**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-QSB**





QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For
                  the fiscal quarter ended **March 31, 2006**
              Commission
                  File Number:
**333-86498**


**PROTOCALL
                  TECHNOLOGIES INCORPORATED****(Exact
                  name of small business issuer specified in its
                  charter)****NEVADA**
              **41-2033500****(State
                  or other jurisdiction of incorporation)**
              **(I.R.S.
                  Employer Identification No.)****47
                  Mall Drive, Commack, NY 11725-5717****(Address
                  of principal executive offices)****(631)
                  543-3655****(Issuer’s
                  telephone number, including area
                  code)**





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such
      shorter period that the issuer 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 an accelerated filer (as defined in
      Rule
      12b-2 of the Exchange Act). Yes o No
x





As
      of May
      31, 2006, there were 55,345,316 shares of Common Stock outstanding.





Transitional
      Small Business Disclosure Format. Yes
o No x











**Protocall
      Technologies Incorporated and Subsidiaries**


**Condensed
      Consolid`ated Balance Sheets**





**Part
      I - Financial Information**


**Item
      1 - Financial Statements**


**March
                31, 2006**
            
            **December
                31,**
              **2005****(Unaudited)**
            
            **(Derived
                from Audited Financial Statements)****ASSETS**Current
                assets:Cash
            
            $
            76,014
            
            $
            402,221Accounts
                receivable, net
            
            
            53,928
            
            
            56,980Inventory
            
            
            23,310
            
            
            28,106Prepaid
                Expenses and other current assets
            
            
            49,223
            
            
            69,735Total
                current assets
            
            
            202,475
            
            
            557,042Property
                and equipment, net
            
            
            366,002
            
            
            510,670Patents,
                net
            
            
            24,959
            
            
            25,567Deferred
                Lease Costs
            
            
            77,926
            
            
            97,405Other
                Assets**TOTAL
                ASSETS**
            
            $
            671,362
            
            $
            1,190,684**LIABILITIES
                AND STOCKHOLDERS' (DEFICIT) EQUITY**Current
                liabilities:Accounts
                payable
            
            $
            517,310
            
            $
            511,274Accrued
                expenses
            
            
            729,879
            
            
            892,781Notes
                payable to officers/stockholders
            
            
            7,927
            
            
            7,927Accrued
                salaries - officers/stockholders
            
            
            317,603
            
            
            394,272Other
                notes payable
            
            
            101,456
            
            
            27,375Current
                portion of obligations under capital leases
            
            
            316,651
            
            
            299,225Current
                portion of liabilities of discontinued operations
            
            
            207,352
            
            
            207,352Total
                current liabilities
            
            
            2,198,178
            
            
            2,340,206Liabilities
                of discontinued operations, less current portion
            
            
            56,610
            
            
            56,610Obligations
                under capital leases, less current portion
            
            
            386,739
            
            
            461,227Other
                notes payable - related parties, including accrued interest of $33,423
                and
                28,483 atMarch
                31, 2006 and December 31, 2005 respectively
            
            
            527,461
            
            
            522,522Total
                liabilities
            
            
            3,168,988
            
            
            3,380,565Stockholders'
                (deficit) equity:Common
                stock, $0.001 par value, 100,000,000 shares authorized, 52,216,047
                and
                47,789,364 issued and outstanding at March 31, 2006 and December
                31, 2005
                respectively
            
            
            52,216
            
            
            47,789Additional
                paid-in capital
            
            
            36,802,773
            
            
            36,083,723Deferred
                sales fee, net
            
            
            (183,698
            )
            
            (204,488
            )Stock
                subscription receivableAccumulated
                deficit
            
            
            (39,168,917
            )
            
            (38,116,905
            )Total
                stockholders' (deficit) equity
            
            
            (2,497,626
            )
            
            (2,189,881
            )**TOTAL
                LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY**
            
            $
            671,362
            
            $
            1,190,684


**


*See
        notes to condensed consolidated financial statements*


1


**Protocall
      Technologies Incorporated and Subsidiaries**


**Condensed
      Consolidated Statements of Operations**




**Three
                Months Ended March 31,****2006**
            
            **2005**(Unaudited**)**Net
                sales
            
            $
            194,610
            
            $
            101,581Cost
                of sales
            
            
            149,320
            
            
            73,079Gross
                profit
            
            
            45,290
            
            
            28,502Selling,
                general and administrative expenses
            
            
            1,034,155
            
            
            1,249,943Research
                and development expenses
            
            
            24,597
            
            
            50,758Operating
                loss
            
            
            (1,013,462
            )
            
            (1,272,199
            )Interest
                expense
            
            
            (42,750
            )
            
            (51,317
            )Other
                income
            
            
            4,200
            
            
            15,490Net
                loss
            
            $
            (1,052,012
            )
            $
            (1,308,026
            )Per
                share data-basic and diluted:Net
                loss
            
            $
            (.02
            )
            $
            (.05
            )Weighted
                average number of shares-basic and diluted
            
            
            50,510,623
            
            
            25,383,710





*See
        notes to condensed consolidated financial statements*




2




**Protocall
      Technologies Incorporated**


**Condensed
      Consolidated Statements of Cash Flows**


**Three
                  Months Ended**
                **March
                  31,****2006**
              
              **2005****(Unaudited)**
              
              **(Unaudited)****Cash
                  flows from operating activities:**Net
                  loss from continuing operations
              
              $
              (1,052,012
              )
              $
              (1,308,026
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Depreciation
                  and amortization
              
              
              166,066
              
              
              162,624Equity
                  compensation cost
              
              
              170,399
              
              
              20,116Stock
                  issued for services
              
              
              68,077Warrants
                  issued for settlement and subsequent change in fair value
              
              
              49,977
              
              
              --Subscription
                  receivable write-off
              
              
              
              
              
              1,665Conversion
                  of accrued salary to note payable
              
              
              75,906Amortization
                  of deferred lease costs
              
              
              19,479
              
              
              19,478Changes
                  in:Accounts
                  receivable
              
              
              3,052
              
              
              (4,926
              )Inventory
              
              
              4,796
              
              
              4,015Prepaid
                  expenses and other current assets
              
              
              20,512
              
              
              --Other
                  assets
              
              
              
              
              
              1,433Accounts
                  payable and accrued expenses
              
              
              (66,843
              )
              
              (67,189
              )Accrued
                  salaries
              
              
              (76,669
              )
              
              (3,316
              )Accrued
                  interest on other notes payable
              
              
              4,939
              
              
              4,941Net
                  cash provided by (used in) discontinued operations
              
              
              
              
              
              (20,221
              )Net
                  cash used in operating activities
              
              
              (612,321
              )
              
              (1,189,406
              )**Cash
                  flows from investing activities:**Capital
                  expenditures
              
              
              
              
              
              (17,090
              )**Cash
                  flows from financing activities:**Proceeds
                  from issuance of common stock
              
              
              345,000Other
                  Liabilities
              
              
              (1,825
              )
              
              (3,450
              )Repayment
                  of capitalized lease obligations
              
              
              (57,061
              )
              
              (83,325
              )Net
                  cash provided by (used in) financing activities
              
              
              286,114
              
              
              (86,775
              )**Net
                  decrease in cash**
              
              
              (326,207
              )
              
              (1,293,271
              )**Cash
                  - beginning of period**
              
              
              402,221
              
              
              2,133,223**Cash
                  - end of period**
              
              $
              76,014
              
              $
              839,952
 **Supplemental
                  cash flow information:**Cash
                  paid for:Interest
              
              $
              15,804
              
              $
              22,092Taxes
              
              
              791Non
                  cash transactions:Warrants
                  issued for settlement and subsequent change in fair value
              
              
              49,977Stock
                  issued for services
              
              
              68,077Stock
                  issued for settlement
              
              
              140,000





*See
      notes to condensed consolidated financial statements*




3





**Basis
      of Presentation: The Accompanying unaudited condensed consolidated financial
      statements have been prepared in accordance with Generally Accepted Accounting
      Principles for interim financial information and with the instructions to Form
      10-Q and article 10 of Regulation S-X. Accordingly, they do not include all
      of
      the information and footnotes required by Generally Accepted Accounting
      Principles for complete financial statements. In the opinion of management,
      all
      adjustments (consisting of normal recurring accruals) considered necessary
      for a
      fair presentation have been included.**





**Note
      A -** **Summary
      of Significant Accounting Policies and Related Matters**




**[1]**
            **Description
                of business:**





The
      accompanying consolidated financial statements include the accounts of Protocall
      Technologies Incorporated and its wholly-owned subsidiaries, Protocall Software
      Delivery Systems, Inc. ("PSD") and Precision Type, Inc. (collectively, the
      "Company"). The Company has recently focused all of its time and resources
      on
      its SoftwareToGo® product in its PSD subsidiary. PSD was founded in 1998 to
      develop and commercialize a proprietary system that enables software retailers
      to produce fully packaged software CDs, on-demand, at their stores and at their
      web site fulfillment centers. SoftwareToGo® (the “System”) is a software
      display, storage and production system, similar in size to an ATM cash machine.
      The System is designed to complement physical inventory systems and enable
      traditional resellers to create "on demand" inventory at point of sale for
      walk-in as well as Internet customers. The Company intends to market and
      distribute its System to major retailers. The Company signs license agreements
      with software publishers, allowing the Company to resell their software products
      to one or more of the Company’s retail customers.





