UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________ FORM 1O-QSB _________________ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2006 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the Transition Period From ________ to _______ Commission File Number000-18689 _________________ CONNECTED MEDIA TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) _________________ Delaware06-1238435 (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) (954) 727-8218 (Issuers Telephone Number, Including Area Code) 950 South Pine Island Road Suite A150-1094 Plantation, Florida 33324 (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.  Yesx
        Noo  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. Yesx
        Noo Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yeso
        Nox  State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date: 606,815,326* shares of common stock were outstanding as of August 14, 2006.  * This number includes 2,000,000 shares that have been redeemed by the Company       CONNECTED MEDIA TECHNOLOGIES, INC.

FORM 10QSB

FOR THE QUARTERLY PERIOD ENDING JUNE 30, 2006


PART I
        FINANCIAL INFORMATIONItem 1.  Consolidated Financial StatementsConsolidated Balance Sheet (Unaudited)Consolidated Statements of Operations (Unaudited)Consolidated Statements of Cash Flows (Unaudited)Notes to Unaudited Consolidated Financial StatementsItem 2. Managements Discussion and Analysis and Results of Operations


Item 3.  Controls and ProceduresPart II
        OTHER INFORMATIONItem 1. Legal Proceedings

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

Item 3. Defaults Upon Senior Securities

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

Item 5. Other Information

Item 6. Exhibits and Reports of Form 8-K

Signatures



PART I - FINANCIAL INFORMATION




Item 1.
        Financial Statements:

BASIS OF PRESENTATION



The accompanying unaudited financial statements are presented in accordance with US generally accepted accounting principles for interim financial information and the instructions to Form 10-QSB. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying statements should be read in conjunction with the audited financial statements for the year ended December 31, 2005. In the opinion of management, all adjustments (consisting only of normal occurring accruals) considered necessary in order to make the financial statements not misleading, have been included. Operating results for the six months ended June 30, 2006 are not necessarily indicative of results that may be expected for the year ending December 31, 2006. The financial statements are presented on the accrual basis.



FINANCIAL STATEMENTS AND EXHIBITS.



For the information required by this Item, refer to the Index to Financial Statements appearing on page F-1 of the registration statement.








Connected Media Technologies, Inc. and Subsidiary

(A Development Stage Company)

FINANCIAL STATEMENTS



AS OF JUNE 30, 2006



Connected Media Technologies, Inc. and Subsidiary

(a development stage company)

Financial Statements Table of Contents








CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
        Page #Consolidated Balance Sheet (Unaudited)
        F-2Consolidated Statements of Operations (Unaudited)
        F-3Consolidated Cash Flow Statements (Unaudited)
        F-4/F-5Notes to unaudited consolidated  Financial Statements
        F-6





F-1







Connected Media Technologies, Inc. and Subsidiary(A Development Stage Company)Consolidated Balance SheetJune 30, 2006(Unaudited)ASSETSCurrent AssetsCash
        
        $
        9,205Prepaid expenses
        
        22,947Promissory note receivable
        
        50,616Total Current Assets
        
        82,768Office equipment, net of $26,294 accumulated depreciation
        
        8,531Other AssetsDebt issue costs, net
        
        24,072Total Assets
        $
        115,371LIABILITIES AND STOCKHOLDERS DEFICIENCYCurrent LiabilitiesAccounts payable
        $
        110,558Accounts payable - related parties
        
        203,048Accrued expenses
        
        65,991Accrued compensation - officers
        
        318,879Accrued payroll taxes payable
        
        16,275Accrued interest payable - related party
        
        14,773Accrued interest payable
        
        307Loan payable
        
        10,446Line of credit
        
        250,000Note payable - related party
        
        202,000Convertible notes payable, net of discount of $748,618
        
        369,382Embedded conversion option liability
        
        1,248,189Warrant liability
        
        32,699Total Current Liabilities
        
        2,842,547Total Liabilities
        
        2,842,547Commitments and Contingencies (See Note 12)Stockholders DeficiencyPreferred stock,  $0.0001 par value; 10,000,000 shares authorized,none issued  and outstanding
        
        -Common stock,  $0.0001 par value; 2,000,000,000 shares authorized,306,307,663 shares issued 291,066,440 outstanding
        
        30,631Additional paid-in capital
        
        776,002Deficit accumulated during the development stage
        
        (3,132,692)(2,326,059)Less:  Deferred consulting
        
        (1,292)Less:  Treasury stock (15,241,223 shares at cost)
        
        (399,825)Total Stockholders Deficiency
        
        (2,727,176)Total Liabilities and Stockholders Deficiency
        $
        115,371

F-2




Connected Media Technologies, Inc. and Subsidiary(A Development Stage Company)Consolidated Statements of Operations(Unaudited)For thePeriod fromThree Months Ended
        
        Six Months Ended
        
        July 19, 2001June 30,
        
        June 30,
        
        (Inception) to2006
        
        2005
        
        2006
        
        2005
        
        6/30/06Revenue
        $
        40,000
        $
        -
        $
        40,000
        $
        -
        $
       40,000Cost of goods sold
        
        9,362
        
        -
        
        9,362
        
        -
        
        9,362Gross Profit
        
        30,638
        
        -
        
        30,638
        
        -
        
        30,638Operating ExpensesPayroll, contract services and stock based compensation
        
        122,909
        
        157,008
        
        562,342
        
        306,609
        
        1,538,803Professional fees
        
        62,795
        
        128,967
        
        99,210
        
        192,652
        
        1,032,022Research and development
        
        146
        
        10,142
        
        4,006
        
        22,265
        
        62,177Rent
        
        482
        
        6,992
        
        1,220
        
        13,817
        
        46,626Depreciation
        
        1,306
        
        (1,110)
        
        2,532
        
        3,507
        
        32,151Costs of recapitalization
        
        -
        
        -
        
        -
        
        -
        
        62,217Equity line commitment fee expense
        
        -
        
        19,531
        
        134,417
        
        19,531
        
        238,773Restructuring fees
        
        -
        
        -
        
        106,000
        
        -
        
        106,000General and administrative
        
        43,348
        
        89,940
        
        89,475
        
        139,164
        
        380,022Impairment loss
        
        -
        
        -
        
        -
        
        -
        
        61,265Total Operating Expenses
        
        230,986
        
        411,470
        
        999,202
        
        697,545
        
        3,560,056Loss from Operations
        
        (200,348)
        
        (411,470)
        
        (968,564)
        
        (697,545)
        
        (3,529,418)Other Income (Expense)Other Income
        
        616
        
        -
        
        616
        
        -
        
        705,616Gain on settlement and transfer of property with officer
        
        450,577
        
        -
        
        450,577
        
        -
        
        450,577Change in fair market value of embedded conversion option liability
        
        612,480
        
        -
        
        (351,797)
        
        -
        
        (351,797)Change in fair market value of warrant liability
        
        622,480
        
        -
        
        142,276
        
        -
        
        142,276Interest expense - related party
        
        -
        
        -
        
        (4,126)
        
        -
        
        (14,712)Interest expense
        
        (231,366)
        
        (27,585)
        
        (411,940)
        
        (32,694)
        
        (535,234)Total Other Expense
        
        1,454,787
        
        (27,585)
        
        (174,394)
        
        (32,694)
        
        396,726Net income (Loss)
        $
        1,254,439
        $
        (439,055)
        $
        (1,142,958)
        $
        (730,239)
        $
        (3,132,692)Net Income (Loss) Per Share  - Basic and Diluted
        $
        -
        $
        -
        $
        -
        $
        -
        $
        -Weighted average number of shares outstandingduring the period - basic and diluted
        
        291,066,443
        
        298,860,952
        
        292,639,980
        
        295,482,578
        
        279,551,503F-3




Connected Media Technologies, Inc. and Subsidiary(A Development Stage Company)Consolidated Statements of Cash Flows(Unaudited)For thePeriod fromYear Ended
        
