**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-QSB**


(Mark
      One)


[
                X
                ]
            QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934For
                the quarterly period ended September 30, 2005[  
                ]
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACTFor
                the transition period from ________________ to
                _________________Commission
                file number 0-50742





**SIGN
                MEDIA SYSTEMS, INC**.
              (Exact
                name of small business issuer as specified in its
                charter)FLORIDA
              (State
                or other jurisdiction of incorporation or organization)
            02-0555904
              (IRS
                Employer Identification No.)2100
                19thStreet, Sarasota FL 34234
              (Address
                of principal executive offices)(941)
                330-0336
              (Issuer's
                telephone number)_____________________________________________________________________________
              (Former
                name, former address and former fiscal year, if changed since last
                report)




**APPLICABLE
      ONLY TO CORPORATE ISSUERS**




State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of the latest practicable date: 8,460,000 Common Shares no par value as
      of
      September 30, 2005.





Transitional
      Small Business Disclosure Format (Check one): Yes [  ] No [ X ]





Document
      Incorporated by reference: Exhibit 10.6 from the Company’s Form 10-QSB/A2 dated
      November 11, 2005, and filed with the Securities and Exchange Commission on
      November 18, 2005.





**PART
      I — FINANCIAL INFORMATION**




**Item
      1. Financial Statements.**




Our
        unaudited financial statements included in this Form 10-QSB are as
        follows:
 
 (a)
            Condensed
                Consolidated Balance Sheet (Unaudited) as of September 30,
                2005. (b)
            Condensed
                Consolidated Statements of Income for the Nine and Three Month
                Months ended September 30, 2005 and 2004 (Unaudited); (c)
            Condensed
                Consolidated Statements of Cash Flows for the Nine and Three Months
                ended September 30, 2005 and 2004 (Unaudited); (d)
            Notes
                to Condensed Consolidated Financial
                Statements. 
 These
        unaudited financial statements have been prepared in accordance with accounting
        principles generally accepted in the United States of America for interim
        financial information and the SEC instructions to Form 10-QSB. In the opinion
        of
        management, all adjustments considered necessary for a fair presentation
        have
        been included. Operating results for the interim period ended September 30,
        2005
        are not necessarily indicative of the results that can be expected for the
        full
        year.


2


**SIGN
                  MEDIA SYSTEMS, INC.****CONDENSED
                  CONSOLIDATED BALANCE SHEET****SEPTEMBER
                  30, 2005****(UNAUDITED)****ASSETS****CURRENT
                  ASSETS**Cash
                  and cash equivalents
              
              $
              6,015Accounts
                  receivable
              
              
              705,463Interest
                  receivable
              
              
              15,900Inventory
              
              
              70,500Due
                  from employees
              
              
              700**Total
                  current assets**
              
              
              798,578**PROPERTY
                  AND EQUIPMENT - Net**
              
              
              190,750**OTHER
                  ASSETS**Due
                  from related parties
              
              
              972,000**Total
                  other assets**
              
              
              972,000**TOTAL
                  ASSETS**
              
              $
              1,961,328**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****CURRENT
                  LIABILITIES**Deferred
                  revenue
              
              $
              538,948Liability
                  for stock to be issued
              
              
              224,900Accounts
                  payable and accrued expenses
              
              
              232,765Income
                  taxes payable
              
              
              61,000Due
                  to related parties
              
              
              14,151Current
                  portion of long-term debt
              
              
              4,606**Total
                  current liabilities**
              
              
              1,076,370**Long-term
                  debt - net of current portion**
              
              
              51,184**TOTAL
                  LIABILITIES**
              
              $
              1,127,554**STOCKHOLDERS'
                  EQUITY**Common
                  stock, no par value, 100,000,000 shares authorized atSeptember
                  30, 2005 and 8,460,000 shares issued and outstandingat
                  September 30, 2005
              
              $
              5,000Additional
                  paid-in capital
              
              
              671,700Retained
                  Earnings
              
              
              157,074**Total
                  stockholders' equity**
              
              
              833,774**TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY**
              
              $
              1,961,328The
                  accompanying notes are an integral part of these condensed consolidated
                  financial statements.







F
          -
          1


**SIGN
                  MEDIA SYSTEMS, INC.****CONDENSED
                  CONSOLIDATED STATEMENTS OF INCOME****FOR
                  THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
                  (UNAUDITED)****NINE
                  MONTHS ENDED**
              
              **THREE
                  MONTHS ENDED****September
                  30,**
              
              **September
                  30,**
              
              **September
                  30,**
              
              **September
                  30,****2005**
              
              **2004**
              
              **2005**
              
              **2004****REVENUE
                  - sales**
              
              $
                  936,923
              
              $
                  1,291,885
              
              $
                  425,538
              
              $
                  637,401OTHER
                  REVENUE - recovery of bad debt
              
              
              500,000
              
              
              -
              
              
              -
              
              
              -**Total
                  revenue**
              
              
              1,436,923
              
              
              1,291,885
              
              
              425,538
              
              
              637,401**COST
                  OF GOODS SOLD**
              
              
              28,299
              
              
              196,469
              
              
              14,903
              
              
              102,209**GROSS
                  PROFIT**
              
              
              1,408,624
              
              
              1,095,416
              
              
              410,635
              
              
              535,192**OPERATING
                  EXPENSES**Professional
                  fees
              
