, the  Company's  Board of Directors  granted an option to
Tyler Wheeler,  to purchase  restricted common shares. This option was valued at
$315,000.  This  amount has been  recorded  as an expense  for  services  and is
included with general and administrative  expenses in the Company's Statement of
Operations for the three months ended March 31, 2005.


                                       10
<PAGE>

Stock-based Compensation

During the quarter  ended March 31, 2006,  options to purchase  41,667 shares at
$0.55 per share, granted to William L. Arnold, became vested under his executive
employment  agreement based on his first three months of service as President of
the Company.  The vested options were valued at $19,583 using the  Black-Scholes
option pricing model based on the grant-date  fair value in accordance with SFAS
No. 123R.


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATION

The following  discussion and analysis  should be read in  conjunction  with our
financial statements,  including the notes thereto,  appearing elsewhere in this
Report.

FORWARD-LOOKING STATEMENTS

The  following  information  contains  certain  forward-looking   statements  of
management  of the  Company.  Forward-looking  statements  are  statements  that
estimate the happening of future  events and are not based on  historical  fact.
Forward-looking  statements  may be  identified  by the  use of  forward-looking
terminology, such as "may," "could," "expect," "estimate," "anticipate," "plan,"
"predict,"  "probable,"  "possible,"  "should,"  "continue,"  or similar  terms,
variations  of those terms or the negative of those terms.  The  forward-looking
statements  specified in the  following  information  have been  compiled by our
management  on the basis of  assumptions  made by management  and  considered by
management  to  be  reasonable.  Our  future  operating  results,  however,  are
impossible  to predict  and no  representation,  guaranty,  or warranty is to be
inferred from those forward-looking statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The  Company's  financial  statements  have been  prepared  in  accordance  with
accounting principles generally accepted in the United States of America,  which
contemplate  continuation of the Company as a going concern.  The preparation of
these financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

RESULTS OF OPERATIONS

SELECTED FINANCIAL DATA

The following  selected  statement of operations  and balance sheet data for the
period from  September 25, 1996,  the date of our  inception,  through March 31,
2006 and for the three  months  ended  March 31,  2006 as  compared to the three
months ended March 31, 2005 were derived from our financial statements and notes
thereto included in this report which are unaudited.  Historical results are not
necessarily  indicative  of results that may be expected for any future  period.
The following data should be read in conjunction with "Plan of Operation" below,
and our  unaudited  financial  statements,  including  the related  notes to the
financial statements.


                                       11
<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
                                                                                   For the period from
                                                                                   September 25, 1996
                                For the three months     For the three months      (inception) through
                                ended March 31, 2006     ended March 31, 2005       March 31, 2006
------------------------------------------------------------------------------------------------------
<S>                                  <C>                      <C>                    <C>
STATEMENT OF OPERATIONS DATA
------------------------------------------------------------------------------------------------------
Net sales                                     -                        -                          -
------------------------------------------------------------------------------------------------------
Operating expenses                   $  277,650               $  482,222               $  3,337,641
------------------------------------------------------------------------------------------------------
Operating loss                       $ (277,650)              $ (482,222)             $  (3,337,641)
------------------------------------------------------------------------------------------------------
Net loss                             $ (277,650)              $ (482,222)             $  (3,340,841)
------------------------------------------------------------------------------------------------------
</TABLE>


------------------------------------------------------------------------------
                                                          As of March 31, 2006
------------------------------------------------------------------------------
BALANCE SHEET DATA:
------------------------------------------------------------------------------
Total assets                                                   $ 5,722,537
------------------------------------------------------------------------------
Total liabilities                                              $ 1,144,322
------------------------------------------------------------------------------
Total stockholders' equity                                     $ 4,578,215
------------------------------------------------------------------------------

