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**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549





**FORM
      10-QSB**





(MARK
      ONE)





x QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE


SECURITIES
      EXCHANGE ACT OF 1934





For
      the
      quarterly period ended June 30, 2006





o TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF


THE
      EXCHANGE ACT





For
      the
      transition period from ___ to ___





Commission
      file number: 333-5278-NY








(Exact
      Name of small business issuer as Specified in Its Charter)





**Delaware**
            **94-3334052**(State
                or other jurisdiction of
            (I.R.S.
                Employerincorporation
                or organization)
            Identification
                No.)





**555
                Twin Dolphin Drive, Suite 650****Redwood
                City, California 94065**(Address
                of principal executiveoffices)





Issuer's
      telephone number: (650) 232-2600


**PowerHouse
        Technologies Group, Inc.**
 (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 Securities 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 o





Indicate
      by checkmark whether the registrant is a shell company (as defined in Rule
      12b-2
      of the Exchange Act). Yes o No x





As
      of
      August 1, 2006, there were 66,034,389 shares of the issuer's common stock,
      $0.0001 par value per share ("Common Stock"), outstanding.





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





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QUARTERLY
      REPORT





TABLE
      OF CONTENTS





PART
                I. FINANCIAL INFORMATION
            3Item
                1. Financial Statements
            3Consolidated
                Balance Sheet - June 30, 2006(Unaudited) and
                December 31, 2005
            3Consolidated
                Statements of Operations -Three and six months
                endedJune
                30, 2006 and 2005 Unaudited
            4Consolidated
                Statements of Cash Flows -Six months
                endedJune
                30, 2006 and 2005 - Unaudited
            5Notes
                to Consolidated Financial Statements -
                Unaudited
            6Item
                2. Management's Discussion and Analysis or Plan of
                Operation
            14Item
                3. Controls and Procedures
            17PART
                II. OTHER INFORMATION
            17Item
                1. Legal Proceedings
            17Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds
            17Item
                3. Defaults Upon Senior Securities
            17Item
                4. Submission of Matters to a Vote of Security
                Holders
            17Item
                5. Other Information
            18Item
                6. Exhibits
            19SIGNATURES
            19





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PART
      I. FINANCIAL INFORMATION





Item
      1. Financial Statements





**MIGO
      SOFTWARE, INC.**


**CONSOLIDATEDBALANCE
      SHEET** **S**


As
                of
            
            As
                ofJune
                30,
            
            December
                31,2006
            
            2005(Unaudited)
            
            ***ASSETS*****Current
                Assets:***Cash
                and cash equivalents
            
            $
            189,622
            
            $
            2,510,704Short-term
                investments
            
            
            5,370,650
            
            
            2,875,000Accounts
                receivable
            
            
            14,887
            
            
            25,368Inventory
            
            
            —
            
            
            15,755Other
                current assets
            
            
            84,405
            
            
            82,983Total
                current assets
            
            
            5,659,564
            
            
            5,509,810Property
                and equipment, net
            
            
            10,036
            
            
            7,923OTHER
                ASSETS:Software
                technology, net
            
            
            1,685,045
            
            
            1,965,101Other
                assets
            
            
            39,475
            
            
            39,475**TOTAL
                ASSETS**
            
            $
            7,394,120
            
            $
            7,522,309**LIABILITIES
                AND STOCKHOLDERS' EQUITY (DEFICIT)*****Current
                Liabilities:***Accounts
                payable
            
            $
            151,720
            
            $
            1,104,157Accrued
                compensation
            
            
            112,469
            
            
            78,084Accrued
                liabilities
            
            
            1,141,048
            
            
            1,271,640Total
                current liabilities
            
            
            1,405,237
            
            
            2,453,881***Non-current
                liabilities:***Warrant
                liability, at fair value
            
            
            —
            
            
            3,882,672Total
                Liabilities
            
            
            1,405,237
            
            
            6,336,553Commitments
                and contingencies (Note 8)**Temporary
                Equity,**Common
                Stock, 0 and 27,879,700 shares issued and outstanding at June 30,
                2006 and
                December 31, 2005, respectively
            
            
            —
            
            
            5,908,036**Stockholders'
                Equity (Deficit):**Junior
                A Preferred stock, $.0001 par value; 5,000,000 shares authorized,
                790,250
                shares issued and outstanding; preference upon liquidation of
                $2,600,000
            
            
            79
            
            
            79Common
                stock, $.0001 par value;
                100,000,000 shares authorized; 66,034,389 and 26,598,180 shares issued
                and
                outstanding at June 30, 2006 and December 31, 2005,
                respectively
            
            
            6,700
            
            
            2,660Additional
                paid in capital in excess of par value
            
            
            43,877,431
            
            
            29,344,416Deferred
                Compensation Expense
            
            
            (279,483
            )
            
            (462,694
            )


Treasury
                Stock
            
            
            (386,400
            )
            
            (386,400
            )Accumulated
                Deficit
            
            
            (37,229,444
            )
            
            (33,220,341
            )**Total
                stockholders' equity (deficit )**
            
            
            5,988,883
            
            
            (4,722,280
            )**TOTAL
                LIABILITIES AND STOCKHOLDERS'****EQUITY
                (DEFICIT)**
            
            $
            7,394,120
            
            $
            7,522,309*
                Derived from the December 31, 2005 audited financial
                statements


The
      accompanying notes are an integral part of these consolidated financial
      statements.  -3-
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            to Table of Contents**
  **MIGO
        SOFTWARE, INC.**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS
      (UNAUDITED)**


Three
                  Months ended
              
              Three
                  Months ended
              
              Six
                  Months ended
              
              Six
                  Months endedJune
                  30,
              
              June
                  30,
              
              June
                  30,
              
              June
                  30,2006
              
              2005
              
              2006
              
              2005**Revenues**
              
              $
              26,387
              
              $
              57,141
              
              $
              67,616
              
              $
              130,687Cost
                  of Sales
              
              
              148,757
              
              
              199,987
              
              
              304,801
              
              
              739,981Gross
                  Profit
              
              
              (122,370
              )
              
              (142,846
              )
              
              (237,185
              )
              
              (609,294
              )**Operating
                  Expenses**Research
                  and development
              
              
              425,488
              
              
              192,443
              
              
              785,541
              
              
              363,501Sales
                  and marketing
              
              
              279,031
              
              
              305,923
              
              
              541,421
              
              
              625,210General
                  and administrative
              
              
              1,333,667
              
              
              886,269
              
              
              2,557,868
              
              
              2,137,592Total
                  operating expenses
              
              
              2,038,186
              
              
              1,384,635
              
              
              3,884,830
              
              
              3,126,303**Loss
                from operations**
              
              
              (2,160,556
              )
              
              (1,527,481
              )
              
              (4,122,015
              )
              
              (3,735,597
              )**Other
                  income (expense)**Interest
                  (net)
              
              
              55,267
              
              
              (5,133
              )
              
              119,180
              
              
              (3,469
              )Decrease
                  in warrant liability
              
              
              —
              
              
              —
              
              
              166,538
              
              
              —Other
              
              
              110,501
              
              
              —
              
              
              (172,804
              )
              
              282,236Total
                  other income (expense)
              
              
              165,768
              
              
              (5,133
              )
              
              112,912
              
              
              278,767Loss
                  Before Income Taxes
              
              
              (1,994,788
              )
              
              (1,532,614
              )
              
              (4,009,103
              )
              
              (3,456,830
              )Provision
                  for Income Taxes
              
              
              —
              
              
              800
              
              
              —
              
              
              2,658**Net
                  Loss**
              
              
              (1,994,788
              )
              
              (1,533,414
              )
              
              (4,009,103
              )
              
              (3,459,485
              )Deemed
                  and Regular Preferred Stock Dividend
              
