**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington
      D.C. 20549**




**FORM
      10-QSB**


(Mark
      One)




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





For
      the
      quarterly period ended December
      31, 2006





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





For
      the
      transition period from _________________ to _________________





Commission
        File No.: **000-52184**




**THE
      SMALL BUSINESS COMPANY**


(Exact
      name of registrant as specified in its charter)





**Delaware**
            **55-0808106**(State
                or other jurisdiction of
              incorporation
                or organization)
            (I.R.S.
                Employer
              Identification
                No.)**674
                Via de La Valle**
              **Solana
                Beach, CA 92075**
              ****(Address
                of principal executive offices)




Issuer’s
      telephone number: **(858)
      481-5600**




(Former
      name, former address and former fiscal year, if changed since last
      report)









Check
      whether the registrant filed all documents and reports required to be filed
      by
      Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 during the
      preceding 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  ̈ No x




**APPLICABLE
      ONLY TO CORPORATE ISSUERS**




As
      of
      February 8, 2007, 16,185,334 shares of our common stock were
      outstanding.




Transitional
      Small Business Disclosure Format: Yes o No
x














**PART
      1— FINANCIAL
      INFORMATION**





**Item
      1. Financial Statements.**





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




December
                31, 2006
            
            June
                30, 2006(Audited)**ASSETS**Current
                AssetsCash
            
            $
            9,723
            
            $
            19,708Prepaid
                Expense
            
            
            475
            
            
            -Accounts
                Receivable
            
            
            -
            
            
            1,000Total
                Current Assets
            
            
            10,198
            
            
            20,708Property
                and Equipment, net
            
            
            989
            
            
            -Total
                Assets
            
            $
            11,187
            
            $
            20,708**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                LiabilitiesAccounts
                Payable
            
            $
            15,724
            
            $
            -Total
                Current Liabilities
            
            
            15,724
            
            
            -Notes
                Payable
            
            
            49,215
            
            
            -Total
                Liabilities
            
            
            64,939
            
            
            -Stockholders'
                EquityCommon
                Stock, authorized 500,000,000shares,
                par value $0.0001, issued andoutstanding
                on December 31, 2006 andJune
                30, 2006 is 16,145,334 and16,045,334
                shares respectively
            
            
            1,615
            
            
            1,605Additional
                Paid-in Capital
            
            
            399,685
            
            
            374,695Subscriptions
                Receivable
            
            
            150,000
            
            
            75,000Deficit
                Accomulated during DevelopmentStage
            
            
            (605,052
            )
            
            (430,592
            )Total
                Stockholders' Equity
            
            
            (53,752
            )
            
            20,708Total
                Liabilities and Stockholders' Equity
            
            $
            11,187
            
            $
            20,708The
                accompanying notes are an integral part of these
                statements.


1





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




November
                26,2002Six
                Months Ended
            
            Three
                Months Ended
            
            (Inception)
                toDecember
                31,
            
            December
                31,
            
            December
                31,2006
            
            2005
            
            2006
            
            2005
            
            2006IncomeConsulting
                Revenue
            
            $
            -
            
            $
            21,776
            
            $
            -
            
            $
            20,526
            
            $
            277,996Operating
                ExpensesGeneral
                and Administrative
            
            
            174,262
            
            
            47,678
            
            
            90,699
            
            
            23,839
            
            
            879,226Depreciation
            
            
            198
            
            
            604
            
            
            99
            
            
            302
            
            
            3,822Total
                Expenses
            
            
            174,460
            
            
            48,282
            
            
            90,798
            
            
            24,141
            
            
            883,048Net
                Loss from Operations
            
            
            (174,460
            )
            
            (26,506
            )
            
            (90,798
            )
            
            (3,615
            )
            
            (605,052
            )Interest
                Expense
            
            
            
            
            
            -
            
            
            
            
            
            -
            
            
            -Net
                Loss
            
            $
            (174,460
            )
            $
            (26,506
            )
            $
            (90,798
            )
            $
            (3,615
            )
            $
            (605,052
            )Basic
                and Diluted(Loss)
                per Share
            
            $
            (0.01
            )
            $
            (0.00
            )
            $
            (0.01
            )
            $
            (0.00
            )Weighted
                  AverageNumber of Shares
            
            
            16,117,073
            
            
            15,966,475
            
            
            16,117,073
            
            
            15,966,475The
                accompanying notes are an integral part of these
                statements.





