##### Table of Contents

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UNITED
STATESSECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 10-QSB

|[X] |  | Quarterly
report under Section 13 or 15 (d) of the Securities Exchange Act of  1934 for the
quarterly period ended September 30, 2006
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------

|[  ] |  | Transition report under Section 13 or 15 9d) of the Exchange Act for the Transition
Period from ____________ to  _______________.
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------

# TELEMETRIX INC.(Exact name of small business issuer as specified in its
charter)

|DELAWARE                          | 470830931
|--------------------------------- | ---------
|(State or other jurisdiction      |          
|of incorporation or organization) |          

7105 La Vista
Place, Suite 100, Longmont, Colorado 80503(Address of principal executive offices)
303-652-3279(Issuers telephone number)

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

Check
whether the issuer (1) filed all reports required to be filed by Section 13 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  [   ]

Indicate by
check mark whether the registrant is a small company (as defined in Rule 12b-2 of the
Exchange Act).      Yes  [X]    No  [   ]

APPLIABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEEDING FIVE YEARS

Check
whether the registrant filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court.     Yes  [   ]    No  [   ]

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. There are 24,999,682 shares of common stock
outstanding as of September 10, 2006.

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





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##### Table of Contents

TELEMETRIX
INC.INDEX



PART  I -
FINANCIAL INFORMATION

|                            |  | PAGE NO.                                                                                                         
|--------------------------- |  | -----------------------------------------------------------------------------------------------------------------
|Item 1.                     |  | Financial Statements.                                                                                            
|                            |  |                                                                                                                  
|                            |  | Consolidated Balance Sheet as of September 30, 2006 (unaudited)                                                  
|                            |  |                                                                                                                  
|                            |  | Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2006 and 2005 (unaudited)
|                            |  |                                                                                                                  
|                            |  | Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2006 and 2005 (unaudited)          
|                            |  |                                                                                                                  
|                            |  | Notes to Consolidated Financial Statements                                                                       
|                            |  |                                                                                                                  
|Item 2.                     |  | Managements Discussion and Analysis of Financial Condition and Plan of Operations                               
|                            |  |                                                                                                                  
|Item 3.                     |  | Controls and Procedures.                                                                                         
|                            |  |                                                                                                                  
|PART II  OTHER INFORMATION |  | 24                                                                                                               
|                            |  |                                                                                                                  
|Item 1.                     |  | Legal Proceedings.                                                                                               
|                            |  |                                                                                                                  
|Item 2.                     |  | Changes in Securities and Use of Proceeds.                                                                       
|                            |  |                                                                                                                  
|Item 3.                     |  | Defaults Upon Senior Securities.                                                                                 
|                            |  |                                                                                                                  
|Item 4.                     |  | Submission of Matters to a Vote of Securities Holders.                                                           
|                            |  |                                                                                                                  
|Item 5.                     |  | Other Information.                                                                                               
|                            |  |                                                                                                                  
|Item 6.                     |  | Exhibits and Reports on Form 8-K.                                                                                
|                            |  |                                                                                                                  
|SIGNATURES                  |  |                                                                                                                  
|                            |  |                                                                                                                  

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##### Table of Contents

# PART IFINANCIAL INFORMATION

## Item 1.
      Financial Statements

Telemetrix,
Inc.Consolidated Balance SheetSeptember 30, 2006(Unaudited)