              
              86,765
              
              
              63,064
              
              
              52,911
              
              
              35,043General
                  and administrative expenses
              
              
              513,753
              
              
              320,258
              
              
              170,754
              
              
              71,163Depreciation
              
              
              41,333
              
              
              17,463
              
              
              16,392
              
              
              748**Total
                  operating expenses**
              
              
              641,851
              
              
              400,785
              
              
              240,057
              
              
              106,954**NET
                  INCOME BEFORE OTHER INCOME (EXPENSE)**
              
              
              766,773
              
              
              694,631
              
              
              170,578
              
              
              428,238**OTHER
                  INCOME (EXPENSE)**Interest
                  income
              
              
              15,900
              
              
              -
              
              
              15,900
              
              
              -Other
                  income
              
              
              104
              
              
              -
              
              
              1
              
              
              -Interest
                  expense
              
              
              (2,516
              )
              
              (53,609
              )
              
              (799
              )
              
              (18,477
              )**Total
                  Other Income (Expense)**
              
              
              13,488
              
              
              (53,609
              )
              
              15,102
              
              
              (18,477
              )**NET
                  INCOME BEFORE PROVISION FOR INCOME TAXES**
              
              
              780,261
              
              
              641,022
              
              
              185,680
              
              
              409,761Provision
                  for income taxes
              
              
              61,000
              
              
              80,850
              
              
              61,000
              
              
              -**NET
                  INCOME APPLICABLE TO COMMON SHARES**
              
              $
              719,261
              
              $
              560,172
              
              $
              124,680
              
              $
              409,761**NET
                  INCOME PER BASIC AND DILUTED SHARES**
              
              $
              0.09
              
              $
              0.07
              
              $
              0.01
              
              $
              0.05**WEIGHTED
                  AVERAGE NUMBER OF COMMON****SHARES
                  OUTSTANDING**
              
              
              8,460,000
              
              
              8,368,865
              
              
              8,460,000
              
              
              8,460,000The
                  accompanying notes are an integral part of these condensed consolidated
                  financial statements.







F
          -
          2


**SIGN
                  MEDIA SYSTEMS, INC.****CONDENSED
                  CONSOLIDATED STATEMENTS OF CASH FLOWS****FOR
                  THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
                  (UNAUDITED)****2005**
              
              **2004****CASH
                  FLOWS FROM OPERATING ACTIVITIES:**Net
                  income
              
              $
              719,261
              
              $
              560,172Adjustments
                  to reconcile net income to net cash provided byoperating
                  activitiesRecovery
                  of allowance for accounts receivable
              
              
              (500,000
              )
              
              -Depreciation
              
              
              41,333
              
              
              17,463**Changes
                  in assets and liabilities:**(Increase)
                  decrease in accounts receivable
              
              
              345,115
              
              
              (834,442
              )(Increase)
                  in investment receivable
              
              
              (15,900
              )
              
              -Decrease
                  in inventory
              
              
              15,072
              
              
              4,995Decrease
                  in prepaid expenses and other current assets
              
              
              3,300
              
              
              55,144(Increase)
                  in miscellaneous receivable
              
              
              -
              
              
              (4,000
              )Increase
                  in accounts payable and accrued expenses
              
              
              62,776
              
              
              67,666Increase
                  in income taxes payable
              
              
              61,000
              
              
              80,850Increase
                  in deferred revenue
              
              
              538,948
              
              
              -**Total
                  adjustments**
              
              
              551,644
              
              
              (612,324
              )**Net
                  cash provided by (used in) operating activities**
              
              
              1,270,905
              
              
              (52,152
              )**CASH
                  FLOWS FROM INVESTING ACTIVITIES:**Acquisition
                  of property and equipment
              
              
              (107,528
              )
              
              (63,141
              )Investment
                  in related party
              
              
              (1,200,000
              )
              
              -Proceeds
                  from investment in related party
              
              
              228,000
              
              
              -**Net
                  cash (used in) investing activities**
              
              
              (1,079,528
              )
              
              (63,141
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES:**Increase
                  in liability for stock to be issued
              
              
              24,900
              
              
              -Payments
                  on long-term debt
              
              
              (13,814
              )
              
              (55,214
              )Payments
                  on debt - related parties
              
              
              (202,800
              )
              
              (73,685
              )Contribution
                  of additional paid-in capital
              
              
              -
              
              
              200,000**Net
                  cash (used in) provided by financing activities**
              
              
              (191,714
              )
              
              71,101**NET
                  (DECREASE) IN CASH AND CASH EQUIVALENTS**
              
              
              (337
              )
              
              (44,192
              )**CASH
                  AND CASH EQUIVALENTS - BEGINNING OF PERIOD**
              
              
              6,352
              
              
              47,068**CASH
                  AND CASH EQUIVALENTS - END OF PERIOD**
              
              $
              6,015
              
              $
              2,876**SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:**Cash
                  paid during the period for interest.
              
              $
              -
              
              $
              53,609**SUPPLEMENTAL
                  NON-CASH INVESTING ACTIVITIES:**Conversion
                  of liability to common stock
              
              $
              -
              
              $
              324,000The
                  accompanying notes are an integral part of these condensed consolidated
                  financial statements.






