**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




_________________


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


_________________




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




QUARTERLY
      PERIOD ENDED SEPTEMBER 30, 2006




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





For
      the
      Transition Period From ________ to _______




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


________________




**CONNECTED
      MEDIA TECHNOLOGIES, INC.**


(Exact
      name of registrant as specified in its charter)


_________________






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


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


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




80
      SW
      8 th Street,
      Suite 2230


Miami,
      FL 33130


**** (Address
      of Principal Executive Offices)




**(786)
      425-0028**


(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.




Yes   x  No o




Check
      whether the registrant filed all documents and reports required to be filed
      by
      Section 12, 13 or l5(d) of the Exchange Act after the distribution of securities
      under a plan confirmed by a court.




Yes   x  No o




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




Yes   o No x




State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date: 621,815,326* shares of common stock were
      outstanding as of November 20, 2006.




*
      This
      number includes 2,000,000 shares that have been redeemed by the
      Company











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


**FORM
      10QSB**


**FOR
      THE QUARTERLY PERIOD ENDING SEPTEMBER 30, 2006**




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




Item
                  1.
              Consolidated
                  Financial Statements
              1Consolidated
                  Balance Sheet (Unaudited)
              F-1Consolidated
                  Statements of Operations (Unaudited)
              F-2Consolidated
                  Statements of Cash Flows (Unaudited)
              F-3Consolidated
                  Statement of Changes in Stockholders’ Equity (Deficiency) (Unaudited)
              F-4Notes
                  to Unaudited Consolidated Financial Statements
              F-5-F-17Item
                  2.
              Management’s
                  Discussion and Analysis and Results of Operations
              2Item
                  3.
              Controls
                  and Procedures
              16
  **Part
        II**   **OTHER
        INFORMATION**
  Item
                  1.
              Legal
                  Proceedings
              17Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              17Item
                  3.
              Defaults
                  Upon Senior Securities
              17Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              17Item
                  5.
              Other
                  Information
              17Item
                  6.
              Exhibits
              17






Signatures










**PART
      I - FINANCIAL INFORMATION**





Item
      1.  Financial
      Statements:





BASIS
      OF
      PRESENTATION




The
        accompanying unaudited consolidated 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 of Connected Media Technologies, Inc.
        as
        filed in 10-KSB filed with the U.S. Securities and Exchange Commission and
        the
        audited financial statements of Natcom Marketing International, Inc., filed
        as
        part of our Form 8-K filed with the U.S Securities and Exchange Commission
        on
        September 18, 2006. In the opinion of management, all adjustments (consisting
        only of normal recurring adjustments) considered necessary in order to make
        the
        consolidated financial statements not misleading, have been included. Operating
        results for the nine months ended September 30, 2006 are not necessarily
        indicative of results that may be expected for the year ending December 31,
        2006.















CONNECTED
                  MEDIA TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED
                  BALANCE SHEETSeptember
                  30, 2006(Unaudited)ASSETSCURRENT
                  ASSETS:Cash
              
              $
              217,828Accounts
                  receivable
              
              
              85,604Prepaid
                  expenses
              
              
              11,076Total
                  Current Assets
              
              
              314,508PROPERTY
                  AND EQUIPMENT - Net
              
              
              298,069OTHER
                  ASSETSInvestment
                in non-marketable equity securities
              
              
              164,817Debt
                  issue costs, net
              
              
              18,741Total
                  other Assets
              
              
              183,558Total
                  Assets
              
              $
              796,135LIABILITIES
                  AND SHAREHOLDERS' DEFICIENCYCURRENT
                  LIABILITIES:Convertible
                  debentures payable, net of
                  discount of $1,055,018
              
              
              662,982Accounts
                  payable
              
              
              319,732Accounts
                  payable - related parties
              
              
              47,379Accrued
                  expenses
              
              
              113,273Accrued
                  compensation officer
              
              
              329,741Accrued
                  interest payable
              
              
              82,535Accrued
                  interest payable - related party
              
              
              12,661Line
                  of
                  credit
              
              
              250,000Notes
                  payable - related party
              
              
              202,000Warrant
                  liability
              
              
              48,242Embedded
                  conversion option liability
              
              
              2,261,332Total
                  Current Liabilities
              
              
              4,329,877Total
                  Liabilities
              
              
              4,329,877Commitments
                  and contingencies (See Note 9)STOCKHOLDERS'
                  DEFICIENCY:Preferred
                  stock
                  ($0.0001 Par Value; 10,000,000 shares authorized; Noshares issued and outstanding)
              
              
              -Common
                  Stock ($0.0001 Par Value; 2,000,000,000 shares authorized;606,815,326 shares issued and outstanding)
              
              
              60,682Additional
                  paid-in capital
              
              
              13,847,540Accumulated
                  deficit
              
              
              (17,042,139
              )Less:
                  treasury stock
              
              
              (399,825
              )Total
                  Stockholders' Deficiency
              
              
              (3,533,742
              )Total
                  Liabilities and Stockholders' Deficiency
              
              $
              796,135




See
        accompanying notes to unaudited consolidated financial
        statements.






F-1


CONNECTED
                  MEDIA TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED
                  STATEMENTS OF OPERATIONSFor
                  the Three Months Ended
              
              For
                  the Nine Months EndedSeptember
                  30,
              
              September
                  30,2006
              
              2005
              
              2006
              
              2005(Unaudited)
              
              (Unaudited)
              
              (Unaudited)
              
              (Unaudited)NET
                  SALES
              
              $
              32,213
              
              $
              6,070
              
              $
              183,463
              
              $
              8,203COST
                  OF SALES
              
              
              15,000
              
              
              6,232
              
              
              127,159
              
              
              8,144GROSS
                  PROFIT
              
              
              17,213
              
              
              (162
              )
              
              56,304
              
              
              59OPERATING
                  EXPENSES:Depreciation
              
              
              65,351
              
              
              13,825
              
              
              65,351
              
              
              17,025Professional
                  fees
              
              
              86,758
              
              
              6,776
              
              
              94,858
              
              
              8,826Rent
              
              
              7,158
              
              
              5,349
              
              
              24,488
              
              
              5,824Payroll,
                  contract services and stock-based compensation
              
              
              104,327
              
              
              68,734
              
              
              109,244
              
              
              68,734Other
                  selling, general and administrative
              
              
              109,276
              
              
              31,845
              
              
              112,196
              
              
              40,315Total
                  Operating Expenses
              
              
              372,870
              
              
              126,529
              
              
              406,137
              
              
              140,724LOSS
                  FROM OPERATIONS
              
              
              (355,657
              )
              
              (126,691
              )
              
              (349,833
              )
              
              (140,665
              )OTHER
                  (EXPENSES):Change
                  in fair market value of embedded conversion option
                  liability
              
              
              (473,143
              )
              
              -
              
              
              (473,143
              )
              
              -Change
                  in fair market value of warrant liability
              
              
              (15,543
              )
              
              -
              
              
              (15,543
              )
              
              -Impairment
                  of
                  goodwill
              
              
              (16,227,967
              )
              
              -
              
              
              (16,227,967
              )
              
              -Impairment
                  of
                  investment
              
              
              -
              
              
              (155,500
              )
              
              -
              
              
              (155,500
              )Interest
                  expense - related party
              
              
              (2,037
              )
              
              -
              
              
              (2,037
              )
              
              -Interest
                  expense
              
              
              (382,280
              )
              
              -
              
              
              (391,049
              )
              
              -Total
                  Other (Expenses)
              
              
              (17,100,970
              )
              
              (155,500
              )
              
              (17,109,739
              )
              
              (155,500
              )NET
                  LOSS
              
              $
              (17,456,627
              )
              $
              (282,191
              )
              $
              (17,459,572
              )
              $
              (296,165
              )NET
                  LOSS PER COMMON SHARE - Basic and Diluted
              
              $
              (0.03
              )
              $
              -
              
              $
              (0.04
              )
              $
              -WEIGHTED
                  AVERAGE COMMON SHARESOUTSTANDING
                  -
                  Basic and Diluted
              
              
              573,521,015
              
              
              300,507,663
              
              
              392,512,163
              
              
              300,507,663


See
        accompanying notes to unaudited consolidated financial
        statements.