|                                                               | 
|-------------------------------------------------------------- | 
|Assets                                                         | 
|                                                               | 
|Current assets:                                                | 
|Cash                                                           | 
|Accounts receivable, net                                       | 
|                                                               | 
|Total current assets                                           | 
|                                                               | 
|                                                               | 
|Property and equipment, net                                    | 
|                                                               | 
|Other assets:                                                  | 
|Licenses                                                       | 
|                                                               | 
|Total assets                                                   | 
|                                                               | 
|                                                               | 
|Liabilities and stockholders' (deficit)                        | 
|                                                               | 
|Current liabilities:                                           | 
|Accounts payable                                               | 
|Accrued expenses                                               | 
|Convertible debentures                                         | 
|Notes payable - affiliates                                     | 
|Notes payable                                                  | 
|Accrued interest-related party                                 | 
|Accrued interest                                               | 
|Current portion of long-term debt                              | 
|                                                               | 
|Total current liabilities                                      | 
|                                                               | 
|                                                               | 
|Stockholders' (deficit):                                       | 
|Preferred stock, $.001 par value, 24,750,000 shares authorized | 
|none issued or outstanding                                     | 
|Preferred stock, series D, $.001 par value, Convertible,       | 
|liquidation preferences $30 per share, 250,000 authorized      | 
|none issued or outstanding                                     | 
|Common stock, $.001 par value,                                 | 
|750,000,000 shares authorized,                                 | 
|24,999,682 shares issued and outstanding                       | 
|Paid in capital                                                | 
|Accumulated (deficit)                                          | 
|                                                               | 
|Total stockholders' (deficit)                                  | 
|                                                               | 
|                                                               | 
|Total liabilities and stockholder's (deficit)                  | 
|                                                               | 
|                                                               | 

See the
accompanying notes to the consolidated financial statements.

3



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##### Table of Contents

Telemetrix,
Inc.Consolidated Statements of OperationsThree and Nine Months Ended September 30, 2006 and 2005
(Unaudited)

|                                                 | Three Months Ended | Nine Months Ended |   |                
|------------------------------------------------ | ------------------ | ----------------- | - | ---------------
|
|Revenue:                                         |                    |                   |   |                
|Pager                                            |                    | $             390 |   | $        20,005
|Network services                                 |                    |                  |   |               
|Other                                            |                    | 64,245            |   | 47,833         
|                                                 |                    |                   |   |                
|Total revenue                                    |                    | 64,635            |   | 67,838         
|                                                 |                    |                   |   |                
|                                                 |                    |                   |   |                
|Cost of revenue                                  |                    | 48,334            |   | 61,419         
|                                                 |                    |                   |   |                
|                                                 |                    |                   |   |                
|Gross margin                                     |                    | 16,301            |   | 6,419          
|                                                 |                    |                   |   |                
|                                                 |                    |                   |   |                
|Operating expenses:                              |                    |                   |   |                
|Selling, general and administrative expenses     |                    | 302,209           |   | 253,957        
|                                                 |                    |                   |   |                
|Total operating expenses                         |                    | 302,209           |   | 253,957        
|                                                 |                    |                   |   |                
|                                                 |                    |                   |   |                
|(Loss) from operations                           |                    | (285,908          | ) | (247,538       
|                                                 |                    |                   |   |                
|                                                 |                    |                   |   |                
|Other (income) expense:                          |                    |                   |   |                
|Gain on the settlement of debt                   |                    |                  |   |               
|Loss on disposal of assets                       |                    | 661,210           |   |               
|Bad debts                                        |                    |                  |   |               
|Interest expense                                 |                    | 230,703           |   | 61,832         
|                                                 |                    |                   |   |                
|Total other (income) expense                     |                    | 891,913           |   | 61,832         
|                                                 |                    |                   |   |                
|                                                 |                    |                   |   |                
|Net (loss)                                       |                    | $(1,177,821       | ) | $    (309,370  
|                                                 |                    |                   |   |                
|Per share information - basic and fully diluted: |                    |                   |   |                
|Weighted average shares outstanding              |                    | 24,999,682        |   | 24,999,682     
|                                                 |                    |                   |   |                
|                                                 |                    |                   |   |                
|Net (loss) per share                             |                    | $         (0.05   | ) | $         (0.01
|                                                 |                    |                   |   |                
|                                                 |                    |                   |   |                

See the
accompanying notes to the consolidated financial statements.