F
          -
          3


**SIGN
        MEDIA SYSTEMS, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2005 AND 2004**
 
 **NOTE
        1-** **ORGANIZATION
        AND BASIS OF PRESENTATION**
 
 The
        condensed unaudited interim financial statements included herein have been
        prepared by Sign Media Systems, Inc. (the “Company”) without audit, pursuant to
        the rules and regulations of the Securities and Exchange Commission (the
“SEC”).
        Certain information and footnote disclosures normally included in the financial
        statements prepared in accordance with accounting principles generally accepted
        in the United States of America have been condensed or omitted as allowed
        by
        such rules and regulations, and the Company believes that the disclosures
        are
        adequate to make the information presented not misleading. It is suggested
        that
        these condensed consolidated financial statements be read in conjunction
        with
        the December 31, 2004 audited financial statements and the accompanying notes
        thereto. While management believes the procedures followed in preparing these
        condensed financial statements are reasonable, the accuracy of the amounts
        are
        in some respects dependent upon the facts that will exist, and procedures
        that
        will be accomplished by the Company later that year.
 
 The
        management of the Company believes that the accompanying unaudited condensed
        consolidated financial statements contain all adjustments (including normal
        recurring adjustments) necessary to present fairly the operations and cash
        flows
        for the periods presented.
 
 The
        Company began business as Go! Agency LLC, a Florida Limited Liability Company
        (“Go Agency”). Go Agency was formed in April 2000 , principally
        to pursue third party truck side advertising. The principal of Go Agency
        invested approximately $857,000 in Go Agency pursuing this business. It became
        apparent that a more advanced truck side mounting system would be required
        and
        that third party truck side advertising alone would not sustain an ongoing
        profitable business. Go Agency determined to develop a technologically advanced
        mounting system and focused on a different business plan.
 
 The
        Company was incorporated on January 28, 2002 as a Florida corporation. Upon
        incorporation, an officer of the Company contributed $5,000 and received
        1,000
        shares of common stock of the Company. Effective January 1, 2003, the Company
        issued 7,959,000 shares of common stock in exchange of $55,702 of net assets
        of
        GO! Agency, LLC, a Florida limited liability company (“Go Agency”), a company
        formed on June 20, 2000, as E Signs Plus.com, LLC, a Florida limited
        liability
  F
            -
            4
  **SIGN
        MEDIA SYSTEMS, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
        30, 2005 AND 2004**
 
 **NOTE
        1-** **ORGANIZATION
        AND BASIS OF PRESENTATION (CONTINUED)**
 
 company.
        In this exchange, the Company assumed some debt of GO! Agency and the exchange
        qualified as a tax-free exchange under IRC Section 351. The net assets received
        were valued at historical cost. The net assets of Go Agency that were exchanged
        for the shares of stock were as follows:
 Accounts
                    receivable
                
                $
                30,668Fixed
                    assets, net of depreciation
                
                
                112,214Other
                    assets
                
                
                85,264Accounts
                    payable
                
                
                (29,242
                )Notes
                    payable
                
                
                (27,338
                )Other
                    payables
                
                
                (115,864
                )Totals
                
                $
                55,702
  Go
        Agency
        was formed to pursue third party truck advertising. The principal of Go Agency
        invested approximately $857,000 in Go Agency pursuing this business. It became
        apparent that a more advanced truck side mounting system would be required
        and
        that third party truck side advertising alone would not sustain an ongoing
        profitable business. Go Agency determined to develop a technologically advanced
        mounting system and focused on a different business plan. Go Agency pre-exchange
        transaction was a company under common control of the major shareholder of
        SMS.
        Post-exchange transactions have not differed. Go Agency still continues to
        operate and is still under common control.
 
 Go
        Agency
        and the Company developed a new and unique truck side mounting system, which
        utilizes a proprietary cam lever technology, which allows an advertising
        image
        to be stretched tight as a drum. Following the exchange, the Company had
        7,960,000 shares of common stock issued and outstanding. The Company has
        developed and filed an application for a patent on its mounting systems.
        The cam
        lever technology is considered an intangible asset and has not been recorded
        as
        an asset on the Company’s consolidated balance sheet. This asset was not recoded
        due to the fact that there was no historic recorded value on the books of
        Go
        Agency for this asset.
 
  F
            -
            5
  **SIGN
        MEDIA SYSTEMS, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
        30, 2005 AND 2004**
 
 **NOTE
        1-** **ORGANIZATION
        AND BASIS OF PRESENTATION (CONTINUED)**
 
 On
        November 17, 2003, the Company entered into a merger agreement by and among
        American Powerhouse, Inc., a Delaware corporation and its wholly owned
        subsidiary, Sign Media Systems Acquisition Company, Inc., a Florida corporation
        and Signs Media Systems, Inc. Pursuant to the merger agreement, Signs Media
        Systems merged with Sign Media Systems Acquisition Company with Sign Media
        Systems being the surviving corporation. The merger was completed on December
        8,
        2003 with the filing of Articles of Merger with the State of Florida at which
        time Sign Media Systems Acquisition ceased to exist and Sign Media Systems
        became the surviving corporation. Some time prior to the merger, American
        Powerhouse had acquired certain technology for the manufacture of a water
        machine in the form of a water cooler that manufactures water from ambient
        air.
        However, American Powerhouse was not engaged in the business of manufacturing
        and distributing the water machine but was engaged in the licensing of that
        right to others. Prior to the merger, American Powerhouse granted a license
        to
        Sign Media Systems Acquisition to use that technology and to manufacture
        and
        sell the water machines. The acquisition of this license was the business
        purpose of this merger. As consideration for the merger, Sign Media Systems
        issued 300,000 shares of its common stock to American Powerhouse, 100,000
        shares
        in the year ending December 31, 2002, and 200,000 shares in the year ending
        December 31, 2004. The 300,000 shares of stock were valued at $1.50 per share
        based on recent private sales of Sign Media Systems common stock. There were
        no
        other material costs of the merger. There was and is no relationship between
        American Powerhouse and either Sign Media Systems or GO! AGENCY. The Company
        recorded this license as an intangible asset for $400,000 and subsequently
        impaired the entire amount.
 