Although
      our system is currently utilized for delivery of software products under the
      product name “SoftwareToGo®;” we are vigorously pursuing an expansion of
      available products to include movie and television content. We believe our
      technology is readily adaptable to these and other types of digital products
      without additional significant investment. In connection with movie and
      television content, we recently announced our new ‘TitleMatch’ system name,
      which was selected to reflect the inclusion of products other than consumer
      software.





Precision
      Type Inc., which marketed and distributed font software products using its
      electronic software distribution system to dealers and commercial end-users,
      was
      discontinued on June 30, 2004.





The
      Company incurred net losses for the three months ended March 31, 2006 and 2005
      of $1,052,012 and $1,308,026, respectively, and has an accumulated deficit
      of
      $39,168,917 at March 31, 2006. Through March 31, 2006, the Company has been
      dependent upon investments through private offerings of convertible and
      non-convertible debt and equity from related and non-related parties to finance
      its business operations.





**[2]**
            **Going
                Concern****:**




As
      of
      June 7, 2006, the Company had a cash balance of approximately $65,124.
      Management believes that cash on hand will enable the Company to continue its
      business plan through approximately June 2006 although there can be no
      assurances that this will be the case. The Company is attempting to obtain
      additional financing from an existing shareholder and collect customer accounts
      receivable. The Company is also actively pursuing additional short-term funding
      from existing shareholders and long-term funding from institutional investors.
      Management’s plan is to secure sufficient short-term capital to fund its
      operations through the completion of a larger institutional financing, although
      there can be no assurances that any financing will be available, or if
      available, that it will be on terms acceptable to the Company. Management
      believes that its ability to secure short-term and long-term financing is
      directly related to the Company’s progress with new customers and movie content
      agreements, which are actively being pursued by it.





In
      the
      event that sufficient short-term or long-term financing is not obtained, in
      order to enable the company to continue to pursue its customer and content
      negotiations over a longer term, the Chief Executive Officer has agreed to
      forgo
      compensation and to cause the Company to increasingly reduce its operating
      expenditures by, among other actions, making further personnel reductions.
      In
      addition, the Company’s two major stockholders agreed not to take any actions
      that would cause the Company’s operations to terminate prior to September 30,
      2006.





The
      accompanying financial statements have been prepared on the basis that the
      Company will continue as a going concern, which assumes the realization of
      assets and satisfaction of liabilities in the normal course of
      business. The
      uncertainties regarding the availability of continued financing and commencement
      of adequate commercial revenues raise substantial doubt about the Company’s
      ability to continue as a going concern, which contemplates the realization
      of
      assets and satisfaction of liabilities in the normal course of business. The
      financial statements do not include any adjustments relating to the
      recoverability of the recorded assets or the classification of liabilities
      that
      may be necessary should the Company be unable to continue as a going
      concern .





4


**[3]**
            **Revenue
                recognition:**




The
      Company recognizes revenue from retailer sales of product through its software
      delivery system upon delivery to the consumer.


Rebates
      and refunds are recorded as a reduction of revenue in accordance with Emerging
      Issues Task Force ("EITF") Issue No. 01-9, Accounting for Consideration Given
      by
      a Vendor to a Customer (Including a Reseller of the Vendor's
      Products).




**[4]**
            **Use
                of estimates:**




The
      preparation of the consolidated financial statements in conformity with
      accounting principles generally accepted in the United States of America
      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 consolidated financial statements and the
      reported amounts of revenues and expenses during the reporting period. Such
      estimates include valuation of warrants issued in connection with various forms
      of financing by the Company. Actual results could differ from those
      estimates.




**[5]**
            **Accounting
                for stock options:**





In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
      123R “Share Based Payment” (SFAS 123R”), which requires all share-based payments
      to employees, including grants of employee stock options, to be recognized
      in
      the statement of operations as an operating expense, based on their fair values
      on grant date. Prior to the adoption of SFAS 123R the Company accounted for
      stock based compensation using Accounting Principles Board (APB) Opinion No.
      25,
      Accounting for Stock Issued to Employees and Related Interpretations. The
      Company adopted the provisions of SFAS NO 123R effective January 1, 2006, using
      the modified prospective transition method. Under the modified prospective
      transition method, non-cash compensation expense is recognized for the portion
      of outstanding stock option awards granted prior to the adoption of SFAS 123R
      for which service has not been rendered, and for any future stock option grants.
      Accordingly, periods prior to adoption have not been restated. The Company
      recognizes share-based compensation costs on a straight-line basis over the
      requisite service periods of awards. That cost is recognized as compensation
      expense over the service period, which would normally be the vesting period
      of
      the options.





The
      following table illustrates the effect on net income and earnings per share
      if
      the fair value based method had been applied to the prior period.




Three
                Months EndedMarch
                31, 2005Net
                Loss as Reported
            
            $
            (1,308,026
            )Stock-based
                employee compensation expense included in reported net loss, net
                of
                related tax effects
            
            
            20,116Stock-based
                employee compensation determined under the fair value based
                method
            
            
            (317,029
            )Pro
                forma net loss
            
            $
            (1,604,939
            )Net
                Income per share-basic and dilutedAs
                reported
            
            $
            (.05
            )Pro
                forma
            
            $
            (.06
            )





Stock
      based compensation expense recognized in the consolidated statement of income
      for the three months ended March 31, 2006 was $170,399, $55,092 of which is
      employee compensation, $26,708 is for options issued to consultants and $88,599
      is for options issued to directors. The compensation cost of $687,710 for
      non-vested options at March 31, 2006 will be recorded over the respective
      vesting periods.





5





Option
      transactions for the three months ended March 31, 2006 are summarized as
      follows:




**2000
                Plan**
            
            **2004
                Plan****#
                Shares**
            
            **Weighted**
              **Average**
              **Exercise**
              **Price
                per**
              **Share**
            
            **Weighted**
              **Average**
              **Remaining**
              **Contractual
                Term**
            
            **#
                Shares**
            
            **Weighted**
              **Average**
              **Exercise**
              **Price
                per Share**
            
            **Weighted**
              **Average**
              **Remaining**
              **Contractual
                Term**
            
            **Aggregate**
              **Intrinsic**
              **Value**Outstanding
                at beginning of year
            
            
            2,537,785
            
            $
            1.64
            
            
            
            
            
            4,142,988
            
            $
            .71
            
            
            
            
            $
            0.00Granted
                (1)
            
            
            
            
            
            
            
            
            
            
            
            257,667
            
            $
            .69
            
            
            
            
            $
            0.00Exercised
            
            
            --
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            --Forfeited
                (2)
            
            
            (11,526
            )
            $
            2.75
            
            
            
            
            
            (1,560,329
            )
            $
            .40
            
            
            
            
            $
            0.00Outstanding
                at end of period
            
            
            2,526,259
            
            $
            1.64
            
            
            1.54
            
            
            2,840,326
            
            $
            .88
            
            
            8.62
            
            $
            0.00Exercisable
                at end of period
            
            
            2,526,259
            
            $
            1.64
            
            
            1.54
            
            
            1,899,035
            
            $
            .87
            
            
            8.35
            
            $
            0.00Non
                vested at end of period
            
            
            -
            
            
            
            
            
            
            
            
            941,291
            
            $
            .91
            
            
            9.16
            
            $
            0.00





(1)
            990,000
                options were granted March 31, 2006 subject to shareholder approval.
                These
                options are not considered granted for financial reporting
                purposes.





(2)
            1,362,000
                options were rescinded subsequent to March 31, 2006 as a result of
                Board
                of Directors action to correct option grants in November 2005 inconsistent
                with the Company’s 2004 Stock Option Plan. The rescinded options include:
                (a) 300,000 of 500,000 shares granted to Don Hoffmann, former CEO,
                (b)
                103,750 of 150,000 shares granted to Brenda Newman, Senior VP Digital
                Rights and Content Management, (c) 479,125 of 750,000 shares granted
                to
                Peter Greenfield, Director, and (d) 479,125 of 750,000 shares granted
                to
                Bruce Newman, Director and current President and CEO.





These
      options were not included in the stock option charge for the quarter ending
      March 31, 2006 and are incorporated above as being forfeited in the first
      quarter of 2006.




