**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**


________________


**FORM
      1O-QSB** ****


_________________




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




**QUARTERLY
      PERIOD ENDED MARCH 31, 2007**




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





For
      the
      Transition Period From ________ to _______




**Commission
      File Number**  **000-18689**


________________




**CONNECTED
      MEDIA TECHNOLOGIES, INC.**


(Exact
      name of registrant as specified in its charter)


_________________





**Delaware**  ****  ****  ****  ****  ****  ****  **06-1238435**


**(State
      or Other Jurisdiction**  ****  ****  **(IRS Employer Identification No.)**


**of
      Incorporation or Organization)**  ****  ****  ****  ****  ****  ****  ****  ****




80
      SW
      8thStreet,
      Suite 2230


**Miami,
      FL 33130**


**** (Address
      of Principal Executive Offices)




**(786)
      425-0028**


(Issuer's
      Telephone Number, Including Area Code)




N/A


(Former
      Name or Former Address, if Changed Since Last Report)





Check
      whether the Issuer (1) filed all reports required to be filed by Section 13
      or
      l5( d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. YesxNoo




Check
      whether the registrant filed all documents and reports required to be filed
      by
      Section 12, 13 or l5(d) of the Exchange Act after the distribution of securities
      under a plan confirmed by a court. Yes x No o




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act.




Yes o No x




State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of the latest practicable date: 641,907,436 shares of common stock were
      outstanding as of May 15, 2007.




*    This
      number excludes 15,241,223 shares that have been redeemed by the Company and
      held as treasury shares.













**CONNECTED
      MEDIA TECHNOLOGIES, INC.  AND SUBSIDIARIES**


**FORM
      10QSB**


**FOR
      THE QUARTERLY PERIOD ENDING MARCH 31, 2007**





**PART
      I**  **FINANCIAL
      INFORMATION**


Item
                  1.
              Consolidated
                  Financial StatementsConsolidated
                  Balance Sheet (Unaudited)
              3Consolidated
                  Statements of Operations (Unaudited)
              4Consolidated
                  Statements of Cash Flows (Unaudited)
              5Unaudited
                  Notes to Consolidated Financial Statements
              6
                  -
                  14Item
                  2.
              Management's
                  Discussion and Analysis or Plan of Operations
              15Item
                  3.
              Controls
                  and Procedures
              22**Part
                  II****OTHER
                  INFORMATION**Item
                  1.
              Legal
                  Proceedings
              23Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              23Item
                  3.
              Defaults
                  Upon Senior Securities
              23Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              23Item
                  5.
              Other
                  Information
              23Item
                  6.
              Exhibits
              24Signatures
              
              24
  -2-










**PART
      I - FINANCIAL INFORMATION**


Item
      1. Financial Statements:


CONNECTED
                  MEDIA TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED
                  BALANCE SHEETMarch
                  31, 2007(Unaudited)ASSETSCURRENT
                  ASSETS:Cash
              
              $
              3,191Accounts
                  receivable
              
              
              23,182Total
                  Current Assets
              
              
              26,373PROPERTY
                  AND EQUIPMENT - Net
              
              
              253,619OTHER
                  ASSETSIntangible
                  assets, net
              
              
              106,875Non-marketable
                  securities, at cost
              
              
              164,817Debt
                  issue costs, net
              
              
              3,430Total
                  Other Assets
              
              
              275,122Total
                  Assets
              
              $
              555,114LIABILITIES
                  AND STOCKHOLDERS' DEFICIENCYCURRENT
                  LIABILITIES:Convertible
                  debentures payable, net of discount of $367,817
              
              $
              1,286,183Loan
                  payable
              
              
              48,271Overdraft
                  liability
              
              
              4,348Accounts
                  payable
              
              
              391,966Accounts
                  payable - related parties
              
              
              77,365Accrued
                  expenses
              
              
              83,258Accrued
                  compensation -officer
              
              
              329,741Accrued
                  interest payable
              
              
              207,626Accrued
                  interest payable - related party
              
              
              21,024Deferred
                  revenue - related party
              
              
              145,000Notes
                  payable - related party
              
              
              452,000Warrant
                  liability
              
              
              12,253Embedded
                  conversion option liability
              
              
              2,849,043Total
                  Current Liabilities
              
              
              5,908,078Total
                  Liabilities
              
              
              5,908,078Commitments
                  and contingencies (see Note 6)STOCKHOLDERS'
                  DEFICIENCY:Preferred
                  stock ($0.0001 Par Value; 10,000,000 shares authorized; Noshares
                  issued and outstanding)
              
              
              -Common
                  Stock ($0.0001 Par Value; 2,000,000,000 shares authorized;657,148,659
                  shares issued and 641,907,436 shares outstanding)
              
              
              65,715Additional
                  paid-in capital
              
              
              14,169,405Accumulated
                  deficit
              
              
              (19,188,259
              )Less:
                  treasury stock (15,241,223 common shares, at cost)
              
              
              (399,825
              )Total
                  Stockholders' Deficiency
              
              
              (5,352,964
              )Total
                  Liabilities and Stockholders' Deficiency
              
              $
              555,114


See
        accompanying unaudited notes to consolidated financial
        statements.


-3-





CONNECTED
                  MEDIA TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED
                  STATEMENTS OF OPERATIONSFor
                  the Three Months EndedMarch
                  31,2007
              
              2006(Unaudited)
              
              (Unaudited)NET
                  REVENUES
              
              $
              234,394
              
              $
              87,500COST
                  OF REVENUES
              
              
              85,119
              
              
              41,591GROSS
                  PROFIT
              
              
              149,275
              
              
              45,909OPERATING
                  EXPENSES:Depreciation
                  and amortization
              
              
              39,100
              
              
              21,614Professional
                  fees
              
              
              36,029
              
              
              1,148Rent
              
              
              14,000
              
              
              8,559Payroll,
                  contract services and stock-based compensation
              
              
              244,998
              
              
              -Other
                  selling, general and administrative
              
              
              84,988
              
              
              2,685Total
                  Operating Expenses
              
              
              419,115
              
              
              34,006(LOSS)
                  INCOME FROM OPERATIONS
              
              
              (269,840
              )
              
              11,903OTHER
                  INCOME (EXPENSES):Change
                  in fair market value of embedded conversion option
                  liability
              
              
              (1,505,423
              )
              
              -Change
                  in fair market value of warrant liability
              
              
              73,676
              
              
              -Interest
                  expense - related party
              
              
              (7,020
              )
              
              -Interest
                  expense
              
              
              (410,793
              )
              
              (6,409
              )Total
                  Other Income (Expenses)
              
              
              (1,849,560
              )
              
              (6,409
              )NET
                  (LOSS) INCOME
              
              $
              (2,119,400
              )
              $
              5,494NET
                  (LOSS) INCOME PER COMMON SHARE - Basic and Diluted
              
              $
              -
              
              $
              -WEIGHTED
                  AVERAGE COMMON SHARESOUTSTANDING
                  - Basic and Diluted
              
              
              634,481,992
              
              
              300,507,663


See
        accompanying unaudited notes to consolidated financial statements.
 -4-







CONNECTED
                  MEDIA TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED
                  STATEMENTS OF CASH FLOWSFor
                  the Three Months EndedMarch
                  31,2007
              
              2006(Unaudited)
              
              (Unaudited)CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  (Loss) Income
              
              $
              (2,119,400
              )
              $
              5,494Adjustments
                  to Reconcile Net (Loss) Income to Net Cash FlowsProvided
                  by (Used in) Operating Activities:Depreciation
                  and amortization
              
              
              39,100
              
              
              21,614Amortization
                  of discount on convertible notes payable
              
              
              343,600
              
              
              -Stock-based
                  compensation
              
              
              5,713
              
              
              -Amortization
                  of debt issuance cost
              
              
              7,655
              
              
              -Change
                  in fair value of derivatives
              
              
              1,431,747
              
              
              -(Increase)
                  Decrease in:Accounts
                  receivable
              
              
              65,334
              
              
              41,410Accounts
                  receivable - related party
              
              
              41,500
              
              
              -Prepaid
                  expenses
              
              
              503
              
              
              -Increase
                  (Decrease) in:Accounts
                  payable
              
              
              47,881
              
              
              (7,750
              )Accounts
                  payable - related parties
              
              
              27,808
              
              
              -Accrued
                  expenses
              
              
              (39,403
              )
              
              -Accrued
                  compensation -officer
              
              
              342
              
              
              -Deferred
                  revenue
              
              
              83,500
              
              
              -Accrued
                  interest payable
              
              
              57,926
              
              
              -Accrued
                  interest payable - related party
              
              
              7,020
              
              
              -Net
                  Cash Flows Provided by Operating Activities
              
              
              826
              
              
              60,768CASH
                  FLOWS FROM FINANCING ACTIVITIES:Cash
                  overdraft
              
              
              840
              
              
              (4,372
              )Payments
                  on loans payable
              
              
              -
              
              
              (50,000
              )Net
                  Cash Flows Provided by (Used in) Financing Activities
              
              
              840
              
              
              (54,372
              )Net
                  Increase in Cash
              
              
              1,666
              
              
              6,396Cash
                  - Beginning of Period
              
              
              1,525
              
              
              -Cash
                  - End of Period
              
              $
              3,191
              
              $
              6,396SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:Cash
                  paid during the period for:Interest
              
              $
              1,611
              
              $
              6,409Income
                  Taxes
              
              $
              -
              
              $
              -NON-CASH
                  INVESTING AND FINANCING ACTIVITIES:Derivative
                  liability reclassified to equity upon conversion of debt
              
              $
              33,785
              
              $
              -Common
                  stock issued for debt conversion
              
              $
              24,000
              
              $
              -


See
      accompanying unaudited notes to consolidated financial statements.