2





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




Six
                Months EndedDecember
                31,2006
            
            2005Operating
                ActivitiesNet
                (Loss)
            
            $
            (174,460
            )
            $
            (26,506
            )Adjustments
                to reconcile Net (Loss)Common
                Stock issued for Services
            
            
            25,000
            
            
            12,500Depreciation
            
            
            198
            
            
            604Changes
                in Operating Assets and Liabilities(Increase)/Decrease
                in Accounts Receivable
            
            
            1,000
            
            
            15,300(Increase)/Decrease
                in Prepaid Expense
            
            
            (475
            )
            
            -Increase/(Decrease)
                in Accounts Payable
            
            
            15,724
            
            
            (2,404
            )Net
                Cash Provided by Operating Activities
            
            
            (133,013
            )
            
            (506
            )Investment
                ActivitiesPurchase
                of Equipment
            
            
            (1,187
            )
            
            -Net
                Cash (Used) by Investment Activities
            
            
            (1,187
            )
            
            -Financing
                ActivitiesProceeds
                from Notes Payable
            
            
            50,000
            
            
            -Repayment
                of Notes Payable
            
            
            (785
            )
            
            -Proceeds
                from Subscriptions Receivable
            
            
            75,000
            
            
            -Proceeds
                from sale of Common Stock
            
            
            -
            
            
            2,500Net
                Cash Provided by Financing Activities
            
            
            124,215
            
            
            2,500Net
                Increase in Cash
            
            
            (9,985
            )
            
            1,994Cash,
                Beginning of Period
            
            
            19,708
            
            
            626Cash,
                End of Period
            
            $
            9,723
            
            $
            2,620Supplemental
                Information:Interest
                Paid
            
            $
            839
            
            $
            -Income
                Taxes Paid
            
            $
            -
            
            $
            -The
                accompanying notes are an integral part of these
                statements.




3





**The
      Small Business Company, Inc.**


(A
      Development Stage Company)





**NOTES
      TO UNAUDITED FINANCIAL STATEMENTS**


**(December
      31, 2006 and June 30, 2006)**





**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 1,320,000 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.





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.






4




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





December
                31,
            
            June
                302006
            
            2006Computers
            
            $
            4,810
            
            $
            3,623Less
                Accumulated Depreciation
            
            
            (3,821
            )
            
            (3,623
            )Equipment,
                net
            
            $
            989
            
            $
            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.





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 $605,052 as of December
      31, 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.





5




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.





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.





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.




6




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
            
            
            8/20/07Period
                Ended December 31, 2006
            
            
            500,000
            
            
            0.25
            
            
            11/1/08




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 December 31 and June 30, 2006 are 700,000
      and 200,000 respectively. 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.





**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.





On
      November 2, 2006 the Company received $50,000 prepayment on a subscription
      agreement for 500,000 common shares to be issued at $0.10 per share no later
      than November 1, 2007.





As
      of
      December 31, 2006 the Company also has a balance of 700,000 outstanding
      warrants for common stock as detailed above.






7





**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.





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.





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* .




8




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.




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




The
      following discussion and analysis is provided to increase the understanding
      of,
      and should be read in conjunction with, our unaudited financial statements
      and
      related notes 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.
      This report contains “forward looking statements” within the meaning of the
      Private Securities Litigation Reform Act of 1995. The statements, which are
      not
      historical facts contained in this Report, including this Management’s
      discussion and analysis of financial condition and results of operation, and
      notes to our unaudited financial statements, particularly those that utilize
      terminology such as “may” “will,” “should,” “expects,” “anticipates,”
“estimates,” “believes,” or “plans” or comparable terminology are
      forward-looking statements. Such statements are based on currently available
      operating, financial and competitive information, and are subject to various
      risks and uncertainties. Future events and our 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, our 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 our clients, the
      potential liability with respect to actions taken by our existing and past
      employees, risks associated with international sales, and other risks described
      herein and in our other filings with the Securities and Exchange
      Commission.





