**U.S.
          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 1934
 
 For
          the
          quarterly period ended: September 30, 2006
 
 OR
 
 o TRANSITION
          REPORT
          UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 
 For
          the
          transition period from ___________ to ___________
 
 **THE
          SMALL BUSINESS COMPANY**
 (Name
          of
          small business issuer in its charter)
 
 55-0808106
 (I.R.S.
          employer identification number)
  **7140
          Calabria Court, Suite B**
 **San
          Diego, California 92122.**
 **(858)
          243-1003**
 
 SEC
          File
          Number: File No. 000-52184
 
 Check
          whether the issuer: (1) filed all reports required to be filed by Section13
          or
          15(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
 
 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
 
 **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: 16,145,334 shares
          of common stock outstanding as of November 17, 2006.
 
 Transitional
          Small Business Disclosure Format (check one): Yes o No
          x
  
  TABLE
          OF CONTENTS
 
 PART
                    I - Financial Information
                3Item
                    1. Financial Statements
                3Item
                    2. Management’s Discussion and Analysis of Financial Condition and Results
                    of Operations
                16Item
                    3. Controls and Procedures
                18PART
                    II - OTHER INFORMATION
                18Item
                    1. Legal Proceedings
                18Item
                    2. Changes in Securities
                18Item
                    3. Defaults upon Senior Securities.
                19Item
                    4. Submission of Matters to a Vote of Security Holders.
                19Item
                    5. Other Information.
                19Item
                    6. Exhibits
                19
  
 
 **PART
          I - Financial Information**
 
 **Item
          1. Financial Statements**
 
 The
      accompanying unaudited financial statements have been prepared in accordance
      with generally accepted accounting principles for interim financial reporting
      and pursuant to the rules and regulations of the Securities and Exchange
      Commission ("Commission"). While these statements reflect all normal recurring
      adjustments which are, in the opinion of management, necessary for fair
      presentation of the results of the interim period, they do not include all
      of the information and footnotes required by generally accepted accounting
      principles for complete financial statements. For further information, refer
      to the financial statements and footnotes thereto, contained in The Small
      Business Company’s latest registration statement filed with the Commission
      on Form 10-SB.
  3


**The
        Small Business Company, Inc.**
 (A
        Development Stage Company)
 
 Balance
        Sheets
 (Unaudited)


September
                    30,
                  2006
              
              June
                      30,
                    2006(Audited)**ASSETS**Current
                  AssetsCash
              
              $
              958
              
              $
              19,708Accounts
                  Receivable
              
              
              -
              
              
              1,000Total
                  Current Assets
              
              
              958
              
              
              20,708Property
                  and Equipment, net
              
              
              1,088
              
              
              -Total
                  Assets
              
              $
              2,046
              
              $
              20,708**LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                  LiabilitiesAccounts
                  Payable
              
              $
              15,000
              
              $
              -Total
                  Current Liabilities
              
              
              15,000
              
              
              -Total
                  Liabilities
              
              
              15,000
              
              
              -Stockholders'
                  EquityCommon
                    Stock, authorized 500,000,000 shares, par value $0.0001, issued
                    and
                    outstanding on September 30, 2006 and 2005 is 16,145,334 and
                    15,960,334
                    respectively
              
              
              1,615
              
              
              1,605Additional
                  Paid-in Capital
              
              
              399,685
              
              
              374,695Subscriptions
                  Receivable
              
              
              100,000
              
              
              75,000Deficit
                  Accomulated during DevelopmentStage
              
              
              (514,254
              )
              
              (430,592
              )Total
                  Stockholders' Equity
              
              
              (12,954
              )
              
              20,708Total
                  Liabilities and Stockholders' Equity
              
              $
              2,046
              
              $
              20,708




The
        accompanying notes are an integral part of these statements




4


**The
        Small Business Company, Inc.**
 (A
        Development Stage Company)
 
 Statements
        of Operations
 (Unaudited)


November
                  26,Three
                  Months Ended
              
              2002
                  (Inception)September
                  30,
              
              to
                  September 30,2006
              
              2005
              
              2006IncomeConsulting
                  Revenue
              
              $
              -
              
              $
              25,834
              
              $
              277,996Operating
                  ExpensesGeneral
                  and Administrative
              
              
              83,563
              
              
              27,918
              
              
              788,527Depreciation
              
              
              99
              
              
              302
              
              
              3,723Total
                  Expenses
              
              
              83,662
              
              
              28,220
              
              
              792,250Net
                  Loss from Operations
              
              
              (83,662
              )
              
              (2,386
              )
              
              (514,254
              )Interest
                  Expense
              
              
              
              
              
              -
              
              
              -Net
                  Loss
              
              $
              (83,662
              )
              $
              (2,386
              )
              $
              (514,254
              )Basic
                  and Diluted(Loss)
                  per Share
              
              $
              (0.01
              )
              $
              (0.00
              )Weighted
                  AverageNumber
                  of Shares
              