F-2




CONNECTED
                  MEDIA TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED
                  STATEMENTS OF CASH FLOWSFor
                  the Nine Months EndedSeptember
                  30,2006
              
              2005(Unaudited)
              
              (Unaudited)CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  Loss
              
              $
              (17,459,572
              )
              $
              (296,165
              )Adjustments
                  to
                  Reconcile Net Loss to Net Cash FlowsUsed
                  in
                  Operating Activities:Depreciation
                  and amortization
              
              
              65,351
              
              
              17,025Amortization
                  of
                  discount on convertible notes payable
              
              
              273,998
              
              
              -Amortization
                  deferred consulting
              
              
              1,292
              
              
              -Stock-based
                  compensation
              
              
              30,105
              
              
              -Impairment
                  of
                  goodwill
              
              
              16,227,967
              
              
              -Impairment
                  of
                  investment
              
              
              -
              
              
              155,500Amortization
                  of
                  debt issuance cost
              
              
              6,781
              
              
              -Change
                  in fair value of derivatives
              
              
              488,686
              
              
              -(Increase)
                  Decrease in:Accounts receivable
              
              
              78,236
              
              
              82,813Prepaid expenses
              
              
              1,424
              
              
              -Barter credits
              
              
              -
              
              
              129,566Increase
                  (Decrease) in:Accounts payable
              
              
              (30,375
              )
              
              37,290Accounts payable - related parties
              
              
              (24,077
              )
              
              -Accrued expenses
              
              
              22,425
              
              
              (10,801
              )Accrued compensation officer
              
              
              10,864
              
              
              -Accrued
                  interest payable
              
              
              82,227
              
              
              -Accrued
                  interest payable - related party
              
              
              (98
              )
              
              -Net
                    Cash Flows Provided by (Used in) Operating
                    Activities
              
              
              (224,766
              )
              
              115,228CASH
                  FLOWS FROM INVESTING ACTIVITIES:Increase
                  in
                  investment in common stock
              
              
              -
              
              
              (8,350
              )Purchase
                  of
                  property and equipment
              
              
              -
              
              
              (8,765
              )Cash
                  acquired in acquisition
              
              
              9,205
              
              
              -Net
                  Cash Flows Provided by (Used in) Operating Activities
              
              
              9,205
              
              
              (17,115
              )CASH
                  FLOWS FROM FINANCING ACTIVITIES:Cash
                  overdraft
              
              
              (4,372
              )
              
              -Proceeds
                  from
                  convertible notes payable
              
              
              600,000
              
              
              -Placement
                  fees
                  paid
              
              
              (62,250
              )
              
              -Payments
                  on
                  loans payable
              
              
              (99,989
              )
              
              (99,941
              )Net
                    Cash Flows Provided by (Used in) Financing
                    Activities
              
              
              433,389
              
              
              (99,941
              )Net
                  (Decrease) Increase in Cash
              
              
              217,828
              
              
              (1,828
              )Cash
                  - Beginning of Period
              
              
              -
              
              
              1,879Cash
                  - End of Period
              
              $
              217,828
              
              $
              51SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:Cash
                  paid during the period for:Interest
              
              $
              31,253Income
                  Taxes
              
              $
              -
              
              $
              -NON-CASH
                  INVESTING AND FINANCING ACTIVITIES:Discount
                  on debentures payable associated with derivative
                  liabilities
              
              $
              540,000
              
              $
              -Acquisition
                  details:Fair
                  value of assets acquired
              
              $
              62,811
              
              $
              -Liabilities
                  assumed
              
              $
              2,814,778
              
              $
              -Common
                  stock issued for acquisitions
              
              $
              13,476,000
              
              $
              -Goodwill
              
              $
              16,227,967
              
              $
              -




See
          accompanying notes to unaudited consolidated financial
          statements.




F-3




CONNECTED
                  MEDIA TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED
                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)For
                    the Years Ended December 31, 2006, 2005, 2004 and 2003TotalCommon
                  Stock
              
              
              
              Retained
              
              
              
              Stockholders'$0.0001
                  Par Value
              
              Additional
              
              Earnings
              
              Treasury
              
              EquityShares
              
              Amount
              
              Paid-in
                  Capital
              
              (Deficit)
              
              Stock
              
              (Deficiency)Balance
                  at December 31, 2003
              
              
              300,507,663
              
              $
              30,051
              
              $
              (29,051
              )
              $
              768,252
              
              $
              -
              
              $
              769,252Net
                  income for the year
              
              
              -
              
              
              -
              
              
              -
              
              
              45,926
              
              
              
              
              
              45,926Balance
                  at December 31, 2004
              
              
              300,507,663
              
              
              30,051
              
              
              (29,051
              )
              
              814,178
              
              
              -
              
              
              815,178Net
                  loss for the year
              
              
              -
              
              
              -
              
              
              -
              
              
              (396,745
              )
              
              -
              
              
              (396,745
              )Balance
                  at December 31, 2005
              
              
              300,507,663
              
              
              30,051
              
              
              (29,051
              )
              
              417,433
              
              
              -
              
              
              418,433Stock
                  option vested
              
              
              -
              
              
              -
              
              
              30,105
              
              
              -
              
              
              -
              
              
              30,105Recapitalization
                  of company
              
              
              306,307,663
              
              
              30,631
              
              
              13,846,486
              
              
              -
              
              
              (399,825
              )
              
              13,477,292Net
                  loss for the period
              
              
              -
              
              
              -
              
              
              -
              
              
              (17,459,572
              )
              
              -
              
              
              (17,459,572
              )Balance
                  at September 30, 2006
              
              
              606,815,326
              
              $
              60,682
              
              $
              13,847,540
              
              $
              (17,042,139
              )
              $
              (399,825
              )
              $
              (3,533,742
              )






See
            accompanying notes to unaudited consolidated financial
            statements.







F-4


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


**Notes
      to Unaudited Consolidated Financial Statements**


**September
      30, 2006**




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




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




On
          January 31, 2006, Connected Media Technologies, Inc., a Delaware publicly
          held
          corporation entered into a preliminary Stock Purchase Agreement and Share
          Exchange (the “Agreement”) with Natcom Marketing International, Inc., a
          privately held Puerto Rican based full-service marketing communications
          agency
          (“NMI”), and the NMI shareholders. The closing of the transaction was completed
          on July 10, 2006 (the “Acquisition Date”). On the Acquisition Date, Connected
          Media acquired all of the outstanding shares of NMI in exchange for a total
          of
          300,507,663 shares or approximately 50% of Connected Media Technologies,
          Inc.’s
          issued and outstanding common stock. As additional consideration, on the
          Acquisition Date, Connected Media Technologies, Inc. reserved up to $250,000
          of
          the funding received by Montgomery Equity Partners, LP for distribution
          to NMI
          to be used toward the acquisition of a majority interest in NewsProNet
          Interactive, LLC. On the Acquisition Date, Connected Media Technologies,
          Inc.
          also provided funding to NMI for the payment of certain outstanding debts,
          which
          included relief of the promissory note and accrued interest (See Note 6).
          Pursuant to the Agreement, on the Acquisition Date, NMI became a wholly
          owned
          subsidiary of Connected Media Technologies, Inc.