Our  operating  expenses  decreased by $204,572 for the quarter  ended March 31,
2006,  as  compared  to the  quarter  ended March 31,  2005.  The  decrease  was
primarily  due to decreases of $194,054 in officers and  directors  compensation
and  $89,567 in  investor  relations  expenses,  offset by an  increase in legal
expenses  of  $58,361.  The  decrease in  officers  and  directors  compensation
resulted  primarily  from more stock  options  granted  during the quarter ended
March 31,  2005.  The  decrease  in  investor  relations  expense is because the
principal of our former investor relations consulting firm has been President of
the Company  since  December 30, 2005 and has been  performing  many of the same
functions.  The  increase in legal  expenses is due to the ongoing  Oswald & Yap
litigation and responding to the SEC inquiry.

PLAN OF OPERATION

This plan of operation contains  forward-looking  statements that involve risks,
uncertainties,  and assumptions.  The actual results may differ  materially from
those  anticipated  in these  forward-looking  statements as a result of certain
factors,  including,  but not  limited to,  those  described  elsewhere  in this
report.

On September 10, 2002, we entered into a License  Agreement with Two Dog Net for
an exclusive  worldwide  license to market and sell The  Children's  Internet(R)
service.  We subsequently  replaced the royalty and license agreement with a new
Wholesale Sales & Marketing  Agreement with the same effective date of September
10, 2002. The new agreement provides for us to be the exclusive marketers of Two
Dog Net's  proprietary and patent pending secure Internet service for pre-school
to junior  high school  aged  children  called The  Children's  Internet(R).  We
further  amended this agreement in February 2005 to decrease the per user fee to
Two Dog Net from $3.00 to $1.00. In consideration for this decrease, Two Dog Net
was granted an option to acquire  18,000,000  post-split shares of the Company's
restricted  common  stock at an exercise  price of $.07 per share for five years
from the date of grant.  The shares  underlying  the option  have  "piggy  back"
registration  rights  for a period of one year  following  any  exercise  of the
option.


                                       12
<PAGE>

The Company released The Children's  Internet(R),  version 9.0, to the market on
March 2, 2006.  The Company is the  exclusive  marketer and  distributor  of The
Children's  Internet(R)  membership-based  service created just for kids. In the
August  2004  issue of PC  Magazine  The  Children's  Internet(R)  was ranked as
Editors'  Choice in the category of "Kids' Browsers and Services," and was voted
number one over AOL,  EarthLink  and MSN  Premium 9. We believe  The  Children's
Internet(R) is the most  comprehensive,  smart solution to the problems inherent
to a child's unrestricted and unsupervised Internet access. We offer a protected
online  service  and  "educational  super  portal"  specifically   designed  for
children,  pre-school to junior high, providing them with SAFE, real-time access
to the World Wide Web; access to hundreds of thousands of the best pre-selected,
pre-approved  educational and  entertaining  web pages accessed through a secure
propriety browser and search engine.

During 2005 and 2006,  the  technology on which the product is based was updated
and numerous features including secure e-mail,  Family  Favorites(TM),  and more
home rooms were added,  as well as improving  the overall  functionality  of the
service.

We also created a "User  Advisory  Group" that served as critical  advisors with
respect to both content and  technical  aspects of the  product.  This group was
disbanded in December 2005 after providing very valuable constructive commentary
and with the understanding  that the only components to be finalized were secure
e-mail and an enhanced search engine. Those components have now been added.

Additionally,  during  2005 and 2006,  we  identified  and,  where  appropriate,
contracted   with  third  party  companies  to  outsource   non-strategic   core
competencies to provide  administrative  support services and effectively put in
place the  infrastructure  to  support  the  growth of the  business.  Convergys
Corporation of Cincinnati,  Ohio has been contracted to manage telemarketing and
the order taking process, and Mercury Media of Santa Monica, California has been
contracted to manage media  placement.  Neither of these  companies has received
any payment,  nor have they begun to perform services for the Company, as of the
date of this report.