The
      weighted average fair value of stock options is estimated at the grant date
      using the Black-Scholes option-pricing model with the following weighted average
      assumptions:




**Three
                Months Ended March 31,****2006**
            
            **2005**Risk-free
                interest rate
            
            
            4.52
            %
            
            3.88
            %Expected
                life of options
            
            
            5.00
            
            
            5.00Expected
                dividend yield
            
            
            0.00
            %
            
            0.00
            %Expected
                volatility
            
            
            168.23
            
            
            139.60
            %Weighted
                average fair value
            
            $
            .10
            
            $
            1.20




**[6]**
            **Loss
                per share and common share
                equivalent:**




The
      Company's basic and diluted net loss per share is computed by dividing net
      loss
      by the weighted average number of outstanding common shares. Potentially
      dilutive securities, which were excluded from the computation of diluted loss
      per share because to do so would have been anti-dilutive, are as
      follows:




**Three
                Months Ended March 31,****2006**
            
            **2005**Stock
                Options
            
            
            5,366,585
            
            
            6,133,432Warrants
            
            
            11,186,486
            
            
            1,774,219Convertible
                notes (1)
            
            
            644,263
            
            
            --Total
                dilutive shares
            
            
            17,197,334
            
            
            7,907,651




(1)
            Represents
                aggregate principal and accrued interest of $82,466 convertible into
                equity at $0.128 per share.





6


**[7]**
            **Inventory**





Inventory,
      consisting primarily of blank CDs, CD cases and other supplies associated with
      products distributed on the Company's virtual inventory system, are valued
      at
      the lower of cost (first-in, first-out) or market.





**Note
      B - Related Party Transactions**





On
      October 14, 2003, a stockholder/director opened an irrevocable standby letter
      of
      credit on behalf of the Company as required by an equipment lease agreement,
      for
      the entire term of the lease obligation, in the amount of $1,040,000. As
      compensation, the Company issued a warrant to purchase 520,000 shares of common
      stock exercisable at the lower of $2.75 per share or the sales price of common
      stock in subsequent offerings. The fair value of the warrant was $269,470
      utilizing the Black-Scholes option-pricing model with the following assumptions:
      50% volatility, seven-year expected life, risk-free interest rate of 3.86%
      and
      dividend yield of 0%. The warrant was originally scheduled to expire on October
      14, 2010, but was converted into approximately 95,047 shares of common stock
      in
      connection with the reverse merger on July 22, 2004. The fair value of the
      warrant has been recorded as a deferred lease cost and is being amortized,
      on a
      straight-line basis, over the term of the lease obligation which terminates
      April 1, 2007. In November 2005, the letter of credit was reduced to $ 750,652
      and extended through April 2008. The Company is contingently liable for the
      amounts of the letter of credit in the event the stockholder/director is
      obligated to make payments thereunder as a result of noncompliance with the
      terms of the lease agreement.




**Note
      C - Other Notes Payable, Long-Term**





On
      July 22, 2004, in connection with the reverse merger, $494,038 ($414,565 of
      this amount is due to a related party) of previously accrued interest on
      convertible notes payable was converted into new promissory notes, bearing
      interest at 4% per annum. As of March 31, 2006, the total accrued interest
      on
      the notes payable amounted to $33,423. All principal and accrued interest on
      the
      notes are due and payable in full on July 22, 2007. The payees have a right
      to
      convert all or any portion of the outstanding principal balance and/or accrued
      interest of the notes into shares of common stock in the Company’s next round of
      equity financing subsequent to July 22, 2004, on the same terms and conditions
      as applicable to all other purchasers of such equity securities. As of March
      31,
      2006, $82,466 of principal and accrued interest remains convertible.





**Note
      D- Discontinued Operations**





Summarized
      financial information of discontinued operations is as follows:


**March
                31**
            
            **December
                31****Liabilities:**
            
            
            **2006**
            
            
            **2005**Accounts
                payable and accrued expenses
            
            $
            179,047
            
            $
            179,047Notes
                payable, current
            
            
            28,305
            
            
            28,305Total
                current liabilities of discontinued operations
            
            
            207,352
            
            
            207,352Notes
                payable, non-current
            
            
            56,610
            
            
            56,610Total
                liabilities of discontinued operations
            
            $
            263,962
            
            $
            263,962





**Note
      E - Deferred Officers’ Compensation**




At
      March
      31, 2006, accrued but unpaid salaries to officers totaled $660,635 (this amount
      was reduced to $317,603 after deducting authorized payments of
      $343,032).




**Note
      F- Litigation:**





Upon
      his
      termination from employment with the Company, the former CEO Mark Benedikt
      asserted monetary claims under his employment agreement, and by demand dated
      October 19, 2005, sought arbitration of those claims which for purposes of
      the
      arbitration demand he had valued at $366,979. The Company settled on January
      23,
      2006. The terms of the settlement require the Company to make periodic cash
      payments totaling $100,000 and the issuance of a warrant to purchase 240,000
      shares of common stock at an exercise price of $1.06 per share with registration
      rights. The warrant was valued at $24,274 on the settlement date and recorded
      as
      expense and as a liability in 2006. In accordance with EITF 00-19, this
      liability will be marked to fair value at each reporting date until the warrant
      is exercised. On March 31, 2006, the warrant was valued at $49,977. The Company
      will incur a liability of up to $25,000 if it fails to register the warrants
      as
      per the terms of the agreement. The Company had accrued the $100,000 due to
      Mr.
      Benedikt as of December 31, 2005.





7


On
      August
      23, 2005, First Providence Financial Group, LLC (“First Providence”) filed a
      Demand for Arbitration against the Company with the American Arbitration
      Association. The demand alleged that the Company breached a January 2000
      placement agency agreement with First Providence. The demand sought $5 million
      in damages, plus fees and costs. The demand alleged that First Providence had
      a
      right of first refusal and that the Company disregarded it. The Company believed
      that First Providence was not then in business, incapable of performing and
      failed to do so when requested to perform. The Company reached a settlement
      agreement with First Providence on January 31, 2006. The Company issued First
      Providence 1,000,000 shares of common stock and reimbursed First Providence
      $8,000 for out of pocket costs. The shares valued at $140,000 were accrued
      in
      December 2005 First Providence withdrew the arbitration request.





The
      case
      of Code Ventures LLC v. Protocall Software Delivery Systems, Inc., et al. was
      filed in the Superior Court of the State of California, San Diego Judicial
      District, on or about August 31, 2005. The complaint asserts claims for: (i)
      breach of a software development agreement between the parties dated October
      13,1999; (ii) quantum merit; and (iii) goods sold, and seeks damages of at
      least
      $200,000, plus interest, attorneys’ fees, and cost. The plaintiff also seeks a
      judgment declaring that it is entitled to exercise certain options for stock
      in
      Protocall Software Delivery Systems, Inc. The Company filed a cross complaint
      asserting claims for breach of contract, restitution, money had and received,
      conversion and declaratory relief. The Company is also seeking recovery of
      $43,700 for the value of equipment not returned to the Company by Code Ventures.
      Depositions from both parties are scheduled to be taken during June 2006. The
      jury trial is scheduled to commence on August 4, 2006. Management of the Company
      intends to vigorously defend its position, and believes the Company has
      meritorious defenses to Code Ventures’ claims and has not recorded any charges
      for any potential settlement. However, no determination can be made as to the
      ultimate outcome at this time, nor to the potential amount of loss to the
      Company should an unfavorable outcome result.





**Note
      G- 2006 Private Offerings:**





In
      January 2006, the Company entered into a securities purchase agreement with
      an
      investor in a private placement. In connection with the private placement,
      the
      Company sold 2,222,222 shares of common stock, at $.135 per share, and warrants
      (the “Warrants”) to purchase up to 1,111,111 shares of the Company’s common
      stock, for an aggregate of $300,000.





The
      January Warrants have an exercise price of $.50 per share of common stock,
      are
      exercisable immediately and expire on the third year anniversary of the initial
      warrant date. The exercise price of the January Warrants is subject to
      adjustment in the event of specified dilutive or accretive events, such as
      stock
      splits and stock combinations. The exercise price, as well as the per share
      price of the common stock sold in the private placement is subject to further
      adjustment if the Company issues any shares of common stock or securities
      convertible or exercisable into common stock (subject to customary exceptions
      such as securities issued pursuant to equity incentive plans) through January
      2007 at a price per share less than the per share price of the common stock
      and/or the exercise price of the January Warrants, in which case the per share
      price and/or the exercise price, as applicable, will be adjusted to equal the
      price of the securities in the new issuance. The adjustment in the per share
      price would result in the issuance of additional shares of common stock to
      the
      holder. Due to the private offering entered into in February 2006 (see below)
      ,
      the Company issued an additional 121,528 shares of common stock and adjusted
      the
      January Warrants’ exercise price to $.128 per share pursuant to the
      anti-dilution provisions of the January 2006 securities purchase
      agreement.





In
      February 2006, the Company entered into a securities purchase agreement with
      an
      investor in a private placement. In connection with the private placement,
      the
      Company sold 390,625 shares of common stock, at $.128 per share, and warrants
      (the “Warrants”) to purchase up to 585,938 shares of the Company’s common stock,
      for an aggregate of $50,000.