              
              —
              
              
              196,978
              
              
              —
              
              
              396,566Net
                  Loss Attributable to Holders of common shares
              
              $
              (1,994,788
              )
              $
              (1,730,392
              )
              $
              (4,009,103
              )
              $
              (3,856,054
              )Basic
                  and Diluted net loss attributable to common shareholders per
                  share
              
              $
              (0.03
              )
              $
              (0.44
              )
              $
              (0.07
              )
              $
              (1.01
              )Weighted
                  Average Shares Outstanding Basic and Diluted
              
              
              66,034,389
              
              
              3,951,559
              
              
              61,171,629
              
              
              3,818,573


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


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            Contents**




**MIGO
        SOFTWARE, INC.**


**CONSOLIDTED
      STATEMENTS OF CASH FLOWS
      (UNAUDITED)**


Six
                Months
            
            Six
                MonthsEnded
                June 30,
            
            Ended
                June 30,2006
            
            2005(Unaudited)
            
            (Unaudited)Cash
                Flows from Operating Activities:Net
                loss
            
            $
            (4,009,103
            )
            $
            (3,459,488
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Common
                stock and options issued for services
            
            
            —
            
            
            353,678Inventory
                write-downs
            
            
            15,442
            
            
            70,914Depreciation
                and amortization
            
            
            283,456
            
            
            277,451Amortization
                of deferred compensation
            
            
            248,211
            
            
            —Interest
                expense relating to amortization of debt issuance costs
            
            
            —
            
            
            29,200Interest
                expense relating to amortization of debt discount and beneficial
                conversion
            
            
            —
            
            
            5,819Remeasurement
                of warrants to fair value
            
            
            (166,538
            )
            
            —Stock
                based compensation
            
            
            1,040,867
            
            
            296,974Gain
                on Settlement
            
            
            (683,971
            )
            
            —Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            10,481
            
            
            65,384Inventory
            
            
            313
            
            
            76,619Other
                current assets
            
            
            (1,422
            )
            
            27,413Other
                assets
            
            
            —
            
            
            12,050Accounts
                payable
            
            
            (268,465
            )
            
            (177,008
            )Accrued
                compensation
            
            
            34,385
            
            
            98,638Accrued
                liabilities
            
            
            116,378
            
            
            174,580Net
                cash used in operating activities
            
            
            (3,379,966
            )
            
            (2,147,776
            )Cash
                Flows from Investing Activities:Purchases
                of available-for-sale investments
            
            
            (2,495,650
            )
            
            —Acquisition
                of First Person Software
            
            
            —
            
            
            6,761Purchase
                of equipment
            
            
            (5,514
            )
            
            —Net
                cash provided by (used in) investing activities
            
            
            (2,501,164
            )
            
            6,761Cash
                Flows from Financing Activities:Payment
                of debt issuance costs
            
            
            —
            
            
            (1,355,438
            )Proceeds
                from convertible notes
            
            
            —
            
            
            700,000Payments
                upon rescission of common stock
            
            
            —
            
            
            (12,500
            )Payment
                of equity financing costs
            
            
            (414,952
            )
            
            —Proceeds
                from sale of common stock
            
            
            3,975,000
            
            
            —Proceeds
                from sale of preferred stock
            
            
            —
            
            
            1,308,805


Net
                cash provided by financing activities
            
            
            3,560,048
            
            
            640,867NET
                DECREASE IN CASH AND CASH EQUIVALENTS
            
            
            (2,321,082
            )
            
            (1,500,148
            )CASH
                AND CASH EQUIVALANTS, Beginning of period
            
            
            2,510,704
            
            
            1,893,280CASH
                AND CASH EQUIVALENTS, End of period
            
            $
            189,622
            
            $
            393,132**Non-cash
                investing and financing activity:**Issuance
                of shares for dividends
            
            
            
            
            $
            1,489,180Restricted
                stock issued
            
            $
            65,000
            
            
            —Reclassification
                from temporary to permanent equity
            
            
            8,715,214
            
            
            —Reclassification
                from warrant liability to permanent equity
            
            
            5,130,926
            
            
            —Common Stock Purchase Warrant Issued to Placement
              Agent
            
            
            246,970
            
            
            —**Supplemental
                Disclosure of cash paid for :**Interest
            
            
            —
            
            
            —Income
                Taxes
            
            
            800
            
            
            1,000


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


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MIGO
        SOFTWARE, INC.
 NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


1.
            Interim
                Financial Data and Basis of
                Presentation





The
      accompanying unaudited consolidated financial statements have been prepared
      by Migo Software, Inc. ("Migo" or "the Company") in accordance with accounting
      principles generally accepted in the United States of America ("US GAAP").
      In
      the opinion of management, the accompanying unaudited
      consolidated financial statements contain all adjustments, consisting only
      of those of a normal recurring nature, necessary for a fair presentation of
      the
      Company's financial position, results of operations and cash flows at the dates
      and for the periods indicated. These consolidated financial statements
      should be read in conjunction with the consolidatd financial statements and
      notes related thereto, included in the Annual Report on Form 10-KSB\T for the
      nine months ended December 31, 2005. The Company was a development stage
      enterprise from May 16, 2002 (inception) through June 30, 2005. On January
      9,
      2006, the Board of Directors of the Company determined to change the Company’s
      fiscal year end to December 31 from March 31, effective for the year ended
      December 31, 2005. As of August 10, 2006, the Company's name was changed to
      "Migo Software, Inc."





The
      results for the three and six month periods ended June 30, 2006 are
      not necessarily indicative of the results to be expected for the full fiscal
      year. The preparation of the financial statements in conformity with US GAAP
      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
      revenues and expenses during the reporting period. Actual results could differ
      from those estimates.





Forward-Looking
      Statements





This
      Quarterly Report on Form 10-QSB contains forward-looking statements including,
      without limitation, statements concerning the future of the industry in which
      the Company operates, its product development plans, business strategy,
      financial estimates, continued acceptance of its products and dependence on
      significant distributors and customers. In some cases, you can identify
      forward-looking statements by terminology such as "may", "will", "should",
      "expects", "plans", "anticipates", "believes", "estimates", "predicts",
      "potential", "continue" or the negative of such terms or other comparable
      terminology. You should not place undue reliance on the forward-looking
      statements contained in this document. When considering forward-looking
      statements, you should keep in mind the risk factors and other cautionary
      statements made in this Quarterly Report on Form 10-QSB and in the Company’s
      other SEC filings. Forward-looking statements, particularly those concerning
      anticipated events relating to the development and marketing of the Company's
      products and the timing or magnitude of those events, are inherently uncertain.
      The risk factors and other considerations noted in the Company’s SEC filings
      could cause the Company’s actual results to differ significantly from those
      contained in any forward-looking statements.





2.
            Summary
                of Significant Accounting Policies





*Basis
      of Presentation* - The
      accompanying financial statements have been prepared in conformity with
      accounting principles generally accepted in the United States (“US GAAP”), which
      contemplate continuation of the Company as a going concern. However, the Company
      is subject to the risks and uncertainties associated with a new business and
      has
      incurred significant losses from operations. From inception, the Company has
      never been profitable and has sustained substantial net losses from operations.
      There can be no assurance that it will ever generate sufficient revenues from
      its operating activities, or that it will achieve and sustain a profit during
      any future period, particularly if operations remain at current levels.
      Management estimates that the current funds available and on-hand will be
      adequate to fund operations throughout 2006.