        July 19, 2001June 30, 2006
        
        (Inception) to2006
        
        2005
        
        June 30, 2006Cash Flows From Operating Activities:Net Loss
        $
        (1,142,958)
        $
        (730,239)
        $
        (3,132,692)Adjustments to reconcile net (loss) to net cashProvided by (Used in) operations:Change in fair value of derivatives
        
        209,521
        
        -
        
        209,521Amortization of debt issue costs
        
        11,878
        
        -
        
        11,878Amortization of debt discount
        
        369,385
        
        -
        
        369,385Depreciation
        
        2,533
        
        3,507
        
        32,152Gain on settlement and transfer of property
        
        (450,577)
        
        -
        
        (450,577)Stock options issued for services
        
        -
        
        836
        
        836Stock issued as restructuring fee
        
        76,000
        
        6,000
        
        132,000Amortization stock options
        
        38,273
        
        -
        
        38,273Recognition of stock based compensation for employee stock option grants
        
        305,489
        
        15,864
        
        334,379Recognition of equity line commitment fee expense
        
        134,417
        
        19,531
        
        205,265Recognition of deferred compensation
        
        1,709
        
        342
        
        4,103Recognition of deferred consulting
        
        12,751
        
        66,615
        
        158,445Impairment loss - patent and trademark
        
        -
        
        -
        
        61,265Changes in operating assets and liabilities:(Increase) DecreasePrepaid Expenses
        
        (20,446)
        
        (19,262)
        
        (22,946)Increase (Decrease)Accounts payable
        
        (12,849)
        
        2,340
        
        110,557Accounts payable - related party
        
        18,557
        
        46,299
        
        203,048Accrued expenses
        
        60,346
        
        15,000
        
        125,991Accrued compensation - officers
        
        114,984
        
        69,644
        
        504,629Accrued payroll taxes payable
        
        129
        
        17,884
        
        16,275Accrued interest payable - related party
        
        4,007
        
        4,130
        
        14,773Accrued interest receivable
        
        (616)
        
        -
        
        (616)Accrued interest payable
        
        (857)
        
        3,480
        
        58,308Net Cash Used In Operating Activities
        
        (268,324)
        
        (478,029)
        
        (1,015,748)Cash Flows From Investing Activities:Purchase of equipment
        
        -
        
        (8,216)
        
        (40,683)Patent and trademark cost disbursements
        
        -
        
        -
        
        (61,265)Advance to related party
        
        -
        
        -
        
        (20,000)Disbursement of promissory note receivable
        
        (50,000)
        
        -
        
        (50,000)Loan repayment from related party
        
        -
        
        20,000
        
        20,000Cash acquired in recapitalization
        
        -
        
        -
        
        405Net Cash Provided By (Used In) Investing Activities
        
        (50,000)
        
        11,784
        
        (151,543)Cash Flows From Financing Activities:Proceeds from issuance of common stock
        
        -
        
        -
        
        20,000Proceeds from promissory notes
        
        -
        
        600,000
        
        600,000Equity line commitment fee disbursement
        
        -
        
        (85,000)
        
        (85,000)Proceeds from related party notes
        
        -
        
        42,000
        
        232,000Debt issue costs and lender fees
        
        (85,950)
        
        -
        
        (85,950)Proceeds from convertible notes
        
        400,000
        
        -
        
        400,000Payments on related party notes
        
        -
        
        (30,000)
        
        (30,000)Recapitalization consideration paid for treasury shares
        
        -
        
        -
        
        (135,000)Proceeds from line of credit
        
        1,625
        
        97,000
        
        250,000


F-4


Proceeds from related party loans
        
        -
        
        -
        
        266,000Repayments of related party loans
        
        -
        
        -
        
        (266,000)Proceeds from Insurance financing
        
        10,446
        
        -
        
        10,446Net Cash Provided by Financing Activities
        
        326,121
        
        624,000
        
        1,176,496Net Increase in Cash
        
        7,797
        
        157,755
        
        9,205Cash at Beginning of Period
        
        1,408
        
        33,991
        
        -Cash at End of Period
        $
        9,205
        $
        191,746
        $
        9,205Supplemental disclosure of cash flow information:Cash paid for interest
        $
        -
        $
        -
        $
        14,420Cash paid for taxes
        $
        -
        $
        -
        $
        -Supplemental disclosure of Non-Cash Investing and Financing Activities:Common stock issued for compensation
        $
        -
        $
        -
        $
        4,103Common stock issued for consulting services
        $
        -
        $
        -
        $
        158,901Deferred equity line commitment fee
        $
        -
        $
        -
        $
        120,264Reclassification of warrant fair value from equity to liability
        $
        3,365
        $
        -
        $
        3,365Initial recording of debt discount
        $
        1,068,000
        $
        -
        $
        1,068,000Restructuring of note, accrued interest and liquidated damages
        $
        718,000
        $
        -
        $
        718,000

F-5







Connected Media Technologies, Inc. and Subsidiary

(A Development Stage Company)

Notes to Consolidated Financial Statements

June 30, 2006

(Unaudited)






Note 1
        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, 2005 included in the companys Form 10-KSB.




Note 2
        Going ConcernAs reflected in the accompanying consolidated financial statements, the company has minimal   revenues, a net loss of $1,142,958 and net cash used in operations of $268,324for the six months ended June 30, 2006, and a working capital deficiency of $2,759,779, a stockholders deficiency of $2,727,176 and a deficit accumulated during development stage of $3,132,692 at June 30, 2006.



The Company has minimal revenues, 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 from the licensing of the #534 Patent. 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 currently a development stage company and its continued existence
is dependent upon the companys ability to resolve its liquidity problems,
principally by obtaining additional debt financing and/or equity capital. In
January 2006, the Company obtained debt financing. (See Note 9). The company has
yet to generate an internal cash flow, and until licensing activities commence,
the company is very dependent upon debt and equity funding. In July 2006, the
Company acquired Natcom Marketing International Inc. (see Note 13)




Note 3
        Summary of Significant Accounting Policies

Accounting for Derivatives The Company evaluates its 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. 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



6



Connected Media Technologies, Inc. and Subsidiary

(A Development Stage Company)

Notes to Consolidated Financial Statements

June 30, 2006

(Unaudited)





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.




Note 4
        Concentrations

The Company maintains its cash in bank deposit accounts, which, at times, exceed federally insured limits. As of June 30, 2006, the Company did not have any deposits in excess of federally insured limits. The Company has not experienced any losses in such accounts through June 30, 2006.



The Company has two patents available for licensing as of June 30, 2006.




Note 5
        Net Loss Per Share

In accordance with Statement of Financial  Accounting  Standards No. 128, "Earnings per Share", basic earnings per share is computed by
dividing the net income (loss) less preferred  dividends for the period by the weighted average number of shares  outstanding.  Diluted
earnings  per share is computed by dividing  net income  (loss) less  preferred  dividends  by the  weighted  average  number of shares
outstanding  including the effect of share equivalents.  At June 30, 2006 there were 21,300,000 options outstanding  ("Issued Options")
and 8,200,000  warrants  outstanding  ("Issued  Warrants") that could potentially dilute future earnings per share. For the period from
July 19, 2001  (inception) to June 30, 2006, the 21,300,000  Issued Options and 8,200,000  Issued Warrants  represented the only common
share  equivalents,  which could  potentially  dilute  future  earnings  per share.  The effect of these common  stock  equivalents  is
anti-dilutive since the company reflects a net loss.