              
              16,088,812
              
              
              16,045,334




The
        accompanying notes are an integral part of these statements




5




**The
        Small Business Company, Inc.**
 (A
        Development Stage Company)
 
 Statement
        of Stockholders' Equity
 (Unaudited)
 From
        November 26, 2002 (Inception) to September 30, 2006


(Deficit)AccumulatedPrice
              
              
              
              
              
              
              
              
              
              during
              
              TotalPer
              
              Common
                  Stock
              
              Paid
                  in
              
              Subscriptions
              
              Development
              
              Equity/Share
              
              Shares
              
              Amount
              
              Capital
              
              Receivable
              
              Stage
              
              (Deficit)Common
                  Shares issued to Foundersfor
                  Services
              
              
              
              
              
              13,000,000
              
              $
              1,300
              
              $
              -
              
              
              
              
              $
              -
              
              $
              1,300Common
                  Shares issued for Cashbetween
                  6-Jan-03 and 16-Jan-03
              
              $
              0.04
              
              
              250,000
              
              
              25
              
              
              9,975
              
              
              
              
              
              
              
              
              10,000between
                  17-Jan-03 and1-May-03
              
              $
              0.15
              
              
              553,334
              
              
              55
              
              
              82,945
              
              
              
              
              
              
              
              
              83,000on
                  4-Mar-03
              
              $
              0.10
              
              
              100,000
              
              
              10
              
              
              9,990
              
              
              
              
              
              
              
              
              10,000-
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              -Net
                  (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (90,278
              )
              
              (90,278
              )**Balance,
                  June 30, 2003**
              
              
              
              
              
              13,903,334
              
              
              1,390
              
              
              102,910
              
              
              -
              
              
              (90,278
              )
              
              14,022Common
                  Shares issued for Cashbetween
                  30-Dec-03 and 5-Apr-04
              
              $
              0.25
              
              
              92,000
              
              
              9
              
              
              22,991
              
              
              
              
              
              
              
              
              23,000Common
                  Shares issued for Serviceson
                  2-Jan-04
              
              $
              0.25
              
              
              493,000
              
              
              49
              
              
              123,201
              
              
              
              
              
              
              
              
              123,250Net
                  (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (225,883
              )
              
              (225,883
              )**Balance,
                  June 30, 2004**
              
              
              
              
              
              14,488,334
              
              
              1,448
              
              
              249,102
              
              
              -
              
              
              (316,161
              )
              
              (65,611
              )Common
                  Shares issued for Cashon
                  2-Aug-04
              
              $
              0.25
              
              
              100,000
              
              
              10
              
              
              24,990
              
              
              
              
              
              
              
              
              25,000on
                  20-Aug-04
              
              $
              0.25
              
              
              8,000
              
              
              1
              
              
              1,999
              
              
              
              
              
              
              
              
              2,000Common
                  Shares issued for Cashbetween
                  18-Nov-04 to 31-Dec 04
              
              $
              0.06
              
              
              1,364,000
              
              
              137
              
              
              77,363
              
              
              
              
              
              
              
              
              77,500Net
                  (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (9,547
              )
              
              (9,547
              )**Balance,
                  June 30, 2005**
              
              
              
              
              
              15,960,334
              
              
              1,596
              
              
              353,454
              
              
              -
              
              
              (325,708
              )
              
              29,342Cash
                  for Stock Subscriptions
              
              $
              0.06
              
              
              
              
              
              
              
              
              
              
              
              75,000
              
              
              
              
              
              75,000Common
                  Shares issued for Cashon
                  23-Aug-05
              
              $
              0.25
              
              
              10,000
              
              
              1
              
              
              2,499
              
              
              
              
              
              
              
              
              2,500Common
                  Shares issued for Serviceon
                  15-Sep-05
              
              $
              0.25
              
              
              75,000
              
              
              8
              
              
              18,742
              
              
              
              
              
              
              
              
              18,750Net
                  (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (104,884
              )
              
              (104,884
              )**Balance,
                  June 30, 2006**
              
              
              
              
              
              16,045,334
              
              
              1,605
              
              
              374,695
              
              
              75,000
              
              
              (430,592
              )
              
              20,708Cash
                  for Stock Subscriptionson
                  10-Aug-06
              
              $
              0.08
              
              
              
              
              
              
              
              
              
              
              
              25,000
              
              
              
              
              
              25,000Common
                  Shares issued for Serviceon
                  21-Aug-2006
              
              $
              0.25
              
              
              100,000
              
              
              10
              
              
              24,990
              
              
              
              
              
              
              
              
              25,000Net
                  (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (83,662
              )
              
              (83,662
              )**Balance,
                  September 30, 2006**
              
              
              
              
              
              16,145,334
              
              $
              1,615
              
              $
              399,685
              
              $
              100,000
              
              $
              (514,254
              )
              $
              (12,954
              )




The
        accompanying notes are an integral part of these statements




6


**The
        Small Business Company, Inc.**
 (A
        Development Stage Company)
 
 Statements
        of Cash Flows
 (Unaudited)


November
                  26,Three
                  Months Ended
              
              2002
                  (Inception)September
                  30,
              
              to
                  September 30,2006
              
              2005
              
              2006Operating
                  ActivitiesNet
                  (Loss)
              