THE BUSINESS MODEL

The product has a suggested  retail  price of $9.95 per month with a 30-day free
trial  offer for the  first  month of  service  to the  consumer.  The user must
already have internet access, either through dial-up, DSL or cable broadband. We
utilize both retail and wholesale channels of distribution.

The Company will focus on  establishing  long term,  value-driven  relationships
with:

      o     Parents  and Kids
      o     The School Market:  School Administrators and Teachers
      o     Major ISP's such as Comcast, Yahoo, AOL, etc.
      o     Non-profit  organizations  such as religious groups,  Boy Scouts and
            Girl Scouts, etc.
      o     ISP customers with an interest in protecting their families

With the product now launched and generating minimal revenues,  we are affecting
a broad based Sales and  Marketing  Plan.  We will focus our sales and marketing
programs on five distinct areas where we can produce revenue:


                                       13
<PAGE>

1.    CONSUMER SALES- In March 2006, we began selling monthly  subscriptions  of
      the service directly to consumers via a nationwide Sales Agent program. We
      introduced a Sales Agent  program on January 11, 2006 and began  enrolling
      independent   Sales  Agents  to  sell   subscriptions  to  The  Children's
      Internet(R)  service on a commission  only basis. A monthly  commission of
      $2.00 per  subscriber  is paid to the sales agent and continues as long as
      the  subscriber  is enrolled  with our service.  These  independent  Sales
      Agents have  introduced  the product to some of the nations  largest ISPs,
      retailers,  merchandisers, and fast food companies. As of the date of this
      report, only minimal sales have been made.

      Consumers may also acquire the product directly from the Company via our
      website at: www.thechildrensinternet.com.

2.    WHOLESALERS-  We are  planning  to  sell  The  Children's  Internet(R)  to
      independent  distributors,  resellers  and  ISPs  who  will  sell  it as a
      value-added  service to their current customer base. Targets would include
      companies  such as Comcast,  AT&T,  EarthLink  and the hundreds of "local"
      ISPs throughout the United States. In these situations, the business model
      changes  dramatically  as we would not be engaged in billing,  collecting,
      customer service or level-one technical support.

3.    CHARITABLE  ORGANIZATIONS-  We are planning to "partner"  with  non-profit
      organizations to have them market the product. Targets would include large
      religious   organizations,   various  scout   programs,   Internet  safety
      activists,   law  enforcement  agencies,   etc.  Moreover,  we  offer  any
      age-appropriate  school,  public or private,  20 free licenses for a year.
      From there, we expect Parent Teacher  Associations to use the product as a
      fundraiser, deepening our penetration into the homes of children.

4.    INFOMERCIALS-  Subject  to  securing  financing,  the  cornerstone  of our
      consumer  marketing  plan is a national  television  advertising  campaign
      which includes a 30-minute  infomercial  that was produced over a two-year
      period of time by Two Dog Net.  This  infomercial  will be  re-edited  and
      updated.  We  then  intend  to  utilize  the  infomercial  to  launch  the
      advertising and consumer  marketing program to build brand recognition and
      to generate revenues from customer monthly subscriptions. We plan to first
      conduct a limited  media test to  identify  what  television  stations  in
      various  geographical  markets generate the most response.  From the media
      test we will be able to build the media  plan to  launch  the  advertising
      campaign  on a  national  basis  thereafter  and will be the basis for the
      ongoing infomercial media schedule.

5.    INTERNATIONAL  MARKETING-  the Company has been  approached  by identified
      resellers  in  Europe  and  Mexico  and  will  accommodate  them as we are
      successful in the United States.  Canada and Australia are obvious targets
      for  development.  A Spanish  language  version will ultimately open doors
      throughout Latin America and Spain.

CHANNELS OF DISTRIBUTION:

The  Children's  Internet,  Inc.  will  employ both  direct and  indirect  sales
channels.