The
          transaction was accounted for as a reverse acquisition with NMI as the
          acquirer
          for accounting purposes using the purchase method of accounting since both
          Companies are considered operating entities and management of NMI has obtained
          control through (i) holding approximately a 50% interest with no other
          shareholder or group of shareholders holding equivalent rights; and (ii)
          Board
          control. Accordingly, the consolidated financial statements subsequent
          to the
          acquisition will consist of the balance sheet of NMI at historical cost,
          the
          balance sheet of Connected Media Technologies, Inc. marked to fair value
          based
          on the purchase price, the historical operations of NMI and the operations
          of
          Connected Media Technologies from the acquisition date. The new consolidated
          entity is hereinafter referred to as the “Company.”
  F-5


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


**Notes
      to Unaudited Consolidated Financial Statements**


**September
      30, 2006**








**Note
      1 -** **Nature
      of Operations and Basis of Presentation (continued)**




The
        Company’s legal subsidiary NMI is focused on serving multi-national
        organizations, as well as emerging growth companies seeking to enter or expand
        in the U.S. Hispanic/Latin American markets. NMI uses television programming
        as
        its main entry into the Hispanic and minority advertising space. To date,
        NMI
        entered into a letter of intent to purchase substantially all of the assets
        of
        NewsProNet Interactive, LLC (“NPN”), an Atlanta based provider of converged
        media content solutions and interactive branding strategies for local
        broadcasters Connected Media Technologies, Inc. is
        a
        sales and marketing company focused on digital media that offers a broad
        spectrum of services and solutions across current and emerging media platforms,
        including print, television, radio, Internet, CD, DVD and mobile devices
        such as
        mobile phones and personal digital assistants (PDAs).  As
        a
        combined entity, the services the Company currently provide includes consulting,
        advertising, media selection and placement, sales promotion, direct marketing,
        collateral development, television production and placement, radio production
        and placement, point-of-sale displays, trade shows, barter programs, Internet
        site development, and patented technology solutions.


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





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




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




For
      further information, refer to the audited consolidated financial statements
      and
      footnotes of the company for the year ending December 31, 2005
      included in the company’s Form 10-KSB and the audited financial statements and
      footnotes of NMI for the year ending December 31, 2005 as filed in the
      Company’s Form 8-K on September 18, 2006.




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




As
        reflected in the accompanying consolidated financial statements, the Company
        has
        minimal revenues, a net loss of $17,459,572 and net cash used in operations
        of
        $224,766 for the nine months ended September 30, 2006, and a working
        capital deficiency of $4,015,369, a stockholders’ deficiency of $3,533,742 and
        an accumulated deficit of $17,042,139 at September 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. The consolidated financial statements do not include any
      adjustments that might be necessary if the company is unable to continue as
      a
      going concern.




The
        Company is dependent upon the ability to resolve its liquidity problems,
        principally by obtaining additional debt financing and/or equity capital.
        In
        July and August 2006, the Company obtained debt financing (See Note 6). In
        July
        2006, Connected Media Technologies, Inc. acquired Natcom Marketing International
        Inc. pursuant to a reverse acquisition transaction. (See Note
        4)


F-6





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


**Notes
      to Unaudited Consolidated Financial Statements**


**September
      30, 2006**








**Note
      3 -** **Summary
      of Significant Accounting Policies**





**Principles
      of Consolidation**




The
        unaudited consolidated financial statements include the accounts of Connected
        Media Technologies, Inc. a Delaware corporation, and its wholly-owned
        subsidiary, NatCom Marketing International, Inc. and inactive subsidiaries
        Trust
        Licensing, Inc. and Connected Media, Inc. All significant intercompany accounts
        and transactions have been eliminated in consolidation.


**Use
      of Estimates**




In
      preparing financial statements, management is required to make estimates and
      assumptions that affect the reported amount of assets and liabilities,
      disclosure of contingent assets and liabilities at the date of the financial
      statements, and revenues and expenses during the periods presented. Actual
      results may differ from these estimates.




Significant
      estimates during 2006 and 2005 include depreciable lives on equipment, valuation
      of derivative liabilities, and valuation allowance for deferred tax
      assets.





**Cash
      and Cash Equivalents**





For
      the
      purpose of the cash flow statements, the Company considers all highly liquid
      investments with original maturities of three months or less at the time of
      purchase to be cash equivalents.





**Account
      Receivable**


Account
        Receivable presented in the balance sheets represent customers debts to the
        Company resulting from normal business transactions during the periods. As
        of
        September 30, 2006, no allowance for uncollectible amounts have been provided
        since, in the opinion of management, they will be fully paid within a reasonable
        time after period end.




**Investment
        in non-marketable equity securities**
 
 Certain
        securities that the Company may invest in can be determined to be
        non-marketable. Non-marketable securities where the Company owns less than
        20%
        of the investee are accounted for at cost pursuant to APB No. 18, “The Equity
        Method of Accounting for Investments in Common Stock” (“APB 18”)
 
 The
        Company periodically reviews its investments in non-marketable securities
        and
        impairs any securities whose value is considered non-recoverable. There was
        no
        impairment losses charged to operations during the nine months ended September
        30, 2006.








F-7





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


**Notes
      to Unaudited Consolidated Financial Statements**


**September
      30, 2006**








**Note
      3 -** **Summary
      of Significant Accounting Policies (continued)**





**Property
      and Equipment**





Computers,
      furniture and fixtures and equipment are stated at cost and are depreciated
      on a
      straight-line basis over the estimated useful lives of the assets, which is
      five
      years.





Leasehold
      improvements are amortized on a straight-line basis over the term of the
      respective lease, or over their estimated useful lives, whichever is
      shorter.





**Long-Lived
      Assets**





The
      Company reviews 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. The Company recognized a loss on impairment
      of
      goodwill during the nine months ended September 30, 2006 of $16,227,967 (see
      note 4).





**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 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.





**Concentration
      of Credit Risk**




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





**Revenue
      Recognition**




The
      Company follows the guidance of the Securities and Exchange Commission’s Staff
      Accounting Bulletin No. 104 for revenue recognition. In general, the Company
      records 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.


F-8


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


**Notes
      to Unaudited Consolidated Financial Statements**


**September
      30, 2006**





**Note
      3 -** **Summary
      of Significant Accounting Policies (continued)**





**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 September 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. Additionally, the Company has convertible debentures which
      are convertible into 390,898,749 shares of common stock as of September
      30, 2006. The effect of these common stock equivalents is anti-dilutive
      since the company reflects a net loss.





**Recent
      Pronouncements**




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




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





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


F-9


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


**Notes
      to Unaudited Consolidated Financial Statements**


**September
      30, 2006**





**Note
      4 - Reverse Acquisition**




On
          July
          10, 2006 (the “Acquisition Date”), the Company acquired all of the outstanding
          shares of NMI in exchange for a total 300,507,663 or approximately 50%
          of the
          issued and outstanding shares of the Company’s common stock. Pursuant to the
          Agreement, on the Acquisition Date, NMI became a wholly-owned subsidiary
          of
          Connected Media Technologies, Inc. The transaction was accounted for as
          a
          reverse acquisition using the purchase method of accounting in accordance
          with
          SFAS No. 141 since both Companies are considered operating entities and
          management of NMI has obtained control through (i) holding a controlling
          interest with no other shareholder or group of shareholders holding equivalent
          rights and (ii) Board control. Accordingly, the consolidated financial
          statements subsequent to the acquisition will consist of the balance sheet
          of
          NMI at historical cost, the balance sheet of Connected Media Technologies,
          Inc.
          marked to fair value based on the purchase price, the historical operations
          of
          NMI and the operations of Connected Media Technologies, Inc. from the
          acquisition date. The purchase price is based on the average fair value
          of the
          Company’s shares during the period before and after the date of the agreement
          and the date of the announcement. This amounted to $13,476,000. The purchase
          price was allocated to the net assets of Connected Media Technologies Inc.
          based
          on their fair values.





The
      allocation of fair value of the net assets acquired was as follows:





Cash
            
            $
            9,205Property
                and equipment
            
            
            7,388Other
                assets
            
            
            46,218Goodwill
            
            
            16,227,967Accounts
                payable and accrued expenses
            
            
            (742,906
            )Convertible
                debt and other debt assumed Net
            
            
            (790,984
            )Derivative
                liabilities assumed
            
            
            (1,280,888
            )Purchase
                Price
            
            $
            13,476,000





Since
      the
      Company has minimal revenues, has incurred losses and used cash in operations,
      the Company deemed the acquired goodwill to be impaired and wrote-off the
      goodwill on the acquisition date. Accordingly, for the nine months ended
      September 30, 2006, the Company recorded an impairment of goodwill of
      $16,227,967 on the accompanying statement of operations.