              $
              (83,662
              )
              $
              (2,386
              )
              $
              (514,254
              )Adjustments
                  to reconcile Net (Loss)Common
                  Stock issued for Services
              
              
              25,000
              
              
              -
              
              
              168,300Depreciation
              
              
              99
              
              
              -
              
              
              3,723Changes
                  in Operating Assets and Liabilities
              
              
              
              
              
              -(Increase)/Decrease
                  in Accounts Receivable
              
              
              1,000
              
              
              -
              
              
              -Increase/(Decrease)
                  in Accounts Payable
              
              
              15,000
              
              
              -
              
              
              15,000Net
                  Cash Provided by Operating Activities
              
              
              (42,563
              )
              
              (2,386
              )
              
              (327,231
              )Investment
                  ActivitiesPurchase
                  of Equipment
              
              
              (1,187
              )
              
              -
              
              
              (4,811
              )Net
                  Cash (Used) by Investment Activities
              
              
              (1,187
              )
              
              -
              
              
              (4,811
              )Financing
                  ActivitiesProceeds
                  from Subscriptions Receivable
              
              
              25,000
              
              
              
              
              
              100,000Proceeds
                  from sale of Common Stock
              
              
              
              
              
              2,500
              
              
              233,000Net
                  Cash Provided by Financing Activities
              
              
              25,000
              
              
              2,500
              
              
              333,000Net
                  Increase in Cash
              
              
              (18,750
              )
              
              114
              
              
              958Cash,
                  Beginning of Period
              
              
              19,708
              
              
              361
              
              
              -Cash,
                  End of Period
              
              $
              958
              
              $
              475
              
              $
              958Supplemental
                  Information:Interest
                  Paid
              
              $
              -
              
              $
              -
              
              $
              -Income
                  Taxes Paid
              
              $
              -
              
              $
              -
              
              $
              -




The
        accompanying notes are an integral part of these statements




7




**The
      Small Business Company, Inc.**


(A
      Development Stage Company)





**NOTES
      TO UNAUDITED FINANCIAL STATEMENTS**


**(September
      30, 2006 and 2005)**




**NOTE
      1.**  **GENERAL
      ORGANIZATION AND BUSINESS**





The
      Small
      Business Company, Inc. (“Company”) was incorporated in Delaware on November 26,
      2002. The Company, based in San Diego, California began business as Optibiz,
      LLC, a California limited liability company and then converted to a Delaware
      corporation on November 26, 2002.





The
      Company is in its development stage even though it has produced limited revenues
      in proof-of-concept beta testing and business development consulting services.
      The company develops, packages and will market business improvement solutions
      for small business owners in the form of books, CD’s, and Business Coaching. The
      company will market these products through the internet.





**NOTE
      2.**  **RESTATED
      FINANCIALS**





The
      Company has erroneously recorded $75,000 as a liability entitled Convertible
      Notes Payable. In substance the note instrument was actually a prepayment for
      a
      deferred issue of 1,320,000of shares of stock. There is no provision for
      interest or any repayment option other than the issuance of stock.





The
      Company’s financial statements were revised to eliminate the payable and record
      a contra Subscriptions Receivable resulting in a $75,000 increase in equity
      which will be written to the common stock and additional paid in capital upon
      issue of the stock. The issue of stock has not been recorded because the
      agreements provide for a no-later-than May 31, 2007 stock issue
      date.




**NOTE
      3.**  **SUMMARY
      OF SIGNIFICANT ACCOUNT POLICIES**




Accounting
      Basis





The
      statements were prepared following generally accepted accounting principles
      of
      the United States of America consistently applied. The Company uses a June
      30
      fiscal year end.





8




Cash
      and Cash Equivalents





Cash
      and
      cash equivalents include all short-term liquid investments that are readily
      convertible to know amounts of cash and have original maturities of three months
      or less. As of June 30, 2006 there were no cash equivalents.




Accounts
      Receivable




The
      Company analyzes current accounts receivable for an allowance for doubtful
      accounts based on historical bad debt, customer credit-worthiness, the current
      business environment and historical experience with the customer. The allowance
      includes specific reserves for accounts where collection is deemed to be no
      longer probable.




Advertising
      Costs


Advertising
      Costs are expensed as incurred. No advertising costs were incurred for the
      years
      ended June 30, 2006 and 2005.




Use
      of
      Estimates


The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenue and expenses during
      the reporting period. Actual results could differ from those
      estimates.





Equipment





Equipment
      is stated at cost. Depreciation is computed using the straight-line method
      over
      their estimated useful lives, which for computer equipment is three years.
      Maintenance and repairs are charged to expense as incurred. Fixed assets consist
      of the following


September
                    30,
                
                June
                    302006
                
                2006Computers
                
                $
                4,810
                
                $
                3,623Less
                    Accumulated Depreciation
                
                
                (3,722
                )
                
                (3,623
                )Equipment,
                    net
                
                $
                1,088
                
                $
                0
  Revenue
        Recognition


Revenues
      from services are recognized when there is persuasive evidence of an
      arrangement, the fee is fixed or determinable, services have been rendered,
      payment has been contractually earned and it is reasonably assured that the
      related receivable or unbilled revenue is collectable.