                                       14
<PAGE>

      Also subject to secure  financing  we will hire a direct sales force.  The
      primary targets will be the largest Internet Service  Providers as well as
      other  national   organizations   that  market  to  the  most  appropriate
      demographic for our service. We believe one or more of the largest ISPs in
      the United States will recognize the first mover advantage opportunity and
      will use The  Children's  Internet  to not only  offer  this  much  needed
      product to their existing  customers,  but also to take significant market
      share from their competition. We also believe that almost any company that
      markets to our  demographic  will want to seize the public  relations good
      will that will accrue to any company offering our service.

      The indirect  channel,  composed of  non-salaried  independent  agents and
      wholesale  distributors,  will target a wide range of opportunities,  from
      local  charities  to  national   organizations  where  they  may  have  an
      influential contact. These  agents/distributors  will have the opportunity
      to employ  secondary  resellers  to work for them,  but we will not market
      using a multi-level  marketing  plan. The Company expects to have 30 sales
      agents by the end of 2006, growing to 100 by the end of 2007.

      FUTURE PRODUCTS AND SERVICES

      In the future we anticipate  generating  revenues via advertising  sold to
      the purveyors of children goods and services.  We also intend to engage in
      the  merchandising of The Children's  Internet(R)  themed  products,  from
      clothing to toys to books,  but for the  foreseeable  future we will focus
      strictly on the successful distribution of our core service.

      MARKET SHARE, CASH FLOW AND PROFITABILITY

      Although market data is not exact, and varies depending on the source, our
      plan is based on the belief that in the United  States  alone there are an
      approximately  48 million homes with internet  access with children  under
      the age of 16.  Our  model,  with a mix of  business  generated  from  the
      respective  channels  of  distribution,  indicates  we  can be  cash  flow
      positive  and  profitable  with less than 0.5% of the  market.  During the
      quarter ended March 31, 2006, no subscription revenue was realized.

LIQUIDITY AND RESOURCES

As of  March  31,  2006,  we  had  net  loss  from  inception  of  approximately
$3,341,000. Of this amount, approximately $595,000 represents the estimated fair
market value for the cost of wages,  if paid,  for the services  rendered by our
Chief  Executive  Officer  and an outside  consultant  (we have  recorded  these
amounts  for the cost of  wages,  since  they did not  charge  the  Company,  as
additional paid in capital),  $1,148,000  represents  professional  fees such as
legal  and  accounting  expenses,  $575,000  represents  a debt  financing  fee,
$315,000 represents officers compensation for which an option to purchase common
stock was issued,  $247,000  represents accrued officers  compensation,  and the
balance   of   $461,000   consists   primarily   of   payroll,   occupancy   and
telecommunications  costs including internet costs. To date, our parent company,
Shadrack, has funded all of our expended costs.

Currently,  we are dependent on funding from Shadrack for our current operations
and for  providing  office space and  utilities  that for the three months ended
March 31,  2006,  averaged  $30,700 per month in operating  costs,  exclusive of
professional  fees,  salaries  accrued but unpaid and time donated by our staff.
Through  March 31, 2006,  the amount  funded by Shadrack  totaled  approximately
$1,140,000.  On March 31, 2006,  the balance due to Shadrack  was  approximately
$683,000. The difference of approximately $457,000 was converted to common stock
on February 15, 2005,  when the  Company's  Board of  Directors  authorized  the
conversion of all debt owed to Shadrack  into  13,054,628  post-split  shares of
restricted  common stock at a  conversion  price of $0.07 per  pre-split  share.
Shadrack is under no obligation  to continue  funding our  operations  and could
stop at any time without notice.