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Telemetrix,
Inc.Consolidated Statements of Cash FlowsFor the Nine Months Ended September 30, 2006 and 2005
(Unaudited)

|                                          | 2006 | 2005           
|----------------------------------------- | ---- | ---------------
|Cash flows from operating activities:     |      |                
|Net cash (used in) operating activities   |      | $(1,169,022    
|                                          |      |                
|Cash flows from investing activities:     |      |                
|Purchase of property and equipment        |      | (872,441       
|                                          |      |                
|Net cash (used in) investing activities   |      | (872,441       
|                                          |      |                
|                                          |      |                
|Cash flows from financing activities:     |      |                
|Advances from affiliates                  |      | 2,068,125      
|Increase (decrease) in notes-lenders      |      | 323,259        
|Payments on long-term debt and notes      |      | (323,642       
|                                          |      |                
|Net cash provided by financing activities |      | 2,067,742      
|                                          |      |                
|                                          |      |                
|Net increase (decrease) in cash           |      | 26,279         
|                                          |      |                
|Beginning - cash balance                  |      | 115            
|                                          |      |                
|Ending - cash balance                     |      | $      26,394  
|                                          |      |                
|                                          |      |                
|Supplemental cash flow information:       |      |                
|Cash paid for income taxes                |      | $             
|                                          |      |                
|Cash paid for interest                    |      | $      63,764  
|                                          |      |                
|                                          |      |                

See the
accompanying notes to the consolidated financial statements.

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##### Table of Contents

TELEMETRIX,
INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2006(UNAUDITED)

(1)     
Basis of Presentation

The
accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
(GAAP) for interim financial information and Item 310(b) of Regulation SB. They
do not include all of the information and footnotes for complete financial
statements as required by GAAP. In managements opinion, all adjustments
(consisting only of normal recurring adjustments) considered necessary for a
fair presentation have been included. The results of operations for the periods
presented are not necessarily indicative of the results to be expected for the
full year. For further information, refer to the Companys financial
statements as of December 31, 2005, and for the two years then ended, including
notes thereto included in the Companys Form 10-KSB.

(2)     
Earnings Per Share

The
Company calculates net income (loss) per share as required by SFAS 128,
Earnings per Share. Basic earnings (loss) per share is calculated by
dividing net income (loss) by the weighted average number of common shares
outstanding for the period. Diluted earnings (loss) per share is calculated by
dividing net income (loss) by the weighted average number of common shares and
dilutive common stock equivalents outstanding. During periods when they are
anti-dilutive, common stock equivalents, if any, are not considered in the
computation.

(3)     
Revenue Recognition

The
Company recognizes paging and telemetry revenue, which consists of fees charged
to subscribers, when services are provided. Revenue from the sale of paging
equipment is recognized upon delivery to the customer. The Company recognizes
revenue from network services (switching) which consists of fees for engineering
services, equipment sales and fees for wireless mobile telephone interconnection
(switching) services upon completion of the service or delivery of the
equipment.

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(4)     
Property and Equipment

On
April 3, 2006, the Company entered into a Hosting Agreement and an Equipment
Services Agreement with Pario Solutions, a Nokia value added reseller located in
Texas. This Hosting Agreement will allow for compliance with Federal
Communications Commission and Department of Justice requirements for wireless
carriers. The transition from the switch in Gering, Nebraska to Dallas, Texas
took place in September 2006.

As of
September 30, 2006, the Company has purchased $872,441 of equipment, primarily a
media gateway, to enable its radio access network in Gering, Nebraska to connect
to Pario Solutions switch in Dallas, Texas. This new equipment replaces
nearly all of the equipment previously used in our operations. On September 30,
2006, the Company wrote off $1,142,382 of fixed assets resulting in a loss on
disposal of $661,210. The Company has granted a security interest in this
equipment to the related party and the Company has pledged substantially all
property and equipment as collateral on the notes described in Note 5 and Note 6
below.

On
April 26, 2006, the Company gave notice to its paging customers that it would be
discontinuing providing pager services effective June 9, 2006. The Company
transitioned its paging customers to a competing local paging company during
June 2006. On June 30, 2006, the Company wrote off $432,291 of fully depreciated
paging equipment and $66,920 of fully depreciated mobile phone equipment due to
the discontinuation of this service.