-5-














**Connected
      Media Technologies, Inc. and Subsidiaries**


**Unaudited
      Notes to Consolidated Financial Statements**


**March
      31, 2007**




**Note
      1 -** **Nature of Operations and Basis of Presentation**




**(A)**  **Nature
      of Business**




On
      January 31, 2006, Connected Media Technologies, Inc., a Delaware publicly held
      corporation entered into a preliminary Stock Purchase Agreement and Share
      Exchange (the “Agreement”) with Natcom Marketing International, Inc., a
      privately held Puerto Rican based full-service marketing communications agency
      (“NMI”), and the NMI shareholders. The closing of the transaction was completed
      on July 10, 2006 (the “Acquisition Date”). On the Acquisition Date, Connected
      Media acquired all of the outstanding shares of NMI in exchange for a total
      of
      300,507,663 shares or approximately 50% of Connected Media Technologies, Inc.'s
      issued and outstanding common stock. As additional consideration, on the
      Acquisition Date, Connected Media Technologies, Inc. reserved up to $250,000
      of
      the funding received by Montgomery Equity Partners, LP for distribution to
      NMI
      to be used toward the acquisition of a majority interest in NewsProNet
      Interactive, LLC. On the Acquisition Date, Connected Media Technologies, Inc.
      also provided funding to NMI for the payment of certain outstanding debts,
      which
      included relief of the promissory note and accrued interest. Pursuant to the
      Agreement, on the Acquisition Date, NMI became a wholly-owned subsidiary of
      Connected Media Technologies, Inc.




The
      transaction was accounted for as a reverse acquisition with NMI as the acquirer
      for accounting purposes using the purchase method of accounting since both
      Companies are considered operating entities and management of NMI has obtained
      control through (i) holding approximately a 50% interest with no other
      shareholder or group of shareholders holding equivalent rights; and (ii) Board
      control. Accordingly, the consolidated financial statements subsequent to the
      acquisition will consist of the balance sheet of NMI at historical cost, the
      balance sheet of Connected Media Technologies, Inc. marked to fair value based
      on the purchase price, the historical operations of NMI and the operations
      of
      Connected Media Technologies from the acquisition date. The new consolidated
      entity is hereinafter referred to as the “Company.”





The
      Company's legal subsidiary NMI is focused on serving multi-national
      organizations, as well as emerging growth companies seeking to enter or expand
      in the U.S. Hispanic/Latin American markets. NMI uses television programming
      as
      its main entry into the Hispanic and minority advertising space.





On
      October 4, 2006, the Company's wholly-owned subsidiary, NPN Asset Acquisitions,
      Inc. (“NPNAA”) entered into an Assignment Agreement (the “NBC Assignment”) with
      NBC-NPN Holding, Inc. (“NBC”) and NewsProNet Interactive, LLC (“NPN”), whereby
      NBC assigned approximately $2.365 million in secured debt (the “Secured Debt”)
      against NPN to the Company’s subsidiary NPNAA.  As additional
      consideration for the assignment of the Secured Debt, the parties entered into
      a
      Securities Purchase Agreement whereby the Company issued 15,000,000 shares
      of
      Connected Media Technologies, Inc. common stock to NBC. Also on October 4,
      2006, the Company's subsidiary NPNAA entered into an Assignment Agreement with
      NPN (the “NPN Assignment”), pursuant to which NPNAA exercised certain security
      rights with the consent of NPN.





Connected
      Media Technologies, Inc. is a sales and marketing company focused on digital
      media that offers a broad spectrum of services and solutions across current
      and
      emerging media platforms, including print, television, radio, Internet, CD,
      DVD
      and mobile devices such as mobile phones and personal digital assistants
      (PDAs). As a combined entity, the services the Company currently provide
      includes consulting, advertising, media selection and placement, sales
      promotion, direct marketing, collateral development, television production
      and
      placement, radio production and placement, point-of-sale displays, trade shows,
      barter programs, Internet site development, and patented technology solutions.
      NPNAA is an Atlanta based provider of converged media content solutions and
      interactive branding strategies for local broadcasters











-6-








**Connected
      Media Technologies, Inc. and Subsidiaries**


**Unaudited
      Notes to Consolidated Financial Statements (continued)**


**March
      31, 2007**





**(B)**  **Basis
      of Presentation**





The
      accompanying unaudited consolidated financial statements have been prepared
      in
      accordance with accounting principles generally accepted in the United States
      of
      America and the rules and regulations of the United States Securities and
      Exchange Commission for interim financial information. Accordingly, they do
      not
      include all the information and footnotes necessary for a comprehensive
      presentation of consolidated financial position and results of
      operations.




It
      is
      management's opinion, however, that all material adjustments (consisting of
      normal recurring adjustments) have been made which are necessary for a fair
      consolidated financial statement presentation. The results for the interim
      period are not necessarily indicative of the results to be expected for the
      year.




For
      further information, refer to the audited consolidated financial statements
      and
      footnotes of the company for the year ending December 31, 2006
      included in the company's Form 10-KSB .





**Note
      2 -** **Going Concern**




As
      reflected in the accompanying unaudited consolidated financial statements,
      the
      Company has a net loss of $2,119,400 and net cash provided by operations of
      $826
      for the three months ended March 31, 2007, and a working capital deficiency
      of $5,881,705, a stockholders' deficiency of $5,352,964 and an accumulated
      deficit of $19,188,259 at March 31, 2007.




The
      Company has incurred cumulative losses since inception and has funded operations
      primarily through related-party loans and investor capital. The ability of
      the
      Company to continue as a going concern is dependent on the Company's ability
      to
      further implement its business plan, raise capital, and generate revenues.
      The
      consolidated financial statements do not include any adjustments that might
      be
      necessary if the company is unable to continue as a going concern.




The
      Company is dependent upon the ability to resolve its liquidity problems,
      principally by obtaining additional debt financing and/or equity capital. In
      July and August 2006, the Company obtained debt financing. In July 2006,
      Connected Media Technologies, Inc. acquired Natcom Marketing International
      Inc.
      pursuant to a reverse acquisition transaction.





**Note
      3 -** **Related Party Transactions**





**Accounts
      Receivable - Related Party**





For
      the
      three months ended March 31, 2007, the Company recorded deferred revenue of
      $83,500 from progress invoices billed to a company owned by the Company’s Vice
      Chairman and principal shareholder. These invoices related to the performance
      of
      services which will be recognized as revenue in 2007 upon completion. At March
      31, 2007, deferred revenue of $145,000 has been reflected on the accompanying
      consolidated balance sheet. At March 31, 2007, accounts receivable from progress
      invoices due from this same company owned by the Company’s Vice Chairman and
      principal shareholder amounted to $0 and a total of $23,182 was due from
      unrelated customers. There was no allowance recorded as of March 31,
      2007.





**Accounts
      Payable - Related Parties**





At
      March
      31, 2007, the Company had outstanding $77,365 of accounts payable to various
      related parties.








-7-








**Connected
      Media Technologies, Inc. and Subsidiaries**


**Unaudited
      Notes to Consolidated Financial Statements (continued)**


**March
      31, 2007**







**Notes
      Payable - Related party and Accrued Interest - Related
      Party**





At
      March
      31, 2007, the Company had a note payable to Irrevocable Trust Agreement Number
      III (“Trust III”) in the amount of $202,000. This note matured on December 9,
      2006 pursuant to a Loan Extension Agreement dated January 31, 2006. In December
      2006, the Company defaulted on the Line of Credit (see Note 4) and it was repaid
      to the bank with proceeds from the Certificate of Deposit held by Trust III
      (the
“Guarantor”) in the amount of $250,000. Leigh M. Rothschild, a Director of the
      Company until January 30, 2007 (resignation date), is the primary beneficiary
      of
      Trust III. Accordingly, at March 31, 2007, the Company has notes payable
      outstanding to Trust III of $452,000. At March 31, 2007, the Company had accrued
      interest payable, related party of $21,024.