Critical
      Accounting Policies





The
      Company makes estimates and assumptions in the preparation of its consolidated
      financial statements in conformity with US GAAP. These accounting principles
      require management to make certain estimates, judgments and assumptions. The
      Company believes that the estimates, judgments and assumptions upon which it
      relies are reasonable based upon information available at the time that these
      estimates, judgments and assumptions are made. These estimates, judgments and
      assumptions can affect the reported amounts of assets and liabilities as of
      the
      date of the financial statements, as well as the reported amounts of revenues
      and expenses during the periods presented. To the extent there are material
      differences between these estimates, judgments or assumptions and actual
      results, the Company's financial statements will be affected. The accounting
      policies that reflect more significant estimates, judgments and
      assumptions


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MIGO
        SOFTWARE, INC.
 NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


which
      management believes are the most critical to aid in fully understanding and
      evaluating the Company's reported financial results include the
      following:





*Principles
      of Consolidation* - The
      consolidated financial statements include the accounts of the Company and its
      subsidiaries, PowerHouse Acquisition LLC, and PowerHouse Studios, Inc. All
      significant inter-company accounts and transactions have been eliminated in
      consolidation.





*Use
      of Estimates* - The
      preparation of financial statements in conformity with US GAAP 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 revenues
      and
      expenses during the reported periods. Management bases its estimates and
      assumptions on historical experience and on various other assumptions that
      it
      believes are reasonable under the circumstances. Actual results could materially
      differ from those estimates. Significant estimates include the valuation of
      acquired software technology and revenue recognition.





*Cash,
      Cash Equivalents* - The
      Company considers temporary liquid investments with an original maturity of
      three months or less to be cash equivalents.





*Accounts
      Receivable* -
      Accounts receivable are stated at the amount management expects to collect
      from
      outstanding balances. An allowance for doubtful accounts is provided for those
      accounts receivable considered to be uncollectible, based upon historical
      experience and management's evaluation of outstanding accounts receivable at
      the
      end of the year. At June 30, 2006 management believed that all amounts were
      collectible.





*Inventory* ** -
      Historically, inventory was valued at the lower of cost or market with cost
      determined by the first-in, first-out method. Prior to March 31, 2006, inventory
      consisted of finished goods of which certain amounts were on consignment with
      third party distributors and resellers. Although the Company is principally
      in
      the business of developing software, to support sales of software licenses
      it
      has at times purchased hardware and resold it with its software pre-installed.
      As a result, the Company was exposed to a number of factors that could result
      in
      portions of its inventory becoming either obsolete or in excess of anticipated
      usage. These factors included, but were not limited to, technological changes
      in
      its markets, competitive pressures in products and prices, and the introduction
      of new product lines. The Company regularly evaluated its ability to realize
      the
      value of its inventory based on a combination of factors, including historical
      usage rates, forecasted sales, product life cycles, and market acceptance of
      new
      products. When inventory that was obsolete or in excess of anticipated usage
      is
      identified, it was written down to realizable salvage value or an inventory
      valuation reserve is established. As of June 30, 2006, the Company no longer
      sells items such as flash drives or watches with its Migo software
      pre-installed, and only sells software that is either downloaded or
      pre-installed by its partners.  As such, the Company no longer carries
      any physical inventory, nor does it anticipate doing so in the future. For
      the
      three months ended June 30, 2006, the Company recorded an expense of $4,320
      related to the write-off of inventory.





*Property
      and Equipment* -
      Property and equipment are stated at cost. Depreciation is computed using the
      straight-line method over estimated useful lives of three to five years.
      Leasehold improvements are amortized over the shorter of the lease term or
      the
      estimated useful life. The Company capitalizes costs associated with acquiring
      and installing software to be used for internal purposes.





*Software
      Technology Assets* -
      Software technology assets acquired as part of the First Person Software
      acquisition (Note 4) are stated at cost. Amortization is computed using the
      revenue or straight-line method, whichever is greater, over an estimated useful
      life of five years.





*Impairment
      of Long-Lived Assets* -
      Property, equipment, intangible and certain other long-lived assets are
      amortized over their useful lives. Useful lives are based on management’s
      estimates of the period that the assets will generate revenues. Long-lived
      assets are written down to fair value whenever events or changes indicate that
      the carrying amount of an asset may not be recoverable. The Company’s policy is
      to review the recoverability of all long-lived assets at a minimum of once
      per
      year and record an impairment loss when the fair value of the assets does not
      exceed the carrying amount of the asset. The Company’s most significant
      long-lived asset is its software technology. Differences between the Company’s
      original forecasts and actual results have resulted primarily from the Company’s
      change in focus from selling directly to consumers primarily through advertising
      to selling through partners such as M-Systems. While the change in focus
      resulted in lower than projected revenues being achieved, operating expenses
      have also declined significantly. In


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MIGO
        SOFTWARE, INC.
 NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


calculating
      the current value for the Company’s core software technology, the Company
      primarily relies upon its estimates of the future cash flows (net realizable
      value) derived from the sale of its software. Among the key assumptions used
      by
      management are projected sales via M-Systems and other potential partners,
      assumptions regarding the potential conversion percentages of users upgrading
      their version of Migo software, costs to develop additional features for the
      Migo software, as well as projected headcount, marketing and general and
      administrative expenses. The software remains the core component of the current
      version of the Migo software. As circumstances change, the actual life and/or
      usage pattern may vary in the future, which might result in either increases
      or
      decreases in future amortization expense. Also, if circumstances and/or
      assumptions regarding the utility and recoverability of the software technology
      change, future write-offs or write-down might be required.





*Revenue
      Recognition* - The
      Company recognizes revenue in accordance with Statement of Accounting Position
      (“SOP”) 97-2, *Software
      Revenue Recognition* ,
      as
      amended, and Staff Accounting Bulletin (“SAB”) No. 104, *Revenue
      Recognition* .





The
      Company recognizes revenue from sales through the Company's website after the
      30
      day return period has lapsed. The Company’s software products are licensed on a
      perpetual basis. Revenue from the sale of software licenses is recognized only
      when persuasive evidence of an arrangement exists, the product has been
      delivered, the fee is fixed or determinable and collection of the resulting
      receivable is reasonably assured. For sales over the Internet, the Company
      uses
      a credit card authorization as evidence of an arrangement.





Revenue
      from direct sale contracts of the Company’s products to commercial users is
      recognized based on the terms of the agreement, after the product has been
      delivered, and collection of the resulting receivable is reasonably assured.
      Revenue from distributors is recognized when the product has been sold to third
      party customers.





*Basic
      and Diluted Loss Per Share* - In
      accordance with the Financial Accounting Standards Board’s (“FASB”) SFAS No.
      128, “Earnings Per Share,” the basic loss per common share, which excludes
      dilution, is computed by dividing the net loss available to common shareholders
      by the weighted average number of common shares outstanding. Diluted loss per
      common share reflects the potential dilution that could occur if all potential
      common shares had been issued and if the additional common shares were
      dilutive. Since the Company has incurred net losses for all periods
      presented, there is no difference between basic and diluted loss per share
      of
      common stock. Potential shares of common stock to be issued upon the exercise
      of
      all stock options and warrants amounted to 35,147,844 as of June 30, 2006 and
      2,867,401 shares at June 30, 2005.





*Comprehensive
      Loss* -
      Comprehensive loss is comprised of net loss and other comprehensive income
      (loss). Other comprehensive income (loss) includes certain changes in
      stockholders’ equity that are excluded from net loss, such as unrealized gains
      and losses on marketable securities and currency translation adjustments.
      Comprehensive income (loss) for all periods presented equals net
      loss.