The
      following unaudited pro forma consolidated results of operations have been
      prepared as if the acquisitions of Connected Media had occurred as of the
      following periods:





Nine
                Months Ended September 30, 2006
            
            Nine
                Months Ended September 30, 2005Net
                Revenues
            
            $
            223,463
            
            $
            --Net
                Loss from continuing operations
            
            $
            (18,602,530
            )
            $
            (1,442,095
            )Net
                Loss per Share from continuing operations
            
            $
            (.05
            )
            $
            --





Pro
      forma
      data does not purport to be indicative of the results that would have been
      obtained had these events actually occurred at the beginning of the periods
      presented and is not intended to be a projection of future
      results.


F-10





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


**Notes
      to Unaudited Consolidated Financial Statements**


**September
      30, 2006**





**Note
      5 -** **Notes
      Payable, Related Party and Accrued Interest Payable, Related
      Party**





At
      September 30, 2006, the Company has note payable to Irrevocable
      Trust Agreement Number III (“Trust III”) in the amount of $202,000. Leigh M.
      Rothschild, a Director of the Company, is the primary beneficiary of Trust
      III.
      The note matures on December
      9, 2006 pursuant to a Loan Extension Agreement dated January 31, 2006. At
      September 30, 2006, the Company had accrued interest payable, related party
      of
      $12,661.





**Note
      6 - Financing Arrangements**





**Convertible
      Debentures Payable**





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




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




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




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


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


F-11





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


**Notes
      to Unaudited Consolidated Financial Statements**


**September
      30, 2006**





**Note
      6 - Financing Arrangements (continued)**





**Convertible
      Debentures Payable (continued)**




On
        July
        13, 2006, in connection with the “Second Closing” contemplated by the Securities
        Purchase Agreement by and between the Company and Montgomery, the Company
        issued
        to Montgomery a secured convertible debenture in the amount of $300,000.
        The
        convertible debenture has an interest rate of 14% and a maturity date of
        October
        14, 2007, and is convertible into shares of the Company’s common stock at a
        conversion price equal to the lesser of (a) $0.016 or (b) seventy five percent
        (75%) of the lowest Closing Bid Price of the Common Stock, as quoted by
        Bloomberg, LP, of the ten (10) trading days immediately preceding the Conversion
        Date. The Conversion Price may be adjusted pursuant to the other terms of
        this
        Debenture. In addition, upon an “Event of Default” (as that term is defined in
        the debenture), the conversion price will permanently be reduced to $
        0.0001.





In
      connection with the debt issuance on July 13, 2006, $32,250 was deducted from
      the gross proceeds of which $30,000 is being deferred as debt discount and
      amortized over the life of the convertible debentures. Other fees taken from
      the
      $300,000 in gross proceeds include $2,250 of structuring fees and related costs
      and fees, which are treated as debt issue costs and will be amortized to debt
      issue cost expense over the remaining life of the debenture.





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





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




During
        the nine months ended September 30, 2006, amortization debt issue costs was
        $6,781. The remaining balance of debt issue costs at September 30, 2006 was
        $18,741. The amortization of debt discounts for the nine months ended September
        30, 2006 was $268,756. The balance of the discount is $1,055,018 at September
        30, 2006.


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


F-12





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


**Notes
      to Unaudited Consolidated Financial Statements**


**September
      30, 2006**





**Note
      6 - Financing Arrangements (continued)**





**Convertible
      Debentures Payable (continued)**





Additionally,
      in connection with the Second Closing t he
      initial estimated fair value of the embedded conversion option was $370,180.
      Accordingly, the Company recorded a debt discount of $270,000 which reduced
      the
      carrying value of this secured convertible debenture to zero. The $100,180
      excess value of the fair values of the embedded conversion option over the
      net
      proceeds received from this secured convertible debenture was charged to change
      in fair market value of embedded conversion option liability upon recording.
      The
      initial fair values of this embedded conversion option was estimated using
      the
      Black-Scholes option pricing model with the following assumptions: estimated
      volatility of 304%; risk-free interest rate of 5.27%; estimated life of 1.25
      year and no dividends.





Additionally,
      in connection with the Third Closing t he
      initial estimated fair value of the embedded conversion option was $372,883.
      Accordingly, the Company recorded a debt discount of $270,000 which reduced
      the
      carrying value of this secured convertible debenture to zero. The $102,883
      excess value of the fair values of the embedded conversion option over the
      net
      proceeds received from this secured convertible debenture was charged to change
      in fair market value of embedded conversion option liability upon recording.
      The
      initial fair values of this embedded conversion option was estimated using
      the
      Black-Scholes option pricing model with the following assumptions: estimated
      volatility of 312%; risk-free interest rate of 5.03%; estimated life of 1.25
      year and no dividends





At
      September 30, 2006, the Company revalued the embedded conversion option
      liability and warrants resulting in a loss on derivative liability of $285,623
      due to fluctuations in the Company's stock price. At September 30, 2006, the
      fair value of the embedded conversion option liability and warrant liability
      were estimated using the Black-Scholes option pricing model with the following
      assumptions: estimated volatility of 314%; risk-free interest rate ranging
      from
      4.91%; estimated life of 1 year and no dividends. At September 30, 2006, the
      estimated fair value of the embedded conversion option liability and warrant
      liability was $2,261,332 and $48,242, respectively, and are reflected on the
      accompanying consolidated balance sheet.





The
      convertible debenture liability is as follows at September 30,
      2006:





Convertible
                debentures payable
            
            $
            1,718,000Less:
                unamortized discount on debentures
            
            
            (1,055,018
            )Convertible
                debentures, net
            
            $
            662,982





**Line
      of Credit**




The
        Company entered into a transaction with a Bank pursuant to which the company
        has
        access to a two hundred and fifty thousand dollar ($250,000) line of credit.
        In
        general, all or any portion of the $250,000 may be drawn down at any time,
        and
        must be repaid in full by October 25, 2006, with interest at prime plus 1.5%.
        In
        addition, each consecutive month, the Company must pay accrued interest on
        outstanding amounts owed. The Company used the line of credit for general
        working capital. The credit line is guaranteed by a stockholder and secured
        by a
        Certificate of Deposit owned by an officer of the Company. At September 30,
        2006, the Company owes $250,000 under this line of credit.
  F-13





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


**Notes
      to Unaudited Consolidated Financial Statements**


**September
      30, 2006**











**Note
      7 -** **Stockholders’
      Deficiency**





**Registration
      Rights on Previously Issued Shares**




Of
      the
      306,307,663 shares issued in connection with the recapitalization of the
      Company, 7,600,000 shares issued to Cornell and the 200,000 shares underlying
      warrants shall have "piggy-back" registration rights.





**Stock
      Options**





For
      the
      nine months ended September 30, 2006, the Company recorded stock-based
      compensation of $30,105 pursuant to SFAS 123R and was based on vesting
      provisions.





A
      summary
      of the status of the Company's outstanding stock options as of September 30,
      2006 and changes during the period then ended are as follows:





Number
                of Options
            
            Weighted
                Average Exercise PriceBalance
                at December 31, 2005
            
            -
            
            $-Stock
                option assumed in acquisition
            
            
            21,300,000
            
            
            0.02Granted
            
            
            -
            
            
            -Exercised
            
            
            -
            
            
            -Forfeited
            
            
            -
            
            
            -Balance
                at September 30, 2006
            
            
            21,300,000
            
            $
            0.02Options
                exercisable at end of period
            
            
            21,300,000
            
            $
            0.02Weighted
                average fair value of options granted during the period
            
            
            
            
            $
            0.00





The
      following table summarizes information about employee and consultants stock
      options outstanding at September 30, 2006:





Options
                Outstanding
            
            Options
                ExercisableRange
                of Exercise Price
            
            Number
                Outstanding at September 30, 2006
            
            Weighted
                Average Remaining Contractual Life (Years)
            
            Weighted
                Average Exercise Price
            
            Number
              Exercisable
                at
              September
                30, 2006
            
            Weighted
                Average Exercise Price$
            0.02
            
            21,000,000
            
            2
            $
            0.02
            
            21,000,000
            $
            0.02$
            0.04
            
            300,000
            
            1.5
            
            0.04
            
            300,000
            
            0.0421,300,000
            
            
            $
            0.02
            
            21,300,000
            $
            0.02





F-14





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


**Notes
      to Unaudited Consolidated Financial Statements**


**September
      30, 2006**





**Note
      7 -** **Stockholders’
      Deficiency**





**Common
      Stock Warrants**





A
      summary
      of the status of the Company's outstanding stock warrants as of September 30,
      2006 and changes during the period then ended are as follows:





Number
                of Options
            
            Weighted
                Average Exercise PriceBalance
                at December 31, 2005
            
            -
            
            $-Stock
                warrants assumed in acquisition
            
            
            8,200,000
            
            
            0.0003Granted
            
            
            -
            
            
            -Exercised
            
            
            -
            
            
            -Forfeited
            
            
            -
            
            
            -Balance
                at September 30, 2006
            
            
            8,200,000
            
            $
            0.0003Options
                exercisable at end of period
            
            
            8,200,000
            
            $
            0.0003Weighted
                average fair value of options granted during the period
            
            
            
            
            $
            0.00





The
      following table summarizes information about employee and consultants stock
      options outstanding at September 30, 2006:





Options
                Outstanding
            
            Options
                ExercisableRange
                of Exercise Price
            
            Number
                Outstanding at September 30, 2006
            
            Weighted
                Average Remaining Contractual Life (Years)
            
            Weighted
                Average Exercise Price
            
            Number
              Exercisable
                at
              September
                30, 2006
            
            Weighted
                Average Exercise Price$
            .0001
            
            8,000,000
            
            2.25
            $
            .0001
            
            8,000,000
            $
            .0001$
            0.01
            
            200,000
            
            2.25
            
            .01
            
            200,000
            
            .018,200,000
            
            
            $
            .0003
            
            8,200,000
            $
            .0003








F-15





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


**Notes
      to Unaudited Consolidated Financial Statements**


**September
      30, 2006**







**Note
      8 -** **Related
      Parties**




At
      September 30, 2006, the Company had outstanding $47,379 of accounts payable
      to
      various related parties.




As
      described in Note 5, the Company had total notes payable, related party
      outstanding at September 30, 2006 of $202,000. At September 30, 2006, the
      company had accrued interest payable relating to those notes of $12,661
      outstanding at September 30, 2006.




**Note
      9 -** **Commitments
      and Contingencies**




**Agreements
      with Rothschild Trust Holdings, LLC**




On
          January 31, 2006, Connected Media Technologies, Inc. entered into a Purchase
          and
          Sale Agreement with Rothschild Trust Holdings, LLC (the “Trust”), a related
          party, for the sale of certain issued and pending patents in exchange for
          the
          return of 13,241,223 shares of Connected Media Technologies, Inc.’s common stock
          held by the Trust (the “Shares”). As additional consideration, the Trust granted
          Connected Media Technologies, Inc. a license to use the patents pursuant
          to the
          terms of a License and Royalty Agreement, which grants Connected Media
          Technologies, Inc. a twelve-month right of election to license the patents.
          If
          Connected Media Technologies, Inc. exercises the right of election, the
          Trust
          shall grant Connected Media Technologies, Inc. a two-year exclusive license
          for
          the use of the patents that is renewable subject to performance, and the
          Trust
          shall receive 10% royalties on all gross receipts as defined in the License
          and
          Royalty Agreement. (See note 11)




On
        January 31, 2006, Connected Media Technologies, Inc., the Trust, Montgomery,
        and
        David Gonzalez, as the Escrow Agent, entered into an Escrow Agreement, whereby
        the Trust agreed to place the 13,241,223 shares that were returned to Connected
        Media Technologies, Inc. and Connected Media Technologies, Inc. agreed to
        deposit royalties otherwise payable to the Trust into an escrow account held
        by
        the Escrow Agent until such time as royalties  of $690,000 have been
        deposited into the escrow account or until Montgomery has been repaid and/or
        converted $690,000 of the Convertible Debentures. At such time, the Trust
        shall
        have 30 days to replace the Shares with $728,267.26, 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.


**Note
      10 - Subsequent Event**





On
      October 4, 2006, the Company's wholly-owned subsidiary, NPN Asset Acquisitions,
      Inc. (“NPNAA”) entered into an Assignment Agreement (the “NBC Assignment”) with
      NBC-NPN Holding, Inc. (“NBC”) and NewsProNet Interactive, LLC (“NPN”), whereby
      NBC assigned approximately $2.365 million in secured debt (the “Secured Debt”)
      against NPN to our subsidiary NPNAA.   Such debt is evidenced by
      certain promissory notes entered into in 2000 and 2001 by NBC and NPN, and
      is
      secured by a Security Agreement dated September 18, 2000.  Pursuant to the
      NBC Assignment, NPNAA shall have a first priority secured interest in all of
      the
      assets of NPN.  In consideration for the assignment of the Secured Debt,
      NPNAA agreed to enter into a Content License Agreement whereby NBC Universal,
      Inc. is granted a non-exclusive license to use certain content owned and
      produced by NPN consisting of audio-visual archived news stories.  As
      additional consideration for the assignment of the Secured Debt, the parties
      entered into a Securities Purchase Agreement whereby the Company agreed to
      issue
      15,000,000 shares of Connected Media Technologies, Inc. common stock to
      NBC.





F-16


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


**Notes
      to Unaudited Consolidated Financial Statements**


**September
      30, 2006**








Also
      on October 4, 2006, the Company’s subsidiary NPNAA entered into an
      Assignment Agreement with NPN (the “NPN Assignment”), pursuant to which NPNAA
      exercised certain security rights with the consent of NPN.  Pursuant to the
      NPN Assignment, NPNAA agreed, in lieu of immediate foreclosure upon all of
      the
      Secured Debt, to accept certain assets of NPN and apply the fair market value
      of
      such assets against the balance of the Secured Debt.  Accordingly, NPN
      assigned to NPNAA all title and interest in certain assets consisting of
      equipment, accounts and accounts receivable, customer contracts, certain claims
      or causes of action held by NPN, all intellectual property, and NPN’s complete
      content video archive consisting of approximately 1,700 finished news
      stories.





In
      consideration for such assets, NPNAA agreed to reduce the balance of the Secured
      Debt to $865,000.  The Company also agreed to enter into certain employment
      agreements with four former employees of NPN for positions as Vice Presidents
      of
      NPNAA.




On
          October 25, 2006, the $250,000 Line of Credit referred to in Note 6 became
          due
          and payable in full. The Company did not repay the amount due on the due
          date
          which may cause a default under the Line of Credit and under the Montgomery
          convertible debentures. The Company believes that the bank may execute
          on the
          collateral for the Line of Credit. The Company is currently in negotiation
          to
          restructure the repayment of these amounts.





On
      November 3, 2006, Montgomery converted $40,000 of the $718,000 convertible
      debenture issued to Montgomery on January 31, 2006 into an aggregate of
      5,333,333 shares of common stock. The conversion price was $.0075 per share
      and
      the conversion reduced the principal amount of this debenture to
      $678,000.




On
        November 7, 2006, NPNAA received notice from a creditor of NPN of a claim
        against NPN in the amount of approximately $50,000 plus interest and attorney's
        fees. The creditor claimed, among other things, that the transaction between
        NPN
        and NPNAA was improper, and that NPNAA is directly liable for the amount
        of the
        claim. The company believes that the claim is without merit.





F-17




**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.


2


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
      September 30, 2006, we currently have the following wholly-owned subsidiaries:
      Trust Licensing, Inc., a Florida corporation (successor-by-merger to TLLLC),
      Connected Media, Inc., the inactive California corporation, and Natcom Marketing
      International, Inc., a Puerto Rico corporation (described below).





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





On
      July
      10, 2006, pursuant to a Stock Purchase Agreement and Share Exchange with (i)
      NMI
      and (ii) the NMI shareholders, we acquired all of the outstanding shares of
      NMI
      in exchange for the issuance of common shares to the NMI shareholders in an
      amount equal to approximately fifty percent (50%) of the company’s then issued
      and outstanding shares after the issuance. As a result of the transaction,
      NMI
      became our wholly owned subsidiary.





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 have included Lucent Technologies, Royal Caribbean, RJR/Nabisco, Argent,
      IGT, Avaya, and others.






3





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 and
      project based fees.