**Other**





The
      Company subleases office space, on a month-to-month basis, from National
      Communications, Inc., a company owned by the Company’s Vice Chairman and
      principal shareholder Robert Rodriguez. For the three months ended March 31,
      2007 and 2006, rent expense paid to this related party amounted to $5,000 and
      $0, respectively, and is included in rent expense on the accompanying
      consolidated statement of operations.





**Note
      4 - Financing Arrangements**





**Convertible
      Debentures Payable**





The
      convertible debenture liability is as follows at March 31, 2007:





Convertible
                debentures payable
            
            $
            1,654,000Less:
                unamortized discount on debentures
            
            
            (367,817
            )Convertible
                debentures, net
            
            $
            1,286,183583





On
      July
      10, 2006, in connection with the reverse acquisition, the Company assumed two
      secured convertible debentures with Montgomery Equity Partners, Ltd.
      (“Montgomery”). Under the terms of the financing agreement with Montgomery, the
      Company issued to Montgomery a secured convertible debenture in the amount
      of
      $718,000 as well
      as an additional secured convertible debenture in the amount of $400,000. Both
      convertible debentures have an interest rate of 14% and maturity dates of April
      30, 2007, and are convertible into shares of the Company's common stock at
      a
      conversion price equal to the lesser of (a) $0.04 or (b) seventy five percent
      (75%) of the lowest Closing Bid Price of the Common Stock, as quoted by
      Bloomberg, LP, of the ten (10) trading days immediately preceding the Conversion
      Date. The Conversion Price may be adjusted pursuant to the other terms of this
      Debenture.




On
      July
      13, 2006, in connection with the “Second Closing” contemplated by the Securities
      Purchase Agreement by and between the Company and Montgomery, the Company issued
      to Montgomery a secured convertible debenture in the amount of $300,000. The
      convertible debenture has an interest rate of 14% and a maturity date of October
      14, 2007, and is convertible into shares of the Company's common stock at a
      conversion price equal to the lesser of (a) $0.016 or (b) seventy five percent
      (75%) of the lowest Closing Bid Price of the Common Stock, as quoted by
      Bloomberg, LP, of the ten (10) trading days immediately preceding the Conversion
      Date. The Conversion Price may be adjusted pursuant to the other terms of this
      Debenture. In addition, upon an “Event of Default” (as that term is defined in
      the debenture), the conversion price will permanently be reduced to $ 0.0001.
      In
      connection with the debt issuance on July 13, 2006, $32,250 was deducted from
      the gross proceeds of which $30,000 is being deferred as debt discount and
      amortized over the life of the convertible debentures. Other fees taken from
      the
      $300,000 in gross proceeds include $2,250 of structuring fees and related costs
      and fees, which are treated as debt issue costs and will be amortized to debt
      issue cost expense over the remaining life of the debenture.








-8-








**Connected
      Media Technologies, Inc. and Subsidiaries**


**Unaudited
      Notes to Consolidated Financial Statements (continued)**


**March
      31, 2007**











On
      August
      30, 2006, in connection with the “Third Closing” contemplated by the Securities
      Purchase Agreement by and between the Company and Montgomery, the Company issued
      to Montgomery a secured convertible debenture in the amount of $300,000. The
      convertible debenture has an interest rate of 14% and a maturity date of
      November 30, 2007, and is convertible into shares of the Company's common stock
      at a conversion price equal to the lesser of (a) $0.016 or (b) seventy five
      percent (75%) of the lowest Closing Bid Price of the Common Stock, as quoted
      by
      Bloomberg, LP, of the ten (10) trading days immediately preceding the Conversion
      Date. The Conversion Price may be adjusted pursuant to the other terms of this
      Debenture. In addition, upon an “Event of Default” (as that term is defined in
      the debenture), the conversion price will permanently be reduced to $
      0.0001.





In
      connection with the debt issuance on August 30, 2006, $30,000 was deducted
      from
      the gross proceeds and is being deferred as debt discount and amortized over
      the
      life of the convertible debentures.





The
      Convertible Debentures are secured by a first priority lien on all of the
      Company's assets. As further security for the Company's obligations under the
      Convertible Debentures, the Company executed an Amended and Restated Pledge
      Agreement, pursuant to which the Company pledged 60,000,000 shares of its common
      stock to Montgomery which are held in escrow.




Pursuant
      to the funding transaction, Montgomery was also issued a warrant for 8,000,000
      shares of the Company's common stock. The warrant is exercisable for a period
      of
      three years from the date of issuance, which was January 31, 2006. The
      exercise price per share under the warrant is $0.0001 per share and the shares
      issuable upon exercise of the warrant are to be included in a registration
      statement.




Pursuant
      to the terms of a Registration Rights Agreement, the Company is required to
      register the shares underlying the Convertible Debentures, as well as the shares
      to be issued pursuant to the Warrant within 60 days from the Closing Date of
      the
      Stock Purchase Agreement with NMI and is required to have the registration
      statement declared effective 90 days from the date of filing. In the event
      that
      the registration statement is not filed or declared effective within these
      time
      limits, the Company may be subject to liquidated damages in the amount of 2%
      of
      the entire funding amount per month and may be deemed in default of the
      operative agreements. Based on discussions with Montgomery and the subsequent
      loan modification Agreement, the Company did not accrue any liquidating damages
      as of March 31, 2007.





In
      connection with the assumption of these debentures, the Company assumed a debt
      discount $723,818 which is being deferred as debt discount and amortized over
      the remaining life of the convertible debentures. Additionally, in connection
      with the assumed secured convertible debentures, the Company assumed debt issue
      costs of $23,272 funds which are recorded as an asset. These costs are fees
      and
      expenses incurred in connection with obtaining the debt funding from entities
      other than the lender. The debt issue costs assumed will be amortized to debt
      issue cost expense over the remaining life of the debentures.





During
      the three months ended March 31, 2007, amortization of debt issue costs was
      $7,655. The remaining balance of debt issue costs at March 31, 2007 was $3,430.
      The amortization of debt discounts for the three months ended March 31, 2007
      was
      $343,600. The balance of the discount is $367,817 at March 31,
      2007.


























-9-








**Connected
      Media Technologies, Inc. and Subsidiaries**


**Unaudited
      Notes to Consolidated Financial Statements (continued)**


**March
      31, 2007**








In
      2006,
      the Company evaluated whether or not the secured convertible debentures contain
      embedded conversion options, which meet the definition of derivatives under
      SFAS
      133 "Accounting for Derivative Instruments and Hedging Activities" and related
      interpretations. The Company concluded that since the secured convertible
      debentures had a variable conversion rate the Company could not guarantee it
      would have enough authorized shares pursuant to the criteria of EITF 00-19
      and
      therefore the embedded conversion option
      must be accounted for as a derivative. In addition, all non-employee options
      or
      warrants must be classified as liabilities for the same reason. On acquisition
      date, the Company assumed an embedded conversion options liability of $1,248,189
      and warrant liability relating to 8,200,000 warrants of
      $15,543.





At
      March
      31, 2007, the Company revalued the embedded conversion option liability and
      warrants resulting in a loss on derivative liability of $1,431,747 primarily
      due
      to fluctuations in the Company's stock price. At March 31, 2007, the fair value
      of the embedded conversion option liability and warrant liability were estimated
      using the Black-Scholes option pricing model with the following assumptions:
      estimated volatility of 371%; risk-free interest rate ranging from 4.54% to
      4.90%; estimated life of 1 year based on the remaining contractual life and
      no
      dividends. At March 31, 2007, the estimated fair value of the embedded
      conversion option liability and warrant liability was $2,849,043 and $12,253,
      respectively, and are reflected on the accompanying consolidated balance
      sheet.