*Stock-Based
      Compensation* - In
      December 2004, the FASB issued SFAS No. 123R, *Share
      Based Payment.* SFAS
      No.
      123R establishes the accounting for grants of stock options and other
      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. SFAS No. 123R (1) revises SFAS No. 123, *Accounting
      for Stock-Based Compensation* ,
      (2)
      supersedes Accounting Principles Board (“APB”) Opinion No. 25, *Accounting
      for Stock Issued to Employees* ,
      and (3)
      establishes fair value as the measurement objective for share-based payment
      transactions. The Company has adopted SFAS 123R effective January 1, 2005 in
      accordance with the standard’s early adoption provisions. Prior to January 1,
      2005, the Company’s Board of Directors had not approved the granting of any
      stock options. As such, the Company decided to follow the provisions of SFAS
      No.
      123R on a prospective basis, and for the three months ended June 30, 2006 the
      Company issued 1,620,000 stock options to employees with a fair market value
      of
      $648,000. For the six months ended June 30, 2006 and 2005, the Company recorded
      $1,040,867 and $296,974, respectively in compensation expense related to
      the granting of stock options and restricted stock to employees .
For
      the
      three months ended June 30, 2006 and 2005, the Company recorded$546,733 and
      $71,294, respectively in compensation expense related to thegranting
      of stock options and restricted stock to employees. Unrecognized
      compensation cost related to unvested stock options and restricted stock to
      employees totaled approximately $3,784,743 at June 30, 2006.




*Research
      and Development* -
      Research and development costs are charged to operations as
      incurred. Some of
      the


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MIGO
        SOFTWARE, INC.
 NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Company’s
      products include certain software applications that are integral to the
      operation of the core product. The costs to develop such software have not
      been
      capitalized, as the Company believes its current software development process
      is
      essentially completed concurrent with the establishment of technological
      feasibility of the software.





*Fair
      Value of Financial Instruments* - The
      estimated fair values for financial instruments under SFAS No. 107, *Disclosures
      about Fair Value of Financial Instruments* ,
      are
      determined at discrete points in time based on relevant market information.
      These estimates involve uncertainties and cannot be determined with precision.
      For certain of the Company’s financial instruments, including certain assets,
      accounts payable, accrued liabilities and debt, the carrying amounts approximate
      fair value due to their maturities.





*Concentrations
      of Credit Risk* - Credit
      risk represents the accounting loss that would be recognized at the reporting
      date if counter parties failed completely to perform as contracted. The
      Company’s product revenues are concentrated in the software industry, which is
      highly competitive and rapidly changing. Significant technological changes
      in
      the industry or customer requirements, or the emergence of competitive products
      with new capabilities or technologies, could adversely affect operating results.
      Concentrations of credit risk (whether on or off balance sheet) that arise
      from
      financial instruments exist for groups of customers or counter parties when
      they
      have similar economic characteristics that would cause their ability to meet
      contractual obligations to be similarly affected by changes in economic or
      other
      conditions described below. Financial instruments that subject the Company
      to
      credit risk consist of cash balances maintained in excess of federal depository
      insurance limits and accounts receivable, which have no collateral or security.
      The Company maintains its cash balances with high credit quality financial
      institutions. At times, cash deposits may be in excess of Federal Deposit
      Insurance Corporation’s limits. To date, the Company has not experienced any
      such losses and believes it is not exposed to any significant credit risk with
      respect to its cash balances.





*Financial
      Instruments-* The
      Company’s financial instruments consist pri marily
      o f
      cas h
      and
      cash equivalents and auction rate securities. These balances, as presented
      in
      the consolidated financial statements at June 30, 2006, approximate their fair
      value.





*Short-term
      Investments-* The
      Company’s shor t-term
      i nvest ments
      consist primarily of Auction Rate Securities, or ARS, which represent funds
      available for current operations. In accordance with SFAS, No. 115, *“Accounting
      for Certain Investments in Debt and Equity Securities,”* these
      short-term investments are classified as available-for-sale and are carried
      at
      cost or par value, which approximates the fair market value. These securities
      have stated maturities beyond three months but are priced and traded as
      short-term instruments





*Income
      Taxes* - The
      Company accounts for income taxes using the asset and liability method, as
      set
      forth in SFAS No. 109, *Accounting
      for Income Taxes* ,
      wherein
      deferred tax assets and liabilities are recognized for the future tax
      consequences attributable to differences between financial statement carrying
      amounts of existing assets and liabilities and their respective tax bases.
      Deferred tax assets and liabilities are measured using enacted tax rates
      expected to apply to taxable income in the years in which the temporary
      differences are expected to be recovered or settled. Reserves against deferred
      tax assets are provided when management cannot conclude that realization of
      such
      assets is probable.




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MIGO
        SOFTWARE, INC.
 NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


*Recently
      Issued Accounting Pronouncements -*





In
      July 2006, the FASB issued Interpretation No. 48, *Accounting
      for Uncertainty in Income Taxes,* (“FIN
      No. 48”). FIN No. 48 prescribes a recognition threshold and
      measurement process for recording in the financial statements uncertain tax
      positions taken or expected to be taken in a tax return. Additionally, FIN
      No. 48 provides guidance on the derecognition, classification, accounting
      in interim periods and disclosure requirements for uncertain tax positions.
      The
      provisions of FIN No. 48 will become effective for the Company beginning
      January 1, 2007. The Company is currently evaluating the impact that FIN
      No. 48 will have on its results of operations and financial
      position.




3.
            Debt





The
      Company had no debt outstanding as of June 30, 2006.





4.
            Balance
                Sheet Components





The
      primary component of accrued liabilities of $1,141,048 at June 30, 2006 was
      $760,775 related to the future issuance of penalty shares as a result of
      provisions in our Registration Rights Agreement dated September 2005 and
      December 2005 caused by delays in becoming effective with a Registration
      Statement covering those shares.








5.
            Intangible
                assets




Intangible
      assets consist of the following at June 30, 2006:


Software
            
            $
            2,822,337Accumulated
                amortization
            
            
            (1,137,292
            )$
            1,685,045




The
      Company is currently amortizing its acquired intangible asset over five years.
      Amortization expense related to the software technology asset amounted to
      $140,789 and $140,730 for the three months ended June 30, 2006 and 2005,
      respectively and $280,056 and $281,460 for the six months ended June 30, 2006
      and 2005, respectively.





6.
            Related
                Party Transactions





None.





7.
            Equity
                transactions





On
      March
      17, 2006, the Company completed a follow-on private placement to the September
      2005 Placement and the December 2005 Placement under which the investors
      purchased a total of 12,421,875 shares of the Company’s Common


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MIGO
        SOFTWARE, INC.
 NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Stock
      and
      warrants to purchase 6,210,938 shares of Common Stock. The securities were
      sold
      at $.32 per unit, each unit consisting of one share of Common Stock and a
      warrant to purchase one-half of one share of Common Stock, exercisable at $.40
      per share. The aggregate offering price was $3,975,000. The investor warrants
      issued in connection with the March 2006 Placement expire on September 26,
      2008,
      unless theretofore exercised, contain a call provision in favor of the Company
      at a price of $.01 per share if the stock price should exceed $2.00 per share
      and permit cashless exercise at any time. C. E. Unterberg Towbin, LLC was paid
      a
      placement fee of $397,500 in connection with this transaction. The private
      placement was effected through Common Stock and Warrant Purchase Agreements
      by
      and among the Company and the private placement investors.





On
      September 26, 2005, the Company completed a private placement with certain
      investors of the Company's Common Stock for the issuance of a total of
      19,910,950 shares of Common Stock and warrants to purchase a total of 10,900,400
      shares of the Company's Common Stock. The securities were sold at $0.32 per
      unit, each unit consisting of one share of Common Stock and a warrant to
      purchase one-half of one share of Common Stock. The aggregate offering price
      was
      $6,045,000 and the aggregate placement fee was $191,360 and warrants to purchase
      1,278,490 shares of Common Stock. Fifty percent (50%) of all Warrants issued
      were exercisable at $0.40 per share, and the remaining fifty percent (50%)
      were
      exercisable at $0.48 per share. After taking into account an anti-dilution
      adjustment as a result of the December 2005 placement described below, all
      of
      the Warrants are exercisable at $.40 per share. All Warrants expire after three
      years, unless theretofore exercised, contain a call provision in favor of the
      Company at a price of $.01 if the stock price should exceed $2.00 per share,
      and
      permit cashless exercise only if there is no registration statement in effect
      after one year. The proceeds of the private placement included $883,333 of
      principal and $23,765 of accrued interest converted into Common Stock from
      short-term bridge financing obtained by the Company earlier in 2005. The
      conversion resulted in the issuance of a total of 3,779,700 shares of Common
      Stock at $0.24 per share.