In
      connection with the NMI acquisition, on January 31, 2006, we also entered into
      a
      Purchase and Sale Agreement with Rothschild Trust Holdings. LLC ("RTH", an
      entity controlled by Leigh M. Rothschild, one of the company’s directors) 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 renewable. Simultaneously
      therewith, the company, RTH, Montgomery Equity Partners, L.P. ("Montgomery"),
      and David Gonzalez, as Escrow Agent for Montgomery, entered into an Escrow
      Agreement, whereby the company and RTH agreed to place the 13,241,223 shares
      in
      escrow and the company agreed to deposit royalties otherwise payable to RTH
      into
      an escrow account held by the Escrow Agent until such time as royalties of
      $690,000 have been deposited into the escrow account or until Montgomery has
      been repaid and/or converted $690,000 of the convertible debentures issued
      to
      it. At such time, RTH shall have 30 days to replace these shares with
      $728,267.26 which shall be distributed to the company in exchange for these
      shares; otherwise, the Escrow Agent shall release these shares to the company
      and the royalties to RTH.





*The
      Business of Connected Media/NMI*




We
        are a
        sales and marketing company focused on digital media that offers a broad
        spectrum of digital services across current and emerging media platforms,
        including print, television, radio, Internet, CD, DVD and mobile devices
        such as
        mobile phones and PDAs. Our customers include companies, government agencies,
        advertising agencies, advertisers and content owners who seek to leverage
        opportunities in this age of “digital convergence.” Thanks to the advent of
        digital technology, different media platforms have converged causing many
        changes in the way entertainment content, advertising and marketing messages
        are
        delivered to their audience. Companies are faced with a fragmented marketplace,
        where consumers are reached through multiple channels and on multiple devices
        -
        from televisions and radios, to computers, game consoles, mobile phones,
        personal digital assistants (PDA’s) and portable media players (such as the iPOD
        and other devices). We offer creative services, marketing communications,
        content creation and distribution, and patented technology to help our clients
        navigate through this “new media” landscape. Although our initial operations
        began with us being a technology focused intellectual property company, through
        NMI, we have nearly 10 years experience as a full-service provider of strategic
        marketing consulting, comprehensive promotional planning and integrated,
        multi-media advertising campaigns. As a combined entity, the services we
        currently provide include consulting, advertising, media selection and
        placement, sales promotion, direct marketing, collateral development, television
        production and placement, radio production and placement, point-of-sale
        displays, trade shows, barter programs, Internet site development, and patented
        technology solutions.





As
      a
      result of the acquisition of NMI, our sales and marketing activities have been
      combined to leverage the core competencies of both entities. Operating under
      the
      Connected Media brand, our sales team has incorporated Connected Media’s
      exclusive patent licenses into its marketing and communications initiatives
      to
      both established and new clients. With the wide range of services we now offer,
      we are able to provide our clients with 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 portable devices such as mobile phones and PDA’s. Our exclusive licenses to
      patented technologies enable us to add interactive CD-Rom and DVD disc-based
      solutions to enhance our offerings to customers and help them achieve their
      objectives.






4





In
      addition, on July 31, 2006 we entered into a non-binding letter of intent to
      acquire certain assets and operations of NewsProNet Interactive, LLC (“NPN”), a
      leader in converged media content solutions and interactive branding strategies
      for local television broadcasters. These assets include several intellectual
      property assets, including a library of broadcast content. We intend to use
      these assets to both service current clients of NPN (which include several
      broadcast media companies), and to develop numerous cross-selling and business
      development opportunities using our assets and the assets of NMI. (The NPN
      asset
      acquisition was completed after the close of the third quarter and is described
      in the "Subsequent Events" section.)





We
      are
      headquartered in Miami, Florida with its strong Hispanic and Latin American
      influences. As such, much of our staff is fluent in Spanish and has an in-depth
      knowledge of the different nuances in language and culture that characterize
      each Hispanic community. Our NMI subsidiary 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.





*Technology
      Licenses*





We
      hold
      the exclusive license to patented technology that bridges the gap between online
      and offline initiatives by allowing websites to control video content on CD’s,
      DVD’s, Flash Discs, Memory Cards and other digital storage platforms. This
      process creates a direct connection between the disc user and a website. A
      “connected” disc directs traffic to a specific webpage and then delivers a high
      quality interactive video experience without the need for any streaming,
      downloading or other bandwidth costs or constraints. Applications of such
      patented solutions include promotions, training & distance learning, content
      distribution, tracking rich media content usage, and rewarding users for their
      web based activities.





Through
      the license agreement with RTH the Company is the exclusive licensee 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. The company also has certain exclusive rights to several
      additional patent applications filed with the United States Patent and Trademark
      Office.





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





*Sales
      Strategy*





In
      addition to the ongoing business of NMI (and NPN upon completion of the
      anticipated transaction), we are leveraging the established customer base and
      experience of NMI as it relates to opportunities for our patent licenses. For
      example, NMI has been hired by a tourism bureau in Europe to implement an
      Internet marketing campaign to promote travel to the destination. In the past
      NMI has created and placed an online marketing program for this customer. Now
      we
      will also incorporate a “connected” CD-Rom for this customer using our patented
      technology.





We
      have
      an in-house sales staff, currently consisting of two employees that target
      customers in travel, advertising, cable television and broadcast media, training
      & education, film, music and video. The goal of our sales staff is to
      utilize some or all of our core competencies to craft a solution to meet the
      needs of each individual client. This can range from the creation of marketing
      collateral or a digital branding strategy, to a full-blown turnkey solution
      involving content creation, media placement, web development and creation of
      an
      interactive CD-Rom or DVD utilizing patented technology.







5




In
      addition to our in-house sales staff, we also are establishing a network of
      performance based agents who have expertise, knowledge and contacts in a
      particular industry or market sector where we believe our services and
      technology can be utilized. For example we have agents presenting our
      capabilities and services to the Education, Religious and Cruise Industry
      markets. We also provide our services to third party companies that have been
      contracted by the U.S. Government for interactive training and other initiatives
      that can utilize our capabilities and technology. In particular, we have
      completed an interactive training CD-ROM for the United States Department of
      Housing and Urban Development (HUD). Natcom Marketing Communications, Inc.
      (“NMC”), a company owned by our Vice Chairman and principal shareholder Robert
      Rodriguez, has a contract with HUD and NMC engaged us to create a customized
      CD-Rom incorporating our patented technology. The CD-ROM will automatically
      link
      users to a special section of the HUD website, and provide access to high
      quality video training tutorials that we also produced. The video segments
      play
      from the CD in connection with links and information on the website.





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





In
      addition to servicing and expanding our business with existing customers, our
      sales team has proposals in front of a variety of potential new clients. These
      range from advertising agencies that can grow business with their own clients
      by
      utilizing our digital media services and patented technology, to media research
      firms, sports organizations, and the Latin American divisions of several
      national cable television channels. In all cases, after meeting with potential
      clients and evaluating their needs and objectives we craft a proposed solution
      that utilizes some or all of our offerings to help the customer achieve their
      stated goals.





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 September 30, 2006, we had total assets of approximately
      $ 796,000 ($ 218,828 of which is cash), and total liabilities of
      approximately $ 3,964,000. As described below, we will need to obtain
      additional financing for us to both implement our plans and to continue as
      a
      going concern.





**CRITICAL
      ACCOUNTING POLICIES AND ESTIMATES**





The
      preparation of financial statements and related disclosures in conformity with
      accounting principles generally accepted in the United States requires us to
      make judgments, assumptions, and estimates that affect the amounts reported
      in
      the Consolidated Financial Statements and accompanying notes. Note 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.






6





*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 have not recognized any Royalty revenue for the three months ended September
        30, 2006. However, we recorded $ 32,213 in revenue during the third quarter
        of 2006 from our subsidiary.


We
      recognize other income from patent infringement claims when the claim is
      settled, whether by negotiation or litigation. We recognized no “other income”
during 2005 and for the nine months ended September 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 nine months ended September 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**





NINE
      MONTHS ENDED SEPTEMBER 30, 2006 COMPARED TO NINE MONTHS ENDED
      SEPTEMBER 30, 2005





Revenue.
      Our revenue was $183,463 and $8,203 for the nine months ended September 30,
      2006
      and September 30, 2005 respectively.