 **NOTE
        2-** **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES**
 
 **Principles
        of Consolidation**
 
 The
        condensed consolidated financial statements include the accounts of the Company
        and its wholly owned subsidiary. All significant intercompany accounts and
        transactions have been eliminated in consolidation.
 
 **Use
        of Estimates**
 
 The
        preparation of condensed consolidated financial statements in conformity
        with
        accounting principles generally accepted in the United States of America
        requires management to make estimates and assumptions that affect the reported
        amounts of assets and liabilities and disclosures of contingent assets and
        liabilities at the date of the financial statements and the reported amounts
        of
        revenues and expenses during the reporting period. Actual results could differ
        from those estimates.
 
  F
            -
            6
  **SIGN
        MEDIA SYSTEMS, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
        30, 2005 AND 2004**
 
 **NOTE
        2-** **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**
 
 **Revenue
        and Cost Recognition**
 
 Currently,
        the Company has three primary sources of revenue:
 
 (1)
            The
                sale and installation of their mounting
                system; (2)
            The
                printing of advertising images to be inserted on trucks utilizing
                the
                Company’s mounting systems; and (3)
            Third
                party advertising. 
 The
        Company’s revenue recognition policy for these sources of revenue is as follows.
        The Company relies on Staff Accounting Bulletin Topic 13, in determining
        when
        recognition of revenue occurs. There are four criteria that the Company must
        meet when determining when revenue is realized or realizable and earned.
        The
        Company has persuasive evidence of an arrangement existing; delivery has
        occurred or services rendered; the price is fixed or determinable; and
        collectibility is reasonably assured. Typically, the Company recognizes revenue
        when orders are placed and they receive deposits on those orders. In regard
        to
        the revenue recognition of third party advertising, the Company recognizes
        the
        revenue once they have completed the task for which the consumer
        paid.
 
 In
        addition, the Company offers manufacturer’s warranties. These warranties are
        provided by the Company and not sold. Therefore, no income is derived from
        the
        warranty itself.
 
 Cost
        is
        recorded on the accrual basis as well, when the services are incurred rather
        than when payment is made.
 
 Costs
        of
        goods sold are separated by components consistent with the revenue categories.
        Mounting systems, printing and advertising costs include purchases made,
        and
        payroll costs attributable to those components. Payroll costs is included
        for
        sales, engineering and warehouse personnel in cost of goods sold. Cost of
        overhead is diminimus. The Company’s inventory consists of finished goods, and
        unassembled parts that comprise the framework for the mounting system placed
        on
        trucks for their advertising. All of these costs are included in costs of
        goods
        sold for the nine months ended September 30, 2005 and 2004.
  F
            -
            7
  **SIGN
        MEDIA SYSTEMS, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
        30, 2005 AND 2004**
 
 **NOTE
        2-** **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**
 
 **Provision
        for Bad Debt**
 
 Under
        SOP
        01-6 "Accounting for Certain Entities (including Entities with Trade
        Receivables) That Lend to or Finance the Activities of Others” the Company has
        intent and belief that all amounts in accounts receivable are collectible.
        The
        Company extends unsecured credit to its customers in the ordinary course
        of
        business but mitigates the associated credit risk by performing credit checks
        and actively pursuing past due accounts over 90 days. The Company's major
        customer at December 31, 2004, was uncharacteristically slow in paying their
        outstanding invoices during December 31, 2004. Management after discussing
        the
        situation with the customer determined that an allowance for doubtful accounts
        should be set at $500,000.
 
 Management's
        policy is to vigorously attempt to collect its receivables monthly. The Company
        estimated the amount of the allowance necessary based on a review of the
        aged
        receivables from the major customer. Management additionally instituted a
        policy
        for recording the recovery of the allowance if any in the period where it
        is
        recovered.
 
 In
        the
        interim period ended June 30, 2005, the entire $500,000 established by the
        Company in 2004 as an allowance for doubtful accounts was paid in full by
        cash
        payment. In accordance with the Company’s policies for Provisions for Bad Debt,
        the Company reversed its entry made in 2004 relating to the allowance for
        doubtful accounts and recorded the cash receipt.
 
 **Cash
        and Cash Equivalents**
 
 The
        Company considers all highly liquid debt instruments and other short-term
        investments with an initial maturity of three months or less to be cash
        equivalents.
 
 The
        Company maintains cash and cash equivalent balances at several financial
        institutions that are insured by the Federal Deposit Insurance Corporation
        up to
        $100,000.
 
 **Property
        and Equipment**
 
 Property
        and equipment are stated at cost. Depreciation is computed primarily using
        the
        straight-line method over the estimated useful life of the assets.
 
 Furniture
        and
        fixtures 5
        years
 Equipment 5
        years
 Trucks 3
        years
  F
            -
            8
  **SIGN
        MEDIA SYSTEMS, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
        30, 2005 AND 2004**
 
 **NOTE
        2-** **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**
 
 **Accounts
        Receivable**
 
 Management
        believes that all accounts receivable as of September 30, 2005 are fully
        collectible. Therefore, no allowance for doubtful accounts is recorded. The
        Company recovered $500,000 in the quarter ended June 30, 2005 that was
        previously recorded as an allowance for bad debt.
 