The
      safe
      harbor for forward-looking statements provided by Section 21E of the Securities
      Exchange Act of 1934 excludes issuers of “penny stock” (as defined under Rule
      3a51-1 of the Securities Exchange Act of 1934). Our common stock currently
      falls
      within that definition





All
      forward-looking statements in this document are based on information currently
      available to us as of the date of this report, and we assume no obligation
      to
      update any forward-looking statements. Forward-looking statements involve known
      and unknown risks, uncertainties and other factors that may cause the actual
      results to differ materially from any future results, performance or
      achievements expressed or implied by such forward looking
      statements.




9




The
      following discussion of our financial condition and results of operations should
      be read in conjunction with our unaudited financial statements and related
      notes
      appearing elsewhere in this report.





OVERVIEW





The
      Small
      Business Company is a California based company focused on the development of
      business improvement solutions for small business owners. We were incorporated
      in Delaware in 2002. Since that time, we have created and marketed, in
      management’s opinion, simple, powerful, affordable solutions to millions of
      small business owners. Our product line is founded on its patent-pending
      knowledge base - The “DARE Process” (Decide, Analyze, Realize and Evaluate);
      which process has been formatted into a series of books, high margin CD’s and
      internet downloads. In our opinion, these simple, yet powerful tools empower
      current and future small and home based business owners to succeed. We intend
      to
      compliment these tools with a global network of licensed business coaches,
      DARE
      Success Coaches, who will provide subscription based personalized assistance
      to
      micro-entrepreneurs (sole proprietors to ten employees).





SIGNIFICANT
      ACCOUNTING 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.





*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





December
                31,
            
            June
                302006
            
            2006Computers
            
            $
            4,810
            
            $
            3,623Less
                Accumulated Depreciation
            
            
            (3,821
            )
            
            (3,623
            )Equipment,
                net
            
            $
            989
            
            $
            0







10





*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.





*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.




RESULTS
      OF OPERATIONS





*Six
      months ended December 31, 2006 vs. six months ended December 31,
      2005.*





Revenues :
      We did
      not generate any revenue for the six months ended December 31, 2006 as compared
      to $21,776 in revenues for the same period in 2005. This reduction in revenues
      was due to three resource-related factors in the six month period ended December
      31, 2006: (i) registration of our securities under the Securities Exchange
      Act
      of 1934, as amended; (ii) re-engineering our products for sale; and (iii)
      expanding and implementing our marketing plan. We completed the registration
      process in the quarter ended December 31, 2006 and otherwise do not expect
      this
      trend to continue.





Operating
      Expenses :
      Our
      operating expenses for the six month period ended December 31, 2006 increased
      by
      $126,178, or 261%, to $174,460, from $48,282 for the comparable period in 2005.
      The increase in operating expenses was primarily caused by the increase in
      accounting, legal and consulting fees and related expenses of $70,750 due to
      costs associated with the registration of our securities. Other factors that
      increased operating expenses approximately $55,000 were associated with book
      design and printing and the re-engineering and production of our compact
      discs.





Net
      Loss :
      Due to
      the factors set forth above, our net loss increased to $174,460 for the six
      month period ended December 31, 2006 from $26,506 for the comparable period
      in
      2005 **.**





*Three
      months ended December 31, 2006 vs. Three months ended December 31,
      2005*






11





Revenues: We
      did
      not generate any revenue for the three months ended December 31, 2006 as
      compared to $20,526 in revenues for the same period in 2005. This  reduction
      in revenues was due to three resource-related factors in the three month period
      ended December 31, 2006:(i) registration of our securities under the Securities
      Exchange Act of 1934, as amended; (ii) re-engineering our products for sale;
      and
      (iii) expanding {and implementing} our marketing plan. We completed the
      registration process in the quarter ended December 31, 2006 and otherwise do
      not
      expect this trend to continue. .





Operating
      Expenses: Our
      operating expenses for the three month period ended December 31, 2006 increased
      by $66,657, or 276%, to $90,798, from $24,141 for the comparable period in
      2005.
      The increase in operating expenses was primarily caused by the increase in
      accounting, legal and consulting fees and related expenses of $41,250 due to
      costs associated with the registration of our securities. Other factors that
      increased operating expenses approximately $18,000 associated with
      re-engineering and production of our compact discs.