The
      February Warrants have an exercise price of $.128 per share of common stock,
      are
      exercisable immediately and expire on the third year anniversary of the initial
      warrant date. The exercise price of the February Warrants is subject to
      adjustment in the event of specified dilutive or accretive events, such as
      stock
      splits and stock combinations. The exercise price, as well as the per share
      price of the common stock sold in the private placement is subject to further
      adjustment if the Company issues any shares of common stock or securities
      convertible or exercisable into common stock (subject to customary exceptions
      such as securities issued pursuant to equity incentive plans) through February
      2007 at a price per share less than the per share price of the common stock
      and/or the exercise price of the February Warrants, in which case the per share
      price and/or the exercise price, as applicable, will be adjusted to equal the
      price of the securities in the new issuance. The adjustment in the per share
      price would result in the issuance of additional shares of Common Stock to
      the
      holder.





8


**Note
      H: Consulting Agreement**





On
      February 24, 2006, the Company entered into a consulting agreement with a third
      party for public relations services. The Company agreed to pay the third party
      a
      non refundable retainer fee of 1,153,846 shares of restricted stock. 50% of
      the
      shares valued at $.10 per share (for financial reporting purposes) were issued
      three days after executing the agreement and 115,385 shares valued at $.09
      per
      share were issued March 1 st .
      115,385
      shares are to be issued the first day of each month through July
      2006.





**Note
      I: Subsequent Events**





In
      April
      2006, the Company entered into a securities purchase agreement with investors
      in
      a private placement. In connection with the private placement, the Company
      sold
      an aggregate of 1,819,363 shares of common stock, at $.162 per share, and
      warrants (the “Warrants”) to purchase up to 1,218,324 shares of the Company’s
      common stock, for an aggregate of $300,000.





The
      April
      Warrants have an exercise price of $.20 per share of common stock, are
      exercisable immediately and expire on the third year anniversary of the initial
      warrant date. The exercise price of the April Warrants is subject to adjustment
      in the event of specified dilutive or accretive events, such as stock splits
      and
      stock combinations. The exercise price, as well as the per share price of the
      common stock sold in the private placement is subject to further adjustment
      if
      the Company issues any shares of common stock or securities convertible or
      exercisable into common stock (subject to customary exceptions such as
      securities issued pursuant to equity incentive plans) through April 2007 at
      a
      price per share less than the per share price of the common stock and/or the
      exercise price of the April Warrants, in which case the per share price and/or
      the exercise price, as applicable, will be adjusted to equal the price of the
      securities in the new issuance. The adjustment in the per share price would
      result in the issuance of additional shares of common stock to the holder.





In
      May
      2006, the Company entered into a securities purchase agreement with investors
      in
      a private placement. In connection with the private placement, the Company
      sold
      an aggregate of 1,079,136 shares of common stock, at $.139 per share, and
      warrants (the “Warrants”) to purchase up to 539,568 shares of common stock, for
      an aggregate of $150,000.





The
      May
      Warrants have an exercise price of $.20 per share of common stock, are
      exercisable immediately and expire on the third year anniversary of the initial
      warrant date. The exercise price of the May Warrants is subject to adjustment
      in
      the event of specified dilutive or accretive events, such as stock splits and
      stock combinations. The exercise price, as well as the per share price of the
      common stock sold in the private placement is subject to further adjustment
      if
      the Company issues any shares of common stock or securities convertible or
      exercisable into common stock (subject to customary exceptions such as
      securities issued pursuant to equity incentive plans) through May 2007 at a
      price per share less than the per share price of the common stock and/or the
      exercise price of the May Warrants, in which case the per share price and/or
      the
      exercise price, as applicable, will be adjusted to equal the price of the
      securities in the new issuance. The adjustment in the per share price would
      result in the issuance of additional shares of common stock to the holder.





**Note
      J: Changes in Shareholder’s Equity**




The
      following table sets forth changes in stockholder’s equity from December 31,
      2005 to March 31, 2006.




**Number
                of**
              **Shares**
            **Common
                Stock**
            **Additional
                Paid in Capital**
            **Deferred
                Sales Fee (Net)**
            **Accumulated
                Deficit**
            **Total****Balance
                January 1, 2006**
            47,789,364
            $47,789
            $36,083,723
            ($204,488)
            ($38,116,905)
            ($2,189,881)Shares
                issued in January private placement
            2,222,222
            2,222
            297,778
            
            
            300,000Shares
                issued in February private placement
            390,625
            391
            49,609
            
            
            50,000Shares
                issued due to anti dilution provisions
            121,528
            122
            (122)Shares
                issued First Providence (see note F: Litigation)
            1,000,000
            1,000
            139,000
            
            
            140,000Shares
                issued to third party consultant (see note H; Consulting
                Agreement)
            692,308
            692
            67,386
            
            
            68,078Equity
                compensation
            
            
            170,399
            
            
            170,399Costs
                associated with private placement offerings
            
            
            (5,000)
            
            
            (5,000)Amortization
                of deferred selling fees
            
            
            
            20,790
            
            20,790Net
                Loss
            
            
            
            
            (1,052,012)
            (1,052,012)**Balance
                March 31, 2006**
            52,216,047
            $52,216
            $36,802,773
            ($183,698)
            ($39,168,917)
            ($2,497,626)





9





**Item
      2 - Management’s Discussion and Analysis or Plan of
      Operation**





**Unless
      the context otherwise requires, “we,” “our”, “us” and similar phrases refer to
      Protocall Technologies Incorporated together with is wholly-owned subsidiaries,
      Protocall Software Delivery Systems, Inc. and Precision Type,
      Inc.**





**Overview**




Protocall
      Technologies Incorporated was formed in New York in December 1992. Until 1998,
      Protocall was focused primarily on licensing proprietary font software to large
      businesses and operated through its recently discontinued Precision Type, Inc.
      subsidiary. Active marketing of Protocall's font software licensing business
      was
      discontinued in 2001, when Protocall determined to focus solely on developing
      its current software distribution business (SoftwareToGo); however, revenues
      from the font software business continued through June 2004. For
      much
      of 2005 and 2006, we have focused on supporting our SoftwareToGo system,
      pursuing new customers and publishers and developing our new TitleMatch
      System.





Our
      system is currently utilized for delivery of software products under the product
      name “SoftwareToGo®;” however, we are vigorously pursuing an expansion of
      available products to include movie and television content. We believe our
      technology is readily adaptable to these and other types of digital products
      without additional significant investment. In connection with movie and
      television content, we recently announced our new ‘TitleMatch’ system name,
      which was selected to reflect the inclusion of products other than consumer
      software.


Due
      to
      very limited revenues to date, management has not yet developed nor relied
      on
      any key performance indicators to assess our business.





**Risk
      Factors**





**We
      have incurred significant losses in the past and expect losses in the future,
      which can have a detrimental**  **effect
      on the long-term capital appreciation of our common stock.**  We
      have a
      limited operating history on which to base an evaluation of our business and
      prospects. Our prospects must be considered in light of inherent risks, expenses
      and difficulties encountered by companies in their early stage of development,
      particularly companies in new and evolving markets. Such risks include
      acceptance by software publishers, retailers and consumers in an evolving and
      unpredictable business environment, the lack of a well developed brand identity
      and the ability to bring products to market on a timely basis.




10


**Due
      to our continual dependence upon outside financing, there is substantial doubt
      as to whether we can**  **continue
      as a Going Concern.** Through
      June, 2006 we have been continually dependent upon borrowings through private
      offerings of convertible and non-convertible debt and equity from related and
      non-related parties to finance its business operations.





**Management
      believes that cash on hand at June 7, 2006 will enable us to continue our
      business plan through**  **June,
      2006 although there can be no assurances that this will be the
      case.** We are
      currently seeking additional financing to meet its short-term and long-term
      liquidity requirements, although there can be no assurances that such financing
      will be available, or if available, that it will be on terms acceptable to
      us.
      The accompanying financial statements have been prepared on the basis that
      we
      will continue as a going concern, which assumes the realization of assets and
      satisfaction of liabilities in the normal course of business. The
      uncertainties regarding the availability of continued financing and commencement
      of adequate commercial revenues raise substantial doubt about our ability to
      continue as a going concern, which contemplates the realization of assets and
      satisfaction of liabilities in the normal course of business.





**Until
      such time as we can rely on revenues generated from operations, we have a need
      for subsequent**  **funding;
      if we are not successful in obtaining such funding, we will be forced to curtail
      or cease our**  **activities.** We
      estimate that we will require additional cash resources by late June 2006.
      Our
      continued operations thereafter will depend upon the availability of cash flow,
      if any, from our operations or our ability to raise additional funds through
      equity or debt financing. There can be no assurance that we will be able to
      obtain additional funding when it is needed, or that such funding, if available,
      will be obtainable on terms favorable to or affordable by us. If we cannot
      obtain needed funds, we may be forced to curtail or cease our activities. The
      uncertainties regarding the availability of subsequent funding and commencement
      of adequate commercial revenues raise substantial doubt about our ability to
      continue as a going concern, which contemplates the realization of assets and
      satisfaction of liabilities in the normal course of business.