Note 6Promissory Note Receivable



On February 13, 2006, the Company accepted a promissory note for $50,000 from Natcom Marketing International, Inc. for an original
term of one year bearing interest at the annual rate of 5%, in exchange for a loan. Interest began to accrue on April 1, 2006. The
borrowing was unsecured. At June 30, 2006, $50,000 remains outstanding with related accrued interest of $616. (See Note 13)




Note 7
        Debt Issue Costs

On January 31, 2006, the Company issued a convertible debenture totaling $1,118,000 to Montgomery Equity Partners, Ltd. (Montgomery). In connection with the issuance, $35,950 of distributed funds were classified as debt issue costs and 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 will be amortized to debt issue cost expense over the life of the debt beginning in 2006. During the six months ended June 30, 2006, amortization was $11,878. The remaining balance of debt issue costs at June 30, 2006 was $24,072.




Note 8
        Notes Payable, Related Party and Accrued Interest Payable, Related Party

On January 31, 2006, the maturity date of a $165,000 note payable to an entity related to our Chairman and CEO was extended to December 9, 2006 pursuant to a Loan Extension Agreement dated January 31,



7



Connected Media Technologies, Inc. and Subsidiary

(A Development Stage Company)

Notes to Consolidated Financial Statements

June 30, 2006

(Unaudited)





2006. The extension provides for the same terms currently in force under the original debt agreement. At June 30, 2006, $165,000 remains outstanding. Related accrued interest payable was $12,067.



On January 31, 2006, the maturity date of a $25,000 note payable to an entity related to our Chairman and CEO was extended to December 9, 2006 pursuant to a Loan Extension Agreement dated January 31, 2006. The extension provides for the same terms currently in force under the original debt agreement. At June 30, 2006, $25,000 remains outstanding. Related accrued interest payable was $1,828.



On March 9, 2005, the company entered into a line of credit arrangement to borrow up to an additional $55,000 from Trust III. This borrowing was originally secured, but the security interest was terminated via Termination Agreement dated March 21, 2005. The line of credit arrangement is evidenced by the issuance of a Promissory Note/Line of Credit. The note bears interest at 10% per annum and was originally payable at the earliest of the company receiving a bridge loan or equity investment that nets proceeds to the company of at least $300,000, or December 9, 2005. On May 16, 2005, the maturity date of this note was extended to December 9, 2005 pursuant to the Loan Extension Agreement; the extension provides for the same terms currently in force under the original debt agreement. On January 31, 2006 the maturity date of a line of credit note, relating to a $55,000 line, was extended to December 9, 2006
pursuant to a Loan Extension dated January 31, 2006; the extension provides for the same terms currently in force under the original debt agreement. At June 30, 2006, $12,000 remains outstanding. Related accrued interest payable at June 30, 2006 was $878.



Total Notes Payable, Related Party aggregated $202,000 at June 30, 2006. At June 30, 2006, the company had Accrued Interest Payable, Related Party for $14,773.




Note 9
        Termination of Promissory Note and SEDA and Issuance of New Convertible Debentures  and Warrants

On January 31, 2006, the Company and Cornell Capital Partners, LP (Cornell) entered into a Termination Agreement terminating the Standby Equity Distribution Agreement, Registration Rights Agreement, Escrow Agreement, and Placement Agent Agreement all of which are dated April 14, 2005. Pursuant to the terms of the Termination Agreement, Cornell retained the portion of the commitment fee consisting of 3,800,000 shares of common stock of the Company. Additionally, on the termination date, the Company issued to Cornell an additional 3,800,000 shares of common stock of the Company. Additionally, Cornell retained the Warrant dated April 14, 2005 for 200,000 shares of the Companys common stock. The entire 7,600,000 shares issued to Cornell and the 200,000 shares underlying the warrant shall have piggy-back registration rights. In connection with the termination of the SEDA and related
documents, the Company withdrew the registration statement with the Securities and Exchange Commission, which was originally filed on June 6, 2005. The remaining $134,416 deferred balance of the deferred equity line commitment fee was expensed.



On January 31, 2006 (the Closing Date), the Company completed a financing agreement for $1,600,000 (which includes a refinance of a $600,000 promissory note issued in April 2005  with Montgomery Equity Partners, Ltd. (Montgomery). Of such amount, the original principal amount of $600,000 was previously funded pursuant to a non-convertible Promissory Note dated April 14, 2005, $400,000 was funded on the Closing Date, $300,000 shall be funded Ninety (90) days from the closing and $300,000 shall be funded One Hundred Fifty (150) days from the closing. Under the terms of the agreement, the Company issued to Montgomery a secured convertible debenture in the amount of $718,000 which



8



Connected Media Technologies, Inc. and Subsidiary

(A Development Stage Company)

Notes to Consolidated Financial Statements

June 30, 2006

(Unaudited)





represents the original principal, interest and accrued liquidated damages for the $600,000 previously funded 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.



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 re-pledged the 60,000,000 shares of its common stock to Montgomery that were originally pledged pursuant to the Note to Montgomery dated April 14, 2005 and 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 is 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 the 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 thereof. 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.



As discussed above, the company received gross proceeds of $400,000. In connection with the debt issuance, $111,679 was deducted from
the gross proceeds. $50,000 is being deferred as debt discount and amortized over the life of the convertible debentures, which is
four hundred and fifty four days. Other fees taken from the $400,000 in gross proceeds include $25,729 relating to prepaid interest
and $ 35,950 of structuring fees and related costs and fees, which are treated as debt issue costs. (See Note 7)



Net proceeds of $ 288,321 were calculated as follows:




Gross proceeds
        $ 400,000Less: commitment fee
        $ (50,000)Less: prepaid interest
        $ (25,729)Less: debt issue costs
        $ (35,950)Net proceeds
        $ 288,321

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



9



Connected Media Technologies, Inc. and Subsidiary

(A Development Stage Company)

Notes to Consolidated Financial Statements

June 30, 2006

(Unaudited)





option must be accounted for as a derivative. In addition, the liquidated damage
penalty in the Registration Rights Agreement would cause derivative
classification. In addition, all non-employee options or warrants must be
classified as liabilities for the same reason. The Company recorded an embedded
conversion options liability of $1,047,539 and warrant liability relating to
8,000,000 warrants of $159,457 at the January 31, 2006 funding date with a debt
discount of $1,118,000 and charge to change in fair value of embedded conversion
option of $138,995. In addition, the $3,365, fair value of 200,000 existing
warrants, was reclassified to warrant liabilities from stockholders equity
at the funding date. From April 1, 2006 to June 30, 2006 their was a decrease in
the fair value of the derivative liability which resulted in other income of
$1,234,960. The change for the six months ended June 30, 2006 was a net $209,521
other expense.




Note 10
        Stockholders Deficiency


(A)
        Stock issuances and Cancellation of SEDA

On January 31, 2006, the Company and Cornell Capital Partners, LP ("Cornell") entered into a Termination Agreement terminating the
Standby Equity Distribution Agreement, Registration Rights Agreement, Escrow Agreement, and Placement Agent Agreement all of which
are dated April 14, 2005. Pursuant to the terms of the Termination Agreement, Cornell retained the portion of the commitment fee
consisting of 3,800,000 shares of common stock of the Company. Additionally, on the termination date, the Company issued to Cornell
an additional 3,800,000 shares of common stock of the Company, which are valued and recorded at $.02 per share or $76,000, which was
charged to operations. Additionally, Cornell retained the warrant dated April 14, 2005 for 150,000 shares of the Company's common
stock. The entire 7,600,000 shares issued to Cornell and the 150,000 shares underlying the warrant shall have "piggy-back"
registration rights. In connection with the termination of the SEDA and related documents, the Company withdrew the registration
statement with the Securities and Exchange Commission, which was originally filed on June 6, 2005.




(B)
        Common Stock Options and Warrants Issued for Services

The company follows fair value accounting and the related provisions of SFAS 123R for all share based payment awards. The fair value
of each option or warrant granted is estimated on the date of grant using the Black-Scholes option-pricing model. The following is a
summary of all stock options and warrants granted to employees and non-employees in the first quarter of 2006:




a.
        Employee award  15,000,000 stock options (Director)


i.
        On March 3, 2006, the Company granted 15,000,000 stock options to an employee for future services to be rendered. There was no defined requisite service period, see below for vesting provisions. The option grant was valued pursuant to SFAS 123R and totaled $287,048, which included one month of amortization based on the vesting provisions defined below.