(5)     
Convertible Debentures

During
October 2003 the Company entered into a funding agreement with Nyssen LP
(Nyssen)whereby the Company would be able to borrow up to $2,000,000
in the form of convertible notes. As of November 30, 2004, the Company was
advanced an aggregate of $1,600,025 pursuant to this funding agreement. Pursuant
to an amended agreement dated November 30, 2004, Nyssen agreed to convert the
$1,600,025 into common shares at $.04 per share receiving subscriptions for
40,000,000 shares of common stock. The difference between $.04 per share price
and the fair market value of the shares at the time of conversion was $4,399,975
and this amount was charged to non-cash interest. In the same agreement, an
entity related to Nyssen received subscriptions for 20,000,000 shares of common
stock for non-cash stock compensation for services. The Company recorded a
$3,000,000 charge to non-cash compensation.

Provided
in the November 30, 2004 agreement, Nyssen was to invest an additional $300,000
as follows:

| | $100,000
at $0.02 per share$200,000 at $0.10 per share
| | ------------------------------------------------------

Nyssen
advanced the $300,000 and received subscriptions for 7,000,000 shares of common
stock. Nyssen has advanced an additional $713,259 in the form of demand notes as
of September 30, 2006, including $323,259 during the nine months ended September
30, 2006. The advances bear interest at 15% per annum and are due on demand.

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Also
provided in the November 30, 2004 agreement, a related party, Becker Capital
Management (Becker), its management and associates were to invest
$300,000 as follows:

| | $200,000
at $0.02 per share$100,000 at $0.10 per share
| | ------------------------------------------------------

Becker
advanced the $300,000 and received subscriptions for 11,000,000 shares of common
stock. Becker advanced an additional $2,382,000 in the form of demand notes as
of September 30, 2006, including $2,126,500 during the nine months ended
September 30, 2006. The demand notes bear interest at 15% per annum and are due
on demand.

Pursuant
to this same November 30, 2004 agreement, a related party, Tracy Broadcasting
Corporation, was issued a convertible promissory note for $467,000 loaned to the
company. The note matures on December 31, 2006, bears interest at 10% per annum
and has a conversion feature at $0.02 per share.

(6)     
Notes payable  related parties

The
Company has outstanding notes payable to affiliates in the principal amount of
$2,849,000 at September 30, 2006. Of the total notes payable, $467,000 is
convertible into common shares of the Company at $.02 per share. The other
$2,382,000 of notes payable are demand notes bearing interest at 15%. On October
2, 2006, the Company received a funding commitment of $800,000 from this
affiliate and issued a convertible promissory notes replacing the demand notes
described above. The convertible promissory notes pays interest at 15% per annum
and provide for a conversion feature, based on the prior 14 day average stock
trading price on October 2, 2006, which was $.015 per share. The note matures on
December 31, 2007.

The
Company used the intrinsic value method to determine proceeds that should be
allocated to the embedded beneficial conversion feature of the $467,000 note
described above. As such, $492,000 was credited to additional paid in capital in
2004. The allocation of $467,000 will be amortized over 24 months commencing
January 1, 2005, and the allocation of $25,000 was charged to interest expense
during the year ended December 31, 2004.

|                                                              | 
|------------------------------------------------------------- | 
|Convertible debt - Matures 12/31/06 Interest at 10% per annum | 
|Demand Notes - interest at 15% per annum, due on demand       | 
|                                                              | 
|                                                              | 
|Debt discount, less amortization of $433,625                  | 
|                                                              | 
|                                                              | 
|                                                              | 

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(7)     
Common Stock

The
Company has obligations to issue common shares at September 30, 2006, pursuant
to the conversions of various loans and accrued interest, incentive shares, and
services as follows:

|                      | Shares | Amount     
|--------------------- | ------ | -----------
|Officers salary       |        | 6,479,479  
|Loan incentive shares |        | 6,055,762  
|Conversion of debt    |        | 47,000,000 
|Services              |        | 20,600,000 
|Conversion of related |        |            
|party debt            |        | 75,948,445 
|                      |        |            
|                      |        | 156,083,686
|                      |        |            

The
stock subscriptions which had been classified as unissuable common stock in
previous periods have been reclassified to paid in capital at September 30,
2006, due to shareholder approval of an increase in authorized common shares to
750,000,000 on October 27, 2006.