**We
      depend on continuing relationships with our software publishers, and if we
      lose
      these relationships our**  **product
      offerings would be limited and less desirable to consumers and
      retailers.** **** We
      generate revenue as a just-in-time software distributor to retail stores and
      e-commerce retailers. If we cannot develop and maintain satisfactory
      relationships with software publishers on acceptable commercial terms, we will
      likely experience a decline in revenue. We also depend on these software
      publishers to create, support and provide updates for software products that
      consumers will purchase. If we are unable to license a sufficient number of
      titles from software publishers, or if the quality of titles provided by these
      software publishers does not reach a satisfactory level, we may not be able
      to
      generate adequate interest among retailers or consumers to utilize the system.
      Our contracts with our software publisher clients are generally one to two
      years
      in duration, with an automatic renewal provision for additional one-year
      periods, unless we are provided with a written notice at least 90 days before
      the end of the contract. As is common in our industry, we have no long-term
      or
      exclusive contracts or arrangements with any software publishers that guarantee
      the availability of software products. Software publishers that currently supply
      software to us may not continue to do so and we may be unable to establish
      new
      relationships with software publishers to supplement or replace existing
      relationships.




**Our
      publisher license acquisition process is lengthy, which may cause us to incur
      substantial expenses and expend management time without generating corresponding
      revenue, which would impair our cash flow.** **** We
      market
      our services directly to software publishers and retailers. These relationships
      are typically complex and take time to finalize. Due to operating procedures
      in
      many organizations, a significant amount of time may pass between selection
      of
      our products and services by key decision-makers and the signing of a contract.
      The period between the initial sales call and the signing of a contract with
      significant sales potential is difficult to predict and typically ranges from
      one to twelve months for software publishers. If, at the end of a sales effort,
      a prospective publisher does not license its products to us, we may have
      incurred substantial expenses and expended management time that cannot be
      recovered and that will not generate corresponding revenue. As a result, our
      cash flow and our ability to fund expenditures incurred during the publisher
      license acquisition process may be impaired.





**Software-on-demand
      and DVD-on-demand technology is still evolving and unproven and the industry
      may
      ultimately fail to accept this technology, resulting in our products not being
      in demand.** Our **** success
      will depend in large part on the growth in consumer acceptance of
      software-on-demand and DVD-on-demand technology as a method of distributing
      software products. Software-on-demand is a relatively new method of distributing
      software products to consumers, and unless it gains widespread market
      acceptance, we will be unable to achieve our business plan. Factors that will
      influence the market acceptance of the technology include:





The
      willingness of software publishers and movie and television content owners
      to
      license content for distribution through our system.





11


·
            Continuing
                demand by consumers for software products distributed on CD media
                and
                movie and television content on DVD
                media;




·
            Consumer
                behavior relating to product selection through touch-screen terminals
                for
                walk-in store deployments; and




·
            Consumer
                acceptance of DVD-style packages, which are the same as traditional
                packages for movie and television content on DVD, but smaller than
                traditional software packages.




**Even
      if our technology achieves widespread acceptance, we may be unable to overcome
      the substantial existing and future technical challenges associated with on-site
      delivery of software and movies reliably and consistently on a long-term basis.** Our
      failure to do so would impair our ability to execute our business
      plan.




**Our
      industry is characterized by rapid technological change that may make our
      technology and systems obsolete or cause us to incur substantial costs to adapt
      to these changes.** **** To
      remain **** competitive,
      we must continue to enhance and improve the responsiveness, functionality and
      features of our system and the underlying network infrastructure. If we incur
      significant costs without adequate results, or are unable to adapt rapidly
      to
      technological changes, we may fail to achieve our business plan. The electronic
      commerce industry is characterized by rapid technological change, changes in
      user and client requirements and preferences, frequent new product and service
      introductions embodying new technologies and the emergence of new industry
      standards and practices that could render our technology and systems obsolete.
      To be successful, we must adapt to rapid technological change by licensing
      and
      internally developing leading technologies to enhance our existing services,
      developing new products, services and technologies that address the increasingly
      sophisticated and varied needs of our clients, and responding to technological
      advances and emerging industry standards and practices on a cost-effective
      and
      timely basis. The development of our system and other proprietary technologies
      involves significant technical and business risks. We may fail to use new
      technologies effectively or fail to adapt our proprietary technology and systems
      to client requirements or emerging industry standards.




**System
      failures could reduce the attractiveness of ou** **r
      service offerings; any prolonged interruptions in our operations could cause
      consumers to seek alternative providers** **of software.** We
      provide electronic **** delivery
      of digital media products and product marketing services to our clients and
      end-users through our proprietary technology and rights management systems.
      These systems also maintain an electronic inventory of products. The
      satisfactory performance, reliability and availability of the technology and
      the
      underlying network infrastructure are critical to our operations, level of
      client service, reputation and ability to attract and retain clients. While
      we
      have engaged an outside service company to perform regular service on the
      systems in the field, we have experienced periodic interruptions, affecting
      all
      or a portion of our systems, which we believe will continue to occur from time
      to time. Any systems damage or interruption that impairs our ability to accept
      and fill client orders could result in an immediate loss of revenue to us,
      and
      could cause us to lose clients. In addition, frequent systems failures could
      harm our reputation.




**We
      may become liable to clients who are dissatisfied with our system, which would
      directly impact our prospects.**  We
      design, develop, implement and manage electronic commerce solutions that are
      crucial to the operation of our clients’ businesses. Defects in the solutions we
      develop could result in delayed or lost revenue, adverse consumer reaction,
      and/or negative publicity which could require expensive corrections. As a
      result, clients who experience these adverse consequences either directly or
      indirectly as a result of our services could bring claims against us for
      substantial damages. Any claims asserted could exceed the level of any insurance
      coverage that may be available to us. Moreover, the insurance we carry may
      not
      continue to be available on economically reasonable terms, or at all. The
      successful assertion of one or more large claims that are uninsured, that exceed
      insurance coverage or that result in changes to insurance policies (including
      premium increases) could adversely affect our operating results or financial
      condition.




**Because
      of the relatively small number of employees each of whom possess specialized
      knowledge about our business we would be adversely impacted if any one of those
      employees were to become unavailable** .
      We do
      not currently carry key-man life insurance on the lives of any of our executive
      officers.





**Our
      liability insurance may not be adequate in a catastrophic situation.** **Substantially
      all of our products are produced at our headquarters in Commack, New York or
      assembled in retailers’ stores.** We
      currently maintain property damage insurance covering our inventory, furniture
      and equipment in our corporate headquarters. We maintain liability insurance,
      products and completed operations liability insurance and an umbrella liability
      policy. We also maintain insurance coverage for liability claims resulting
      from
      the use of our equipment located in retail stores and for equipment in-transit
      to and from retail stores. We also purchase business interruption insurance
      for
      losses relating to our facilities. Nevertheless, material damage to, or the
      loss
      of, our facilities, equipment or system data files, due to fire, severe weather,
      flood or other catastrophe, even if insured against, could result in a
      significant loss to us. We are currently preparing a disaster recovery
      plan.




12


**Our
      failure to protect our intellectual property could cause an erosion of our
      current competitive strengths** **.** **** **We
      regard the protection of our patents, trademarks, copyrights, trade secrets
      and
      other intellectual property**  **as
      critical to our success.** We rely
      on a combination of patent, copyright, trademark, service mark and trade secret
      laws and contractual restrictions to protect our proprietary rights. We have
      entered into confidentiality and non-disclosure agreements with our employees
      and contractors, and non-disclosure agreements with parties with whom we conduct
      business, in order to limit access to and disclosure of our proprietary
      information. See “Business -- Patents and Intellectual Property.” These
      contractual arrangements and the other steps taken by us to protect our
      intellectual property may not prevent misappropriation of our technology or
      deter independent third-party development of similar technologies. We also
      seek
      to protect our proprietary position by filing U.S. and foreign patent
      applications related to our proprietary technology, inventions and improvements
      that are important to the development of our business. Proprietary rights
      relating to our technologies will be protected from unauthorized use by third
      parties only to the extent they are covered by valid and enforceable patents
      or
      are effectively maintained as trade secrets. We pursue the registration of
      our
      trademarks and service marks in the United States and internationally. Effective
      patent, trademark, service mark, copyright and trade secret protection may
      not
      be available in every country in which our services are made available
      online.




**The
      steps we have taken to protect our proprietary rights may be inadequate and
      third parties may infringe or misappropriate our trade secrets, trademarks
      and
      similar proprietary rights.** Any **** significant
      failure on our part to protect our intellectual property could make it easier
      for our competitors to offer similar services and thereby adversely affect
      our
      market opportunities. In addition, litigation may be necessary in the future
      to
      enforce our intellectual property rights, to protect our trade secrets or to
      determine the validity and scope of the proprietary rights of others. Litigation
      could result in substantial costs and diversion of management and technical
      resources and may not be successful.