The Company recognized compensation expense of $28,704 for the
three months ended June 30, 2006.





10



Connected Media Technologies, Inc. and Subsidiary

(A Development Stage Company)

Notes to Consolidated Financial Statements

June 30, 2006

(Unaudited)








ii.
        The weighted average assumptions used by management were as follows:


Stock price on grant date
        $0.02Exercise price on grant date
        $0.02Dividend yield
        0%Expected volatility
        230%Risk free interest rate
        4.74%Expected life of option
        3 years


iii.
        The stock option award is exercisable as the vesting occurs. The following represents the vesting of the award:

80% of the options granted vested immediately with the remaining 20%, or 3,000,000, to be vested in equal amounts over a six month period.




iv.
        These stock options are issued pursuant to the Companys Equity Incentive Plan.


b.
        Employee award  4,000,000 stock options (Director)


i.
        On March 3, 2006, the Company granted 4,000,000 stock options to an employee for future services to be rendered. There was no defined requisite service period, see below for vesting provisions. The option grant was valued pursuant to SFAS 123R and totaled $76,546 which included one month of amortization based on the vesting provisions defined below.

The Company recognized compensation expense of $9,567 for the three months ended June 30, 2006, which includes one month of amortization based on the vesting provisions defined below.




ii.
        The weighted average assumptions used by management were as follows:


Stock price on grant date
        $0.02Exercise price on grant date
        $0.02Dividend yield
        0%Expected volatility
        230%Risk free interest rate
        4.74%Expected life of option
        3 years


iii.
        The stock option award is exercisable as the vesting occurs. The following represents the vesting of the award:

75% of the options granted vested immediately with the remaining 25%, or 1,000,000, to be vested in equal amounts over a six month period.




iv.
        These stock options are issued pursuant to the Companys Equity Incentive Plan.







11



Connected Media Technologies, Inc. and Subsidiary

(A Development Stage Company)

Notes to Consolidated Financial Statements

June 30, 2006

(Unaudited)








(C)
        Capital Structure

On March 16, 2006, the company amended its articles of incorporation to increase the authorized common stock from 750,000,000 to 2,000,000,000 shares having a par value of $ 0.0001.




Note 11
        Related Parties

At June 30, 2006, the Company had outstanding $203,048 of accounts payable to various related parties.



As described in Note 8, the Company had total notes payable, related party outstanding at June 30, 2006 of $202,000. At June 30, 2006, the company had accrued interest payable relating to those notes of $14,733 outstanding at June 30, 2006.



During the six months ended June 30, 2006, the Company recognized $40,000 of revenue related to a sub contract entered into with a related party to develop interactive training CDs for the U.S. Department of Housing and Urban Development.



During the six months ended June 30, 2006, as a result of the below mentioned Rothschild transaction (Note 12 (D)), the Company
placed into escrow 13,241,223 shares of common stock. The shares were valued based on the quoted trading price of $.02 at the date of
the transaction resulting in a value of $264,825 of treasury stock. Under the same agreement, the above mentioned shares were reduced
by the accrued compensation owed and the remaining monies due under the contract. The result was a reduction of accrued salary of
$185,752 and a charge to expense of $73,191 for the remaining portion due under the contract. The net effect of the transaction was a
gain on settlement and property transfer with officer of $450,577.




Note 12
        Commitments and Contingencies


(A)
        Litigation Settlement  Other Income

During 2003, the company filed suit in the United States District Court of the Southern District of Florida against an unrelated third-party for, among other things, infringement of the #534 Patent (Case No. 03-20672).  A subsequent related civil action was initiated by the third party against the company in the Superior Court of California, County of Santa Clara for, among other things, breach of contract (Case No. 103-009764).  The settlement was finalized on May 5, 2004 and paid on June 4, 2004 under the following general terms:





        The third party paid to the companys escrow agent $700,000. Of the total, the company was remitted $475,000. The remaining $225,000 was paid to settle accrued legal fees in connection with this lawsuit and is reflected in professional fees in the accompanying consolidated financial statements.



        The company granted to the third party a certain non-exclusive, non-transferable, worldwide, fully paid up right and license under the #534 Patent.

The $700,000 was recorded as other income during the year ended December 31, 2004.





12



Connected Media Technologies, Inc. and Subsidiary

(A Development Stage Company)

Notes to Consolidated Financial Statements

June 30, 2006

(Unaudited)








(B)
        Employment Agreements

On August 23, 2004, the company entered into the following employment agreements with its executive officers:




(1)
        Chairman of the Board (See Note 11)


(i)
        Term is from August 23, 2004 to August 23, 2006.(ii)
        Salary of $175,000 per year


(2)
        President and CEO


(i)
        Term is from August 23, 2004 to August 23, 2006.(ii)
        Salary of $175,000 per year


(3)
        Executive Vice President


(i)
        Term is from August 23, 2004 to August 23, 2006.(ii)
        Salary of $160,000 per year

At June 30, 2006, total accrued compensation to these officers was $318,879.




(C)
        Consulting Agreement

On August 23, 2004, the company entered into a consulting agreement with the former sole officer and director of New Mountain Top Corporation. Under the terms of the agreement, the consultant will provide certain financial consulting services. The term of the agreement is from August 23, 2004 to August 23, 2006.  The consultant is to be paid $2,500 per month as compensation; provided, however, the fees will be accrued until the company receives net cash financing proceeds of at least $500,000.




(D)
        Agreements with Rothschild Trust Holdings, LLC

On January 31, 2006, the Company 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 the Companys common stock held by the Trust (the Shares). As additional consideration, the Trust granted the Company a license to use the patents pursuant to the terms of a License and Royalty Agreement, which grants the Company a twelve-month right of election to license the patents. If the Company exercises the right of election, the Trust shall grant the Company 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. (See note 11)



On January 31, 2006, the Company, 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 the Company and the Company agreed to deposit royalties otherwise payable to the Trust into an escrow account held by the Escrow Agent until such time as royalties



13



Connected Media Technologies, Inc. and Subsidiary

(A Development Stage Company)

Notes to Consolidated Financial Statements

June 30, 2006

(Unaudited)





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 $728,267.26, 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. (See Note 11)




(E)
        Acquisition of Natcom Marketing International, Inc.

On January 31, 2006 (the SPA Effective Date), the Company entered into a preliminary Stock Purchase Agreement and Share Exchange (the Agreement) with Natcom Marketing International, Inc., a Puerto Rican based full-service marketing communications agency (NMI), and the NMI shareholders. The close of the transaction is subject to NMIs completion of two years of audited financial statements, to the completion of each parties due diligence, and certain other requirements.



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. To date, NMI has entered into a letter of intent to purchase a controlling interest in NewsProNet Interactive, LLC (NewsProNet), an Atlanta based provider of converged media content solutions and interactive branding strategies for local broadcasters. (See Note 13)




Note 13
        Subsequent Events

The closing of the transaction was completed on July 10, 2006 (the
Acquisition Date). On the Acquisition Date, the Company acquired all
of the outstanding shares of NMI in exchange for a total of fifty percent (50%)
of newly issued shares of the Companys common stock. As additional
consideration, on the Acquisition Date, the Company is to reserve up to $250,000
of the funding received by Montgomery Equity Partners, LP (as described below)
for distribution to NMI to be used toward the acquisition of a majority interest
in NewsProNet. On the Acquisition Date, the Company also provided funding to NMI
for the payment of certain outstanding debts, which included relief of the
promissory note and accrued interest (See Note 6). Pursuant to the Agreement, on
the Acquisition Date, NMI became a wholly owned subsidiary of the Company.