On
      March
      21, 2007, through a redemption date of September 2007, the Company entered
      into
      a Loan Modification Agreement effective February 2007 with Montgomery Equity
      Partner, Ltd. (“Montgomery”) pursuant to which the due date on outstanding
      promissory notes was extended to June 30, 2007 with interest accruing at 14%.
      The Agreement also provides that the Company may redeem the notes for a payment
      of $1 million with the convertible promissory note in the amount of $678,000
      still remaining outstanding. Upon payment of the $1 million, Montgomery will
      release all liens and encumbrances it holds on the assets of the Company and
      will hold back for a period of 90 days from converting or selling and shares
      underlying the convertible note. Thereafter, Montgomery may convert and sell
      shares under the convertible notes in amount not to exceed $56,500 per calendar
      month. The conversion price changed to $0.01 per share and a discount on the
      conversion price will change to 60% of the lowest bid price of the Company’s
      common stock during the 10 days immediately preceding the conversion rate. Upon
      payment of the full Restated Redemption Price, the Company will issue to
      Montgomery a warrant to purchase 10% of the outstanding Secured Convertible
      Debentures and promissory notes on June 30, 2007 in shares of the Company’s
      common stock. The warrant will have an exercise price equal to one cent ($0.01).
      The warrant will have a seven year maturity date and demand Registration Rights. In
      addition, all currently outstanding warrants held by Montgomery are reset to
      a
      $.0001 exercise price on the modification date.





In
      December 2006, the FASB issued FSP EITF 00-19-2, "Accounting for Registration
      Payments" which was effective immediately. This FSP amends EITF 00-19 to require
      potential registration payment arrangements to be treated as a contingency
      pursuant to FASB Statement 5 rather than at fair value. We considered the effect
      of this standard on the above embedded conversion option and warrant
      classification as a liability and determined that the accounting would not
      have
      changed as a result of this standard; since the variable rate on the convertible
      debentures still cause derivative treatment. Therefore, there was no effect
      of
      implementing this standard.





On
      March
      9, 2007, Montgomery converted $24,000 of the $718,000 convertible debenture
      issued to Montgomery on January 31, 2006 into an aggregate of 30,000,000 shares
      of common stock. The conversion price was $.0008 per share and the conversion
      reduced the principal amount of this debenture to $654,000.




















-10-








**Connected
      Media Technologies, Inc. and Subsidiaries**


**Unaudited
      Notes to Consolidated Financial Statements (continued)**


**March
      31, 2007**








**Line
      of Credit**




The
      Company entered into a transaction with a Bank pursuant to which the Company
      had
      access to a two hundred and fifty thousand dollar ($250,000) line of credit.
      In
      general, all or any portion of the $250,000 may be drawn down at any time,
      and
      must be repaid in full by October 25, 2006, with interest at prime plus 1.5%.
      In
      addition, each consecutive month, the Company must pay accrued interest on
      outstanding amounts owed. The Company used the line of credit for general
      working capital. The credit line was guaranteed by a stockholder and secured
      by
      a Certificate of Deposit owned by a director of the Company. On October 25,
      2006, the $250,000 Line of Credit became due and payable in full. The Company
      did not repay the amount due on the due date. In March 2007, the Company
      received notice from the Bank that the amounts due under the line of credit
      had
      been assigned on December 5, 2006 to Irrevocable Trust Agreement Number III
      (See
      Note 3).





**Loan
      Payable**





The
      Company has a loan with a bank. The loan bears interest at 9.75%, is renewable
      annually, and is secured by accounts receivable. At March 31, 2007, the
      principal amount due under the loan amounted to $48,271.





The
      weighted average interest rate on the Company’s short-term obligation was
      approximately 9%.








**Note
      5 -** **Stockholders' Deficiency**





**Common
      Stock**





On
      March
      9, 2007, Montgomery converted $24,000 of the $718,000 convertible debenture
      issued to Montgomery on January 31, 2006 into an aggregate of 30,000,000 shares
      of common stock. The conversion price was $.0008 per share and the conversion
      reduced the principal amount of this debenture to $654,000.





**Stock
      Options**





On
      March
      5, 2007, the Company granted an aggregate of 2,700,000 stock options to purchase
      2,700,000 shares of the Company’s common stock at an exercise price of $.0014.
      The options expire on March 5, 2017. The
      Company valued these options at $3,780 utilizing the Black-Scholes option
      pricing model. The Company used the following assumptions for determining the
      fair value of options granted under the Black-Scholes option pricing model:
      expected volatility of 371% (based on historical volatility); expected term
      of 8
      years; risk free interest rate of 4.54%; and a dividend yield of 0%. The Company
      uses historical data to estimate option exercise term and employee termination
      within the valuation model. The expected term of options granted represents
      the
      period of time that options granted are expected to be outstanding.





For
      the
      three months ended March 31, 2006, the Company recorded stock-based compensation
      of $5,713 pursuant to SFAS 123R which was based on vesting
      provisions.





At
      March
      31, 2007, there was $57,443 of total unrecognized compensation expense related
      to non-vested option-based compensation arrangements under the
      Plan.














-11-











**Connected
      Media Technologies, Inc. and Subsidiaries**


**Unaudited
      Notes to Consolidated Financial Statements (continued)**


**March
      31, 2007**








A
      summary
      of the status of the Company's outstanding stock options as of March 31, 2007
      and changes during the period then ended are as follows:


Number
                of Options
            
            Weighted
                Average Exercise PriceBalance
                at December 31, 2006
            
            
            32,100,000
            
            $
            0.016Granted
            
            
            2,700,000
            
            
            0.0014Exercised
            
            
            -
            
            
            -Forfeited
            
            
            -
            
            
            -Balance
                at March 31, 2007
            
            
            34,800,000
            
            $
            0.015Options
                exercisable at end of period
            
            
            26,325,000
            
            $
            0.018Weighted
                average fair value of options granted during the period
            
            
            
            
            $
            0.0014





The
      following table summarizes information about employee and consultants stock
      options outstanding at March 31, 2007:




Options
                Outstanding
            
            Options
                ExercisableRange
                of Exercise Price
            
            Number
                Outstanding at March 31, 2007
            
            Weighted
                Average Remaining Contractual Life (Years)
            
            Weighted
                Average Exercise Price
            
            Number
              Exercisable
                at
              March
                31, 2007
            
            Weighted
                Average Exercise Price$
                0.02
            
            21,000,000
            
            1.50
            $
            0.02
            
            21,000,000
            $
            0.02$
                0.009
            
            10,800,000
            
            9.50
            
            0.009
            
            4,800,000
            
            0.009$
                0.0014
            
            2,700,000
            
            10.0
            
            0.0014
            
            225,000
            
            0.0014$
                0.04
            
            300,000
            
            1.00
            
            0.04
            
            300,000
            
            0.0434,800,000
            
            
            $
            0.015
            
            26,325,000
            $
            0.018





**Common
      Stock Warrants**





A
      summary
      of the status of the Company's outstanding stock warrants as of March 31, 2007
      and changes during the period then ended are as follows:




Number
                of Options
            
            Weighted
                Average Exercise PriceBalance
                at December 31, 2006
            
            
            8,200,000
            
            $
            000
                0.0003Granted
            
            
            -
            
            
            -Exercised
            
            
            -
            
            
            -Forfeited
            
            
            -
            
            
            -Balance
                at March 31, 2007
            
            
            8,200,000
            
            $
            0.0003Warrants
                exercisable at end of period
            
            
            8,200,000
            
            $
            0.0003








-12-








**Connected
      Media Technologies, Inc. and Subsidiaries**


**Unaudited
      Notes to Consolidated Financial Statements (continued)**


**March
      31, 2007**








The
      following table summarizes information about warrants outstanding at March
      31,
      2007:





Warrants
                Outstanding
            
            Warrants
                ExercisableRange
                of Exercise Price
            
            Number
                Outstanding at March 31, 2007
            
            Weighted
                Average Remaining Contractual Life (Years)
            
            Weighted
                Average Exercise Price
            
            Number
              Exercisable
                at
              March
                31, 2007
            
            Weighted
                Average Exercise Price$
                .0001
            
            8,000,000
            
            2
            $
            .0001
            
            8,000,000
            $
            .0001$
                0.01
            
            200,000
            
            2
            
            .01
            
            200,000
            
            .018,200,000
            
            
            $
            .0003
            
            8,200,000
            $
            .0003








**Note
      6 -** **Commitments and Contingencies**




**Agreements
      with Rothschild Trust Holdings, LLC**




On
      January 31, 2006, Connected Media Technologies, Inc. entered into a Purchase
      and
      Sale Agreement with Rothschild Trust Holdings, LLC (the “Trust”), a related
      party, for the sale of certain issued and pending patents in exchange for the
      return of 13,241,223 shares of Connected Media Technologies, Inc.'s common
      stock
      held by the Trust (the “Shares”). As additional consideration, the Trust granted
      Connected Media Technologies, Inc. a license to use the patents pursuant to
      the
      terms of a License and Royalty Agreement, which grants Connected Media
      Technologies, Inc. a twelve-month right of election to license the patents.
      If
      Connected Media Technologies, Inc. exercises the right of election, the Trust
      shall grant Connected Media Technologies, Inc. a two-year exclusive license
      for
      the use of the patents that is renewable subject to performance, and the Trust
      shall receive 10% royalties on all gross receipts as defined in the License
      and
      Royalty Agreement.