The
      private placement was effected through Common Stock and Warrant Purchase
      Agreements, dated as of September 26, 2005, by and among the Company and the
      private placement investors who are named therein (the "Purchase Agreement").
      As
      a condition to the transaction, all of the Company's Series A Senior Preferred
      Convertible Stock (the "Senior A Stock") were converted into 20,632,952 shares
      of Common Stock at a conversion ratio of 5.3685 shares of Common Stock for
      each
      share of Senior A Stock, and a Warrant Exchange Agreement, dated as of September
      26, 2005, was entered into with Middlebury Capital LLC under which the holders
      of warrants to purchase 264,725 shares at $3.06 per share exchanged their
      warrants for new warrants for 700,000 shares at $.40 per share. In addition,
      the
      Company executed a Registration Rights Agreement, dated as of September 26,
      2005, with the private placement investors, wherein the Company agreed to
      register under the Securities Act of 1933, as amended (the "Securities Act")
      the
      shares of Common Stock acquired in the private placement and the shares issuable
      upon exercise of the Warrants issued in the private placement. In February
      2006,
      the Company paid a fee related to the Company’s September 2005 private equity
      placement, totaling $175,000 and issued to each of Hugh Deane and Richard Wells
      ("Deane and Wells") a warrant to purchase 250,000 of the Company’s Common
      Stock at $.32 per share. These warrants contain cashless exercise provisions
      and
      expire on March 10, 2010. For the 500,000 warrants issued to Deane and Wells,
      the Company recorded an initial warrant liability of $246,971, which was
      adjusted at March 31, 2006 to $232,955 and recorded $14,016 of other
      income.




On
      December 23, 2005, the Company completed a follow-on private placement (the
      “December 2005 Placement”) with certain investors of its Common Stock for the
      issuance of a total of 7,968,750 shares of the Company's Common Stock and
      warrants to purchase 3,984,375 shares of Common Stock. The securities were
      sold
      at $.32 per unit, each unit consisting of one share of Common Stock and warrants
      to purchase one-half of one share of Common Stock. The aggregate offering price
      was $2,550,000, and the placement fee was paid in the form of Placement Agent
      Warrants to purchase 796,875 shares of Common Stock. The investor warrants
      and
      placement agent warrants issued in connection with the December 2005 Placement
      are exercisable at $.40 per share, expire on September 26, 2008, unless
      theretofore exercised, contain a call provision in favor of the Company at
      a
      price of $.01 per share if the stock price should exceed $2.00 per share and
      permit cashless exercise at any time. The private placement was effected through
      Common Stock and Warrant Purchase Agreements, dated as December 23, 2005, with
      the private placement investors.





The
      holders of the Common Shares acquired in the September 2005, December 2005,
      and
      March 2006 private placements have registration rights that require the Company
      to file and have declared effective a registration statement with the SEC to
      register the resale of the Common Stock and the Common Stock issuable upon
      exercise of warrants. In the event the Company is unable to cause the
      registration to be effective within 90 to 120 days from the date of
      issuance


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MIGO
        SOFTWARE, INC.
 NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


for
      the
      Common Shares acquired in the private placements, the Company would be
      penalized. The penalty accrues at a rate of 3% per month of the original amount
      invested, up to a maximum of 30%, at which point the holders of the Common
      Shares acquired in the private placements have the right to put the stock and
      warrant back to the Company for full redemption. Pursuant to the terms of the
      Registration Rights Agreement, during the first 90 days in which the penalty
      is
      earned, the penalty is payable either in cash or in shares of Common Stock,
      at
      the Company's election. After that 90-day period expires, the penalty must
      be
      paid in cash. Under EITF-00-19, the ability to register stock, or keep the
      registration effective, is deemed to be outside of the Company's control.
      Accordingly, the Company has treated the issuance of the Common Stock as
      temporary equity and the warrant value as a liability as the Registration
      Statement was not yet declared effective by the SEC as of June 30, 2006. The
      Company calculated the total fair market value of the warrants based on the
      Black-Scholes model, which was recorded as a discount to the Common Stock and
      an
      accrued warrant liability in the consolidated balance sheet, and the warrant
      liability is marked to market at the end of each quarter.





For
      the
      12,178,892 warrants issued in connection with the September 2005 transaction,
      the Company recorded temporary equity of $4,136,149 and an initial warrant
      liability of $2,773,553 which was adjusted at December 31, 2005 to $2,652,319,
      the market value at that date. The Company marked this warrant liability to
      market as of March 31, 2006 and recorded $143,952 of other income, as the value
      of the warrants had decreased to $2,508,367 at that date.





For
      the
      4,781,250 warrants issued in connection with the December 2005 transaction,
      the
      Company recorded temporary equity of $1,771,887 and an initial warrant liability
      of $1,260,283, which was adjusted at December 31, 2005 to $1,230,353, the market
      value at that date. The Company marked this warrant liability to its $1,221,783
      market value as of March 31, 2006 and recorded $8,570 of other income. For
      the
      6,210,938 warrants issued in connection with the March 2006 transaction, the
      Company recorded temporary equity of $2,807,178 and an initial warrant liability
      of $1,167,822. Adjustment of this warrant liability to market at March 31,
      2006 was not required, as the portion of the proceeds in the March 2006
      transaction allocated to the warrants exceeded the potential penalty the Company
      could be required to pay.




The
      Company accounts for all its outstanding warrants under EITF 00-19, *Accounting
      for Derivative Financial Instruments Indexed to, and potentially Settled in,
      a
      Company’s Own Stock* (“EITF
      00-19”). Under EITF 00-19, the Company recorded the value of the Common Stock
      issued in connection with the Total Private Placement Transactions as temporary
      equity and the initial fair value of the related warrants as a liability, with
      the corresponding offset amount recorded as a discount to the Common Stock.
      Subsequently, the warrant liability is marked to fair value with the
      corresponding offset amount recorded as other income (expense) on the
      Consolidated Statement of Operations at each reporting period. The reason for
      this treatment is because settlement of the warrant contracts was deemed out
      of
      the Company’s control as defined by EITF 00-19. Any contract, where settlement
      is not in the Company’s control is required to be reported as a liability.





Accordingly,
      at the time of issuance, the Company treated the March 2006 Placement Common
      Stock, $3,975,000, as temporary equity and the fair value of the warrants,
      $1,167,822, as a liability. The corresponding offset to the liability was
      recorded as a discount to the aforementioned Temporary Equity - Common Stock.





On
      April
      7, 2006, the purchasers of equity purchased in association with the three
      private placement transactions, agreed in writing, to allow the Company to
      settle the warrant contract, and penalties, if any, in either shares of common
      stock or cash, at the Company’s sole discretion. Additionally, the purchasers
      agreed to waive any and all full redemption rights associated with the equity.
      Upon modification to the purchase agreements associated with the private
      placements, settlement of the warrant contract is deemed to be under the
      Company’s control as defined by EITF 00-19. As such, the Company reclassified
      the total warrant liability, $5,130,926, and total common stock temporary
      equity, $8,715,214 to permanent equity on the Consolidated Balance Sheet. There
      was no impact to the Company’s Consolidated Statement of Operations as a result
      of this reclassification.