9




Income
      Taxes





The
      provision for income taxes is the total of the current taxes payable and the
      net
      of the change in the deferred income taxes. Provision is made for the deferred
      income taxes where differences exist between the period in which transactions
      affect current taxable income and the period in which they enter into the
      determination of net income in the financial statements.




Earnings
      Per Share





Basic
      earnings per share are computed by dividing net income by the average number
      of
      common shares outstanding during the period. Diluted earnings per share takes
      into consideration the potentially dilutive effect of common stock equivalents,
      such as outstanding stock options and warrants, which if exercised or converted
      into common stock would then share in the earnings of the Company. In computing
      diluted earnings per share, the Company utilizes the treasury stock method
      and
      anti-dilutive securities are excluded.





Outstanding
      options and warrants are considered anti-dilutive.





Stock
      Based Compensation





The
      Company accounts for its stock based compensation based upon provisions in
      SFAS
      No. 123, *Accounting
      for Stock-Based Compensation* .
      In this
      statement stock based compensation is divided into two general categories,
      based
      upon who the stock receiver is, namely: employees/directors and
      non-employees/directors. The employees/directors category is further divided
      based upon the particular stock issuance plan, namely compensatory and
      non-compensatory. The employee/directors non-compensatory securities are
      recorded at the sales price when the stock is sold. The compensatory stock
      is
      calculated and recorded at the securities’ fair value at the time the stock is
      given. SFAS 123 also provides that stock compensation paid to non-employees
      be
      recorded with a value which is based upon the fair value of the services
      rendered or the value of the stock given, whichever is more reliable. The
      Company has selected to utilize the fair value of the stock issued as the
      measure of the value of services obtained.




**NOTE
      4.**  **GOING
      CONCERN**





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern, which contemplates the realization of assets
      and the liquidation of liabilities in the normal course of business. The Company
      is in its development stage and has incurred net losses $514,254 as of September
      30, 2006 . This
      condition creates an uncertainty as to the Company’s ability to continue as a
      going concern. Management is trying to raise additional capital through sales
      of
      common stock as well as seeking financing from third parties. The financial
      statements do not include any adjustments that might be necessary if the Company
      is unable to continue as a going concern.





Management
      has produced limited revenues through business consulting and beta testing
      of
      its products. The company has authored four books and four instructional CD’s
      for small business owners and is testing its business coaching platform. The
      Company will begun full-scale marketing of its products and services during
      the
      current fiscal year as it continues to execute its business plan.




10





Management
      plans to obtain $200,000 in each of three growth phases. Funds are expected
      from
      revenues generated by the sale of products and services, the sale of stock
      and
      the issuance of debt instruments. The first phase to begin upon becoming a
      publicly traded company includes funding to publish, print and market our book
      titles; re-format and re-program our master CD title, and the publication,
      packaging and marketing of our master CD.





The
      second phase to begin ninety days after phase one funding includes money for
      additional staff; the final deployment of our e-commerce website; publication,
      packaging and marketing of additional CD’s and securing additional inventory of
      books.





The
      third
      phase to begin sixty days after phase two funding includes money to expand
      marketing efforts; move corporate headquarters to a larger facility; hire
      additional staff; and begin creating additional books and CDs.





The
      Company expects to generate significant revenues from the marketing of its
      products and services. If additional funding is not forthcoming implementation
      of the expansion phases will be delayed and the Company will implement its
      plan
      to minimize overhead by enforcing the employment agreements with its founders
      to
      pay them only what the Company can afford.




**NOTE
      5.**  **COMMITMENTS,
      CONTINGENCIES AND RELATED PARTIES**





Employment
      Agreements





In
      November 2002, the Company entered into employment contract with the CEO and
      the
      COO who are the majority shareholders. For each officer, the agreement provides
      an annual salary of up to $120,000 per year and a $500 monthly allowance for
      medical and dental insurance. However, the agreement specifically limits the
      salary to the current financial ability of the Company to pay the salary and
      provides for no back payment of unpaid amounts. Reported expenses reflect actual
      salaries in accordance with these agreements.




Lease
      Commitments





The
      Company leases office space in the residence of the Company’s majority
      shareholders and officers at a rate of $2,000 per month. Rent expense for the
      years ended June 30, 2006 and 2005 was $24,000 each.





**NOTE
      6.**  **OPTIONS
      AND WARRANTS**





Options





The
      Company has no outstanding stock options.





11




Warrants





The
      Company accounts for non-cash stock-based compensation issued to non-employees
      in accordance with the provisions of SFAS No. 123 and EITF No. 96-18, Accounting
      for Equity Investments That Are Issued to Non-Employees for Acquiring, or in
      Conjunction with Selling Goods or Services. Common stock issued to non-employees
      and consultants is based upon the value of the services received or the quoted
      market price, whichever value is more readily determinable.