The transaction will be accounted for as a reverse acquisition using the purchase method of accounting since both Companies are considered operating entities and management of NMI has obtained control through (i) holding a significant minority interest (50%) 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.







14



Connected Media Technologies, Inc. and Subsidiary

(A Development Stage Company)

Notes to Consolidated Financial Statements

June 30, 2006

(Unaudited)







The purchase price is based on the average value of the Companys shares during the period before and after the date of the agreement and the date of the announcement. This amount is estimated at $13,476,000. The purchase price will be allocated to the net assets of Connected Media Technologies Inc. based on their fair values. The preliminary estimated allocation of fair value of the net assets acquired which is subject to revision during the allocation period is as follows:




Cash
        $9,205Property
        8,531Other Assets
        47,018Goodwill
        16,253,792Current Liabilities
        (2,842,546)Purchase Price
        $ 13,476,000

The Company expects to write-off the goodwill within a short period after the acquisition.



Also on July 10, 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 April 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.



On July 31, 2006, the Company entered into a non-binding letter of intent to purchase
substantially all of the assets of NewsProNet Interactive, LLC
(NewsProNet), an Atlanta based provider of converged media content
solutions and interactive branding strategies for local broadcasters. NewsProNet
is a strategic content creation company with a business-to-business distribution
model. NewsProNets clients are media companies who use the companys
content and programming strategies to help drive audience to their broadcast and
Internet properties. NewsProNets services include consulting and client
training to maximize the impact and effectiveness of strategic content products.
If we are able to execute a definitive agreement with NewsProNet, the assets
ofNewsProNet will provide us with
several additional valuable intellectual property assets (including a vast
compilation of broadcast content) while simultaneously providing us with
numerous cross-selling and business development opportunities. We anticipate
executing a definitive agreement for the acquisition of these assets in the
third quarter of 2006.







15









Item 2
        MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

MANAGEMENTS DISCUSSION AND ANALYSIS OF INTERIM FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-QSB, including this Managements Discussion and Analysis of Financial Condition and Results 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. Readers are referred to risks and uncertainties identified below, under Risk Factors and elsewhere herein. We undertake no obligation to revise or update any forward-looking statements for any reason.

OVERVIEW



Our current name and business operations have been preceded by various historical name changes and changes in its capitalization.



Mountaintop Corporation becomes New Mountaintop Corporation



Our predecessor was first organized as a Delaware corporation on December 11, 1989 under the name Mountaintop Corporation and in July 1990 became subject to the reporting requirements of the Securities and Exchange Act of 1934 (the Exchange Act). Mountaintop Corporation was involved in the distribution and marketing of spirits, among other things. That business ultimately did not succeed and in 1992, Mountaintop Corporation ceased operations. Shortly thereafter, the charter of Mountaintop Corporation was forfeited by the State of Delaware for non-payment of franchise taxes. On February 21, 2003 through the efforts of its then-majority stockholder and sole director, the company revived and reinstated its charter effective March 1, 1993. However, during the process of reviving the company, the State of Delaware notified the company that its name, Mountaintop Corporation, was no longer available.
Thus, the name of the company was changed to New Mountaintop Corporation. In addition, at the time of that name change, the company amended its Certificate of Incorporation to authorize common stock of 500,000,000 shares, par value $ 0.0001, and 10,000,000 shares of preferred stock, par value $ 0.0001. After the company had its charter reinstated, New Mountaintop Corporation (f/k/a Mountaintop Corporation) continued its reporting obligations of the Exchange Act and upon being reinstated filed its 10-K for the year ended December 31, 2002.



New Mountaintop Corporation becomes Trust Licensing, Inc.



On August 24, 2004, pursuant to the Florida rules and regulations governing mergers and acquisitions, we acquired, by merger, all of the assets and business of Trust Licensing, LLC (TLLLC) through our newly formed wholly owned subsidiary. As consideration for the merger, we issued 270,072,000 shares of our common stock, par value $ .0001 per share representing approximately 93% of its issued and outstanding shares (after giving effect to a 1:10 reverse stock split). The reverse merger was accompanied by a change in the name to Trust Licensing, Inc., in the Board of Directors, management, and business focus. Prior to the merger, we had not conducted regular business operations for several years; rather, its primary focus was seeking a business to acquire. On December 31, 2004, we became eligible for trading on the over-the-counter bulletin board under the symbol TRTL.OB. As a
result of the merger, we became the successor in interest to New Mountaintop Corporation and assumed its Exchange Act reporting obligations.





Trust Licensing, Inc. becomes Connected Media Technologies, Inc.



In early May 2005, we were advised by the Secretary of State of the State of Delaware that the State had failed to notify the company that the use of the word Trust in its corporate name was inconsistent with the applicable provisions of the Delaware Banking Law and requested that we change our name. Therefore, on May 18, 2005, we changed our name to Connected Media Technologies, Inc. Our trading symbol was subsequently changed to CNCM.OB.



In addition, prior to the 2004 reverse merger, TLLLC had been considering a joint business relationship with an unrelated third-party. In connection with this transaction, the third party formed a California corporation named Connected Media, Inc. The goal was to use the name Connected Media and as part of the relationship TLLLC funded the purchase of the web address (URL)www.connectedmedia.com, which was then assigned to the third party. In connection with this transaction, a Connected Media logo was developed by the third party. In March 2005, however, the third party decided it was not in a position to continue to pursue the business relationship and offered to assign to us, at no cost, all of its right, title and interest in and to the Connected Media name, logo and URL, as well as all of the issued and
outstanding shares of Connected Media, Inc. At the time, and since its inception, Connected Media, Inc. had been an inactive corporation with no assets or liabilities. The assignment was made at zero cost and there was no accounting effect to this transaction. Furthermore, the transaction had no material impact on our business. The sole purpose of completing the assignment was to ensure that Connected Media would remain inactive in order to avoid confusion and protect and preserve our intended use of the name Connected Media.



As of June 30, 2006, we currently have the following wholly-owned subsidiaries: Trust Licensing, Inc., a Florida corporation (successor-by-merger to TLLLC) and Connected Media, Inc., the inactive California corporation.



Connected Media Technologies, Inc. agrees to acquire Natcom Marketing International, Inc.



On January 31, 2006, we entered into a Stock Purchase Agreement and Share Exchange with Natcom Marketing International, Inc., a Puerto Rican based full-service marketing communications agency (NMI), and the NMI shareholders. The agreement provides for us to acquire all of the outstanding shares of NMI in exchange for an amount of our common shares so that after such issuance, the NMI shareholders shall hold fifty percent (50%) of the companys issued and outstanding shares. This transaction closed after the close of the second quarter, and is described in the Subsequent Events section below.



NMI was founded in 1997 as a full-service marketing communications agency 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 media as its main entry into the Hispanic and minority advertising space. NMIs clients include Lucent Technologies, Royal Caribbean, RJR/Nabisco, Argent, IGT, Avaya, and others.



NMI has developed a special expertise in serving clients that are entering into or expanding their operations in the U.S. Hispanic marketplace, as well as the Latin America/Caribbean region. For these clients, NMI offers a unique marketing message by using television through syndicated programming to reach its market at a very cost efficient rate.



NMI has been built upon the proposition that its primary value to its clients lies in learning as much as possible about the clients day-to-day business operations, marketing goals and corporate vision. In developing this customer intimacy, NMI becomes an extension of the client organization and a partner in achieving mutually beneficial goals. NMI is structured to develop long standing relationships with clients and receives revenue from consulting services.



In connection with the NMI acquisition, on January 31, 2006, we also entered into a Purchase and Sale Agreement with Rothschild Trust Holdings, LLC (an entity controlled by Leigh M. Rothschild, one of the companys directors)(RTH) for the sale of certain issued and pending patents in exchange for the return of 13,241,223 shares of our common stock. As additional consideration, we were granted a license to use the patents pursuant to the terms of a License and Royalty Agreement, which grants us a twelve month right of election to license the patents. If we



exercise the right of election, we will receive a two year exclusive license for the use of the patents that is renewablesubject to performance, and RTH shall receive 10% royalties on all gross receipts as defined in the License and Royalty Agreement.