 **Advertising**
 
 Costs
        of
        advertising and marketing are expensed as incurred. Advertising and marketing
        costs were $2,525 and $4,593 for the nine months ended September 30, 2005
        and
        2004, respectively
 
 **Fair
        Value of Financial Instruments**
 
 The
        carrying amount reported in the balance sheets for cash and cash equivalents,
        accounts receivable, accounts payable and accrued expenses approximate fair
        value because of the immediate or short-term maturity of these financial
        instruments.
 
 **Earnings
        per Share of Common Stock**
 
 Historical
        net income per common share is computed using the weighted-average number
        of
        common shares outstanding. Diluted earnings per share (EPS) include additional
        dilution from common stock equivalents, such as stock issuable pursuant to
        the
        exercise of stock options and warrants.
  F
            -
            9
  **SIGN
        MEDIA SYSTEMS, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
        30, 2005 AND 2004**
 
 **NOTE
        2-** **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**
 
 **Earnings
        per Share of Common Stock (Continued)**
 
 The
        following is a reconciliation of the computation for basic and diluted
        EPS:
 **September
                    30,****2005**
                
                **2004**Net
                    income
                
                $
                719,261
                
                $
                560,172Weighted-average
                    common shares outstandingBasic
                
                
                8,460,000
                
                
                8,368,865Weighted-average
                    common stock equivalentsStock
                    options
                
                
                -
                
                
                -Warrants
                
                
                -
                
                
                -Weighted-average
                    common shares outstandingDiluted
                
                
                8,460,000
                
                
                8,368,865
  **NOTE
        3-** **PROPERTY
        AND EQUIPMENT**
 
 Property
        and equipment consist of the following at September 30, 2005 and
        2004:
  **2005**
                
                **2004**Equipment
                
                $
                124,850
                
                $
                71,461Furniture
                    and Fixtures
                
                
                112,022
                
                
                57,882Transportation
                    Equipment
                
                
                54,621
                
                
                54,621291,493
                
                
                183,964Less:
                    accumulated depreciation
                
                
                100,743
                
                
                35,232Net
                    Book Value
                
                $
                190,750
                
                $
                148,732
  Depreciation
        expense for the nine months ended September 30, 2005 and 2004 was $41,333
        and
        $17,463, respectively.
 
  F
            -
            10
  **SIGN
        MEDIA SYSTEMS, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
        30, 2005 AND 2004**
 
 **NOTE
        4-**  **COMMITMENTS
        AND CONTINGENCIES**
 
 The
        Company entered into a lease agreement on November 1, 2002 with Hawkeye Real
        Estate, LLC, a related entity, to lease warehouse and office space. The lease
        expires on December 30, 2007, and provides that SMS pay all applicable sales
        and
        use tax, insurance and maintenance. The total minimum rental commitments
        at
        September 30, 2005 under this lease are as follows:
  
 2005
              
              $
              7,5002006
              
              
              30,0002007
              
              
              15,000$
              52,500












**NOTE
      5-** **RELATED
      PARTY TRANSACTIONS**





On
      January 28, 2002, Sign Media Systems, Inc. was formed as a Florida Corporation
      but did not begin business operations until April 2002. Most of the revenue
      that
      Sign Media Systems, Inc. earned was contract work with Go! Agency, LLC., a
      Florida limited liability company, a related party. Sign Media Systems, Inc.
      would contract Go! Agency, LLC. to handle and complete jobs. There was no
      additional revenue or expense added from one entity to the other.





On
      January 3, 2003, the Company entered into a loan agreement with Olympus Leasing
      Company, a related party, and in connection therewith executed a promissory
      note
      with a future advance clause in favor of Olympus Leasing, whereby Olympus
      Leasing agreed to loan the Company up to a maximum of $1,000,000 for a period
      of
      three years, with interest accruing on the unpaid balance at 18% per annum,
      payable interest only monthly, with the entire unpaid balance due and payable
      in
      full on January 3, 2006. As of September 30, 2005 there was $0 due to Olympus.
      Other due to related party advances were $14,151. Due from related parties
      totaled $14,151 at September 30, 2005.





On
      June
      28, 2005, the Company loaned $1,200,000 to Olympus Leasing Company, a related
      party. At June 28, 2005, Antonio F. Uccello, III, was, and is now the President,
      Chairman, a minority owner of the issued and outstanding shares of stock of
      Olympus Leasing and reports to its board of directors. Antonio F. Uccello,
      III,
      was and is one of the Company’s officers and directors and an indirect
      shareholder of Sign Media Systems, Inc. The loan is for a period of five years
      with interest accruing on the unpaid balance at 5.3% per annum payable annually,
      with the entire principle and unpaid interest due and payable in full on June
      28, 2010.There is no prepayment penalty. The purpose of the loan was to obtain
      a
      higher interest rate than is currently available at traditional banking
      institutions. Olympus Leasing’s primary business is making secured loans to
      chiropractic physicians throughout the United