                                       15
<PAGE>

Where practicable we plan to contract with third party companies to outsource
all non-strategic core competencies to provide administrative support services
such as level one technical support as well as to market The Children's
Internet(R) Service. We believe this strategy will minimize the number of
employees required to manage our intended growth through 2006. In connection
with this strategy back on August 14, 2003 we entered into two agreements, an
Independent Sales Agreement and a Licensing Agreement, with Infolink
Communications, Ltd, ("Infolink"), a sales organization in the Internet
Infrastructure industry. Infolink was hired to bring the Company wholesale
distributors, mainly Internet Service Providers who will sell and market The
Children's Internet service to their end users. To date Infolink has brought to
us minimal wholesale distributors who have generated no revenues. However, since
the product release of The Children's Internet (R) Version 9.0, Infolink has
resumed its efforts to proactively engage wholesale distributors. Nonetheless,
there is no assurance that we will be able to enter into additional arrangements
for marketing and administrative support services.

On February 25, 2005,  we entered into a  Consulting  Agreement  with  Crosslink
Financial   Communications,   Inc.,  of  which  Bill  Arnold  is  the  principal
shareholder. Crosslink represented the Company in stockholder communications and
public  relations  with  existing  shareholders,   brokers,  dealers  and  other
investment  professionals as to the Company's  current and proposed  activities,
and in consulting with  management.  For undertaking this engagement the Company
agreed to issue a "Commencement Bonus" payable in the form of 200,000 restricted
post-split shares of the Company's common stock. In addition, the Company agreed
to a monthly stock compensation of 8,000 post-split shares of common stock every
month on the contract  anniversary  date, and a cash fee of $5,000 per month for
the term of the Agreement.  Out of this fee,  Crosslink  paid for  complementary
services (e.g., other mailing services, email services, data base extensions) up
to an average of $2,500 per month.  The  agreement,  which was  originally for a
term  commencing  February 25, 2005 and ending  twelve  months  thereafter,  was
terminated at the end of December  2005.  On December 30, 2005,  Bill Arnold was
hired as The Company's full-time President.

On April 7, 2005, the Company entered into an agreement with Convergys  Customer
Management  Group Inc.  of  Cincinnati,  Ohio to provide  subscriber  management
services,   including   inbound  telephone   coverage  24/7,   capturing  caller
information,  providing  toll-free  numbers  and daily  reporting  of orders and
leads. The term of the agreement begins on April 7, 2005 and continues until the
expiration of 30 days after either party gives the other party written notice of
its intent to terminate.  Under this agreement,  inbound live phone services are
billed at $0.75 per minute for the first million  minutes  annually,  $0.732 for
the  second  million  minutes  and $0.714 per  minute  thereafter.  The  minimum
purchase  commitment is $2,500 per month,  which is waived for the first year of
service. The Convergys relationship is established,  but their services will not
commence until the Infomercial marketing begins.

On August 23, 2005, the Company signed a client services  agreement with Mercury
Media  of  Santa  Monica,  CA to  exclusively  manage  the  distribution  of the
Company's television  infomercials.  Mercury Media is an advertising agency that
specializes  in  purchasing  airtime  for  different  types of  direct  response
advertising. The term of the contract is annual until terminated by either party
by written  notice of not less than 30 days.  For media time bookings under this
contract,  the Company will pay a 10%  commission on the gross amount charged by
broadcast,  satellite or cable television outlets. At the time of this report no
media time has been booked. The Mercury Media  relationship is established,  but
their services will not commence until the Infomercial marketing begins.


                                       16
<PAGE>

GOING CONCERN UNCERTAINTY

Through  the date of this  report,  we have  relied  exclusively  on loans  from
Shadrack  to fund  all of our  expenses.  However,  there is no  assurance  that
Shadrack will be able or willing to continue such funding indefinitely.  We will
be required to obtain  additional  funds through  private  placements of debt or
equity  securities or by other borrowing.  We do not have any arrangements  with
potential  investors  or lenders to provide such funds and there is no assurance
that such  additional  financing  will be  available  when  required in order to
proceed with our business plan.  Further,  our ability to respond to competition
or changes in the market place or to exploit opportunities will be significantly
limited  by lack of  available  capital  financing.  If we are  unsuccessful  in
securing the additional  capital needed to continue  operations  within the time
required, we will not be in a position to continue operations. In this event, we
would attempt to sell the Company or file for bankruptcy.