The
      Company accounts for stock options and warrants issued to employees under the
      fair-value method based on the fair or calculated value of the equity
      instrument. This method requires the calculation of the fair value of the equity
      instrument. No options or warrants have been issued for employee
      compensation.





On
      May
      12, 2003, the Company authorized the issuance of 5,000,000 shares of common
      stock and 5,000,000 warrants. The securities are sold as units consisting of
      one
      share of common stock and one warrant.





Following
      is a list of warrants granted and outstanding and are not in-the-money:


Warrants
              
              Exercise
              
              ExpirationGranted
              
              Price
              
              DateInception
                  to June 30, 2003
              
              
              903,334
              
              $
              0.50
              
              
              Expired
                  5/30/06Year
                  Ended June 30, 2004
              
              
              72,000
              
              
              0.75
              
              
              2/23/0720,000
              
              
              0.75
              
              
              4/5/07Year
                  Ended June 30, 2005
              
              
              108,000
              
              
              0.75
              
              
              8/20/07


All
      warrants issued to date carry no value. Variables used in the Black-Scholes
      warrant pricing model include (1) 4.3 to 5.16% risk-free interest rate, (2)
      expected warrant life is the actual remaining life of the warrants as of each
      year end, (3) expected volatility of 1.2, and (4) zero expected
      dividends.





The
      number of warrants outstanding as of September 30 and June 30, 2006 are 200,000.
      No warrants have been exercised. There is no public market for the stock and
      the
      exercise price of the warrants is triple the price of any stock sold by the
      company.








12




**NOTE
      7.**  **STOCKHOLDERS’
      EQUITY**




Common
      Stock





The
      Small
      Business Company, Inc. (“Company”) was incorporated in Delaware on November 26,
      2002. The Company, based in San Diego, California, develops, packages and
      markets business improvement solutions for small business owners. The Company
      began business as Optibiz, LLC, a California limited liability company and
      then
      converted to a Delaware corporation on November 26, 2002.





The
      Company is authorized 500,000,000 common shares with a $0.0001 par
      value.





On
      November 26, 2002, 13,000,000 common shares were issued to the founders of
      the
      Company for services valued at $1,300.





During
      the period from inception through June 30, 2003, 903,334 common shares were
      issued in private placements for $103,000 cash.





During
      the year ended June 30, 2004, 92,000 common shares were issued at $0.25 per
      share or $23,000 cash and 493,000 common shares were issued for services at
      $0.25 per share or $123,250. Services were valued at the price per share stock
      was sold in our private placement.





During
      the year ended June 30, 2005 1,364,000 common shares were issued for cash at
      $0.568 per share or $77,500. Additionally, 108,000 common shares were issued
      at
      $0.25 per share or $27,000 cash.





During
      the year ended June 30, 2006 75,000 common shares were issued at $0.25 per
      share
      or $18,750 of services rendered and 10,000 common shares were issued at $0.25
      per share or $2,500 cash and $75,000 cash was received in prepayment of
      subscription agreements for 1,320,000 common shares to be issued at $0.0568
      per
      share no later than May 31, 2007.





On
      August
      10, 2006 the Company received $25,000 prepayment on subscription agreements
      for
      300,000 common shares to be issued at $0.082 per share no later than August
      10,
      2007.





On
      August
      21, 2006 the Company issued 100,000 common shares at $0.25 per share for
      services of $25,000.





As
      of
      September 30, 2006 the Company also has a balance of 200,000 outstanding
      warrants for common stock that are exercisable at
      $0.75
      per share.





**NOTE
      8.**  **PROVISION
      FOR INCOME TAXES**





The
      Company provides for income taxes under Statement of Financial Accounting
      Standards NO. 109, Accounting for Income Taxes. SFAS No. 109 requires the use
      of
      an asset and liability approach in accounting for income taxes. Deferred tax
      assets and liabilities are recorded based on the differences between the
      financial statement and tax bases of assets and liabilities and the tax rates
      in
      effect when these differences are expected to reverse.




13





SFAS
      No.
      109 requires the reduction of deferred tax assets by a valuation allowance
      if,
      based on the weight of available evidence, it is more likely than not that
      some
      or all of the deferred tax assets will not be realized. In the Company’s
      opinion, it is uncertain whether they will generate sufficient taxable income
      in
      the future to fully utilize the net deferred tax asset. Accordingly, a valuation
      allowance equal to the deferred tax asset has been recorded. The total deferred
      tax asset is $94,730, which is calculated by multiplying a 22% estimated tax
      rate by the items making up the deferred tax account, the estimated NOL of
      $430,592. The total valuation allowance is a comparable $94,730.





The
      provision for income taxes is comprised of the net changes in deferred taxes
      less the valuation account plus the current taxes payable as shown in the chart
      below for the years ended December 31, 2006 and 2005:


June
                  30,
              
              2006
              
              2005Deferred
                  Tax Asset
              
              $
              89,230
              
              $
              66,156Less:
                  Valuation Allowance
              
              
              (89,230
              )
              
              (66,156
              )Net
                  Current Deferred Tax Asset
              
              $
              0
              
              $
              0


Below
      is
      a chart showing the federal net operating losses and the years in which they
      will expire:


Year
              
              Amount
              
              Expiration2003
              
              $
              90,278
              
              
              20232004
              
              
              225,883
              
              
              20242005
              
              
              9,547
              
              
              20252006
              
              
              104,885
              
              
              2026Total
                  NOL
              
              $
              430,592





**NOTE
      9.**  **THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS**





Below
      is
      a listing of the most recent accounting standards SFAS 150-154 and their effect
      on the Company.