F
            -
            11




**SIGN
      MEDIA SYSTEMS, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**


**SEPTEMBER
      30, 2005 AND 2004**








**NOTE
      5-** **RELATED
      PARTY TRANSACTIONS (CONTINUED)**





States
      for the purchase of chiropractic adjustment tables. The loans are generally
      for
      less than $3,000 each and are secured by a first lien on each chiropractic
      adjustment table. Each loan is personally guaranteed by the chiropractic
      physician. The rate of return on the Olympus Leasing loans is between 15% and
      25% per annum. To date, Olympus Leasing has suffered no loss from any loan
      to a
      chiropractic physician for the purchase of a chiropractic adjustment table.
      There is an excellent market for the re-sale of tables which may be the subject
      of a foreclosure. Olympus Leasing currently has in excess of $1,000,000 in
      outstanding finance receivables from chiropractic physicians secured by a first
      lien on each chiropractic adjustment table. Since the making of the loan by
      the
      Company to Olympus Leasing, Olympus Leasing has made payments to the Company
      of
      $228,000 pursuant to the note attached hereto as Exhibit 10.6. Because of the
      foregoing facts, the Company believes there is the probability of a default
      on
      the loan by it to Olympus Leasing is unlikely. For the nine months ended
      September 30, 2005, the Company had net income of over $700,000. Moreover,
      the
      Company has achieved substantial savings on manufacturing costs because of
      engineering advances which has reduced the Company’s cost of goods sold. In the
      Company’s Form 10-KSB/A at December 31, 2004, it budgeted approximately
      $1,300,000 of expenses for the year ending December 31, 2005. Through the first
      nine months of 2005, the Company is on pace to expend expenses of approximately
      $855,000 which is $445,000 below budget. For all of the foregoing reasons,
      the
      Company believes, but cannot guarantee, that the loan to Olympus Leasing will
      not effect liquidity.





**NOTE
      6-** **LONG-TERM
      DEBT**





Long-term
      debt consists of two installment notes with GMAC Finance. As discussed in Note
      1, the Company assumed debt from Go! Agency as of January 28, 2002. On June
      18,
      2003, the Company acquired a truck in the amount of $45,761 financed by GMAC
      over a period of 5 years. Monthly payments are $763. The loan carries no
      interest charges.











F
            -
            12




**SIGN
      MEDIA SYSTEMS, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**


**SEPTEMBER
      30, 2005 AND 2004**











**NOTE
      7-** **PROVISION
      FOR INCOME TAXES**


Current
                  tax expense
              
              $
              229,000Benefit
                  of loss carry forward
              
              
              (168,000
              )Net
                  current expense
              
              $
              61,000


The
      Company will utilize its net operating losses to offset any Federal Income
      Tax
      due.





**NOTE
      8-** **STOCKHOLDERS’
      EQUITY**





As
      of
      September 30, 2005 and 2004, there were 100,000,000 shares of common stock
      authorized.




As
      of
      September 30, 2005 and 2004, there were 8,460,000 shares of common stock issued
      and outstanding.




During
      the nine months ended September 30, 2004 the Company issued 216,000 shares
      of
      common stock in conversion of a liability.





During
      the nine months ended September 30, 2005 the Company did not have any stock
      transactions.








**NOTE
      9-** **LIABILITY
      FOR STOCK TO BE ISSUED**





At
      September 30, 2005, the Company has recorded $224,900 for common stock to be
      issued at a later date. Upon the issuance of the common stock the liability
      will
      be removed.














F
          -
          13




**Item
      2. Management's Discussion and Analysis or Plan of
      Operation.**





THE
      FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
      THE
      COMPANY SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND NOTES
      THERETO INCLUDED ELSEWHERE IN THIS REPORT.





THIS
      DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
      UNCERTAINTIES, AND THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM
      THOSE
      ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
      INCLUDING, BUT NOT LIMITED TO COMPETITION AND OVERALL MARKET AND ECONOMIC
      CONDITIONS.





RESULTS
      OF OPERATIONS





**Nine
      Months Ended**


**September
      30**





**2005**
            
            **2004**Revenue
            
            $
            1,436,923
            
            $
            1,291,885Cost
                of goods sold
            
            
            28,299
            
            
            196,469Gross
                profit
            
            
            1,408,624
            
            
            1,095,416Operating
                and other
              expense
            
            
            628,363
            
            
            454,394Net
                income (loss) before
              Provision
                for income taxes
            
            
            780,261
            
            
            641,022Provision
                for income taxes
            
            
            61,000
            
            
            80,850Net
                income applicable to common shares
            
            $
            719,261
            
            $
            560,172Gross
                profit margin
            
            
            98
            %
            
            85
            %Earnings
                per share
              of
                common stock
            
            $
            0.09
            
            $
            0.07Weighted
                average of
              common
                shares
            
            
            8,460,000
            
            
            8,368,865





The
      Company restated its June 30, 2005, financial statements to reclassify $500,000
      that was posted directly to additional paid-in capital that should have been
      posted as a recovery of bad debt. The $500,000 recovery of bad debt is now
      included in revenue. The effect of this June 30, 2005, restatement did not
      effect total stockholders’ equity. The effect did increase revenue from $936,923
      to 1,436,923, net income after provision for income taxes from $219,261 to
      $719,261 and earnings per share from .03 to .09 for the nine months ended
      September 30, 2005. The recovery of the $500,000 of bad debt was due entirely
      to
      a cash payment to the Company by one key customer that contributes the bulk
      of
      the Company’s revenue.





For
      the
      nine months ended September 30, 2005, the Company generated $1,436,923 of
      revenue, which included $500,000 as recovery of bad debt expense in the
      immediately preceding quarterly period, $1,408,624 of gross profit, $719,216
      of
      net income applicable to common shares after a provision of $61,000 for income
      taxes and $0.09 in earnings per weighted average common share based upon a
      weighted average of 8,460,000 common shares outstanding.