(8)     
Commitments and Contingencies

On
April 3, 2006, the Company entered into a Hosting Agreement and an Equipment
Services Agreement with Pario Solutions, a Nokia value added reseller located in
Texas. This agreement calls for monthly re-occurring fee of $8,500 for hardware
and software TAC, upgrade support and emergency support services as well as a
per transaction charge for both SMS and voice traffic. The transition from the
switch in Gering, Nebraska to Dallas, Texas took place in September 2006.

The
Company entered into a services agreement with a former officer during 2005, to
provide network operations for the Company for $24,000 per month. Termination of
the agreement by either party requires 60 days notice. The agreement was
terminated on May 26, 2006. The Company entered into a new services agreement
with this former officer to provide network services on an as needed basis for
$100 per hour.

The
Company entered into an office lease agreement with a former officer for a
monthly fee of $1,860 per month plus common area charges. The lease expires
October 31, 2006.

In
September 2006, the Company entered into an agreement with Verisign for output
billing services. This contract enables the Company to provide billing services
to our roaming partners, primarily Cingular and T-Mobile. The contract is for 36
months and the charges for this service are transaction based with certain
monthly minimums.

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In
September 2006, the Company entered into an agreement the ARS Informatica for
voice and data billing services. This contract enables the Company to provide
billing services to our voice and data customers. The contract is for two years
and the charges for this service are transactional based with certain monthly
minimums.

(9)     
Going Concern

The
Companys financial statements are presented on a going concern basis,
which contemplates the realization of assets and satisfaction of liabilities in
the normal course of business.

The
Company has experienced significant losses from operations. For the nine months
ended September 30, 2006, the Company incurred a net loss of $2,178,616. In
addition, the Company has an accumulated deficit of $79,018,608 and working
capital and stockholders deficits of $7,206,462 and $6,340,318 at
September 30, 2006.

The
Companys ability to continue as a going concern is contingent upon its
ability to expand its service operations and secure additional financing. The
Company is pursuing financing for its operations and seeking to expand its
operations. Failure to secure such financing or expand its operations may result
in the Company not being able to continue as a going concern.

The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.

(10)     
Litigation and Contingencies

On April 12,
2006, Michael J. Tracy filed a complaint in the District Court for Scottsbluff County,
Nebraska, against the Company, in  Case No. CI-06-291.  Mr. Tracy is the former CEO and
Director of the Company.  The Complaint alleges that the Company owes Mr. Tracy
$3,378,129 as of April 1, 2006, including principal and interest for loans Mr. Tracy made
to the Company at various times in 2001 and  2002.  The loans are represented by demand
notes.  On May 26, 2003, Mr. Tracy and the Company entered into an agreement for the
exchange and conversion of these notes for preferred stock of Telemetrix.  The Complaint
alleges that Telemetrix has failed to  perform this agreement.  The Company has
meritorious defenses to the Complaint and has filed an Answer to the Complaint asserting
these defenses as well as Counterclaims against Mr. Tracy. Mr. Tracy has filed a Reply to
the Companys Counterclaims. The Company  intends to vigorously defend the Complaint
and the Counterclaims against Mr. Tracy.  The parties are now conducting discovery in
this  case.

On
September 10, 2004, the Company filed a Complaint in the United States District
Court in the Southern District of New York against Michael Tracy
(Tracy), Michael L. Glaser (Glaser), and William W.
Becker (Becker), in case number 04CV7255. The Complaint sought an
award for compensatory damages, an injunction against Tracy, Glaser and Becker
for breach of fiduciary duty, costs and expenses for litigation (except fees and
other disbursements) including reasonable attorneys fees, and against
Tracy for conversion, and such other and further relief as may be deemed just
and proper.