Statement
      No. 150  Accounting
      for Certain Financial Instruments with Characteristics of both Liabilities
      and
      Equity (Issued 5/03)





This
      Statement establishes standards for how an issuer classifies and measures
      certain financial instruments with characteristics of both liabilities and
      equity.





Statement
      No. 151  Inventory
      Costs-an amendment of ARB No. 43, Chapter 4 (Issued 11/04)





This
      statement amends the guidance in ARB No. 43, Chapter 4, *Inventory
      Pricing* ,
      to
      clarify the accounting for abnormal amounts of idle facility expense, freight,
      handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter
      4, previously stated that “...under some circumstances, items such as idle
      facility expense, excessive spoilage, double freight and re-handling costs
      may
      be so abnormal as to require treatment as current period charges....” This
      Statement requires that those items be recognized as current-period charges
      regardless of whether they meet the criterion of “so abnormal.” In addition,
      this Statement requires that allocation of fixed production overheads to the
      costs of conversion be based on the normal capacity of the production
      facilities.




14





Statement
      No. 152  Accounting
      for Real Estate Time-Sharing Transactions (an amendment of FASB Statements
      No.
      66 and 67)





This
      Statement amends FASB Statement No. 66, *Accounting
      for Sales of Real Estate* ,
      to
      reference the financial accounting and reporting guidance for real estate
      time-sharing transactions that is provided in AICPA Statement of Position (SOP)
      04-2, *Accounting
      for Real Estate Time-Sharing Transactions* .





This
      Statement also amends FASB Statement No. 67, Accounting *for
      Costs and Initial Rental Operations of Real Estate Projects* ,
      states
      that the guidance for (a) incidental operations and (b) costs incurred to sell
      real estate projects does not apply to real estate time-sharing transactions.
      The accounting for those operations and costs is subject to the guidance in
      SOP
      04-2.





Statement
      No. 153  Exchanges
      of Non-monetary Assets (an amendment of APB Opinion No. 29)





The
      guidance in APB Opinion No. 29, *Accounting
      for Non-monetary Transactions* ,
      is
      based on the principle that exchanges of non-monetary assets should be measured
      based on the fair value of the assets exchanged. The guidance in that Opinion,
      however, includes certain exceptions to the principle. This Statement amends
      Opinion 29 to eliminate the exception for non-monetary exchanges of similar
      productive assts and replaces it with a general exception for exchanges of
      non-monetary assets that do not have commercial substance. A non-monetary
      exchange has commercial substance if the future cash flows of the entity are
      expected to change significantly as a result of the exchange.





Statement
      No. 154 *-
      Accounting Changes and Error Corrections (a replacement of APB Opinion No.
      20
      and FASB Statement No. 3)*




This
      Statement replaces APB Opinion No. 20, *Accounting
      Changes,* and FASB
      Statement No. 3, *Reporting
      Accounting Changes in Interim Financial Statements,* and
      changes the requirements for the accounting for and reporting of a change in
      accounting principle. This Statement applies to all voluntary changes in
      accounting principle. It also applies to changes required by an accounting
      pronouncement in the unusual instance that the pronouncement does not include
      specific transition provisions. When a pronouncement includes specific
      transition provisions, those provisions should be followed.





The
      adoption of these new Statements is not expected to have a material effect
      on
      the Company’s current financial position, results or operations, or cash flows.


15




**Item
        2.** **Management’s
        Discussion and Analysis of Financial Condition and Results of
        Operations**
 
 MANAGEMENT'S
        DISCUSSION AND ANALYSIS OF FINANCIAL
 CONDITION
        AND RESULTS OF OPERATIONS
 
 FORWARD
        LOOKING STATEMENTS
 
 The
        following discussion and analysis is provided to increase the understanding
        of,
        and should be read in conjunction with, the Financial Statements of the Company
        and Notes thereto included elsewhere in this Report. Historical results and
        percentage relationships among any amounts in these financial statements
        are not
        necessarily indicative of trends in operating results for any future period.
        The
        statements, which are not historical facts contained in this Report, including
        this Plan of Operations, and Notes to the Financial Statements, constitute
        "forward-looking statements" within the meaning of the Private Securities
        Litigation Reform Act of 1995. Such statements are based on currently available
        operating, financial and competitive information, and are subject to various
        risks and uncertainties. Future events and the Company's actual results may
        differ materially from the results reflected in these forward-looking
        statements. Factors that might cause such a difference include, but are not
        limited to, dependence on existing and future key strategic and strategic
        end-user customers, limited ability to establish new strategic relationships,
        ability to sustain and manage growth, variability of operating results, the
        Company's expansion and development of new service lines, marketing and other
        business development initiatives, the commencement of new engagements,
        competition in the industry, general economic conditions, dependence on key
        personnel, the ability to attract, hire and retain personnel who possess
        the
        technical skills and experience necessary to meet the service requirements
        of
        its clients, the potential liability with respect to actions taken by its
        existing and past employees, risks associated with international sales, and
        other risks described herein and in the Company's other SEC
        filings.
 