On
      January 31, 2006, Connected Media Technologies, Inc., the Trust, Montgomery,
      and
      David Gonzalez, as the Escrow Agent, entered into an Escrow Agreement, whereby
      the Trust agreed to place the 13,241,223 shares that were returned to Connected
      Media Technologies, Inc. and Connected Media Technologies, Inc. agreed to
      deposit royalties otherwise payable to the Trust into an escrow account held
      by
      the Escrow Agent until such time as royalties  of $690,000 have been
      deposited into the escrow account or until Montgomery has been repaid and/or
      converted $690,000 of the Convertible Debentures. At such time, the Trust shall
      have 30 days to replace the Shares with $728,267, which shall be distributed
      to
      the Company in exchange for the Shares; otherwise, the Escrow Agent shall
      release the Shares to the Company and the royalties to the Trust.





**Litigation**





On
      March
      23, 2007, the Company and its wholly-owned subsidiary Trust Licensing, Inc.,
      were each served with a lawsuit from Irrevocable Trust Agreement Number III.
      The
      lawsuit was commenced in the Circuit Court of the 17th Judicial Circuit in
      and
      for Broward County, Florida. The lawsuit relates to amounts claimed owed to
      Irrevocable Trust Agreement Number III in the approximate total principal amount
      of $500,000, and also seeks various interest, costs, and fees (see Note
      3).




















-13-








**Connected
      Media Technologies, Inc. and Subsidiaries**


**Unaudited
      Notes to Consolidated Financial Statements (continued)**


**March
      31, 2007**








On
      March
      21, 2007, Rothschild Trust Holdings, LLC, the licensor of various patents to
      the
      Company, alleged, among other things, that the Company's license to these
      patents has been terminated. The patents licensed to the Company were included
      in the License and Royalty Agreement, by and between Rothschild Trust Holdings,
      LLC and the Company, dated as of January 31, 2006, The licensor has now claimed
      all right, title and interest in the subject intellectual property and has
      further asserted that any subsequent use or sublicense of the subject
      intellectual property will constitute infringement. The Company disagrees with
      the licensor's assertions concerning the Company's rights in the intellectual
      property, and is currently evaluating its options with counsel with respect
      to
      the continued use of the subject intellectual property rights. The dispute
      relates, in part, to the parties' differing interpretations of the terms of
      the
      License and Royalty Agreement, and the subsequent actions and conduct between
      the parties relating thereto. Although the Company intends to assert its rights
      to the intellectual property, the patents do not represent a material portion
      of
      the Company’s operating revenue.





From
      time
      to time the Company may become subject to proceedings, lawsuits and unasserted
      claims in the ordinary course of business.  Such matters are subject to
      many uncertainties, and outcomes are not predictable with assurance.  As of
      the date of this report, we do not believe that any of these matters would
      be
      material to the Company’s financial condition or operation.

























-14-











**Item
      2**  **MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**




*This
      quarterly report on Form 10-QSB, including this Management's Discussion and
      Analysis or Plan of Operations, contains forward-looking statements regarding
      future events and our future results that are subject to the safe harbors
      created under the Securities Act of 1933 and the Securities Exchange Act of
      1934. These statements are based on current expectations, estimates, forecasts,
      and projections about the industries in which we operate and the beliefs and
      assumptions of our management. Words such as “expects,” “anticipates,”
“targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,”
“estimates,” “continues,” “may,” variations of such words, and similar
      expressions are intended to identify such forward-looking statements. In
      addition, any statements that refer to projections of our future financial
      performance, our anticipated growth and trends in our business and other
      characterizations of future events or circumstances are forward-looking
      statements. Readers are cautioned that these forward-looking statements are
      only
      predictions and are subject to risks, uncertainties, and assumptions that are
      difficult to predict.*





*Therefore,
      actual results may differ materially and adversely from those expressed in
      any
      forward-looking statements. We undertake no obligation to revise or update
      any
      forward-looking statements for any reason.*





**OUR
      BUSINESS**





We
      are a
      sales and marketing company focused on digital media that offers a broad
      spectrum of digital services across current and emerging media platforms,
      including print, television, radio, Internet, CD, DVD and mobile devices such
      as
      mobile phones and PDAs. Our customers include companies, government agencies,
      advertising agencies, advertisers and content owners who seek to leverage
      opportunities in this age of “digital convergence.” Thanks to the advent of
      digital technology, different media platforms have converged causing many
      changes in the way entertainment content, advertising and marketing messages
      are
      delivered to their audience. Companies are faced with a fragmented marketplace,
      where consumers are reached through multiple channels and on multiple devices
      -
      from televisions and radios, to computers, game consoles, mobile phones,
      personal digital assistants (PDA's) and portable media players (such as the
      iPOD
      and other devices). We offer creative services, marketing communications,
      content creation and distribution, and technology to help our clients navigate
      through this “new media” landscape.




On
      October 4, 2006, we acquired the assets of NewsProNet Interactive, LLC ("NPN"),
      a leader in converged media content solutions and interactive branding
      strategies for local television broadcasters. These assets include several
      intellectual property assets, including a library of broadcast content. We
      intend to use these assets to both service current clients of NPN (which include
      several broadcast media companies), and to develop numerous cross-selling and
      business development opportunities using our assets and the assets of
      NMI.




** *Technology
      Licenses*




Through
      the license agreement with Rothschild Trust Holdings. LLC  the
      Company is the exclusive licensee of United States Patent No. 6,101,534,
      "Interactive, Remote, Computer Interface System" (”534 Patent") and a second
      patent, "A Media Validation System", U.S. Patent No. 6,952,697. The company
      also
      has certain exclusive rights to several additional patent applications filed
      with the United States Patent and Trademark Office.





In
      general, the claims of the `534 patent relate to technology that allows
      multimedia content stored on a removable local media (including, but not limited
      to CD-ROM and DVD-ROM discs) to be "controlled" or "released" for access by
      the
      user by visiting a related website on the Internet.


























-15-










*Sales
      Strategy*





In
      addition to the ongoing business of NMI and NPN, we are leveraging the
      established customer base and experience of NMI as it relates to opportunities
      for our patent licenses. For example, NMI has been hired by a tourism bureau
      in
      Europe to implement an Internet marketing campaign to promote travel to the
      destination. In the past NMI has created and placed an online marketing program
      for this customer.





We
      have
      an in-house sales staff, currently consisting of four employees that target
      customers in travel, advertising, cable television and broadcast media, training
      education, film, music and video.





The
      goal
      of our sales staff is to utilize some or all of our core competencies to craft
      a
      solution to meet the needs of each individual client. This can range from the
      creation of marketing collateral or a digital branding strategy, to a full-blown
      turnkey solution involving content creation, media placement, web development
      and creation of an interactive CD-Rom or DVD utilizing patented
      technology.




We
      have
      developed a special focus on helping our customers leverage the many changes
      that have occurred in the areas of marketing, advertising and content delivery
      in the age of digital convergence and converged media. We believe that
      government agencies as well as private sector companies across many industries
      and target markets are faced with new challenges as more and more consumers
      use
      the Internet and a wide range of digital media platforms to receive their
      entertainment and information. We offer digital media services and technology
      solutions to help our customers meet such challenges in a constantly changing
      environment.




We
      believe that if potential revenue streams materialize from our services and
      applications in a timely and meaningful fashion, it will enable us to increase
      shareholder value. However, we do not believe that cash flow from operations
      alone will be sufficient to fund our activities in the next 12 months. As of
      March 31, 2007, we had total assets of approximately $555,000 ($3,191 of which
      is cash), and total liabilities of approximately $5,908,000. As described below,
      we will need to obtain additional financing for us to both implement our plans
      and to continue as a going concern.





**CRITICAL
      ACCOUNTING POLICIES AND ESTIMATES**





The
      preparation of financial statements and related disclosures in conformity with
      accounting principles generally accepted in the United States requires us to
      make judgments, assumptions, and estimates that affect the amounts reported
      in
      the Consolidated Financial Statements and accompanying notes. Note 1 to the
      audited Consolidated Financial Statements included in the Company’s annual
      report on Form 10-KSB for the year ended December 31, 2006 describes the
      significant accounting policies and methods used in the preparation of the
      Consolidated Financial Statements. These critical accounting policies are
      affected significantly by judgments, assumptions, and estimates used in the
      preparation of the Consolidated Financial Statements and actual results could
      differ materially from the amounts reported based on these
      policies.