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On
September 16, 2004, the Company filed a complaint in the United States District
Court for the District of Nebraska, in case number 7:04CV5020, against TowerGate
Finance, Ltd., (TowerGate) and Nyssen, LP (Nyssen). The
Complaint alleges fraudulent misrepresentations against TowerGate, fraudulent
concealment against Nyssen, breach of fiduciary duty against TowerGate, civil
conspiracy against TowerGate and Nyssen, breach of contract against TowerGate,
and breach of the covenant of good faith and fair dealings against TowerGate.
The Complaint seeks preliminary and permanent injunction, declaratory judgment
and an accounting. The Complaint also requests a jury trial.

On
December 10, 2004, the Company, Tracy, Glaser and Becker and our other majority
shareholders and TowerGate and Nyssen entered into a binding agreement
(Agreement) dated as of November 30, 2004, in which the parties
agreed to dismiss the above described lawsuits, and settle the dispute between
them and between the Company and TowerGate and Nyssen. The agreement calls for
the appointment of an interim board of directors and stipulated that so long as
Becker and affiliated entities and TowerGate/Nyssen hold in excess of 25% of the
outstanding voting common shares that they will be entitled to appoint two
directors.

All
parties to the Settlement Agreement are either beneficial owners of the
Companys common stock, current or proposed members of the Companys
management, and/or are parties or affiliates of parties involved in the
Litigation that gave rise to the Settlement Agreement. Despite the filing of a
December 21, 2004, Form 8-K related to this litigation, the Company has never
disclosed the specific terms of the Settlement Agreement, including the
relationships among the parties to the Settlement Agreement, whether and how the
terms of the Settlement Agreement will be fulfilled and the existence and
substance of potential violations of Delaware law and the Companys bylaws
as a result of the terms contained in the Settlement Agreement. On September 15,
2006 the Company filed a Form 14A and disclosed the specific terms of the
Settlement Agreement, including the relationship among the parties to the
Settlement Agreement. On October 27, 2006, the Company held its 2006 Annual
Shareholder Meeting and the shareholders approved the proposals to implement the
Settlement Agreement.

In the
Settlement Agreement, the parties agree that the parties will undertake the
following actions:

| | Increase
the Companys authorized share capital;
| | ------------------------------------------------

| | Effect
material share issuances to  Becker Capital Management;
| | --------------------------------------------------------------

| | Effect
material share issuances to Nyssen LP and  TowerGate Finance Limited; and
| | --------------------------------------------------------------------------------

| | Adopt
a stock option plan for the Companys  existing and new management.
| | -------------------------------------------------------------------------

The
Settlement Agreement gives rise to the following unasserted claims, all of which
expose the Company to potential shareholder lawsuits or SEC regulatory actions.
The Company is attempting to comply with all of the requirements of Delaware law
and the SEC requirements, but there can be no assurance that it will be able to
do so. In addition, FCC approval is required for certain of the share issuances
and if this approval is not obtained by the Company there may be material
negative impact on the Companys financial position and results of
operations. The Company is currently preparing the Amendment to its Articles of
Incorporation to comply with Delaware law. On September 15, 2006, the Company
received approval from the SEC to file its Form 14A and seek shareholder
approval of the proposals contemplated in the Settlement Agreement. On August
10, 2006, the Company received approval from the FCC for the share issuances
contemplated in the Settlement Agreement. On October 27, 2006, a majority of the
disinterested shareholders approved the Settlement Agreement.

11



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##### Table of Contents

Violation of
Delaware Law and Corporate Bylaws.Section 144 of the Delaware Corporation Code states:

| | Interested
directors; Quorum provides that any contract or transaction between the Company and
one or more of its directors or officers, or between a corporation and any other
corporation, partnership, association or other organization in which 1 or more of its
directors or officers, are directors or officers, or have a financial interest requires
the approval of the contract and related transactions by: (a) a majority of the
Companys disinterested directors; and (b) the Companys shareholders.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If the
Company fails to comply with either requirement (a and b above), it is subject
to shareholder action All of the interested directors and interested
shareholders abstained from voting on the Settlement Agreement. On October 27,
2006, a majority of the disinterested shareholders approved the Settlement
Agreement. Additionally, Section 144 provides that the Settlement Agreement
could potentially be voided unless it is fair to the Company. The action of
increasing the Companys authorized common stock so that it can issue large
numbers of shares to the parties to the agreement, who are management,
beneficial owners or affiliates, and also adopting a stock option plan for the
benefit of management, may be considered unfair to the Companys
shareholders who are not party to the agreement. The Companys position on
the fairness of the Settlement Agreement is discussed in the Form 14A filed with
the SEC on September 15, 2006. On October 27, 2006, 71%, of the Companys
disinterested directors and disinterested shareholders approved the Settlement
Agreement.