 The
        safe
        harbors of forward-looking statements provided by Section 21E of the Exchange
        Act are unavailable to issuers of penny stock. As we issued securities at
        a
        price below $5.00 per share, our shares are considered penny stock and such
        safe
        harbors set forth under the Reform Act are unavailable to us.
 
 The
        following discussion of our financial condition and results of operations
        should
        be read in conjunction with the Financial Statements and Notes to the Condensed
        Consolidated Financial Statements appearing elsewhere in this
        report.
 
 OVERVIEW
 
 Since
        our
        inception in 2002, we have been developing a series of business improvement
        solutions for small business owners. The foundation of our solution is the
“DARE
        Process”: Decide, Analyze, Realize and Evaluate. We believe this process
        addresses many problems facing many small businesses. Our initial products
        are
        based on the DARE Process: an interactive CD-ROM and our “DARE 2” books,
        co-authored by our founders, David Larson and Stuart Schreiber.
 
 RESULTS
        OF OPERATIONS
 
 *Three
        months ended September 30, 2006 vs. Three months ended September 30,
        2005*
 
 The
        Small
        Business Company generated $0 revenues for the three months ended September
        30,
        2006 compared to $25,834 in revenues for the same period in 2005. This decrease
        in net sales was due to our re-allocation of man hours from consulting to
        matters relating to becoming a fully reporting public company; final testing
        and
        review of our books and CDs; and planning the execution of our marketing
        plan
        projected to launch January, 2007. The Company does not expect this trend
        to
        continue with the launch of marketing initiatives to include: a public relations
        campaign, alliances with small business associations, opt-in mail, online,
        print, and media and the projected sales of our books and CDs.
 
 Operating
        Expenses :
        Operating expenses for the quarter ending September 30, 2006 increased $55,442,
        or 296%, to $83,662, from $28,220 for the September 30, 2005 ending quarter.
        The
        increase in operating expenses was primarily caused by the increase in
        accounting, legal and consulting fees and related expenses of $29,500 due
        to
        costs associated with the preparation for becoming a public company. Other
        factors that increased operating expenses by $55,442 included $4,100 for
        book
        re-designs, $3,421 for printing expenses, $6,250 for CD production, $7,678
        for
        CD re-engineering, and $4,493 for website build-out.
  16
 
 Net
        Earnings (loss): Due to
        the foregoing, our net loss increased from ($2,386) in the September 30,
        2005
        ending quarter to ($83,662) in the September 30, 2006 ending
        quarter.
 
 Liquidity
        and Capital Resources
 
 From
        our
        inception on November 26, 2002 to September 30, 2006, we have had a net loss
        from operations of $514,254 and had $792,250 in total operating expenses.
        To
        finance these uses we received $333,000 through the sale of common stock,
        $168,300 in services for stock and received $277,996 in revenues from our
        inception on November 26, 2002 to September 30, 2006.
 
 As
        of
        September 30, 2006, we had cash on hand of $958 and accounts receivable of
        $0,
        which is sufficient to satisfy our operating requirements only through November
        30, 2006. However, we intend to secure approximately $600,000 in additional
        debt
        or equity financing as a publicly traded company to develop our business
        plan.
        We have no commitment for additional debt or equity financing in place at
        this
        time. However, we plan to continue to pay for certain services with shares,
        obtain unsecured convertible loans for shares and seek other funding
        opportunities upon becoming a publicly traded company. If we don’t raise or
        generate these funds, the implementation of our short-term business plan
        will be
        delayed or eliminated.
 
 We
        have
        an unsecured convertible note executed on April 4, 2006, for $25,000 due
        on or
        before April 4, 2007, which is convertible to a total of 250,000 shares of
        common stock. We have an unsecured convertible note executed on May 31, 2006,
        for $50,000 due on or before by May 31, 2007 which is convertible to a total
        of
        500,000 shares of common stock. We have an unsecured convertible note executed
        on August 10, 2006, for $25,000 due on or before August 10, 2007, which is
        convertible to a total of 300,000 shares of common stock. There is no interest
        on the convertible notes of April 4, 2006, May 31, or August 10, 2006. The
        date
        of conversion to common shares extends for one year from execution date with
        the
        specific date of conversion solely at our discretion. These notes have now
        been
        reclassified as subscriptions receivable in the “Stockholders’ Equity” section
        of our financial statements.
 
 Our
        ability to continue as a going concern is dependent on our ability to raise
        funds to implement our planned development; however we may not be able to
        raise
        sufficient funds to do so. Our independent auditors have indicated that there
        is
        substantial doubt about our ability to continue as a going concern over the
        next
        twelve months. Our poor financial condition could inhibit our ability to
        achieve
        our business plan. Because we are currently operating at a substantial loss
        with
        no operating history and very limited revenues, an investor cannot determine
        if
        we will ever become profitable.
 