Cost
      of
      sales. For the nine months ended September 30, 2006 and 2005, cost of sales
      amounted to $127,159 and $8,144, respectively.




Operating
      Expenses. Operating expenses for the nine months ended September 30, 2006 was
      $ 406,137 compared to operating expenses of $ 140,724 for the same
      period in 2005, an increase of $265,413 or 188.6%. The increase in operating
      expenses results primarily from the following:





·
            For
                the nine months ended September 30, 2005, depreciation expense amounted
                to
                $65,351 as compared to $17,025 for the nine months ended September
                30,
                2005, an increase of $48,326 or 283.6%. This increase was attributable
                to
                the acquisition of Connected Media Technologies, Inc on July 10,
                2006.





·
            For
                the nine months ended September 30, 2006, professional fees amounted
                to
                $94,858 as compared to $8,826 for the nine months ended September
                30,
                2005, an increase of $86,032. This increase was attributable to an
                increase in legal fees associated with our financings, acquisition
                activities, and registration statements and an increase in accounting
                fees.





·
            For
                the nine months ended September 30, 2006, rent expense amounted to
                $24,488
                as compared to $5,824 for the nine months ended September 30, 2005,
                an
                increase of $18,664.






7





·
            For
                the nine months ended September 30, 2006, payroll, contract service
                and
                stock-based compensation amounted to $109,244 as compared to $68,734
                for
                the nine months ended September 30, 2005, an increase of $40,510
                or 58.9%.
                This increase was attributable to an increase in stock-based compensation
                of $30,105 related to the vesting of stock options and an increase
                in
                compensation due to our
                acquisition.





·
            For
                the nine months ended September 30, 2006, other selling, general
                and
                administrative expenses amounted to $112,196 as compared to $40,315
                for
                the nine months ended September 30, 2005, an increase of $71,881
                or
                178.3%. This increase was attributable to an increase in
                operations.





Other
      expenses. $ 17,109,739 in “other expenses” was recognized for the nine
      months ended September 30, 2006. For the nine months ended September 30, 2006,
      we recorded an impairment of goodwill of $16,227,967 related to the
      reorganization of the company and our acquisition. Additionally, we recorded
      a
      loss from the initial valuation and the change in fair value of embedded
      conversion option liabilities of $473,143, a loss from the change in fair market
      value of warrant liability of $15,543, and interest expense of $393,086 related
      to the amortization of debt discount and accrued interest on our debt
      financings. We recognized $ 155,500 in “other expenses” for the nine months
      ended September 30, 2005 which was related to the impairment of an investment
      in
      common stock.





Net
      Loss.
      Our net loss for the nine months ended September 30, 2006 was
      $ 17,459,572 or $.04 per common share compared to a net loss of
      $ 296,165 or $0.00 per common share for the same period in 2005. The net
      loss resulted primarily from the absence of revenue or “other income” coupled
      with the increase in operating expenses.





**LIQUIDITY
      AND CAPITAL RESOURCES**





At
      September 30, 2006, we had $ 217,828 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
        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.









8


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 September 30, 2006 (150 days from closing of the first
        funding)(and was funded during October 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. We filed
      an
      SB-2 registration statement on September 1, 2006, which has not yet
      been declared effective.





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 nine month period
      ending September 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.





9


**SUBSEQUENT
      EVENTS**





*Acquisition
      of Assets of NewsProNet Interactive, LLC*





On
      October 4, 2006, our wholly owned subsidiary, NPN Asset Acquisitions, Inc.
      (“NPNAA”) entered into an Assignment Agreement (the “NBC Assignment”) with
      NBC-NPN Holding, Inc. (“NBC”) and NewsProNet Interactive, LLC (“NPN”), whereby
      NBC assigned approximately $2.365 million in secured debt (the “Secured Debt”)
      against NPN to our subsidiary NPNAA.   Such debt is evidenced by
      certain promissory notes entered into in 2000 and 2001 by NBC and NPN, and
      is
      secured by a Security Agreement dated September 18, 2000.  Pursuant to the
      NBC Assignment, NPNAA acquired a first priority secured interest in all of
      the
      assets of NPN.  In consideration for the assignment of the Secured Debt,
      NPNAA agreed to enter into a Content License Agreement whereby NBC Universal,
      Inc. is granted a non-exclusive license to use certain content owned and
      produced by NPNAA consisting of audio-visual archived news stories.  As
      additional consideration for the assignment of the Secured Debt, the parties
      entered into a Securities Purchase Agreement whereby we agreed to issue
      15,000,000 shares of our common stock to NBC.





Also
      on October 4, 2006, our subsidiary NPNAA entered into an Assignment
      Agreement with NPN (the “NPN Assignment”), pursuant to which NPNAA exercised
      certain security rights with the consent of NPN.  Pursuant to the NPN
      Assignment, NPNAA agreed, in lieu of immediate foreclosure upon all of the
      Secured Debt, to accept certain assets of NPN and apply the fair market value
      of
      such assets against the balance of the Secured Debt.  Accordingly, NPN
      assigned to NPNAA all title and interest in certain assets consisting of
      equipment, accounts and accounts receivable, customer contracts, certain claims
      or causes of action held by NPN, all intellectual property, and NPN’s complete
      content video archive consisting of approximately 1,700 finished news
      stories.  In consideration for such assets, NPNAA agreed to reduce the
      balance of the Secured Debt to $865,000.  We also agreed to enter into
      certain employment agreements with four former employees of NPN for positions
      as
      Vice Presidents of NPNAA.





*NewsProNet
      Content Summary*





A
      leader
      in converged media content solutions and interactive branding strategies for
      local broadcasters, 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.





A
      partial
      list of NewsProNet’s current content products are as follows:





SweepsFeedTM
      --96 special reports topics per year, launched in February 1998.





Heads
      Up!
TMConsumer Health and Money -- A special approach to consumer health and money
      coverage. Twelve television news segments each month about how Americans can
      best spend, save, invest and care for themselves with confidence during these
      changed times. Delivered with split audio to support local talent franchises.
      A
      pro-consumer confidence sponsorship opportunity for local
      advertisers.





Impact
      Radio News -- Demographically targeted short-form in-depth scripts and actuality
      service for radio clients. 100+ topics per year, available with companion
      locally branded web content.





Know
      More
      InteractivelyTM is a companion content brand. The “Know More” program is a
      licensed co-branded content program used by broadcasters as the catalyst for
      converting broadcast audience to loyal online visitors and a tool to drive
      them
      back to air again. The program elements include: on-air promotion support,
      internal newscast branding tools, online publishing tools, as well as local
      advertising sales opportunities, station training and implementation
      support.





Pursuant
      to the terms of the Securities Purchase Agreement, we issued 15,000,000 shares
      of our common stock to NBC. These shares were issued in reliance on an exemption
      from registration under Section 4(2) of the Securities Act of 1933.






10




These
      shares of our common stock qualified for exemption under Section 4(2) of the
      Securities Act of 1933 since the issuance of shares by us did not involve a
      public offering. The offering was not a "public offering" as defined in Section
      4(2) due to the insubstantial number of persons involved in the deal, the size
      of the offering, and the manner of the offering. We did not undertake an
      offering in which we sold a high number of shares to a high number of
      investors.  In addition, NBC had the necessary investment intent as
      required by Section 4(2) since NBC agreed to and received share certificates
      bearing a legend stating that such shares are restricted pursuant to Rule 144
      of
      the 1933 Securities Act. This restriction ensures that these shares would not
      be
      immediately redistributed into the market, and therefore not be part of a
      "public offering." Based on an analysis of the above factors, we have met the
      requirements to qualify for exemption under Section 4(2) of the Securities
      Act
      of 1933 for this transaction.





The
      documents evidencing the above-described transaction were filed as exhibits
      to
      our Form 8K with the Securities and Exchange Commission on October 11, 2006,
      and
      are hereby incorporated by reference.