The Business of Connected Media/NMI



Upon completion of the NMI acquisition, NMI will be our wholly owned subsidiary and the sales and marketing activities of the companies will be combined to leverage the core competencies of both entities. NMIs sales team will incorporate our exclusive patent licenses into its marketing and communications initiatives to both established and new clients. With the inclusion of NMI, we will be well positioned as a converged media solutions provider, able to offer customers in both the government and corporate sector marketing, communications, promotional and training solutions that leverage the convergence of traditional media with digital media, including patented processes to combine rich media content on CD, DVD and other discs with interactive dynamic content on the Internet. As a combined entity, our offerings to customers will be able to encompass a full turnkey converged
media solution that can deliver and satisfy the customers needs across current and emerging media platforms, including Print, Television, Radio, Internet, CD, DVD and Mobile Devices such as mobile phones and PDAs.



Through the license agreement with RTH, we are the exclusive licensor of United States Patent #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. We also have 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. Essentially every computer sold today has either a CD-ROM drive and/or a DVD drive and has the ability to access the Internet. In addition, it is anticipated that next generation DVD players will also have the ability to access the Internet, either directly, or by connecting through a home or business media hub. We believe this technology will offer content providers and advertisers opportunities to combine the dynamic capabilities of the Internet with disc based or similar local content. Advertisers can use this technology to control access to disc based ads and promotions, allowing them to time
release content, track usage and add updated information from the internet.



Leveraging the established customer base and experience of NMI, we will continue to be active in the following activities:





        Developing Applications and Solutions- We plan to develop applications and solutions based upon our patent licenses along with the other patents in the licensed portfolio. We will often create working demos and proof of concept technology for specific applications in order to demonstrate its offering to potential customers and licensees. The areas where we believe our technology can be used include: making available full motion video without the need for a broadband connection; directing customers to specific related websites where dynamic information and content could be added to their CD experience; capturing demographic information on a website in exchange for giving the user access to enhanced or bonus content on a CD; and preventing piracy.



        Licensing- We plan to license rights under the patents(s), and or rights to utilize specific patented applications to third parties. Currently we are targeting potential licensees in the areas of advertising and promotion, film, music, video, television, education and travel, among others.

The markets that we intend to pursue include educational and distance learning, interactive training, entertainment (film, music and video areas), travel related marketing services, advertising, publishing, digital photography and real estate.



In addition, we are also in negotiations to acquire certain assets of NewsProNet, LLC, a leader in converged media content solutions and interactive branding strategies for local broadcasters. NewsProNet is a strategic content creation company with a business-to-business distribution model. NewsProNets clients are media companies who



use the companys content and programming strategies to help drive audience to their broadcast and Internet properties. NewsProNets services include consulting and client training to maximize the impact and effectiveness of strategic content products. If we are able to execute a definitive agreement with NewsProNet, the assets ofNewsProNet will provide us with several additional valuable intellectual property assets (including a vast compilation of broadcast content) while simultaneously providing us with numerous cross-selling and business development opportunities. We anticipate executing a definitive agreement for the acquisition of these assets in the third quarter of 2006.



We remain a development stage company in the very early stages of implementing our business plan. 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 June 30, 2006, we had total assets of approximately $115,371 ($9,205 of which is cash), and total liabilities of approximately $2,842,547. 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 3 to the Unaudited Consolidated Financial Statements describe 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. 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.



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 policies reflect specific criteria for our various revenues streams.



We intend to generate and collect periodic royalty revenue in connection with licensing agreements associated with their intellectual property. Royalty revenue is recognized as it is earned. We recognize income from licensing of patents ratably over the lesser of the economic or legal life of any granted licenses. We recorded $ 40,000 in licensing revenue during the second quarter of 2006.



We recognize other income from patent infringement claims when the claim is settled, whether by negotiation or litigation. We recognized a total of $0 in other income during 2005; we have recorded $0 in other income for the six months ended June 30, 2006.



Impairment of Long-Lived Assets. Our long-lived assets consist of patents (having a fair value of zero for GAAP purposes) 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. None of our long-lived assets required an impairment charge during the six months ended June 30, 2006.



Contingencies and Litigation. We record a reserve for
contingencies and litigation when an adverse outcome is probably and the amount
of the potential liability is reasonably estimable. We are not currently a party
in any litigation nor are we subject to any such contingencies.



RESULTS OF OPERATIONS



SIX MONTHS ENDED JUNE 30, 2006 COMPARED TO SIX MONTHS ENDED JUNE 30, 2005



Revenue. Our revenue was $40,000 and zero for the six months ended June 30, 2006
and June 30, 2005 respectively. The customer was a related party to Nation
Marketing International, the company we acquired subsequent to June 30,
2006.



Operating Expenses. Operating expenses for the six months ended June 30, 2006 was $999,202 compared to operating expenses of $697,545
for the same period in 2005. The increase in operating expenses results primarily from an increase in payroll and stock based
compensation, professional fees, equity line commitment fees, restructuring fees and an increase in research and development costs.



Other income. $616 in other income was recognized for the six months ended June 30, 2006. We recognized $0 in other income for the six months ended June 30, 2005.



Net Loss. Our net loss for the six months ended June 30, 2006 was
$1,142,958 compared to a net loss of $730,239 for the same period in 2005. The
net loss resulted primarily from the absence of significant revenue or other
income coupled with the increase in operating expenses.



LIQUIDITY AND CAPITAL RESOURCES



At June 30, 2006, we had $9,205 in cash. We have no other liquid assets. The company intends to finance its activities through use of the private and public debt and equity financing, including use of the proceeds from the 2006 Montgomery Notes, described below.



Prior to the April 2005 and January 2006 Montgomery transaction (described below), we financed our 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.



We received an audit opinion for the fiscal years ended December 31, 2005 and 2004 that included a going concern risk, which raised
substantial doubt regarding our ability to continue as a going concern. We are
currently in the development stage and 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 April 11, 2005, we entered into a Standby Equity Distribution  Agreement with Cornell Capital Partners, LP ("Cornell").  The Standby
Equity  Distribution  Agreement  contemplated  our ability to periodically  sell to Cornell Capital Partners shares of our common stock
for a total purchase price of up to $10.0 million.  Simultaneous with the execution of the Standby Equity  Distribution  Agreement,  we
executed a Promissory Note in favor of Montgomery  Equity  Partners,  Ltd.  ("Montgomery")  in the principal amount of $600,000 ("April
2005 Note"). In January 2006, the Standby Equity Distribution  Agreement was terminated,  and the April 2005 Note was rolled into a new
promissory  note.  Specifically,  on January 31, 2006, we completed a financing  agreement for $1,660,000 with  Montgomery.  The amount
included the original  principal amount of $600,000  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 scheduled to
be funded on or about April 30, 2006 (90 days from closing of the first  funding)  (which was actually  funded on July 10, 2006) and an
additional  $300,000  was  scheduled to be funded on or about June 30, 2006 (150 days from  closing of the first  funding)  (but is now
anticipated  to be funded prior to October 1, 2006).  Under the terms of the agreement,  we issued to Montgomery a secured  convertible
debenture in the amount of $ 718,000,  which represents the original  principal,  interest and fees for the $600,000  previously funded
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 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.



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.



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.



CAPITAL EXPENDITURES AND COMMITMENTS



We did not acquire a material amount of fixed assets during the six month period ending June 30, 2006 and currently do not plan to do so during the next fiscal year.