OFF-BALANCE SHEET ARRANGEMENTS

None.



ITEM 3.  CONTROLS AND PROCEDURES

       DISCLOSURE CONTROLS AND PROCEDURES

      (a) Restatement.

      In the course of the due diligence for the Annual Report on Form 10-KSB of
      the Company for the fiscal year ended  December 31, 2004,  our  management
      identified an agreement that the Company had entered into with five of our
      shareholders  on  October  11,  2002.  This  agreement  provided  that  in
      consideration for the agreement of these shareholders to loan an affiliate
      of the Company  proceeds  from the sale of their shares of common stock of
      the Company to third  parties,  the Company would issue four shares of its
      restricted common stock for every one share owned. The aggregate number of
      shares of restricted  common stock that the Company was obligated to issue
      pursuant to the agreement was 4,474,000 pre-split  (8,948,000  post-split)
      shares.  The agreement was not disclosed in any of the Company's  previous
      SEC filings or otherwise included as an exhibit as a result of an error of
      omission.  In addition,  the 4,474,000  pre-split  (8,948,000  post-split)
      shares to be issued were not  included in any of the  Company's  financial
      statements for the fiscal years ended December 31, 2003 or 2002, or in any
      interim reporting period through September 30, 2004.

      Management  brought this matter to the attention of its Board of Directors
      and the Board of Directors  brought it to the  attention of the  Company's
      independent  auditor.  After  discussions  with  management,  the Board of
      Directors  determined that previously  reported financial  information for
      the Company be restated to reflect the agreement. In light of the expected
      restatement,  the  Company  filed a Form 8-K on April 21,  2005 under Item
      4.02 (a) advising that due to an error,  its previously  issued  financial
      statements  for the fiscal years ended December 31, 2003 and 2002 and such
      interim periods covered thereby and for the interim periods in fiscal 2004
      should no longer be relied upon.


                                       17
<PAGE>

      (a) Evaluation of Disclosure Controls and Procedures and Remediation

      In  connection  with the  restatement,  under the  direction  of our Chief
      Executive  Officer and  Controller,  we have  reevaluated  our  disclosure
      controls and  procedures.  We have  identified a material  weakness in our
      internal  controls and procedures  relating to the handling and disclosure
      of material agreements. In order to prevent the same kind of mistake noted
      above,  the  Company  has  implemented  a new review  system  whereby  all
      agreements which have a material effect on the Company will be reviewed by
      the Company's President and outside counsel.  Agreements will be forwarded
      by the  President to the  Company's  auditor which will keep copies in its
      files for reporting  purposes.  Additional copies will be forwarded to the
      Company's accounting  department where it will be logged and processed for
      follow-up.  In  addition  to the  above  we will  constantly  monitor  our
      procedures and when  necessary hire outside  consultants to make sure that
      the  Company's  corporate  compliance  program  is up to date with all SEC
      Rules and recommendations.

      We believe  that as of the date of this  filing,  the  process  enumerated
      above will remediate the current  weaknesses  that have been identified in
      our internal  controls  and  procedures  and further that with  applicable
      training  all  relevant  personnel  will  understand  and  apply the rules
      relating to disclosure of material agreements.


PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On November 24, 2004, Oswald & Yap, A Professional Corporation ("O&Y"), formerly
counsel to the Company,  filed a complaint in the Superior  Court of California,
County of Orange, Case No. 04CC11623,  against the Company,  seeking recovery of
allegedly  unpaid legal fees in the amount of $50,984.86 in connection  with the
legal  representation of the Company.  Subsequently the amount claimed of unpaid
legal fees was reduced to $37,378.43  because it was discovered that O&Y did not
properly  credit all of the  payments  that were made by the Company to O&Y. The
amount of $37,378.43  was deposited in an escrow  account by the Company on July
5, 2005.  The complaint  includes  causes of action for breach of contract.  The
Company disputes the amounts claimed alleging that O&Y's services were otherwise
unsatisfactory.  On May 9, 2005,  O&Y submitted an Offer to Compromise  for a $0
payment by the Company to O&Y in exchange for mutual  releases which the Company
rejected.