On
        October 25, 2006, the $250,000 Line of Credit referred to in Note 6 became
        due
        and payable in full. The Company did not repay the amount due on the due
        date
        which may cause a default under the Line of Credit and under the Montgomery
        convertible debentures. The Company believes the bank may execute on the
        collateral for the Line of Credit. The company is currently in negotiations
        to
        restructure the repayment of these amounts.





On
      November 3, 2006, Montgomery converted $40,000 of the $718,000 convertible
      debenture issued to Montgomery on January 31, 2006 into an aggregate of
      5,333,333 shares of common stock. The conversion price was $.0075 per share
      and
      the conversion reduced the principal amount of this debenture to
      $678,000.


On
        November 7, 2006, NPNAA received notice from a creditor of NPN of a claim
        against NPN in the amount of approximately $50,000 plus interest and attorney's
        fees. The creditor claimed, among other things, that the transaction between
        NPN
        and NPNAA was improper, and that NPNAA is directly liable for the amount
        of the
        claim. The company believes that the claim is without
        merit.


**NEW
      ACCOUNTING PRONOUNCEMENTS**




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




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






11





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





**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 straight line 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 during the
      first nine months of 2006.





**Going
      Concern.** As
      of
      September 30, 2006, we recorded a net loss of $17,459,572, 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.





12


**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 nine months ended September
        30,
        2006, we had an aggregate net loss of $17,459,572. Accordingly, an investment
        in
        the company is extremely speculative in nature and involves a high degree
        of
        risk.





**Although
      NMI, our newly acquired subsidiary has generated revenue in the past,** **our
      business is partially dependent on our ability to monetize the licensed patents,
      which to date have generated limited revenue.**





We
      have
      generated limited revenue from royalties or licensing of intellectual property.
      There can be no assurance that we will be able to do so in the future.





**There
        is substantial doubt about our ability to continue as a going
        concern.**




As
        discussed in the accompanying unaudited consolidated financial statements,
        for
        the nine months ending September 30, 2006, the company had $183,463 in revenues,
        a net loss of $17,459,572 and cash used in operations of $224,766. Also,
        at
        September 30, 2006 the company had a working capital deficiency of $4,015,369,
        a
        stockholder’s deficiency of $3,533,742, and an accumulated deficit during the
        development stage of $17,042,139. For the immediately preceding fiscal year
        ending December 31, 2005, the company had no revenues, a net loss of
        $396,745, cash used in operations of $10,816, 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.





**Although
      the debt owed to Montgomery is convertible into common stock, there is no
      assurance that Montgomery will convert the debt into common
      stock.**





Because
      of the convertible nature of the debt owed to Montgomery we may not have to
      repay this debt if the debt is converted into shares of our common stock.
      However, we cannot assure you that this debt will be converted into common
      stock
      and we may have to repay this indebtedness.





**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
      September 30, 2006, our working capital (current assets less current
      liabilities) was $3,484,825. 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.





**Existing
      stockholders may face dilution from our financing efforts as well as a result
      of
      conversion of the debt owed to Montgomery** .






13





We
      must
      raise additional capital from external sources to execute our business plan.
      We
      plan to issue debt securities, capital stock, or a combination of these
      securities. We may not be able to sell these securities, in particular under
      current market conditions. Even if we are successful in finding buyers for
      our
      securities, the buyers could and have demanded high interest rates or require
      us
      to agree to onerous operating covenants, which could in turn harm our ability
      to
      operate our business by restricting our operating activities. We may be forced
      to sell our shares of capital stock at depressed market prices, which could
      result in substantial dilution to our existing stockholders. In addition, any
      shares of capital stock we may issue may have rights, privileges, and
      preferences superior to those of our common stockholders. Furthermore, existing
      stockholders may face substantial dilution if Montgomery converts its debt
      into
      shares of common stock.





**We
      do not own the patents we are exploiting and are subject to the terms and
      conditions of a licensing agreement.**





In
      connection with certain financing transactions described herein, on January
      31,
      2006, we entered into a Purchase and Sale Agreement with Rothschild Trust
      Holdings, LLC ("RTH"), for the sale of all of our issued and pending patents
      in
      exchange for the return of 13,241,223 shares of our common stock, which are
      treasury shares being held in escrow. Leigh M. Rothschild, one of our Directors,
      is a beneficial owner of RTH. As additional consideration, RTH 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, RTH shall
      grant the company a two year exclusive license for the use of the patents that
      is renewable subject to performance, and RTH shall receive 10% royalties on
      all
      gross receipts (as defined in the License and Royalty Agreement). As a result,
      for our business activities related to exploiting our patents we are dependent
      on the license granted to us from RTH. In the event that the License and Royalty
      Agreement is terminated or not renewed by RTH, such a result would have a
      material adverse affect on the company as it would prevent us from licensing
      these patents, thus eliminating any source of revenue from these
      patents.





**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
      applications for pending patents are not granted it could materially affect
      our
      business.**





RTH
      has
      applied for patent protection for some aspects of technology that we intend
      to
      utilize. There can be no guarantee or assurance that patents will be awarded.
      In
      the event patent protection is not granted, or if other companies are granted
      patent protection on similar and/or competing technology, it may be difficult
      for us to maintain an advantage over our competition. Even if patents are
      granted, there is no assurance that competitors will not infringe upon them,
      and
      we do not explicitly control the enforcement of the patents that we license
      from
      RTH.





**If
      we and/or RTH are unable to protect the intellectual property we use in our
      business, it could have a material adverse affect on us.**





Our
      ability to compete depends, in part, upon successful protection of proprietary
      assets. Both RTH and the company plan 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 management deems economically prudent. Despite these precautionary
      measures, existing patent, copyright and trademark laws afford only limited
      protection in certain jurisdictions. We may distribute our solutions in other
      jurisdictions in which there is no protection, or individuals or companies
      in
      jurisdictions where our intellectual property is not protected may simply take
      advantage of our work. As a result, it may be possible for unauthorized third
      parties to copy and distribute intellectual property that is core to our
      business. This could result in a material adverse effect on the
      company.






14




**Litigation
      regarding the intellectual property licensed to us by RTH may have a material
      adverse effect on our business.**





In
      connection with the intellectual property owned by RTH and licensed to us,
      litigation by RTH 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. In
      particular, RTH is currently a plaintiff in litigation regarding the
      unauthorized use of the ‘534 patent. If the result of the litigation is
      unfavorable, it could have a material adverse effect on our license which in
      turn may have a material adverse effect our business.




**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.







15




**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.





**If
      our pending SB-2 registration statement is declared effective, the selling
      stockholders named in the SB-2 intend to sell their shares of our common stock
      in the public market, which sales may cause our stock price to
      decline.**





Although
      the officers, directors and significant shareholders of the company (who
      currently comprise approximately 89% of our issued and outstanding stock) are
      subject to the provisions of various insider trading and rule 144 regulations,
      the selling stockholders named in our pending SB-2 intend to sell in the public
      market up to 1,201,491,000 shares
      being registered in that offering. This large amount compared to the total
      number of shares of common stock issued and outstanding could cause our stock
      price to decline significantly.





**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 third quarter of fiscal 2006 that has
      materially affected, or is reasonably likely to materially affect, our internal
      control over financial reporting.


16


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




**Item
      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 approximately 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.




On
      October 4, 2006, in connection with the acquisition of the assets of NewsProNet
      Interactive, LLC ( *see* "Subsequent Events" ** above)
      we
      issued 15,000,000 shares of our common stock to NBC. These shares were issued
      in
      reliance on an exemption from registration under Section 4(2) of the Securities
      Act of 1933.




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




*Not
      applicable.*




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




*None.*




**Item
      5 Other Information**




*Not
      applicable.*




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




On
      October 11, 2006 the Company filed a Form 8-K disclosing the acquisition of
      assets of NewsProNet Interactive, LLC along with the related transactions and
      agreements, including the issuance of 15,000,000 shares of the company's common
      stock to NBC.







17





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:
                November
                    20, 2006
                Jeffrey
                    W. SassChief
                    Executive OfficerBy:/s/
                    Mark MayoDated:
                November
                    20, 2006
                Mark
                    MayoChief
                    Financial OfficerChief
                    Accounting Officer