*Accounting
      for Derivatives* - We
      evaluate our convertible debt, options, warrants or other contracts to determine
      if those contracts or embedded components of those contracts qualify as
      derivatives to be separately accounted for under Statement of Financial
      Accounting Standards 133 "Accounting for Derivative Instruments and Hedging
      Activities" and related interpretations including EITF 00-19 "Accounting for
      Derivative Financial Instruments Indexed to, and Potentially Settled in, a
      Company's Own Stock". The result of this accounting treatment is that the fair
      value of the embedded derivative is marked-to-market each balance sheet date
      and
      recorded as a liability.


























-16-

















In
      the
      event that the fair value is recorded as a liability, the change in fair value
      is recorded in the consolidated statement of operations as other income or
      expense. Upon conversion or exercise of a derivative instrument, the instrument
      is marked to fair value at the conversion date and then that fair value is
      reclassified to equity. Equity instruments that are initially classified as
      equity that become subject to reclassification under SFAS 133 are reclassified
      to liability at the fair value of the instrument on the reclassification
      date.





In
      December 2006, the FASB issued FSP EITF 00-19-2, "Accounting for Registration
      Payments" which was effective immediately. This FSP amends EITF 00-19 to require
      potential registration payment arrangements be treated as a contingency pursuant
      to FASB Statement 5 rather than at fair value. We considered the effect of
      this
      standard on the above embedded conversion option and warrant classification
      as a
      liability and determined that the accounting would not have changed as a result
      of this standard; since the variable rate on the convertible debentures still
      cause derivative treatment. Therefore, there was no effect of implementing
      this
      standard.





*Revenue
      Recognition* .
      We
      follow the guidance of the Securities and Exchange Commission's Staff Accounting
      Bulletin No. 104 for revenue recognition. In general, we record revenue when
      persuasive evidence of an arrangement exists, services have been rendered or
      product delivery has occurred, the sales price to the customer is fixed or
      determinable, and collectibility is reasonably assured. The following are the
      specific revenue recognition policies for the revenue streams of the
      Company:





Content
      revenue - subscription based:  The Company produces and distributes
      broadcast and digital content for customers that subscribe to such service
      under
      monthly fixed fee arrangements.  Revenue is recognized when the minimum
      content required to be delivered monthly under the agreement is finalized,
      and
      delivered or made available to the customers for unconditional use.





Content
      revenue - revenue sharing arrangements: When content is provided on a revenue
      sharing basis, the revenue is not determinable until the Company receives
      payment from the customer. Accordingly, revenue is recognized upon receipt
      of
      payment. There have been no revenue sharing revenues during the three months
      ended March 31, 2007.





Content
      revenue - barter arrangements: Revenue from barter transactions will be valued
      at the fair value of the goods provided or goods received whichever is more
      readily determinable and recognized upon delivery of the content by the Company.
      There have been no barter revenues during the three months ended March 31,
      2007.





Digital
      media services revenue:  The Company creates and distributes digital
      marketing content and advertising services on a project basis.  Revenue is
      recognized when projects are completed and made available to the customer for
      unconditional use.





*Impairment
      of Long-Lived Assets* .
      Our
      long-lived assets consist of patents (having a fair value of zero for GAAP
      purposes) a video content library and equipment. We review long-lived assets
      and
      certain identifiable assets related to those assets for impairment whenever
      circumstances and situations change such that there is an indication that the
      carrying amounts may not be recoverable. If the undiscounted future cash flows
      of the long-lived assets are less that the carrying amount, their carrying
      amount is reduced to fair value and an impairment loss is recognized. On July
      10, 2006 (the “Acquisition Date”), we acquired all of the outstanding shares of
      NMI in exchange for a total 300,507,663 or approximately 50% of the issued
      and
      outstanding shares of the Company's common stock. Pursuant to the Agreement,
      on
      the Acquisition Date, NMI became a wholly-owned subsidiary of Connected Media
      Technologies, Inc.













-17-













The
      transaction was accounted for as a reverse acquisition using the purchase method
      of accounting in accordance with SFAS No. 141 since both Companies are
      considered operating entities and management of NMI has obtained control through
      (i) holding a controlling interest with no other shareholder or group of
      shareholders holding equivalent rights and (ii) Board control. Accordingly,
      the
      consolidated financial statements subsequent to the acquisition will consist
      of
      the balance sheet of NMI at historical cost, the balance sheet of Connected
      Media Technologies, Inc. marked to fair value based on the purchase price,
      the
      historical operations of NMI and the operations of Connected Media Technologies,
      Inc. from the acquisition date. The purchase price is based on the average
      fair
      value of the Company's shares during the period before and after the date of
      the
      agreement and the date of the announcement. This amounted to approximately
      $13,476,000. The purchase price was allocated to the net assets of Connected
      Media Technologies Inc. based on their fair values. Since we have minimal
      revenues, have incurred losses and used cash in operations, we deemed the
      acquired goodwill to be impaired and wrote-off the goodwill on the acquisition
      date. Accordingly, for the year ended December 31, 2006, we recorded an
      impairment of goodwill of $16,227,967 on the accompanying statement of
      operations.





*Contingencies
      and Litigation* .
      We
      record a reserve for contingencies and litigation when an adverse outcome is
      probable and the amount of the potential liability is reasonably
      estimable.




On
      March
      23, 2007, the Company and its wholly-owned subsidiary Trust Licensing, Inc.,
      were each served with a lawsuit from Irrevocable Trust Agreement Number III.
      The
      lawsuit was commenced in the Circuit Court of the 17th Judicial Circuit in
      and
      for Broward County, Florida. The lawsuit relates to amounts claimed owed to
      Irrevocable Trust Agreement Number III in the approximate total principal amount
      of $500,000, and also seeks various interest, costs, and fees. (See "Subsequent
      Events.")




From
      time
      to time we may become subject to proceedings, lawsuits and unasserted claims
      in
      the ordinary course of business.  Such matters are subject to many
      uncertainties, and outcomes are not predictable with assurance.  As of the
      date of this report, we do not believe that any of these matters would be
      material to the Company's financial condition or operation.




**RESULTS
      OF OPERATIONS**





THREE
      MONTHS ENDED MARCH 31, 2007 COMPARED TO THREE MONTHS ENDED MARCH
      31, 2006




Revenue.
      Our net sales were $234,394 and $87,500 for the three months ended March 31,
      2007 and 2006, respectively, an increase of $146,894 or 167.9%. This increase
      was primarily attributed to the acquisition of NPN Acquisition, Inc. in October
      2006.





Cost
      of
      sales. For the three months ended March 31, 2007 and 2006, cost of sales
      amounted to $85,119 and $41,591, respectively, and included the cost of
      independent contractors and production costs.




Operating
      Expenses. Operating expenses for the three months ended March 31, 2007 was
      $419,115 compared to operating expenses of $34,006 for the same period in 2006,
      an increase of $385,109 or 1,132.5%. The increase in operating expenses results
      primarily from the following:





·
            For
                the three months ended March 31, 2007, depreciation and amortization
                expense amounted to $39,100 as compared to $21,614 for the three
                months
                ended March 31, 2006, an increase of $17,486 or 81%. This increase
                was
                attributable to the amortization of approximately $16,875 on the
                intangible assets acquired in October
                2006.























-18-








·
            For
                the three months ended March 31, 2007, professional fees amounted
                to
                $36,029 as compared to $1,148 for the three months ended March 31,
                2006,
                an increase of $34,881. This increase was attributable to an increase
                in
                legal fees associated with our financings, acquisition activities,
                and
                registration statements and an increase in accounting
                fees.





·
            For
                the three months ended March 31, 2007, rent expense amounted to $14,000
                as
                compared to $8,559 for the three months ended March 31, 2006, an
                increase
                of $5,441 or 63.6%. We sublease office space, on a month-to-month
                basis,
                from National Communications, Inc, a company owned by the Company's
                Vice
                Chairman and principal shareholder Robert Rodriguez. For the three
                months
                ended March 31, 2007, rent expense paid to this related party amounted
                to
                $5,000. Additional rent expense is related to space in Alpharetta,
                Georgia
                occupied by NPNAA.





·
            For
                the three months ended March 31, 2007, payroll, contract service
                and
                stock-based compensation amounted to $244,998 as compared to $0 for
                the
                three months ended March 31, 2006, an increase of $244,998 or 100%.
                This
                increase was attributable to an increase in stock-based compensation
                of
                $5,713 related to the vesting of stock options and an increase in
                compensation due to our
                acquisitions.





·
            For
                the three months ended March 31, 2007, other selling, general and
                administrative expenses amounted to $84,988 as compared to $2,685
                for the
                three months ended March 31, 2006, an increase of $82,303 or 3,065%.
                This
                increase is due to our
                acquisitions.