OFF-BALANCE SHEET ARRANGEMENTS



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





SUBSEQUENT EVENTS



On July 10, 2006 the Company  closed on the Stock  Purchase  Agreement  with NMI and acquired all of the  outstanding  shares of NMI in
exchange for newly issued  shares equal to 50% of the total issued and  outstanding  common stock of the Company  after the issuance to
NMI's sole  shareholder.  Such shares represent  300,507,663  shares of the Company's common stock.  Pursuant to the Agreement,  on the
SPA Closing  Date,  NMI became a wholly owned  subsidiary of the Company.  The  Agreement was approved by the unanimous  consent of our
Board of Directors on July 10, 2006. In addition,  on July 10, 2006, the parties  entered into a modification  and amendment  agreement
to the Agreement waiving some conditions precedent to the close of the Agreement.



In addition, in connection with the closing, the Company added three new persons to its Board of Directors: Robert Rodriguez, Isidrio Gonzalez, and Mark Mayo. The biographies of such new directors including the past five years of working experience can be found in the Form 8K filed by the Company with the Securities and Exchange Commission on July 10, 2006



Also on July 10, 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 April 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.



On July 31, 2006, the Company entered into a non-binding letter of intent to purchase
substantially all of the assets of NewsProNet Interactive, LLC
(NewsProNet), an Atlanta based provider of converged media content
solutions and interactive branding strategies for local broadcasters. NewsProNet
is a strategic content creation company with a business-to-business distribution
model. NewsProNets clients are media companies who use the companys
content and programming strategies to help drive audience to their broadcast and
Internet properties. NewsProNets services include consulting and client
training to maximize the impact and effectiveness of strategic content products.
If we are able to execute a definitive agreement with NewsProNet, the assets
ofNewsProNet will provide us with
several additional valuable intellectual property assets (including a vast
compilation of broadcast content) while simultaneously providing us with
numerous cross-selling and business development opportunities. We anticipate
executing a definitive agreement for the acquisition of these assets in the
third quarter of 2006.



NEW ACCOUNTING PRONOUNCEMENTS



In December 2004, the FASB issued SFAS No. 123 (SFAS 123) (revised 2004) Share-Based Payment (SFAS 123R). This Statement requires that the cost resulting from all share-based transactions be recorded in the financial statements. The Statement establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based measurement in accounting for share-based payment transactions with employees. The Statement also establishes fair value as the measurement objective for transactions in which an entity acquires goods or services from non-employees in share-based payment transactions. The Statement replaces SFAS 123 Accounting for Stock-Based Compensation and supersedes APB Opinion No. 25 Accounting for Stock Issued to Employees. The provisions of this Statement will be
effective for the company beginning January 1, 2006. The company has adopted the provisions of SFAS No. 123R.



In May 2003, the Financial Account Standards Board issued Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity (hereinafter SFAS No. 150). SFAS No. 150 establishes standards for classifying and measuring certain financial instruments with characteristics of both liabilities and equity and requires that those instruments be classified as liabilities in statements of financial position. Previously, many of those instruments were classified as equity. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective at the  beginning of the first interim period beginning after June 15, 2003. The company has determined that there was no impact from the adoption of the statement.





In December 2004, the FASB issued SFAS 153 Exchanges of Non-monetary Assets - an amendment of APB Opinion No. 29. This Statement amended APB Opinion 29 to eliminate the exception for non-monetary exchanges of similar productive assets and replaces it with a general exception for exchanges of non-monetary assets that do not have commercial substance. A non-monetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. The adoption of this Standard is not expected to have any material impact on the companys consolidated financial position, results of operations or cash flows.



CRITICAL ACCOUNTING ESTIMATES



Our discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principals generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of any contingent assets and liabilities. On an on-going basis, we evaluate our estimates. We base our estimates on various assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under alternative assumptions or conditions.



We believe the following critical accounting policy affects our more significant judgments and estimates used in the preparation of our financial statements:



Depreciation.The company uses the 200% double declining balance method.



We intend to generate and collect periodic royalty revenue in connection with licensing agreements associated with intellectual property. Royalty revenue is recognized as it is earned. We recognize income from licensing of patents ratably over the lesser of the economic or legal life of any granted licenses. We did not recognize any royalty revenue or licensing revenue during 2005, and have recognized $ 40,000 in royalty revenue during the first six months of 2006.



Going Concern.We have been in the exploration stage since inception on July 19, 2001 and have only generated $40,000 in revenues to date, recorded a net loss of $1,142,958 for the six months ended June 30, 2006, and remain in serious need of additional financing to fully implement our business plans. These factors among others indicate that the company may be unable to continue as a going concern, particularly in the event that it cannot obtain additional financing. The accompanying financial statements do not include any adjustments relating to the recoverability of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the company cannot continue in existence.



RISK FACTORS



WE ARE SUBJECT TO VARIOUS RISKS THAT MAY MATERIALLY HARM OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS. YOU SHOULD CAREFULLY CONSIDER THE RISKS AND UNCERTAINTIES DESCRIBED BELOW AND THE OTHER INFORMATION IN THIS FILING BEFORE DECIDING TO PURCHASE OUR COMMON STOCK. IF ANY OF THESE RISKS OR UNCERTAINTIES ACTUALLY OCCURS, OUR BUSINESS, FINANCIAL CONDITION OR OPERATING RESULTS COULD BE MATERIALLY HARMED. IN THAT CASE, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE AND YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT. THE FOLLOWING ARE ALL THE MATERIAL RISKS KNOWN TO THE COMPANY.

We have a history of operating losses



The company has a history of operating losses and there is no guarantee we will be able to achieve a positive operating income in the future and, if achieved, sustain such positive operating income. For the period July 19, 2001 (inception) to June 30, 2006, we had an aggregate net loss of $3,132,692. Accordingly, an investment in the company is extremely speculative in nature and involves a high degree of risk.





Our business is dependent on the exploitation of our portfolio of patents, which to date have generated limited income.



We are a development stage company and have a limited income history. There can
be no assurance that we will be able to generate income or achieve profitability
in the future from our intended operations. If profitability is achieved, there
is no assurance that it can be sustained. We anticipate that creating and
marketing new technology will require additional expenditures. Accordingly, an
investment in us is extremely speculative in nature and involves a high degree
of risk.



Our auditors have expressed an opinion that there is substantial doubt about our ability to continue as a going concern



In its report dated March 17, 2006, Salberg & Company, P.A. expressed an opinion that there is substantial doubt about our ability to continue as a going concern. As discussed in the accompanying unaudited consolidated financial statements, for the six months ending June 30, 2006, the company had $40,000 in revenues, a net loss of $1,142,958 and cash used in operations of $268,324. Also, at June 30, 2006 the company had a working capital deficiency of $2,759,779, a stockholders deficiency of $2,727,176, and an accumulated deficit during the development stage of $3,132,692. For the immediately preceding fiscal year ending December 31, 2005, the company had no revenues, a net loss of $1,567,108, cash used in operations of $668,368, a working capital deficiency of $1,895,732, a stockholders deficiency of $1,884,668 and a deficit accumulated during development state of $1,989,734. If we are
unable to continue as a going concern, you may lose your entire investment.



We need additional financing and if we are unable to raise the capital necessary, we may be forced to abandon or curtail our business plan or operations



As of June 30, 2006, our working capital deficiency (current assets less current
liabilities) was $2,759,779. Other than the current financing with Montgomery,
we do not have any continual commitments or identified sources of additional
capital from third parties or from its officers, directors or majority
shareholders. There is no assurance that additional financing will be available
on favorable terms, if at all.



Developing prototype applications based upon patents and intellectual property can be time-consuming and complicated.



Developing prototype applications based upon our licensed patents and
intellectual property can be time-consuming and complicated. Problems and delays
in the application development and deployment process often arise. Given that we
expect a substantial portion of our future revenue to come from licensing
particular applications of patented technology and intellectual property, any
problems or delays in the application development and deployment process could
adversely affect our revenue.