The
      decrease in the fair value of the Total Private Placement Transactions warrants
      from December 31, 2005 to March 31, 2006 was $166,538 and is recorded as other
      income on the Company’s Consolidated Statement of Operations for the six months
      ended June 30, 2006. As the warrant liability was reclassified at the beginning
      of April 2006, there was no other income (expense) during the three months
      ended
      June 30, 2006 as a result of marking the warrants to fair value.


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MIGO
          SOFTWARE, INC.
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)




8.
            Commitments
                and Contingencies





Litigation





In
      July
      2005, the Company received notice of a legal action commenced by Joshua Feller
      related to his former employment with the Company. Mr. Feller filed a claim
      with
      the Labor Commissioner of the State of California on July 12, 2005 seeking
      damages of approximately $540,000 related to his employment. Mr. Feller claims
      that an oral agreement with the Company existed for the payment of performance
      and other bonuses of approximately $415,000, and that his resignation on June
      3,
      2005 was for “good cause”, therefore making him eligible for severance benefits
      of approximately $90,000. Mr. Feller also claims interest in stock options
      valued at approximately $33,000, although no agreement exists for those options.
      In June 2006, a settlement was negotiated with Mr. Feller that required the
      Company to pay a total of $96,000 to settle the case, including legal expenses
      of $38,400, which amount was recognized in the Company's financial statements
      as
      of June 30, 2006.





On
      December 20, 2005, two former employees made a demand for arbitration with
      JAMS, San Francisco alleging that each claimant is entitled to $129,000 in
      severance pay following their resignations in February 2005. The
      claimants were employed by the Company as part of the 2004 acquisition of First
      Person Software, Inc. The Company believes the claims are baseless and
      intends to vigorously defend this matter. The Company has filed
      an answer to the demand and has filed a cross-claim against claimants
      seeking damages attributable to an alleged breach of their agreements with
      the Company. The Company believes that the loss, if any, resulting from the
      arbitration will not have a material impact on its financial position, results
      of operations or cash flow.





In
      the
      normal course of business, the Company is subject to various claims and
      litigation matters none of which in management's opinion will have a material
      effect on financial results.





The
      Company is not aware of any additional pending litigation as of June 30,
      2006.


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Item
      2. Management's Discussion and Analysis of
      Operation.





The
      following discussion should be read in conjunction with the selected
      consolidated financial information and the consolidated financial statements
      and
      notes appearing elsewhere in this Form 10-QSB. The following discussion
      contains forward-looking statements, such as statements of expected revenues
      and
      expenses that involve many risks and uncertainties. We assume no obligation
      to
      update any such forward-looking statements. Our actual results could differ
      materially from those anticipated in these forward-looking statements. Factors
      that could cause or contribute to such differences include, but are not limited
      to, those detailed from time to time in our filings with the Securities and
      Exchange Commission and those discussed in this Form 10-QSB, particularly
      in this Management’s Discussion and Analysis of Financial Condition and Results
      of Operations.





In
      January 2006, we changed our fiscal year-end from March 31 to December 31.
      As a
      result, references in this Form 10-QSB to the second quarter of 2006 are
      references to the three-month period ended June 30, 2006 and references to
      the
      second quarter of 2005 are references to the three-month period ended June
      30,
      2005. Unless expressly stated or the context otherwise requires, the terms
“we”,
“our”, “us”, “the Company”, and “Migo” refer to Migo Software, Inc., formerly
      known as Powerhouse Technologies Group, Inc. and its subsidiaries as a
      whole.  Our name change became official on August 10, 2006.





**General**





We
      are in
      the business of developing, acquiring and marketing software designed to improve
      the way mobile information is personalized, secured, carried and accessed.




*Our
      Technology: The Migo®*





We
      have
      developed Migo® ("Migo"), a software computing system that performs advanced
      synchronization, personalization and data management functions when installed
      on
      portable memory-storage devices that use USB ports on Windows-based computers.
      We believe that Migo has the potential to change the way people work with and
      away from their personal computers, whether in the office, at home, or from
      other remote locations while traveling.





Migo
      seeks to significantly improve the mobile computing experience. Migo is designed
      to make it very easy for users to take their unique, personal data with them,
      without the need to bring along their laptop or link back to their office
      machine. Migo allows users to easily load their entire personalized desktop
      environment, Microsoft® Outlook® e-mail, Internet Explorer favorites, wallpaper,
      presentations, photos, MP3 audio files and/or various other features, and then
      access their personal data on any other Windows-based, “guest” computer. Migo is
      designed so that once it has been disconnected from a “guest” computer, no trace
      of the user's computer environment or its data will be left behind on the
“guest” machine.





Migo
      software currently supports the Microsoft® Windows® operating system (Win 98SE
      to XP) and Outlook® and Outlook Exchange® email programs. We are developing Migo
      software to function with other popular email applications such as Outlook
      Express® and Lotus Notes®, new web browsers such as Mozilla Firefox, and other
      frequently used tools and applications. Migo is in the process of researching
      and developing a range of Migo software for use on other hardware devices,
      including larger capacity SIM Card storage devices, MP3 music players, portable
      disc drives, cellular phones, digital cameras, PDAs and other mobile data
      communication platforms. We believe these products will have the potential
      for
      customized use across a broad range of industries, including healthcare,
      insurance, banking and financial services and education.





*Agreement
      with M Systems Flash Disk Pioneers Ltd.*





On
      March
      30, 2005, we entered into a three-year Development Agreement with M Systems
      Flash Disk Pioneers Ltd. (“M-Systems”). Pursuant to the
      Development Agreement, we granted to M-Systems and its affiliates a
      worldwide, transferable license to use and distribute our Migo products, and
      to
      use related trademarks, as an integrated part of M-Systems’ USB flash drive
      product lines. Migo products are offered to M-Systems customers with either
      (i)
      limited functionality or (ii) full functionality for a period of 45 days, after
      which the end-user may purchase a license directly from us to continue full
      functionality or otherwise retain limited functionality.





We
      are
      continuing to develop software applications to bundle our Migo products with
      M-Systems USB Drives, and we agreed to provide first level support for Migo
      products to M-Systems and M-Systems’ customers and end-users, if  -14-
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desired.
      We are also prohibited from (i) providing any other party or their customers
      with services or applications for USB Drives that are provided to M-Systems
      under the Agreement, and (ii) bundling Migo products with any USB Drive other
      than M-Systems’ USB Flash drives.





**Financial
      Results, Liquidity and Management's Discussion and Analysis**





*Three
      months ended June 30, 2006 and 2005*





We
      reported revenues of $26,387 for the three months ended June 30, 2006 compared
      to revenues of $57,141 for the corresponding period ended June 30, 2005. During
      the three months ended June 30, 2006, we sold only software packaged through
      M-Systems or via online download, while during the quarter ended June 30, 2005
      we primarily sold hardware items, such as flash disks, pre-loaded with Migo
      software. We are working to expand our OEM relationships to promote sales.





Our
      costs
      associated with the sale of products for the three month period ended June
      30,
      2006 were $148,757 and consisted almost entirely of the amortization of software
      technology $140,789, as well as expenses related to fees for customer downloads
      of our software, and packaging and shipping costs. For the three
      month period ended June 30, 2005, we incurred costs associated with the
      sale of our products of $207,125, most of which also consisted of amortization
      of software technology.





Research
      and development expenses totaled $425,488 for the three months ended June 30,
      2006, up from $192,443 in the corresponding period in 2005, due primarily to
      the
      increase of staff dedicated to the development of new products, and the
      completion of products. This increase was partially offset by our reducing
      selling expenses from $305,923 for the three months ended June 30, 2005 to
      $279,031 in the period ended June 30, 2006 primarily due the cessation of
      consumer directed advertising. General and administrative costs increased to
      $1,333,667 for the period ended June 30, 2006 from $886,269 in the year earlier
      quarter due primarily to the expensing of stock options, which totaled $546,733
      for the quarter ended June 30, 2006.