 17
 
 COMMITMENTS
        AND CONTINGENCIES
 
 *Employment
        Agreements* **
 
 In
        November 2002, the Company entered into employment contract with the CEO
        and the
        COO who are the majority shareholders. For each officer, the agreement provides
        an annual salary of up to $120,000 per year and a $500 monthly allowance
        for
        medical and dental insurance. However, the agreement specifically limits
        the
        salary to the current financial ability of the Company to pay the salary
        and
        provides for no back payment of unpaid amounts. Reported expenses reflect
        actual
        salaries in accordance with these agreements.
 
 *Lease
        Commitments*
 
 The
        Company leases office space in the residence of the Company’s majority
        shareholders and officers at a rate of $2,000 per month. Rent expense for
        the
        years ended June 30, 2006 and 2005 was $24,000 each.
 
 **Item
        3. Controls and Procedures**
 
 An
        evaluation was carried out under the supervision and with the participation
        of
        the Company’s management, including the Chief Executive Officer (“CEO”) and
        Chief Financial Officer (“CFO”), of the effectiveness of the Company’s
        disclosure controls and procedures as of September 30, 2006. Based on that
        evaluation, the CEO and CFO have concluded that the Company’s disclosure
        controls and procedures are effective to provide reasonable assurance that:
        (i) information required to be disclosed by the Company in reports that it
        files or submits under the Securities Exchange Act of 1934 is accumulated
        and
        communicated to the Company’s management, including the CEO and CFO, as
        appropriate to allow timely decisions regarding required disclosure by the
        Company; and (ii) information required to be disclosed by the Company in
        reports that it files or submits under the Securities Exchange Act of 1934
        is
        recorded, processed, summarized and reported within the time periods specified
        in Securities and Exchange Commission rules and forms. During the quarter
        ended September 30, 2006, there were no changes in the Company’s internal
        control over financial reporting that have materially affected, or are
        reasonably likely to materially affect, its internal control over financial
        reporting.
 
 **PART
        II - OTHER INFORMATION**
 
 **Item
        1. Legal Proceedings**
 
 None
 
 **Item
        2. Changes in Securities**
 
 On
        August
        10, 2006 the Company received $25,000 prepayment on a subscription agreement
        from one investor for 300,000 common shares to be issued at $0.08 per share
        no
        later than August 10, 2007.
  18
 
 On
        August
        21, 2006 the Company issued 100,000 common shares at $0.25 per share for
        services to one company, Island Stock Transfer, for stock transfer services
        of
        $25,000.
 
 We
        have
        an unsecured convertible note executed on August 10, 2006, for $25,000 due
        on or
        before August 10, 2007, which is convertible to a total of 300,000 shares
        of
        common stock at our discretion.
 
 We
        relied
        upon Section 4(2) of the Securities Act of 1933, as amended for the above
        issuances. We believed that Section 4(2) was available because:
 · None
          of
          these issuances involved underwriters, underwriting discounts or commissions;
 ·We
          placed restrictive legends on all
          certificates issued;
 ·No
          sales were made by general
          solicitation or advertising;
 ·Sales
          were made only to accredited
          investors or investors who were sophisticated enough to evaluate the risks
          of
          the investment.
 
 In
        connection with the above transactions, although
        most of the investors may have also been accredited, we provided the following
        to all investors:
 
 · Access
        to
        all our books and records.
  · Access
        to
        all material contracts and documents relating to our operations.
  · The
        opportunity to obtain any additional information, to the extent we possessed
        such information, necessary to verify the accuracy of the information to
        which
        the investors were given access.
 
 Prospective
        investors were invited to review at our offices at any reasonable hour, after
        reasonable advance notice, any materials available to us concerning our
        business. Prospective Investors were also invited to visit our
        offices.
 
 **Item
        3. Defaults upon Senior Securities.**
 
 None
 
 **Item
        4. Submission of Matters to a Vote of Security Holders.**
 
 None
 
 **Item
        5. Other Information.**
 
 None
 
 **Item
        6. Exhibits**
 
 **Exhibit
        Number, Name and/or Identification of Exhibit**
  1
                31
                Certification
                    of the Chief Executive Officer and Chief Financial Officer pursuant
                    to
                    Section 302 of the Sarbanes-Oxley Act of 2002 Attached2
                32
                Certification
                    of the Chief Executive Officer and Chief Executive Officer and
                    Chief
                    Financial Officer pursuant to U.S.C. Section 1350 as adopted
                    pursuant to
                    Section 906 of the Sarbanes-Oxley Act of
                    2002
 19
  **SIGNATURES**
 
 In
        accordance with the Exchange Act, the registrant caused this report to be
        signed
        on its behalf by the undersigned, thereunto duly authorized.
  **The Small Business
                Company**Date: November 20, 2006/s/ Stuart
                SchreiberStuart
                  Schreiber
                Chief
                  Executive Officer and Chief Financial Officer
  20