**Claims
      against us related to the products that we deliver electronically and the
      products that we deliver**  **physically
      could also require us to expend significant resources.**  Claims
      may be made against us for negligence, copyright or trademark infringement,
      product liability or other theories based on the nature and content of software
      products or tangible goods that we deliver electronically and physically.
      Because we did not create these products, we are generally not in a position
      to
      know the quality or nature of the content of these products. Although we carry
      general liability insurance that requires our customers to indemnify us against
      consumer claims, our insurance and indemnification measures may not cover
      potential claims of this type, may not adequately cover all costs incurred
      in
      defense of potential claims, or may not reimburse us for all liability that
      may
      be imposed. Any costs or imposition of liability that are not covered by
      insurance or indemnification measures could be expensive and time-consuming
      to
      address, distract management and/or delay product deliveries, even if we are
      ultimately successful in the defense of these claims.




**Security
      breaches could hinder our ability to securely transmit confidential information
      and could harm our clients** **.** **** **A
      significant barrier to electronic commerce and communications is the secure
      transmission of**  **confidential
      information over public networks.** Any
      compromise or elimination of our security could be costly to remedy, damage
      our
      reputation and expose us to liability, and dissuade existing and new clients
      from using our services. We rely on encryption and authentication technology
      licensed from third parties to provide the security and authentication necessary
      for secure transmission of confidential information, such as consumer credit
      card numbers. A party who circumvents our security measures could misappropriate
      proprietary information or interrupt our operations.




**We
      may be required to expend significant capital and other resources to protect
      against security breaches or address problems caused by breaches.** Concerns
      over the security of the Internet and **other** online
      transactions and the privacy of users could deter people from using the Internet
      to conduct transactions that involve transmitting confidential information,
      thereby inhibiting the growth of our business. To the extent that our activities
      or those of third-party contractors involve the storage and transmission of
      proprietary information, such as credit card numbers, security breaches could
      damage our reputation and expose us to a risk of loss or litigation and possible
      liability. Our security measures may not prevent security breaches and failure
      to prevent security breaches could lead to a loss of existing clients and deter
      potential clients away from our services.




**We
      rely to a large degree on third parties for the manufacture and maintenance
      of
      our system, who could subject us to delays in satisfying customer needs.** We
      rely
      heavily upon third parties to perform **** such
      tasks as assembly and on-site maintenance of our system. Our ability to enter
      new markets and sustain satisfactory levels of sales in each market will depend
      in significant part upon the ability of these companies to perform effectively
      on our behalf. There can be no assurance that we will be successful in entering
      into agreements with all of these companies when necessary. In addition, once
      we
      enter into such manufacturing contracts, we face the possibility that such
      contracts will not be extended or replaced. We anticipate that we can obtain
      in
      a timely manner alternative third party services and that the failure to extend
      or replace existing contracts would not have a material adverse effect on us,
      although we can give no assurance in this regard.




13


**Implementation
      of our system requires capital, which we may not be able to
      provide** **,
      which could preclude us**  **from
      entering into otherwise promising agreements** **.**  Utilizing
      our system in a retail environment requires a capital commitment for equipment
      and deployment costs, which we may not be able to provide. In agreements that
      call for users of our system to fund equipment and deployment costs themselves,
      we may be required to reduce our selling prices when
      compared to agreements in which we finance equipment and deployment costs. 
The retailer’s financial risk/reward decision might prevent it from
      entering an agreement with us or it may
      demand price concessions to mitigate the financial risk, which may ultimately
      result in the agreement not being economically feasible for us to
      perform .




**Sales
      are highly** **dependent** **on obtaining license rights** **,
      the failure of which would result in insufficient revenue to pay for system
      equipment and deployment costs** **.** Sales
      of
      products through our system are highly dependent on the qualitative mix of
      titles that we are able to license from software publishers and movie studios
      for inclusion on our system. Although we have executed licensing agreements
      with more
      than 214
      software publishers covering
      approximately 1,048 titles , our current
      product offering is not adequate to achieve sufficient revenue for either a
      retailer or us to pay for system equipment and deployment costs. In
      order
      for us to be successful, we will need to improve the quality of titles on our
      system.




**Our
      common stock may be considered a “penny stock” and may be difficult to sell when
      desired.**  The
      SEC
      has adopted regulations which generally define “penny stock” to be an equity
      security that has a market price of less than $5.00 per share or an exercise
      price of less than $5.00 per share, subject to specific exemptions. The market
      price of our common stock is less than $5.00 per share and therefore may be
      designated as a “penny stock” according to rules of the SEC. This designation
      requires any broker or dealer selling these securities to disclose certain
      information concerning the transaction, obtain a written agreement from the
      purchaser and determine that the purchaser is reasonably suitable to purchase
      the securities. These rules may restrict the ability of brokers or dealers
      to
      sell our common stock and may affect the ability of our stockholders to sell
      their shares. In addition, since our common stock is currently quoted on the
      OTC
      Bulletin Board, stockholders may find it difficult to obtain accurate quotations
      of our common stock and may experience a lack of buyers to purchase the stock
      or
      a lack of market makers to support the stock price.




**Investors
      should not anticipate receiving cash dividends on our common
      stock** . We
      have
      never declared or paid any cash dividends or distributions on our capital stock.
      We currently intend to retain any future earnings to support operations and
      to
      finance expansion and, therefore, we do not anticipate paying any cash dividends
      on our common stock in the foreseeable future.





**Revenue
      Model**




We
      employ
      two revenue models in our existing retailer agreements: one for conventional
      ("bricks and mortar") retailers, and another for online/catalog retailers.
      Under
      the "bricks and mortar" revenue model, which is applicable to our agreement
      with
      CompUSA, we license content, integrate, install and maintain SoftwareToGo site
      equipment, provide system training to store personnel, supply the physical
      deliverables (CD, case, packaging and labeling), provide system help desk
      support during store hours and act as an on-demand distributor to the retailer.
      The retailer, in accordance with store configuration and consumer
      merchandising/promotion plans developed jointly with us, supplies prominent
      space for the Product Preview Stations within their stores as well as an
      appropriate location for the Order Fulfillment Station, and provides
      SoftwareToGo system promotion. Prior to deployment, we and the retailer jointly
      develop plans relating to sales reporting procedures, communication line setup,
      network wiring, POS system integration and product pricing.




For
      online and catalog retailers, which is applicable to our agreement with
      TigerDirect.com, the business model differs somewhat. For these retailers,
      a
      high-capacity SoftwareToGo Order Fulfillment Station is used without the need
      for a Product Preview Station. The system can be installed either at our
      facilities or at the customer's shipping center. If the system is installed
      at
      our facility, the system is operated by us and our employees ship the products.
      Under this model, we expect much higher capacity utilization for the Order
      Fulfillment Station and, consequently, a faster payback on deployed
      capital.




We
      secure
      the right to replicate titles through licensing agreements with software
      publishers, paying a licensing fee to each publisher per product vended. In
      instances where a consumer returns SoftwareToGo-produced products, the publisher
      license fee is credited to us.




14


We
      expect
      to be able to improve our licensing terms as the number of installed
      SoftwareToGo sites increase. Because our agreements with publishers provide
      for
      a longer time period to pay the licensing fees due for products sold than the
      period of time provided to the retailers to pay us for the software produced
      by
      the SoftwareToGo system, we do not anticipate an increase to working capital
      requirements from this aspect of the business as the business grows. We do
      not
      prepay or guarantee any minimum license fees to publishers. Our agreements
      provide for a fixed selling price for each product licensed through our system.
      We invoice our customers on a monthly basis, based on 30-day payment terms,
      for
      each unit sold during the prior month.




**Critical
      Accounting Policies**





Our
      discussion and analysis of results of operations and financial condition are
      based upon our consolidated financial statements, which have been prepared
      in
      accordance with accounting principles generally accepted in the United States
      of
      America. The preparation of these consolidated financial statements requires
      us
      to make estimates and judgments that affect the reported amounts of assets,
      liabilities, revenues and expenses, and related disclosure of contingent assets
      and liabilities. We evaluate our estimates on an ongoing basis, including those
      related to provisions for uncollectible accounts receivable, inventories, and
      contingencies and litigation. We base our estimates on historical experience
      and
      on various other assumptions that are believed to be reasonable under the
      circumstances, the results of which form the basis for making judgments about
      the carrying values of assets and liabilities that are not readily apparent
      from
      other sources. Actual results may differ from these estimates under different
      assumptions or conditions.





The
      accounting policies that we follow are set forth in Note A to our condensed
      consolidated financial statements as included in this report. These accounting
      policies conform to accounting principles generally accepted in the United
      States of America, and have been consistently applied in the preparation of
      the
      financial statements.




**Revenue
      Recognition**




We
      recognize revenue from retailers’ sales of product through our software delivery
      system and through catalogues, upon delivery to the retail customer or
      consumer.




Revenue
      from the license or sale of software products and font reference guide books
      from our discontinued business was recognized when the products were delivered
      or shipped to the customer.