The
issuances of significant shares (described above) to the Companys
management and beneficial owners as provided for in the Settlement Agreement may
be set aside under Delaware Corporation Law. Section 161 imposes limitations on
directors power to issue authorized shares. Any new stock issuance, such
as those provided for in the Settlement Agreement, is subject to the statutory
requirements regarding quality and quantity of consideration to be received for
the shares. The foregoing actions may require the vote of disinterested
shareholders pursuant to Delaware Corporate Code Section 144 because all of the
parties to the Settlement Agreement are either the Companys directors
and/or beneficial owners, and/or all are interested directors and/or interested
shareholders. On September 15, 2006 the Company filed a Form 14A with the SEC
and disclosed the specific terms of the Settlement Agreement, including the
relationship among the parties to the Settlement Agreement. On October 27, 2006,
the Company held its 2006 Annual Shareholder Meeting with 71% of the
Companys disinterested directors and disinterested shareholders approved
the Settlement Agreement.

12



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##### Table of Contents

The
Companys bylaws and Delaware corporation law require that directors be
elected at any annual meeting of Shareholders. On October 27, 2006, the
directors of the Company were elected at the 2006 Annual Meeting of the
Shareholders.

Because
the Company has a class of securities registered pursuant to the Securities
Exchange Act of 1934 (Exchange Act), the Company must comply with
Exchange Act Section 14 disclosure requirements. The Company is required to file
a Proxy Statement on Form 14A or an Information Statement on Schedule 14C and
will be prohibited from taking the actions set forth in the Settlement Agreement
until twenty days after the filing of the Proxy or of its Definitive Information
Statement. The Company filed its Proxy Statement on Form 14A on September 15,
2006.

The
Company is also involved in various legal actions arising in the normal course
of business management believes that such matters will not have a material
effect upon the financial position of the Company.

Valley
Bank and Trust Co., (Valley Bank) located in Scottsbluff, Nebraska,
filed a Financing Statement and Security Agreement with the Secretary of State
of Nebraska listing Tracy Corporation II as a debtor in March 1998 and extended
on December 1, 2002. The Company is unaware of any debt owed to Valley Bank and
Valley Bank has not provided any evidence of indebtedness of the Company or
Tracy Corporation II. The Company has requested that Valley Bank file a
termination statement with the Nebraska Secretary of State.

Other

On or
about September 10, 2001, the Company filed a Form S-8 Registration Statement
under the Securities Act of 1933 registering 375,000 shares of common stock to
be issued in accordance with a consulting agreement. On September 21, 2001, the
Company issued the 375,000 shares of common stock. The Company received and
acted in reasonable reliance upon legal advice and guidance from legal counsel
at the time regarding the issuance, however, it has been recently advised that
certain investor relations related services that were to be provided are
prohibited under Regulation S-8. As such, the issuance of the 375,000 shares of
common stock may have violated the registration provisions of the federal
securities laws, specifically Section 5 of the Securities Act of 1933.

(11)     
Subsequent Events

On
October 2, 2006, the Company received a funding commitment of $800,000 from
Becker Capital Management LLC and L.B. Becker Consulting Inc. A total of
$325,000 of this commitment was received in September 2006. The Company has
issued convertible promissory notes for a total of $2,382,000 and cancelled
existing demand notes totaling $2,382,000. The convertible promissory note pays
interest at 15% per annum and provides for a conversion feature, based on the
prior 10 day average stock trading price of TLXT on Pinksheets on
October 2, 2006, which was $.015 per share. The notes mature on December 31,
2007.