For
      the
      nine months ended September 30, 2004, the Company generated $1,291,885 of
      revenue, $1,095,416 of gross profit, $560,172 of net income applicable to common
      shares after a provision of $80,850 for income taxes, and $0.07 of net income
      per weighted common share based upon a weighted average of 8,368,865 common
      shares outstanding.


3





Revenue
      for the nine months ended September 30, 2005, exclusive of recovery of $500,000
      in bad debt expense, decreased $354,962 from the same period last year. Net
      income applicable to common shares for the nine months ended September 30,
      2005,
      increased $159,089 from the same period last year primarily due to the recovery
      of $500,000 in bad debt expense in the immediately preceding quarter. Without
      the recovery of $500,000 in bad debt expense in the immediately preceding
      quarter, net income applicable to common shares for the nine months ended
      September 30, 2005 would have decreased $340,911. Earnings per share for the
      nine months ended September 30, 2005, increased $0.02 from the same period
      last
      year primarily due to the recovery of $500,000 in bad debt expense in the
      immediately preceding quarter.





Cost
      of
      goods sold significantly decreased as a percentage of revenue during the nine
      month ended September 30, 2005. This is primarily the result of three factors:
      (1) the Company has significantly reduced the cost of manufacturing its framing
      systems by significantly reducing the number of necessary parts and the cost
      of
      those parts, (2) the Company acquired a grand format printer which significantly
      reduced the cost of its digital graphics, and (3) the Company recovered $500,000
      in bad debt expense from a previous period.





**Three
      Months Ended**


**September
      30**





**2005**
            
            **2004**Revenue
            
            $
            425,538
            
            $
            637,401Cost
                of goods sold
            
            
            14,903
            
            
            102,209Gross
                profit
            
            
            410,635
            
            
            535,192Operating
                and other
              Expenses
            
            
            224,955
            
            
            125,431Net
                income before
              provision
                for income taxes
            
            
            185,680
            
            
            409,761Provision
                for income taxes
            
            
            61,000
            
            
            -Net
                income (loss) applicable to common shares
            
            $
            124,680
            
            $
            409,761Gross
                profit margin
            
            
            96
            %
            
            84
            %Earnings
                per share
              of
                common stock
            
            $
            0.01
            
            $
            0.05Weighted
                average of
              common
                shares
            
            
            8,460,000
            
            
            8,460,000





For
      the
      three months ended September 30, 2005, the Company generated $425,538 of
      revenue, $410,635 of gross profit, $124,680 of net income applicable to common
      shares, and $0.01 in earnings per weighted average common share based upon
      a
      weighted average of 8,460,000 common shares outstanding. .





For
      the
      three months ended September 30, 2004, the Company generated $637,401 of
      revenue, $535,192 of gross profit, $409,761 of net income applicable to common
      shares, and $0.05 in earnings per weighted average common share based upon
      a
      weighted average of 8,460,000 common shares outstanding.





Revenue
      for the three months ended September 30, 2005, decreased $211,863 from the
      same
      period last year. Net income applicable to common shares for the three months
      ended September 30, 2005, before a provision for income taxes decreased $224,081
      from the same period last year. Earnings per share for the three months ended
      September 30, 2005, decreased $0.04 from the same period last year.





**MANAGEMENT’S
      DISCUSSION**





The
      Company is in the business of developing,
      manufacturing and marketing mobile billboard mounting systems, which are mounted
      primarily on truck sides, rear panels and breaking panel roll up doors. The
      Company also


4


produces
      digitally created outdoor, full color vinyl images which are inserted into
      the
      mounting systems and displayed primarily on trucks. The Company has developed
      mounting systems which allow the digital images to easily slide into an aluminum
      alloy extrusion with a cam-lever that snaps closed stretching the image tight as a drum ,
      and
      that also easily opens to free the image for fast removals and change outs
      without damaging the truck body or the Fleet Graphics. The mounting systems’
proprietary cam-lever technology is the key to their operation.





The
      Company’s revenue comes from three primary sources; sales of the mobile
      billboard mounting systems, sales of digital printing, and sales of third party
      advertising utilizing the mobile billboard mounting systems. During the nine
      months ended September 30, 2005, $918,550. or 98% of the Company’s revenue came
      from the sale of its mobile billboard mounting systems, $0 or 0% of the
      Company’s revenue came from the sale of third party advertising and $18,373 or
      2% of the Company’s revenue came from the sale of digital printing.





A
      material part of the Company’s business is currently dependent upon one key
      customer, Advanced Advertising Network, LLC of Lake Mary, Florida. During the
      nine months ended September 30, 2005, the Company’s sales to this customer were
      approximately $862,317 or 92% of all sales. During the three months ended
      September 30, 2005, the Company’s sales to this customer were approximately
      $411,684 or 97% of all sales. The Company continues to rely on this customer
      for
      the majority of its sales. However, the Company is moving forward to expand
      its
      distribution base so that it will no longer depend on this one key customer.
      There can be no guarantee that the Company will be able to diversify its
      distribution base. Advanced Advertising Network, LLC is not a related
      party.