Part
      of
      our marketing strategy to acquire new consumers includes retail promotions
      in
      which we pay retailers if they are successful in marketing software products
      on
      our system to consumers. These payments are recorded as a reduction in revenue
      in accordance with EITF No. 01-9. As a result of this accounting treatment,
      these payments, which we consider to be marketing costs, are not included in
      marketing expense, but instead, recorded as a reduction in revenue. Estimated
      customer rebates are reflected as a reduction in revenue in the period that
      the
      related sale is recorded. Customer returns, although not material, are also
      reflected as a reduction in revenue in the period that they are returned or
      earlier if any such returns are anticipated.





**Seasonality**





We
      believe there will ultimately be a minor degree of seasonality in our business.
      We anticipate that the fourth quarter of each fiscal year (October to December)
      will show slightly higher revenues due to the holiday shopping
      season.




**Software
      Development Costs**




Costs
      associated with the development and enhancement of proprietary software incurred
      between the achievements of technological feasibility and availability for
      general release to the public were insignificant, and therefore not
      capitalized.




**Research
      and Product Development Costs**




We
      expense research and product development costs as incurred.




**Principles
      of Consolidation**




The
      consolidated financial statements include the accounts of Protocall Technologies
      Incorporated and its wholly-owned subsidiaries. All intercompany balances and
      transactions have been eliminated in consolidation.





15


**Results
      of Operations**





**Three
      months ended March 31, 2006 compared to three months ended March 31,
      2005**





**Net
      Loss from Continuing Operations.** We had
      net losses from continuing operations of $1,052,012 and $1,308,026 for the
      three
      months ended March 31, 2006 and 2005, respectively. During these periods,
      operations were financed through various equity and debt private financing
      transactions.





**Net
      Sales.** Net
      sales for the three months ended March 31, 2006 increased $ 93,029, or 91.6%,
      to
      $194,610 compared to $101,581 for the three months ended March 31, 2005. This
      increase is principally due to increased sales to TigerDirect.com.





**Gross
      Profit.** Gross
      profit for the three months ended March 31, 2006 was $45,290, or 23.3 % of
      net
      sales, as compared to $28,502, or 28% of net sales, for the comparable period
      ended March 31, 2005.





**Research
      and Development Expenses.** Research
      and development expense, or R&D, decreased $26,161 or 51.5%, from $50,758 to
      $24,597, for the three months ended March 31, 2006 as compared to the three
      months ended March 31, 2005. The decrease in R&D from 2005 was primarily due
      to enhancements made to the latest version of our SoftwareToGo system during
      the
      first quarter of 2005.





**Selling,
      General and Administrative Expenses.** Selling,
      general and administrative expenses decreased $215,788, or 17.26%, to $1,034,155
      for the three months ended March 31, 2006 from $1,249,943 for the three months
      ended March 31, 2005.





Employee
      compensation decreased $175,554, or 38.25%, to $283,392 from $458,946 for the
      three months ended March 31, 2006 as compared to the three months ended March
      31, 2005 due to a reduction in personnel in the third and fourth quarters of
      2005 offset by the Company’s adoption of SFAS 123R in January 2006 and resulting
      charge of $55,092 for the fair value of stock options earned during the
      quarter.





Depreciation
      and amortization expense increased $3,442 in 2006, or 2.12%, to $166,066 from
      $162,624 for the three months ended March 31, 2006 as compared to the three
      months ended March 31 2005. Consulting expenses increased $13,736 in 2006,
      or
      10.29%, to $81,819 from $133,538 in 2005. Marketing expenses decreased $66,392
      in 2006, or 69.8%, to $28,718 from $95,110 in 2005, due to increased marketing
      and advertising of our SoftwareToGo system in 2005 and an effort to reduce
      costs
      in 2006. Professional fees decreased $82,043 in 2006, or 73.99%, to $28,837
      from
      $110,880 in 2005 due to costs associated with the first year of being a public
      company in 2005 and an effort to reduce costs in 2006. Investor Relations
      increased $98,577 in 2006, or 2767% from $3,562 for the three months ended
      March
      31,2005 to $102,139 for the three months ended March 31, 2006 due primarily
      to a
      charge of $68,077 for stock issued a third party IR firm and increased use
      of IR
      firms in 2006.





**Interest
      and Finance Charges.** Interest
      and finance expenses combined decreased by $8,567, or 16.69%, to $42,750 from
      $51,317 for the three months ended March 31, 2006 compared to the three months
      ended March 31, 2005.





Interest
      expense decreased $8,577, or 26.9%, to $23,271 from $31,838, for 2006 as
      compared to 2005 due to the renegotiation of the terms of a capital lease in
      November 2005. The term of the lease was extended an additional two years
      resulting in a reduction of monthly payments of principal and interest beginning
      December 2005.





**Other
      Income.** Other
      income decreased to $4,200 for the three months ended March 31, 2006, from
      $15,490 for the three months ended March 31, 2005.





**Liquidity
      and Capital Resources**




At
      March
      31, 2006, our working capital deficit amounted to $1,995,703 as compared with
      a
      working capital deficit of $1,783,164 at December 31, 2005. At March 31, 2006,
      we had an accumulated deficit in the amount of $39,168,917. The accumulated
      losses resulted principally from costs incurred in developing our business
      plan,
      research and development, general and administrative expenses, seeking and
      establishing sales channels and capital raising activities.





As
      of
      June 7, 2006, we had a cash balance of approximately $65,124. Management
      believes that cash on hand will enable the Company to continue its business
      plan
      through approximately June 2006 although there can be no assurances that this
      will be the case. The Company is attempting to obtain additional financing
      from
      an existing shareholder and collect customer accounts receivable. The Company
      is
      also actively pursuing additional short-term funding from existing shareholders
      and long-term funding from institutional investors. Management’s plan is to
      secure sufficient short-term capital to fund its operations through the
      completion of a larger institutional financing, although there can be no
      assurances that any financing will be available, or if available, that it will
      be on terms acceptable to the Company. Management believes that its ability
      to
      secure short-term and long-term financing is directly related to the Company’s
      progress with new customers and movie content agreements, which are actively
      being pursued by us.




16


In
      the
      event that sufficient short-term or long-term financing is not obtained, in
      order to enable the company to continue to pursue its customer and content
      negotiations over a longer term, the Chief Executive Officer has agreed to
      forgo
      compensation and to cause the Company to increasingly reduce its operating
      expenditures by, among other actions, making further personnel reductions.
      In
      addition, the Company’s two major stockholders agreed not to take any actions
      that would cause the Company’s operations to terminate prior to September 30,
      2006.




The
      accompanying financial statements have been prepared on the basis that the
      Company will continue as a going concern, which assumes the realization of
      assets and satisfaction of liabilities in the normal course of
      business. The
      uncertainties regarding the availability of continued financing and commencement
      of adequate commercial revenues raise substantial doubt about the Company’s
      ability to continue as a going concern, which contemplates the realization
      of
      assets and satisfaction of liabilities in the normal course of business. The
      financial statements do not include any adjustments relating to the
      recoverability of the recorded assets or the classification of liabilities
      that
      may be necessary should the Company be unable to continue as a going
      concern .




**Item
      3 - Controls and Procedures**





As
      required by U.S. Securities and Exchange Commission rules, we have evaluated
      the
      effectiveness of the design and operation of our disclosure controls and
      procedures at the end of the period covered by this report, the three months
      ended March 31, 2006. This evaluation was carried out under the supervision
      and
      with the participation of our management, including our principal executive
      officer and principal financial officer. Based upon the controls evaluation,
      our
      principal executive officer and principal financial officer have concluded
      that,
      as of the end of the period covered by this report, our disclosure controls
      are
      effective to provide reasonable assurance that information required to be
      disclosed in our reports filed under the Securities Exchange Act of 1934 such
      as
      this report, is recorded, processed, summarized and reported within the time
      periods specified in the SEC’s rules and forms, however, we are late in filing
      this report.





There
      has
      been no change in our internal controls over financial reporting during the
      fiscal quarter ended March 31, 2006 that has materially affected, or is
      reasonably likely to materially affect, our internal controls over financial
      reporting.





Disclosure
      controls and procedures are our controls and other procedures that are designed
      to ensure that information required to be disclosed by us in the reports that
      we
      file or submit under the Exchange Act is recorded, processed, summarized and
      reported, within the time periods specified in the SEC’s rules and forms.
      Disclosure controls and procedures include, without limitation, controls and
      procedures designed to ensure that information required to be disclosed by
      us in
      the reports that we file under the Exchange Act is accumulated and communicated
      to our management, including principal executive officer and principal financial
      officer, as appropriate, to allow timely decisions regarding required
      disclosure.





**Part
      II - Other Information**





**Item
      1 - Legal Proceedings**





Upon
      his
      termination from employment with the Company, the former CEO Mark Benedikt
      asserted monetary claims under his employment agreement, and by demand dated
      October 19, 2005, sought arbitration of those claims which for purposes of
      the
      arbitration demand he had valued at $366,979. The Company settled on January
      23,
      2006. The terms of the settlement require the Company to make periodic cash
      payments totaling $100,000 and the issuance of a warrant to purchase 240,000
      shares of common stock at an exercise price of $1.06 per share with registration
      rights. The warrant was valued at $24,274 on the settlement date and recorded
      as
      expense and as a liability in 2006 in accordance with EITF 00-19. This liability
      will be marked to fair value at each reporting date until the warrant is
      exercised. On March 31, 2006, the warrant was valued at $49,977. The Company
      will incur a liability of up to $25,000 if it fails to register the warrants
      as
      per the terms of the agreement. The Company had accrued the $100,000 due to
      Mr.
      Benedikt as of December 31, 2005.