If the licensor is unable to protect the intellectual property on which we possess a license, it could have a material adverse effect
on us.


Our ability to compete depends, in part, upon the successful protection by the licensor of the proprietary assets underlying our
licenses. The licensor plans to protect proprietary and intellectual property rights through available patent, copyright and
trademark laws and licensing and distribution arrangements with reputable companies, and to the extent deemed economically prudent.
Despite these precautionary measures, existing patent, copyright and trademark laws afford only limited protection in certain
jurisdictions. The licensor may distribute the solutions in other jurisdictions in which there is no protection, or individuals or
companies in jurisdictions where the intellectual property is not protected may simply take advantage of the work. As a result, it
may be possible for unauthorized third parties to copy and distribute the intellectual property to which we hold a license. This
could result in a material adverse effect on the Company.  In connection with the intellectual property that we license, litigation by the licensor may be necessary to enforce and protect the
intellectual property rights, or to determine the validity and scope of the proprietary rights of others or to defend against claims
of infringement or invalidity. There can be no assurance that such litigation will not materially adversely our license to the
intellectual property, and affect our business, financial condition or results of operations.



We do not carry liability insurance or business interruption insurance



We carry customary Directors & Officers Insurance, but we do not carry general liability insurance or business interruption insurance at this time. We intend to purchase such insurance when we deem such an investment to be economically prudent. Consequently, if any peril or event occurs that would subject the company to liability or business interruption, we will not be insured for that loss. Such an event could severely affect our ability to conduct our normal business operations and adversely affect both our business operations and our revenue.



We are reliant on key personnel and if we lose any of its key employees, it could have a material adverse effect on our business and operations

Our success depends largely on highly skilled personnel. We rely upon personnel having skills in areas such as sales, marketing, application development, and skills relating directly to developing and commercializing the companys intellectual property and intellectual property that the company licenses. The loss of the services of any key personnel could adversely affect us.





We do not expect to pay dividends for the foreseeable future



We have not declared or paid, and do not anticipate declaring or paying in the foreseeable future, any cash dividends on our common stock. Our ability to pay dividends is dependent upon, among other things, our future earnings, if any, as well as our operating and financial condition, capital requirements, general business conditions and other pertinent factors. Furthermore, any payment of dividends by us is subject to the discretion of our board of directors. Accordingly, there is no assurance that any dividends will ever be paid on our common stock.



We are controlled by our principal shareholders



At present, our principal shareholders own approximately 83% of the issued and outstanding common stock and therefore have the ability to elect all of the members of the Board of Directors of the company. As such, control of the company will remain with the controlling shareholders who will continue to formulate business decisions and policy.



There is a limited market for our common stock and our stock price may be volatile.



Our shares are listed on the Over-the-Counter Bulletin Board, and have had a limited volume of sales, thus providing a limited liquidity into the market for our shares. Moreover, the price of our shares may be subject to wide fluctuations in response to several factors, including, but not limited to the sale of shares by Montgomery as a result of the exercise of their conversion rights. The size of such sales could be substantially grater than the normal amount of trading occurring in our stock and could have a substantial influence on the price of our stock.



Our shares are traded on the Over-The-Counter Bulletin Board. In recent years the stock market in general has experienced extreme price fluctuations that have oftentimes have been unrelated to the operating performance of the affected companies. Similarly, the market price of our common stock may fluctuate significantly based upon factors unrelated or disproportionate to our operating performance. These market fluctuations, as well as general economic, political and market conditions may adversely affect the market price of our shares.



We are subject to price volatility due to our operations materially fluctuating; as a result, any quarter-to-quarter comparisons in our financial statements may not be meaningful.

As a result of the evolving nature of the markets in which we compete, and the early stage in development of our business plan, we believe that our operating results may fluctuate materially, as a result of which quarter-to-quarter comparisons of our results of operations may not be meaningful. Until we have successfully completed our acquisition of NMI and further developed and demonstrated uses for our intellectual property, our quarterly results of operations may fluctuate significantly.



Our common stock is deemed to be penny stock, which may make it more difficult for investors to sell their shares due to suitability requirements

Our common stock is deemed to be "penny stock" as that term is defined in Rule 3a51-1 promulgated under the Securities Exchange Act
of 1934. Penny stocks are stocks: (a) with a price of less than $5.00 per share; (b) that are not traded on a "recognized" national
exchange; (c) whose prices are not quoted on the NASDAQ automated quotation system; (d) NASDAQ stocks that trade below $5.00 per
share are deemed a "penny stock" for purposes of Section 15(b)(6) of the Exchange Act; (e) issuers with net tangible assets less than
$2.0 million (if the issuer has been in continuous operation for at least three years) or $5.0 million (if in continuous operation
for less than three years), or with average revenues of less than $6.0 million for the last three years.



Broker/dealers dealing in penny stocks are required to provide potential investors with a document disclosing the risks of penny stocks. Moreover, broker/dealers are required to determine whether an investment in a penny stock is a suitable investment for a prospective investor. These requirements may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors in our



common stock to sell shares to third parties or to otherwise dispose of them. This could cause our stock price to decline.




Item 3
        CONTROLS AND PROCEDURES.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of March 31, 2006. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commissions rules and forms and that our disclosure and controls are designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.



There were no changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls over financial reporting that occurred during the first quarter of fiscal 2006 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.




PART II
        OTHER INFORMATIONItem 1 Legal Proceedings


Not applicable.Item 2 Unregistered Sales of Equity Securities and Use of Proceeds

On July 10, 2006, the Company acquired all of the outstanding shares of NMI in exchange for a total of fifty percent (50%) of the issued and outstanding shares of the Companys common stock equal to 300,507,663 shares of common stock to NMIs sole shareholder. Pursuant to the Agreement, on the SPA Closing Date, NMI became a wholly owned subsidiary of the Company.

Item 3. Defaults Upon Senior Securities.




Not applicable.

Item 4 Submission of Matters to a Vote of Security Holders

The Company filed a Form 14C on April 6, 2006 notifying the shareholders that shareholders holding approximately 76.02% of the outstanding common stock of the Company approved the following actions of the Company on March 16, 2006:


1.
        Amending the Articles of Incorporation of the Company, pursuant to which the maximum number of shares of stock that the Company shall be authorized to have outstanding at any time shall be increased to two billion (2,000,000,000) shares of common stock at par value of $.0001 with no preemptive rights.2.
        The Stock Purchase Agreement and Share Exchange (the Agreement) with Natcom Marketing International (NMI), a Puerto Rican based full-service marketing communications agency (NMI), and the NMI shareholders.3.
        The election of a new Board of Directors for the Company upon the completion of the Agreement with NMI to serve until the next annual stockholders meeting.





4.
        The financing agreement for $1,660,000 with Montgomery Equity Partners, Ltd.5.
        The Purchase and Sale Agreement and the License and Royalty Agreement with Rothschild Trust Holdings, LLC, and the Escrow Agreement by and among the Company, the Trust, Montgomery, and David Gonzalez, as the Escrow Agent.Item 5 Other Information


Not applicable.Item 6 Exhibits and Reports of Form 8-K

On February 8, 2006, the Company filed a Form 8-K disclosing the Stock Purchase Agreement and Share Exchange with NMI, the financing agreements with Montgomery, and the Purchase and Sale Agreements and License and Royalty Agreement with RTH.

On March 9, 2006, the Company filed a Form 8-K disclosing a change in directors.

On July 11, 2006, the Company filed a Form 8-K disclosing the closing of the Stock Purchase Agreement and Share Exchange with NMI, and a change in directors.

On August 11, 2006, the Company filed a Form 8-K disclosing a change in officers.



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/ Jeffrey W. SassDated:
        August 14, 2006
        Jeffrey W. SassChief Executive Officer


By:/s/ Mark MayoDated:
        August 14, 2006
        Mark MayoChief Financial OfficerChief Accounting Officer