For
      the
      nine months ended September 30, 2005, the Company attributes the increase in
      revenue, net income and earnings per share to increases in sales and the
      elimination of $500,000 in bad debt expense in the quarter ending June 30,
      2005.
      Without the recovery of that bad debt expense, the Company’s revenue, net income
      and earnings would have decreased primarily due to lack of sales by the
      Company’s key customer. The Company’s primary emphasis is to expand sales nation
      wide and to also expand into Latin America by acquiring independent dealers.





On
      June
      28, 2005, the Company loaned, $1,200,000 to Olympus Leasing Company, a related
      party. At
      June
      28, 2005, Antonio F. Uccello, III, was, and is now the President, Chairman
      and a
      minority owner of the issued and outstanding shares of stock of Olympus Leasing
      and reports to its board of directors. Antonio F. Uccello, III, was and is
      one
      of the Company’s officers and directors and an indirect shareholder of Sign
      Media Systems, Inc. The
      loan
      is for a period of five years with interest accruing on the unpaid balance
      at
      5.3% per annum payable annually, with the entire principal and unpaid interest
      due and payable in full on June 28, 2010. There is no prepayment penalty. The
      purpose of the loan was to obtain a higher interest rate than is currently
      available at traditional banking institutions. Olympus Leasing’s primary
      business is making secured loans to chiropractic physicians throughout the
      United States for the purchase of chiropractic adjustment tables. The loans
      are
      generally for less than $3,000 each and are secured by a first lien on each
      chiropractic adjustment table. Each loan is personally guaranteed by the
      chiropractic physician. The rate of return on the Olympus Leasing loans is
      between 15% and 25% per annum. To date, Olympus Leasing has suffered no loss
      from any loan to a chiropractic physician for the purchase of a chiropractic
      adjustment table. There is an excellent market for the re-sale of chiropractic
      adjustment tables, which may be the subject of a foreclosure. Olympus Leasing
      currently has in excess of $1,000,000 in outstanding finance receivables from
      chiropractic physicians secured by a first lien on each chiropractic adjustment
      table. Since the making of the loan by the Company to Olympus Leasing, Olympus
      Leasing has made re-payments to the Company of $228,000 pursuant to the note
      attached hereto as Exhibit 10.6. Because of the foregoing facts, the Company
      believes that the probability of a default on the loan by it to Olympus Leasing
      is unlikely. For the nine months ended September 30, 2005, the Company had
      net
      income of over 500,000. Moreover, the Company has achieved substantial savings
      on manufacturing costs because of engineering advances, which have reduced
      the
      Company's cost of goods sold. In the Company’s Form 10-KSB/A at December 31,
      2004, it budgeted approximately $1,300,000 of expenses for the year ending
      2005.
      Through the first nine months of 2005, the Company is on pace to expend expenses
      of approximately $800,000 which is $500,000 below budget. For all of the
      foregoing reasons, the Company believes, but cannot guarantee, that the loan
      to
      Olympus Leasing will not effect liquidity.


5





**Item
      3. Controls and Procedures.**





(a)
      Evaluation of Disclosure Controls and Procedures





The
      term
      "disclosure controls and procedures" is defined in Rules 13a-15(e) and 15d-15(e)
      of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). This
      term refers to the controls and procedures of a company that are designed to
      ensure that information required to be disclosed by a company in the reports
      that it files under the Exchange Act is recorded, processed, summarized, and
      reported within the required time periods. Our Chief Executive Officer and
      our
      Chief Financial Officer have evaluated the effectiveness of our disclosure
      controls and procedures as of the end of the period covered by this annual
      report. They have concluded that, as of that date, our disclosure controls
      and
      procedures were effective at ensuring that required information will be
      disclosed on a timely basis in our reports filed under the Exchange
      Act.





(b)
      Changes in Internal Control over Financial Reporting





No
      change
      in our internal control over financial reporting (as defined in Rules 13a-15(f)
      and 15d-15(f) under the Exchange Act) occurred during the period covered by
      this
      report that has materially affected, or is reasonably likely to materially
      affect, our internal control over financial reporting.





**PART
      II — OTHER INFORMATION**





**Item
      1. Legal Proceedings.**





There
      are
      no pending or threatened legal proceedings against the Company or any of its
      subsidiaries.





**Item
      2. Changes in Securities.**





NONE





**Item
      3. Defaults Upon Senior Securities**





NONE





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





NONE





**Item
      5. Other Information.**





NONE


6





**Item
      6. Exhibits and Reports on Form 8-K.**





**INDEX
      TO EXHIBITS.**





**EXHIBIT**


**NUMBER**   **DESCRIPTION
      OF EXHIBITS**







10.6    Promissory
      Note described in Part I, Item 2 above incorporated herein by reference
      from the
      Company’s Form 10-SB/A2 dated November 11, 2005, and filed with the
      Securities and
      Exchange Commission on November 18, 2005





31.1    Certification
      of Chief Executive Officer pursuant to 18
      U.S.C. Section 1350, as adopted
      pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002





31.2    Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, asadopted


pursuant
      to Section 302 of the Sarbanes-Oxley Act of
      2002





32.1    Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, asadopted


pursuant
      to Section 906 of the Sarbanes-Oxley Act of
      2002





32.2   Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, asadopted


pursuant
      to Section 906 of the Sarbanes-Oxley Act of
      2002





The
      Company filed no Forms 8K for the quarter ended September 30,
      2005.


7




**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.





SIGN
                MEDIA SYSTEMS, INC.
              (Registrant)DateNovember
                21, 2005
            /s/Antonio
                F. Uccello,
                III
              Antonio F. Uccello, III
              Chief Executive Officer
              Chairman
                of the Board





8