17


On
      August
      23, 2005, First Providence Financial Group, LLC (“First Providence”) filed a
      Demand for Arbitration against the Company with the American Arbitration
      Association. The demand alleged that the Company breached a January 2000
      placement agency agreement with First Providence. The demand sought $5 million
      in damages, plus fees and costs. The demand alleged that First Providence had
      a
      right of first refusal and that the Company disregarded it. The Company believed
      that First Providence was not then in business, incapable of performing and
      failed to do so when requested to perform. The Company reached a settlement
      agreement with First Providence on January 31, 2006. The Company issued First
      Providence 1,000,000 shares of common stock and reimbursed First Providence
      $8,000 for out of pocket costs. The shares valued at $140,000 were accrued
      in
      December 2005. First Providence withdrew the arbitration request.





The
      case
      of Code Ventures LLC v. Protocall Software Delivery Systems, Inc., et al. was
      filed in the Superior Court of the State of California, San Diego Judicial
      District, on or about August 31, 2005. The complaint asserts claims for: (i)
      breach of a software development agreement between the parties dated October
      13,1999; (ii) quantum merit; and (iii) goods sold, and seeks damages of at
      least
      $200,000, plus interest, attorneys’ fees, and cost. The plaintiff also seeks a
      judgment declaring that it is entitled to exercise certain options for stock
      in
      Protocall Software Delivery Systems, Inc. The Company filed a cross complaint
      asserting claims for breach of contract, restitution, money had and received,
      conversion and declaratory relief. The Company is also seeking recovery of
      $43,700 for the value of equipment not returned to the Company by Code Ventures.
      Depositions from both parties are scheduled to be taken during June 2006. The
      jury trial is scheduled to commence on August 4, 2006. Management of the Company
      intends to vigorously defend its position, and believes the Company has
      meritorious defenses to Code Ventures’ claims and has not recorded any charges
      for any potential settlement. However, no determination can be made as to the
      ultimate outcome at this time, nor to the potential amount of loss to the
      Company should an unfavorable result.





**Item
      2 - Recent Sales of Unregistered Securities**





In
      January 2006, we entered into a securities purchase agreement with an accredited
      investor in a private placement exempt from the registration requirements under
      the Securities Act of 1933, as amended. In connection with the private
      placement, we sold 2,222,222 shares of our Common Stock, par value $0.001 per
      share, at $.135 per share, and warrants (the “January Warrants”) to purchase up
      to 1,111,111 shares of our Common Stock, for an aggregate of $300,000. We have
      used the net proceeds of the private offering primarily for funding of working
      capital.





The
      January Warrants had an exercise price of $.50 per share of Common Stock, are
      exercisable immediately and expire on the third year anniversary of the initial
      warrant date. The exercise price of the January Warrants is subject to
      adjustment in the event of specified dilutive or accretive events, such as
      stock
      splits and stock combinations. The exercise price, as well as the per share
      price of the Common Stock sold in the private placement is subject to further
      adjustment if we issue any shares of Common Stock or securities convertible
      or
      exercisable into Common Stock (subject to customary exceptions such as
      securities issued pursuant to equity incentive plans) through January 2007
      at a
      price per share less than the per share price of the Common Stock and/or the
      exercise price of the January Warrants, in which case the per share price and/or
      the exercise price, as applicable, will be adjusted to equal the price of the
      securities in the new issuance. The adjustment in the per share price would
      result in the issuance of additional shares of Common Stock to the holder.
      Due
      to the private offering entered into in February 2006 (see below) , we issued
      an
      additional 121,528 shares of common stock and adjusted the January Warrants’
exercise price to $.128 per share pursuant to the anti-dilution provisions
      of
      the January 2006 securities purchase agreement.





In
      February 2006, we entered into a securities purchase agreement with an
      accredited investor in a private placement exempt from the registration
      requirements under the Securities Act of 1933, as amended. In connection with
      the private placement, we sold 390,625 shares of our Common Stock, par value
      $0.001 per share, at $.128 per share, and warrants (the “February Warrants”) to
      purchase up to 585,938 shares of our Common Stock, for an aggregate of $50,000.
      We have used the net proceeds of the private offering primarily for funding
      of
      working capital.





The
      February Warrants have an exercise price of $.128 per share of common stock,
      are
      exercisable immediately and expire on the third year anniversary of the initial
      warrant date. The exercise price of the February Warrants is subject to
      adjustment in the event of specified dilutive or accretive events, such as
      stock
      splits and stock combinations. The exercise price, as well as the per share
      price of the Common Stock sold in the private placement is subject to further
      adjustment if we issue any shares of Common Stock or securities convertible
      or
      exercisable into Common Stock (subject to customary exceptions such as
      securities issued pursuant to equity incentive plans) through February 2007
      at a
      price per share less than the per share price of the Common Stock and/or the
      exercise price of the February Warrants, in which case the per share price
      and/or the exercise price, as applicable, will be adjusted to equal the price
      of
      the securities in the new issuance. The adjustment in the per share price would
      result in the issuance of additional shares of Common Stock to the holder.





18


In
      April
      2006, we entered into a securities purchase agreement with accredited investors
      in a private placement. In connection with the private placement, the Company
      sold an aggregate of 1,819,363 shares of common stock, at $.162 per share,
      and
      warrants (the “Warrants”) to purchase up to 1,218,324 shares of common stock,
      for an aggregate of $300,000.





The
      April
      Warrants have an exercise price of $.20 per share of common stock, are
      exercisable immediately and expire on the third year anniversary of the initial
      warrant date. The exercise price of the April Warrants is subject to adjustment
      in the event of specified dilutive or accretive events, such as stock splits
      and
      stock combinations. The exercise price, as well as the per share price of the
      common stock sold in the private placement is subject to further adjustment
      if
      we issue any shares of common stock or securities convertible or exercisable
      into common stock (subject to customary exceptions such as securities issued
      pursuant to equity incentive plans) through April 2007 at a price per share
      less
      than the per share price of the common stock and/or the exercise price of the
      April Warrants, in which case the per share price and/or the exercise price,
      as
      applicable, will be adjusted to equal the price of the securities in the new
      issuance. The adjustment in the per share price would result in the issuance
      of
      additional shares of common stock to the holder.





In
      May
      2006, we entered into a securities purchase agreement with accredited investors
      in a private placement. In connection with the private placement, we sold an
      aggregate of 1,079,136 shares of common stock, at $.139 per share, and warrants
      (the “Warrants”) to purchase up to 539,568 shares of common stock, for an
      aggregate of $150,000.





The
      May
      Warrants have an exercise price of $.20 per share of common stock, are
      exercisable immediately and expire on the third year anniversary of the initial
      warrant date. The exercise price of the May Warrants is subject to adjustment
      in
      the event of specified dilutive or accretive events, such as stock splits and
      stock combinations. The exercise price, as well as the per share price of the
      common stock sold in the private placement is subject to further adjustment
      if
      we issue any shares of common stock or securities convertible or exercisable
      into common stock (subject to customary exceptions such as securities issued
      pursuant to equity incentive plans) through May 2007 at a price per share less
      than the per share price of the common stock and/or the exercise price of the
      May Warrants, in which case the per share price and/or the exercise price,
      as
      applicable, will be adjusted to equal the price of the securities in the new
      issuance. The adjustment in the per share price would result in the issuance
      of
      additional shares of common stock to the holder.





**Item
      3 - Default Upon Senior Securities**





None





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





None





**Item
      5 - Other Information**





None





**Item
      6 - Exhibits and Reports On Form 8-K**





***Exhibits***




31.1
            Certification
                of Principal Executive Officer Pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.





31.2
            Certification
                of Principal Financial and Accounting Officer Pursuant to Section
                302 of
                the Sarbanes-Oxley Act of 2002.





32.1
            Certificate
                Pursuant To 10 U.S.C. Section 1350, Section 906 of the Sarbanes-Oxley
                Act
                of 2002.





***Reports
      on Form 8-K***




For
      the
      three months ended March 31, 2006;





1.
            We
                filed a Current Report on Form 8-K on January 5, 2006 regarding the
                completion of a private placement of common stock and a warrant to
                purchase common stock.





2.
            We
                filed a Current Report on Form 8-K on February 28, 2006 regarding
                the
                completion of a private placement of common stock and a warrant to
                purchase common stock.





19




**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.





Date:
      June 8, 2006


**PROTOCALL TECHNOLOGIES
              INCORPORATED**By:
            /s/ Bruce NewmanBruce
              Newman, President and Chief Executive
              Officer(Principal
              Executive Officer)






20