Non-operating
      income totaled $165, 767 for the three months ended June 30, 2006 compared
      with
      Non-operating expense of $5,133 for the three months ended June 30, 2005.
      Interest (net) was $55,267 for the three months ended June 30, 2006 as a result
      of the increased investment income earned from the monies raised from the
      September 2005, December 2005, and March 2006 equity placements. During the
      three months ended June 30, 2006, we reversed, on a one time basis, an
      expense of $683,971 related to a reduction of an outstanding payable, which
      was
      not present in the same period in 2005. We also recorded an expense of $477,470
      during the three months ended June 30, 2006 due to provisions in our
      Registration Rights Agreements dated September 2005 and December 2005 related
      to
      the issuance of additional shares to investors caused by delays in having a
      Registration Statement covering those shares declared effective by the SEC.





*Six
      months ended June 30, 2006 and 2005*





We
      reported revenues of $67,616 for the six months ended June 30, 2006 and revenues
      of $130,687 for the corresponding period ended June 30, 2005.





Our
      costs
      associated with the sale of products for the six month period ended June 30,
      2006 were $304,801 and consisted almost entirely of the amortization of software
      technology $280,056, as well as expenses related to fees for customer downloads
      of our software, and packaging and shipping costs. For the period ended June
      30,
      2005, we incurred costs associated with the sale of our products of $739,981,
      primarily related to the amortization of software technology.





Research
      and development expenses totaled $785,541 for the six months ended June 30,
      2006, up from $363,501 in the corresponding period in 2005, due primarily to
      the
      increase of staff dedicated to the development of new products. This increase
      was partially offset by our reducing selling expenses from $625,210 for the
      six
      months ended June 30, 2005 to $541,421 in the six months ended June
      30, 2006 primarily due the cessation of consumer directed advertising. General
      and administrative costs increased to $2,557,869 for the period ended June
      30,
      2006 up from $2,137,592 due primarily to the requirement to expense stock
      options.  -15-
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Non-operating
      income totaled $112,912 for the six months ended June 30, 2006 compared with
      $278,767 for the six months ended June 30, 2005. Interest (net) increased for
      the six months ended June 30, 2006 to $119,179 due to the increased
      investment income earned from the monies raised from the September 2005,
      December 2005, and March 2006 equity placements. During the six months ended
      June 30, 2005, we reversed, on a one time basis, an expense of $282,236
      related to Agate Technologies, which was not present in the same period in
      2006.
      Due to a decline in our stock price between December 31, 2005 and June 30,
      2006, we recorded a decrease in warrant liability of $166,538, and we also
      recorded an expense of $477,470 during the six months ended June 30, 2006 due
      to
      provisions in our Registration Rights Agreements related to the issuance of
      additional shares to investors caused by delays in having a Registration
      Statement covering these shares declared effective.





*Liquidity
      and Capital Resources*





At
      June
      30, 2006, we had working capital of $4,254,327 as
      compared to a working capital of $3,055,929 at December 31, 2005. The increase
      in working capital is mainly due to raising approximately $3.5 million net
      of
      fees in the March 2006 private placement and the reduction in accounts payable
      that resulted from a negotiated settlement of an outstanding invoice that was
      reduced from approximately $983,000 to $300,000. For the six months ended June
      30, 2006, net cash used in operating activities was $3,379,966. We believe
      we
      have sufficient cash to fund our operations through 2006. Thereafter, we will
      depend on cash from operations, and additional financing, if
      available.





*Recent
      and Expected Losses*





From
      inception, we have never been profitable and have sustained substantial net
      losses from operations. There can be no assurance that we will ever generate
      positive revenues from our operating activities, or that we will achieve and
      sustain a profit during any future period, particularly if operations remain
      at
      current levels. Failure to achieve significant revenues or profitability would
      materially and adversely affect our business, financial condition, and results
      of operations. For the three months ended June 30, 2006 and 2005, we incurred
      net pre-tax losses of $1,994,788 and $1,532,614 respectively.





*Satisfaction
      of Current and Future Capital Requirements*





No
      assurance can be given that we will be able to obtain the additional financing
      we require to continue normal operations. We cannot provide assurances that
      we
      will be able to develop our business to the point of generating net operating
      profits and positive cash flows from operations. If funds from these sources
      are
      not sufficient to offset operating expenses, we would seek to institute
      cost-saving measures that would not only reduce overhead, but also curtail
      operations. We cannot assure that such measures, if implemented, would be
      sufficient to offset all of our operating expenses. If any capital subsequently
      raised from the sale of securities is not sufficient to fund the balance of
      our
      operating expenses after implementing certain cost-cutting measures, we could
      be
      forced to discontinue certain operations or may be unable to continue as a
      going
      concern.





Any
      further issuances of any additional equity securities to raise capital may
      be on
      terms that are detrimental to existing stockholders. In order to meet our
      capital requirements, we may continue to offer equity securities for sale,
      and
      existing stockholders would experience additional dilution. Any new equity
      securities issued may have rights, preferences or privileges senior to those
      of
      holders of existing equity securities.





*Off-Balance
      Sheet Arrangements*





At
      June
      30, 2006, we did not have any relationship with unconsolidated entities or
      financial partnerships, which other companies have been established for the
      purpose of facilitating off-balance sheet arrangements or other contractually
      narrow or limited purposes as defined in Item 303(a)(4)(ii) of SEC Regulation
      S-K. Therefore, we are not materially exposed to any financing, liquidity,
      market or credit risk that could arise if we had engaged in such
      relationships.





*Trends*





As
      of
      June 30, 2006, to the best of our knowledge, no known trends or demands,
      commitments, events or uncertainties, except as described in this Management's
      Discussion and Analysis and in “Notes to Financial Statements Note 8 -
      Commitments and Contingencies” existed, which are likely to have a material
      effect on our liquidity.




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**Item
      3. Controls and Procedures**


Evaluation
      of Disclosure Controls and Procedures





As
      of the
      end of the period covered by this report, under the supervision and with the
      participation of our management, including our chief executive officer ("CEO")
      and chief financial officer ("CFO"), we evaluated the design and operation
      of
      our disclosure controls and procedures (as defined in Rules 13a-15(e) and
      15d-15(e) of the Securities Exchange Act of 1934, as amended, or the "Exchange
      Act").  Based on this evaluation, our management, including our CEO
      and CFO, has concluded that our disclosure controls and procedures are
      designed, and are effective to give reasonable assurance that the
      information we are required to disclose is recorded, processed, summarized
      and
      reported within the time periods specified in the SEC’s rules and
      forms. Based
      upon this evaluation, the CEO and CFO concluded that our disclosure
      controls and procedures are effective in providing reasonable assurance
      that information required to be disclosed in our reports filed with
      or
      submitted to the SEC under the Exchange Act is accumulated and communicated
      to management, including the CEO and CFO, as appropriate to allow
      timely decisions regarding required disclosure.




Changes
      in Internal Control Over Financial Reporting




During
      the quarter ended June 30, 2006, we continued implementing changes that we
      conceived during the nine months ended December 31, 2005, and the three months
      ended March 31, 2006. Following a comprehensive review in early 2006, we
      concluded that the weaknesses we had found, as noted in prior SEC filings,
      were
      a direct result of our being understaffed in our accounting area. We made
      increased use of an outside firm of accounting consultants to support and
      extended the capabilities of our internal staff, and simultaneously employed a
      new
      Controller to ensure that accounting issues are addressed, documented, approved
      and resolved.




Additionally,
      in early 2006, we began actively recruiting additional independent board members
      who could qualify as an "audit committee financial expert" as defined in Item
      401(e)(2) of Regulation S-B, in anticipation of establishing an audit committee.
      Three new Board members joined the board on May 11, 2006, at which time our
      audit committee was formed. The audit committee is now fully functional.