Other
      expenses. For the three months ended March 31, 2007, other expenses amounted
      to
      $1,849,560 as compared to $6,409 for the three months ended March 31, 2006.
      For
      the three months ended March 31, 2007, we recorded a loss from the change in
      fair value of embedded conversion option liabilities of $1,505,423, a gain
      from
      the change in fair market value of warrant liability of $73,676, and interest
      expense of $417,813 related primarily to the amortization of debt discount
      and
      accrued interest on our debt financings. For the three months ended March 31,
      2006, we recorded interest expense of $6,409 related to a loan.





Net
      Loss.
      Our net loss for the three months ended March 31, 2007 was $2,119,400 or
      $.00 per common share compared to net income of $5,494 or $0.00 per common
      share
      for the same period in 2006.





**LIQUIDITY
      AND CAPITAL RESOURCES**





At
      March
      31, 2007, we had $3,191 in cash. We have no other liquid assets, except for
      accounts receivable. We intend to finance our activities through use of the
      private and public debt and equity financing.




Prior
      to
      the April 2005 and January 2006 Montgomery transaction (described below),
      Connected Media financed their activities primarily through a prior loan from
      Montgomery Equity Partners and loans from, and loans secured by, related
      parties.





Our
      cash
      requirements for the next twelve months are approximately $2.5 million,
      including requirements for working capital (estimated to be approximately $1.1
      million), research and development (estimated to be approximately $100,000),
      personnel additions (estimated to be approximately $300,000), licensing
      activities (estimated to be approximately $100,000) and debt service and
      repayment (estimated to be approximately $900,000). The company expects to
      obtain the necessary funds during the course of the twelve-month period and
      will
      manage its activities accordingly.





In
      the
      event we are not able to generate sufficient funds from operations or financing
      from Montgomery, we will seek to obtain funding from other means, including
      the
      use of private and public debt and equity financing.



















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We
      do not
      believe that cash flow from operations will be sufficient to fund our activities
      over the next 12 months. Our ability to continue as a going concern is dependent
      upon obtaining additional public and private equity and debt financing, (which
      we do not anticipate in the foreseeable future). We cannot be certain that
      additional funding will be available as needed, or upon terms that are
      favorable. If we are unable to obtain the necessary funding, we may need to
      curtail the implementation of our core business activities and risk going out
      of
      business.




On
      January 31, 2006, prior to the reverse acquisition, Connected Media completed
      a
      financing agreement for $1,718,000 with Montgomery. The amount included the
      original principal amount of $718,000 previously funded pursuant to the April
      2005 Note plus accrued interest and a 10% termination fee. Of the remaining
      $1,000,000 balance of the note, $400,000 was funded on January 31, 2006,
      $300,000 was funded on July 10, 2006 and an additional $300,000 was funded
      during October 2006. Under the terms of the agreement, we issued to Montgomery
      secured convertible debentures in the amount of $1,718,000. The convertible
      debentures have an interest rate of 14% and maturity dates of April 30, 2007,
      and are convertible into shares of our common stock at a conversion price equal
      to the lesser of (a) $0.04 or (b) seventy five percent (75%) of the lowest
      Closing Bid Price of the Common Stock, as quoted by Bloomberg, LP, of the ten
      (10) trading days immediately preceding the Conversion Date. The Conversion
      Price may be adjusted pursuant to the other terms of this Debenture. On November
      3, 2006, Montgomery converted $40,000 of the $718,000 convertible debenture
      into
      an aggregate of 5,333,333 shares of common stock and on March 9, 2007,
      Montgomery converted $24,000 of the $718,000 convertible debenture into an
      aggregate of 30,000,000 shares of common stock.





The
      Convertible Debentures are secured by a first priority lien on all of our
      assets. As further security for our obligations under the Convertible
      Debentures, we executed an Amended and Restated Pledge Agreement, pursuant
      to
      which we re-pledged the 60,000,000 shares of our common stock to Montgomery
      that
      were originally pledged pursuant to the April 2005 Note.





Pursuant
      to the funding transaction, Montgomery was also issued a warrant for 8,000,000
      shares of our common stock. The warrant is exercisable through January 31,
      2009.
      The exercise price per share under the warrant is $0.0001 per share and the
      shares issuable upon exercise of the warrant are to be included in the
      registration statement.




Pursuant
      to the terms of a Registration Rights Agreement, we are required to register
      the
      shares underlying the Convertible Debentures, as well as the shares to be issued
      pursuant to the Warrant within 60 days from the Closing Date of the Stock
      Purchase Agreement with NMI and to have the registration statement declared
      effective 90 days from the date thereof. In the event that the registration
      statement is not filed or declared effective within these time limits, we may
      be
      subject to liquidated damages in the amount of 2% of the entire funding amount
      per month and may be deemed in default of the operative agreements. We filed
      an
      SB-2 registration statement on September 1, 2006, which has not yet
      been declared effective. Based on communications with the lender and the
      February 2007, loan modification agreement, the lender did not intend to enforce
      this liquidated damages provision as of December 31, 2006.





On
      March
      21, 2007, through ha redemption date of September 2007, we entered into a Loan
      Modification Agreement effective February, 2007 with Montgomery Equity Partner,
      Ltd. (“Montgomery”) pursuant to which the due date on outstanding promissory
      notes was extended to June 30, 2007 with interest accruing at 14%. The Agreement
      also provides that we may redeem the notes for a payment of $1 million with
      the
      convertible promissory note in the amount of $654,000 still remaining
      outstanding. Upon payment of the $1 million, Montgomery will release all liens
      and encumbrances it holds on the assets of the Company and will hold back for
      a
      period of 90 days from converting or selling and shares underlying the
      convertible note. Thereafter, Montgomery may convert and sell shares under
      the
      convertible notes in amount not to exceed $56,500 per calendar month. The
      conversion price changes to $0.01 per share and a discount on the conversion
      price will change to 60% of the lowest bid price of the Company’s common stock
      during the 10 days immediately preceding the conversion rate. Upon
      payment of the full Restated Redemption Price, the Company will issue to
      Montgomery a warrant to purchase 10% of the outstanding Secured Convertible
      Debentures on June 30, 2007 in shares of the Company’s common stock. The warrant
      will have an exercise price equal to one cent ($0.01). The warrant will have
      a
      seven year maturity date and demand Registration Rights. In
      addition, all currently outstanding warrants held by Montgomery are reset to
      a
      $.0001 exercise price on the modification date.




-20-











The
      Montgomery financing transaction was approved by the unanimous consent of our
      Board of Directors on January 31, 2006. A majority of our stockholders approved
      the action by written consent in lieu of a meeting on March 16, 2006. The
      Montgomery financing documents adopted by our Board of Directors were filed
      as
      exhibits to our Form 8K with the Securities and Exchange Commission on February
      8, 2006, and are hereby incorporated by reference.





We
      received an audit opinion for the fiscal year ended December 31, 2006 that
      includes a "going concern" risk, which raises substantial doubt regarding our
      ability to continue as a going concern. We do not believe that cash flow from
      operations will be sufficient to fund our activities over the next 12 months.
      Our ability to continue as a going concern is dependent upon obtaining
      additional financing. Until we can generate sufficient cash flow from our
      operations (which we do not anticipate in the foreseeable future) we expect
      to
      finance future cash needs through private and public financings, including
      equity financings. We cannot be certain that additional funding will be
      available as needed, or upon terms that are favorable. In addition, we may
      need
      to curtail the implementation of our core business activities and plans if
      funding is not available.




**CAPITAL
      EXPENDITURES AND COMMITMENTS**





We
      did
      not acquire a material amount of fixed assets during the period and currently
      do
      not plan to do so during fiscal 2007.





**OFF-BALANCE
      SHEET ARRANGEMENTS**





We
      do not
      currently have any off-balance sheet arrangements.





**Recent
      Pronouncements**




In
      March
      2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial
      Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and
      Servicing of Financial Assets and Extinguishments of Liabilities". This
      statement requires all separately recognized servicing assets and servicing
      liabilities be initially measured at fair value, if practicable, and permits
      for
      subsequent measurement using either fair value measurement with changes in
      fair
      value reflected in earnings or the amortization and impairment requirements
      of
      Statement No. 140. The subsequent measurement of separately recognized servicing
      assets and servicing liabilities at fair value eliminates the necessity for
      entities that manage the risks inherent in servicing assets and servicing
      liabilities with derivatives to qualify for hedge accounting treatment and
      eliminates the characterization of declines in fair value as impairments or
      direct write-downs. SFAS No. 156 is effective for an entity's first fiscal
      year
      beginning after September 15, 2006. The adoption of this statement did not
      have
      a significant effect on our reported financial position or results of
      operations.