Net
      Loss: Due to
      the factors set forth above, our net loss increased to $90,798 for the three
      month period ended December 31, 2006 from $3,615 for the comparable period
      in
      2005.





Liquidity
      and Capital Resources





From
      our
      inception on November 26, 2002 to December 31, 2006, we have had a net loss
      from
      operations of $605,052 and had $883,048 in total operating expenses. We had
      a
      working capital deficit at December 31, 2006 of $53,752 and we had cash of
      $9,723 as December 31, 2006. We have financed our operations from revenues
      received and the sale of our common stock. Since inception, we have received
      $277,996 in revenues and $423,215 in proceeds from the sale of our common stock.





We
      used
      $133,013 of net cash in operating activities for the six months ended December
      31, 2006 as compared to using $506 for the six months ended December 31, 2005.
      This increase is primarily attributable to general and administrative expenses,
      legal expenses and product development costs. This was offset by non-cash
      charges for issuance of stock for services and an increase in our accounts
      payable.





Net
      cash
      flows used in investing activities was $1,187 for the six months ended December
      31, 2006 as compared to $0 for the comparable period in 2005. Net cash flows
      provided by financing activities was $124,215 for the six month period ended
      December 31, 2006 as compared to $2,500 for the six month period ended December
      31, 2005. This increase in net cash provided by financing activities was
      primarily attributable to proceeds from notes payable and subscriptions received
      on the sale of our common stock.





As
      of
      December 31, 2006, we had cash on hand of $9,723 and accounts receivable of
      $0,
      which is sufficient to satisfy our operating requirements only through February
      28, 2007. We anticipate that we will need at least $600,000 in additional
      working capital to satisfy our contemplated cash requirements for our current
      proposed plans and assumptions relating to our operations for a period of
      approximately 12 months. We are currently seeking to fund our capital
      requirements from the sale of our debt or equity securities, however it is
      possible that we will be unable to obtain sufficient additional capital through
      the sale of our debt and/or equity securities as needed. 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. If we don’t
      raise or generate these funds, the implementation of our short-term business
      plan will be delayed or eliminated.





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.





Off
      Balance Sheet Arrangements





None





**Item
      3. Controls and Procedures.**






12




Our
      disclosure controls and procedures are designed to ensure that information
      required to be disclosed in reports that we file or submit under the Securities
      Exchange Act of 1934 is recorded, processed, summarized and reported within
      the
      time periods specified in the rules and forms of the Securities and Exchange
      Commission. Our Chief Executive Officer and the Chief Financial Officer have
      reviewed the effectiveness of our “disclosure controls and procedures” (as
      defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and
      15d-14(c)) within the last ninety days and have concluded that the disclosure
      controls and procedures are effective to ensure that material information
      relating to The Small Business Company is recorded, processed, summarized,
      and
      reported in a timely manner. There were no significant changes in our internal
      controls or in other factors that could significantly affect these controls
      subsequent to the last day they were evaluated by our Chief Executive Officer
      and Chief Financial Officer.





**PART
      II—OTHER
      INFORMATION**




**Item
      1. Legal Proceedings.**





None.





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





On
      November 2, 2006, we issued a $50,000 unsecured convertible promissory note
      and
      related warrants to purchase 500,000 shares of our common stock to a single
      accredited investor. The promissory note has a maturity date of November 1,
      2007
      and is convertible into 500,000 shares of our common stock. The warrant expires
      on November 1, 2008 and has an exercise price of $0.25. The issuance was exempt
      under Section 4(2) of the Securities Act of 1933, as amended. We used the
      proceeds from this issuance for general working capital.




**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**




ItemNo.
            
            Description
            
            Method
                of Filing31.1
            
            Certification
                of Stuart Schreiber pursuant to Rule 13a-14(a)
            
            Filed
                electronically herewith.32.1
            
            Chief
                Executive Officer and Chief Financial Officer Certification pursuant
                to 18
                U.S.C. § 1350 adopted pursuant to Section 906 of the Sarbanes Oxley Act of
                2002
            
            Filed
                electronically herewith.


13


**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.





**THE
                SMALL BUSINESS COMPANY**February
                13, 2007
            /s/
                Stuart SchreiberStuart
                SchreiberChief
                Executive Officer and Chief Financial Officer(Principal
                Executive, Financial and Accounting
                Officer)


14