Except
        as
        identified above, there were no changes in our internal control over financial
        reporting that occurred during our quarter ended June 30, 2006, that have
        materially affected, or are reasonably likely to materially affect, our internal
        control over financial reporting.




Our
      Chief
      Executive Officer and Principal Financial and Accounting Officer believe we
      now
      have effective controls and procedures for the period ended June 30, 2006.
      As
      part of the assessment of our internal controls over financial reporting
      that we expect to undergo during our 2007 fiscal year in connection with the
      process required by Section 404 of the Sarbanes-Oxley Act of 2002, we intend
      to
      continue to review and evaluate our controls and processes.




PART
      II. OTHER INFORMATION





Item
      1. Legal Proceedings





In
      July
      2005, we received notice of a legal action commenced by Joshua Feller related
      to
      his former employment with us. Mr. Feller filed a claim with the Labor
      Commissioner of the State of California on July 12, 2005 seeking damages of
      approximately $540,000 related to his employment. Mr. Feller claims that an
      oral
      agreement with us existed for the payment of performance and other bonuses
      of
      approximately $415,000, and that his resignation on June 3, 2005 was for “good
      cause”, therefore making him eligible for severance benefits of approximately
      $90,000. Mr. Feller also claims interest in stock options valued at
      approximately $33,000, although no agreement exists for those options. In June
      2006, a settlement was negotiated with Mr. Feller that required us to pay a
      total of $96,000 to settle the case, including legal expenses of $38,400, which
      amount was recognized in our financial statements as of June 30,
      2006.





On
      December 20, 2005, two former employees of ours made a demand for
      arbitration with JAMS, San Francisco alleging that each claimant is entitled
      to
      $129,000 in severance pay following their resignations in
      February 2005. We employed the claimants as part of the 2004
      acquisition of First Person Software, Inc. We believe the claims are
      baseless and intend to vigorously defend this matter. We have filed
      our answer to the demand and have filed a cross-claim against
      claimants seeking damages attributable to an alleged breach of their
      agreements with us. We believe that the loss, if any, resulting from the
      arbitration will not have a material impact on our financial position, results
      of operations or cash flow.





We
      are
      not aware of any additional pending litigation as of June 30, 2006.





Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds





None





Item
      3. Defaults Upon Senior Securities





None.





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




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On
        or
        about April 6, 2006, we received written consents in lieu of a meeting of
        Stockholders from holders of 34,081,225 shares representing approximately
        51.0%
        of the 66,824,639 shares of the total issued and outstanding shares of our
        voting stock as of the March 17, 2006 record date for this action, authorizing
        our Board of Directors to effect (or not to effect) on or before March 1,
        2007,
        a reverse split of our common stock at a ratio of up to 1 for 15
        by way
        of an Amendment to our Certificate of Incorporation.
 
 In
        early
        June 2006, we received written consents in lieu of a meeting of Stockholders
        from holders of 34,909,419 shares representing approximately 52.2% of the
        66,824,639 shares of the total issued and outstanding shares of our voting
        stock
        as of the May 17, 2006 record date for this action, approving the following:
        (A)
        Amended and Restated Certificate of Incorporation pursuant to which our
        name is changed to "Migo Software, Inc.", the maximum number of shares of
        common
        stock that we shall be authorized to have outstanding at any time shall be
        increased to 200,000,000 shares of common stock at a par value of $0.0001
        per
        share, and the maximum number of shares of preferred stock that we shall
        be
        authorized to have outstanding shall be increased to 10,000,000 shares of
        preferred stock; (B) the following individuals are elected to our Board of
        Directors for a one-year term and until their successors are elected: Kent
        F.
        Heyman, Jay Elliot, Malcolm Elvey, Mel S. Lavitt, Alex Mashinsky, Gregory
        Osborn
        and Timothy Wallace; and (C) an amendment to our Long-Term Incentive
        Plan was approved to increase to 20,000,000 shares the number of shares
        available for issuance under the Long-Term Incentive Plan and to increase
        to
        3,000,000 shares the maximum number of shares available for grant to any
        particular individual in any calendar year.
 
 The
        written consents in lieu of an annual meeting were approved by the holders
        of a
        majority of our voting stock in accordance with the provisions of Section
        228 of
        the Delaware General Corporation Law.





Item
      5. Other Information





None.





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Item
      6. Exhibits




EXHIBIT
      INDEX:


Exhibit
 Number
              Description
  3.1
              Amended
                  and Restated Certificate of Incorporation.
 
 3.2
              Bylaws,
                  hereby incorporated by reference to Exhibit 3.2 of the Annual Report
                  on
                  Form 10-KSB filed with the SEC on July 14, 2004.
 
 3.3
              Text
                  of amended provision of the Company's Bylaws, hereby incorporated
                  by
                  reference from the Company's Current Report on Form 8-K filed with
                  the
                  Commission on September 27, 2005.
 
 10.1
              Employment
                  Agreement dated May 10, 2006, between Powerhouse Technologies Croup,
                  Inc.
                  and Kent Heyman, hereby incorporated by reference from the Company's
                  Quarterly Report on Form 10-QSB filed with the Commission on May
                  15, 2006.
 
 10.2
              Employment
                  Agreement dated May 10, 2006, between Powerhouse Technologies Croup,
                  Inc.
                  and Richard Liebman, hereby incorporated by reference from the
                  Company's
                  Quarterly Report on Form 10-QSB filed with the Commission on May
                  15,
                  2006.
 
 31.1
              Certification
                  of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002.
 
 31.2
              Certification
                  of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002.
 
 32.1
              Certification
                  of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002, 18 U.S.C. 1350.
 
 32.2
              Certification
                  of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002, 18 U.S.C. 1350.
 
 **SIGNATURES**
 
 In
        accordance with the requirements of the Exchange Act, the registrant caused
        this
        report to be signed on its behalf by the undersigned, thereunto duly authorized.
  **MIGO SOFTWARE,
                INC.**Date:
                August 10, 2006
              By:
              /s/
                Kent
                HeymanKent
                HeymanChief
                  Executive Officer (Principal Executive Officer)
 Date:
                August 10, 2006
              By:
              /s/
                Richard LiebmanRichard
                LiebmanChief
                  Financial Officer
                (Principal
                  Financial and Accounting Officer)
  -19-
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              Contents**


EXHIBIT
        INDEX:
  Exhibit
                Number
              Description
  3.1
              Amended
                  and Restated Certificate of Incorporation.
 
 3.2
              Bylaws,
                  hereby incorporated by reference to Exhibit 3.2 of the Annual Report
                  on
                  Form 10-KSB filed with the SEC on July 14, 2004.
 
 3.3
              Text
                  of amended provision of the Company's Bylaws, hereby incorporated
                  by
                  reference from the Company's Current Report on Form 8-K filed with
                  the
                  Commission on September 27, 2005.
 
 10.1
              Employment
                  Agreement dated May 10, 2006, between Powerhouse Technologies Croup,
                  Inc.
                  and Kent Heyman, hereby incorporated by reference from the Company's
                  Quarterly Report on Form 10-QSB filed with the Commission on May
                  15, 2006.
 
 10.2
              Employment
                  Agreement dated May 10, 2006, between Powerhouse Technologies Croup,
                  Inc.
                  and Richard Liebman, hereby incorporated by reference from the
                  Company's
                  Quarterly Report on Form 10-QSB filed with the Commission on May
                  15, 2006.
                  .
 
 31.1
              Certification
                  of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002.
 
 31.2
              Certification
                  of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002.
 
 32.1
              Certification
                  of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002, 18 U.S.C. 1350.
 
 32.2
              Certification
                  of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002, 18 U.S.C. 1350.