The Company  filed a  cross-complaint  against O&Y alleging  breach of contract,
professional negligence, negligent representation,  and breach of good faith and
fiduciary  duty.  The Company is seeking  damages in an  unspecified  amount for
costs,  legal fees and losses incurred.  O&Y has vigorously  disputed the claims
set forth in the  cross-complaint  and has  indicated its  intention,  should it
prevail in its defense, to institute a malicious  prosecution action against the
Company,  Nasser Hamedani,  Sholeh Hamedani and Company counsel. Trial is set in
the matter for November 13, 2006 in Department C16 of the Orange County Superior
court.


                                       18
<PAGE>

The cross-claim was filed in the Superior Court of California, County of Orange,
Case No. 04CC11623 by TCI against O&Y, and the principal  allegation is that O&Y
was retained to assist its  predecessor  company in the purchase and acquisition
of  D.W.C.   Installations  with  the  expectation  that  D.W.C.  had  available
free-trading  shares  such  that TCI  could  immediately  raise  capital  on the
relevant  markets and that in advising TCI through the  purchase,  O&Y failed to
properly  advise  TCI as to the  status of D.W.C.  Installations  and its shares
which in fact were not  free-trading.  As a result of this conduct,  TCI alleges
damages  in  an  unspecified  amount  but  including  purchase  costs,  extended
operation costs, refiling costs, audit costs, legal fees, loan fees, lost market
share, and costs for registration

There is a contingent  liability in connection  with a Stock Purchase  Agreement
executed on October 11, 2002  between  identified  Shareholders  and  identified
Purchasers.  Under the terms of Stock Purchase Agreement,  a payment of $150,000
is due to be paid into escrow in part consideration for purchase of the stock of
D.W.C.  Installations,  Inc. The payment date is  designated as 90 days from the
date that the  Company's  [D.W.C.  Installations,  Inc.,  a Nevada  Corporation]
shares of common  stock become  quoted on the  over-the-counter  bulletin  board
system. The shares became quoted on the  over-the-counter  bulletin board system
on December  23, 2004.  If this payment is not made,  there could be exposure in
connection  with the  identified  shareholders'  efforts to collect  the amounts
allegedly due.

SEC INVESTIGATION

As  previously  disclosed by the Company on August 15, 2005,  November 15, 2005,
and January 3, 2006, that on July 19, 2005, the Company and its auditors and its
former auditors received notice from the Office of Enforcement of the Securities
and Exchange Commission stating that they had commenced an "informal inquiry" to
determine if there have been "any violations of the federal  securities laws" by
the  Company.  On  December  27,  2005,  the  Company  received  notice from the
Securities  and  Exchange  Commission  that  the  Commission  had  elevated  its
inquiries to a formal  investigation  for possible  violation of the  securities
laws  resulting from the Company's  restatement of its financial  statements for
fiscal years 2002 and 2003 and certain  interim  periods in fiscal year 2004. On
May 1, 2006,  the  Company was further  informed by the San  Francisco  District
Office of the Commission  that it is going to "recommend to the Commission  that
it authorize  the staff to file a civil  injunctive  action in the United States
District Court and/or  cease-and-desist  proceeding in an administrative  action
against The Children's Internet" and its C.E.O., Sholeh Hamedani. The Commission
will allege in it's pleadings that the Company, its C.E.O. and other individuals
violated  various  sections  and  rules  of the  Securities  Act of 1933 and the
Securities Exchange Act of 1934. The Commission "may seek injunctive relief or a
cease and desist order, disgorgement,  and civil monetary penalties" against the
Company as well as its C.E.O.  being barred from  serving as either  director or
officer of the Company or of any public company in the future.