In
      July
      2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
      (FIN) No. 48, "Accounting for Uncertainty in Income Taxes-an interpretation
      of
      FASB Statement No. 109." This interpretation provides guidance for recognizing
      and measuring uncertain tax positions, as defined in SFAS No. 109, "Accounting
      for Income Taxes." FIN No. 48 prescribes a threshold condition that a tax
      position must meet for any of the benefit of an uncertain tax position to be
      recognized in the financial statements. Guidance is also provided regarding
      de-recognition, classification, and disclosure of uncertain tax positions.
      FIN
      No. 48 is effective for fiscal years beginning after December 15, 2006. We
      do
      not expect that this interpretation will have a material impact on our financial
      position, results of operations, or cash flows.













-21-








In
      September 2006, FASB issued SFAS 157 “Fair Value Measurements.” This Statement
      defines fair value, establishes a framework for measuring fair value in
      generally accepted accounting principles (GAAP), and expands disclosures about
      fair value measurements. This Statement applies under other accounting
      pronouncements that require or permit fair value measurements, the Board having
      previously concluded in those accounting pronouncements that fair value is
      the
      relevant measurement attribute. Accordingly, this Statement does not require
      any
      new fair value measurements. However, for some entities, the application of
      this
      Statement will change current practice. This Statement is effective for
      financial statements issued for fiscal years beginning after
      November 15, 2007, and interim periods within those fiscal years.
      Management is currently evaluating the effect of this pronouncement on financial
      statements.





In
      December 2006, FASB Staff Position No. EITF 00-19-2, *“Accounting
      for Registration Payment Arrangements,”* was
      issued. The FSP specifies that the contingent obligation to make future payments
      or otherwise transfer consideration under a registration payment arrangement,
      whether issued as a separate agreement or included as a provision of a financial
      instrument or other agreement, should be separately recognized and measured
      in
      accordance with SFAS No. 5, *“Accounting
      for Contingencies.”* The
      Company believes that its current accounting is consistent with the FSP.
      Accordingly, adoption of the FSP had no effect on our consolidated financial
      statements.





In
      February 2007, the FASB issued SFAS No. 159, *“The
      Fair Value Option for Financial Assets and Financial Liabilities, Including
      an
      Amendment of FASB Statement No. 115”* , under
      which entities will now be permitted to measure many financial instruments
      and
      certain other assets and liabilities at fair value on an
      instrument-by-instrument basis. This Statement is effective as of the beginning
      of an entity's first fiscal year that begins after November 15, 2007. Early
      adoption is permitted as of the beginning of a fiscal year that begins on or
      before November 15, 2007, provided the entity also elects to apply the
      provisions of SFAS 157. The Company is currently assessing the impact, if
      any, the adoption of SFAS 159 will have on its consolidated financial
      statements.





**Item
      3**  **CONTROLS
      AND PROCEDURES.**





Evaluation
      of disclosure controls and procedures




Our
      principal executive officer and principal financial officer evaluated our
      disclosure controls and procedures (as defined in rule 13a-14(c) and 15d-14(c)
      under the Securities Exchange Act of 1934, as amended) as of a date within
      90
      days before the filing of this annual report (the Evaluation Date). Based on
      that evaluation, our principal executive officer and principal financial officer
      concluded that, as of the Evaluation Date, the disclosure controls and
      procedures in place were adequate to ensure that information required to be
      disclosed by us, including our consolidated subsidiaries, in reports that we
      file or submit under the Exchange Act, is recorded, processed, summarized and
      reported on a timely basis in accordance with applicable rules and regulations.
      Although our principal executive officer and principal financial officer
      believes our existing disclosure controls and procedures are adequate to enable
      us to comply with our disclosure obligations, we intend to formalize and
      document the procedures already in place and establish a disclosure
      committee.




Changes
      in internal controls




We
      have
      not made any significant changes to our internal controls subsequent to the
      Evaluation Date. We have not identified any significant deficiencies or material
      weaknesses or other factors that could significantly affect these controls,
      and
      therefore, no corrective action was taken.





**PART
      II**  **OTHER
      INFORMATION**





**Item
      1 Legal Proceedings**




On
      March
      21, 2007, Rothschild Trust Holdings, LLC, the licensor of various patents to
      the
      Company, has alleged, among other things, that the Company's license to these
      patents has been terminated. The patents licensed to the Company were included
      in the License and Royalty Agreement, by and between Rothschild Trust Holdings,
      LLC and the Company, dated as of January 31, 2006, the licensor has now claimed
      all





-22-













right,
      title and interest in the subject intellectual property and has further asserted
      that any subsequent use or sublicense of the subject intellectual property
      will
      constitute infringement. The Company disagrees with the licensor's assertions
      concerning the Company's rights in the intellectual property, and is currently
      evaluating its options with counsel with respect to the continued use of the
      subject intellectual property rights. The dispute relates, in part, to the
      parties' differing interpretations of the terms of the License and Royalty
      Agreement, and the subsequent actions and conduct between the parties relating
      thereto. Although the Company intends to assert its rights to the intellectual
      property, the patents do not represent a material portion of the Company's
      operating revenue.


On
        March
        23, 2007, the Company and its wholly-owned subsidiary Trust Licensing, Inc.,
        were each served with a lawsuit from Irrevocable Trust Agreement Number III.
        The
        lawsuit was commenced in the Circuit Court of the 17th Judicial Circuit in
        and
        for Broward County, Florida. The lawsuit relates to amounts claimed owed
        to
        Irrevocable Trust Agreement Number III in the approximate total principal
        amount
        of $500,000, and also seeks various interest, costs, and fees. The claimed
        amounts, which are in dispute, relate primarily to certain promissory notes
        and
        for the reimbursement of business expenses. As previously reported by the
        Company, during the time in which these claims arose, Leigh M. Rothschild
        was a
        Director of the Company and a beneficiary of Irrevocable Trust Agreement
        Number
        III.





The
      Company notes that, for purposes of fiscal conservatism, it has previously
      included portions of the claimed amounts as related party Notes Payable in
      its
      financial statements.




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




*None.*





**Item
      3. Defaults Upon Senior Securities.**





Pursuant
        to the Loan Modification Agreement (the “Modification Agreement”) between the
        Company and Montgomery Equity Partners, Ltd. (“Montgomery”), the Company was
        required to retain a transfer agent recommended by Montgomery within five *(5)* business
        days of the execution of the Modification Agreement. The Company has not
        yet
        paid the required fees in connection with the changing of transfer agents,
        which
        may constitute an event of default under the Secured Convertible Debentures
        and
        the Modification Agreement.





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




**  *None.*





**Item
      5 Other Information**




By
      letters dated January 30, 2007 and January 31, 2007, Mr. Leigh M. Rothschild
      and
      Mr. Adam Bauman resigned as Directors, effective immediately.





As
      previously disclosed, Mr. Rothschild is a beneficiary of Irrevocable Trust
      Agreement Number III ("Trust"), a creditor of Registrant. In correspondence
      accompanying his resignation letter, Mr. Rothschild indicated that his
      resignation was related in part to past due amounts owed to Trust.





Mr.
      Rothschild was a member of the Registrant's Compensation Committee.




In
      correspondence accompanying his resignation letter, Mr. Bauman indicated that
      his resignation was related, in part, to unpaid compensation for Board service
      and Registrant's failure to pay certain other unsecured debt
      obligations.





Mr.
      Bauman was a member of the Registrant's Audit Committee.





On
      May 4,
      2007, Mr. Jeffrey W. Sass, our CEO, resigned as CEO and as an employee of the
      Company effective immediately. He remains as a Director of the Company, and
      will
      be available as a consultant. The reason for the resignation was to pursue
      other
      opportunities that were available to him.





-23-




















**Item
      6 Exhibits**




31.1
      Certification of the Chief Executive Officer pursuant to Section 302 of the
      Sarbanes- Oxley
      Act
      of 2002





31.2
      Certification of the Chief Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act
      of
      2002





32.1
      Certification of Chief Executive Officer Certification pursuant to Section
      906
      of the Sarbanes-Oxley
      Act of 2002





32.2
      Certification of Chief Financial Officer Certification pursuant to Section
      906
      of the Sarbanes-Oxley
      Act of 2002





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.





Connected
                  Media Technologies, Inc.By:
                  /s/ Isidro GonzalezDated:
              May
                  18, 2007
              Isidro
                  GonzalezPresidentBy:
                  /s/ Mark MayoDated:
              May
                  18, 2007
              Mark
                  MayoChief
                  Financial OfficerChief
                  Accounting Officer






-24-