The Company is continuing to seek  resolution  of the staff's  investigation  by
virtue of  settlement.  A  potential  settlement  likely may include the Company
and/or its Chief Executive Officer consenting,  without admitting or denying the
allegations,  to  a  judgment  alleging  negligent,  reckless,  and  intentional
violations  of the  federal  securities  laws,  and  other  sanctions  including
substantial  penalties.  These  penalties  could range from the Chief  Executive
Officer being barred from serving as either  directors or officer of the Company
to also including financial penalties and disgorgement of all profits derived by
the  Company  and/or  its  Chief  Executive  Officer  who  raised  approximately
$2,722,000  through  sale of Company  stock by their  nominees to third  parties
and/or sales by certain  individuals of  approximately  $215,000 and/or sales by
Shadrack  who  subsequently   directly  sold  1,277,150  post-split  shares  for
$753,000.


                                       19
<PAGE>

From  inception,  Shadrack,  the parent  company,  has  advanced  to the Company
approximately  $1.1  million  for  operations.  While  the  exact  amount of the
disgorgement of profits and/or penalties can not be determined at this time, the
ability to pay them by the Company or the Chief  Executive  Officer is a serious
question.  Any proposed settlement will be subject to the Commission's approval.
The  Company  cannot  predict the outcome of any  settlement  negotiations,  the
staff's investigation, or the ultimate Commission action should these settlement
negotiations fail. The Company does not yet have a settlement offer.  Management
and counsel to the Company are currently waiting to see if they will receive one
from  the  Commission's  staff.  Additionally,  there is no  assurance  that the
Company will receive a settlement  offer.  Moreover,  there is no assurance that
their  settlement  offer  (if any) will be  acceptable  to the  Company  and the
prospect  of  litigation  could  ensue  which  could  seriously  compromise  the
Company's ability to achieve its goals.

We are not aware of any other pending or threatened litigation that could have a
material adverse effect on our business.

ITEM 2. UNREGISTRED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The  Company  had no  "Unregistered  Sales of its  securities  during the period
covered by this report.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

The following documents are filed as part of this Report:

(a) Exhibits:

       No.  title
       ---  -----

      31.1  Certification of Chief Executive  Officer Pursuant to the Securities
            Exchange Act of 1934,  Rules 13a-14 and 15d-14,  as adopted pursuant
            to Section 302 of the Sarbanes-Oxley Act of 2002

      31.2  Certification of Chief Financial  Officer Pursuant to the Securities
            Exchange Act of 1934,  Rules 13a-14 and 15d-14,  as adopted pursuant
            to Section 302 of the Sarbanes-Oxley Act of 2002

      32    Certification  Pursuant  to  18  U.S.C.  Section  1350,  as  Adopted
            Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


      (b)   Reports on Form 8-K:

      On  January  3,  2006,  the  Company  filed a  Current  Report on Form 8-K
      reporting  the  receipt  of a notice  from  the  Securities  and  Exchange
      Commission  regarding the change of the nature of its investigation of the
      Company from informal to formal.

      On  January  6,  2006,  the  Company  filed a  Current  Report on Form 8-K
      reporting  the  Employment  Agreement  signed  with  William L.  Arnold on
      December 30, 2005, to serve as President of The Children's Internet, Inc.


                                       20
<PAGE>


                                   SIGNATURES


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


DATED: May 22, 2006                   The Children's Internet, Inc.


                                      /S/ SHOLEH HAMEDANI
                                      ----------------------------------------
                                      By:  Sholeh Hamedani
                                      Its: Chief Executive Officer, and
                                           Chief Financial Officer
                                          (Principal Executive Officer,
                                           Principal Financial Officer
                                           and Principal Accounting Officer)


                                       21