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##### Table of Contents

On
October 19, 2006, the Company filed a Request for Arbitration with the World
Intellectual Property Organization against UT Starcom, Inc., the successor
in interest to Telos Technologies, Inc., the manufacturer of the Sonata SE
switching system. The Request for Arbitration was accepted on October 24,
2006. The dispute relates to a Master Purchase and License Agreement dated
October 22, 2003 for a Sonata SE Global System for Mobile Communications
switching system. The Company requests arbitration of the following claims: (1)
breach of contract; (2) breach of good faith and fair dealing; (3) fraudulent
misrepresentations; (4) fraudulent inducement; (5) negligent misrepresentation;
(6) intentional interference with existing contractual relations; (7) intention
interference with economic relations; and (8) negligent interference with
prospective economic relations. The Company claims that (a) UT Starcom
failed to perform from the time of installation and (b) UT Starcom failed
to deliver five significant features and functionality that Telos represented
would be available at the time the Company purchased the GSM switch and (c)
UT Starcom failed to include E911-Phase II functionality in the GSM Switch
so that Telemetrix could comply with the FCCs mandated 911 services
requirement by June 30, 2006 and (d) UT Starcom represented to Telemetrix that
the GSM Switch would include CAMEL, a GSM feature including intelligent network
functions into a GSM network system and (e) UT Starcom failed to make
available to Telemetrix software in the GSM Switch to enable Telemetrix to
comply with CALEA. CALEA imposes upon Telemetrix a statutory obligation to
ensure that its equipment, facilities or services that provide a customer or
subscriber with the ability to originate, terminate or direct communications.
Telemetrix requests entry of an award during the arbitration in its favor and
against UT Starcom as follows:

|A. |  | for
general damages in an amount to be established at trial;
|-- |  | ------------------------------------------------------------

|B. |  | alternatively,
a rescission of the Agreement;
|-- |  | ---------------------------------------------

|C. |  | for
cost of the arbitration, including attorneys fees; and
|-- |  | -----------------------------------------------------------

|D. |  | for
such other and further relief as the Arbitrator may deem just and fair.
|-- |  | ---------------------------------------------------------------------------

On
October 27, 2006, the Company held its 2006 Annual Meeting of the shareholders.
The Company asked the shareholders to (i) elect five nominees to serve as
directors of the Company; (ii) ratify the appointment of Stark Winter Schenkein
and Co., LLP as the independent accounts for the current fiscal year ended
December 31, 2006; (iii) increase the number of authorized shares of common
stock of the Company from the present 25 million to 750 million; (iv) increase
the number authorized share of preferred stock from 5 million to 25 million; (v)
approve the Settlement Agreement between the Company and the majority
Shareholders of the Company and Nyssen LP and TowerGate Finance Limited; and
(vi) approve an employee stock option plan with 18 million common shares or
approximately 10% of our authorized common stock (assuming the Companys
Shareholders approve an increase in the Companys authorized common stock)
to incentivize the performance of our existing and new management. A
majority of the Companys shareholders voted in favor of all six
proposals.

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##### Table of Contents

Item  2.   
Managements Discussion and Analysis of Financial Condition and Plan of  Operation

The
following discussion should be read in conjunction with our financial statements
and related notes appearing elsewhere in this Form 10-QSB and our Annual Report
on Form 10-KSB for our fiscal year ended December 31, 2005. The terms the
Company, we, our or us refer to
Telemetrix, Inc. This discussion contains forward-looking statements based on
our current expectations, assumptions, and estimates. The words or phrases
believe, expect, may,
anticipates or similar expressions are intended to identify
forward-looking statements.

Actual
results could differ materially from those projected in the forward-looking
statements as a result of a number of risks and uncertainties pertaining to our
business, including: (a) our history of losses makes it difficult to evaluate
our current and future business and our future financial results; (b) our
ability to proceed with our operating plan is dependent on our ability to obtain
additional financing; (c) even if we obtain additional debt or equity financing,
the value of our common stock may be diluted; (d) our ability to continue as a
going concern is contingent upon our ability to expand our service operations
and secure additional financing; (e) debt obligations of approximately $5
million may negatively affect our ability to expand our operations; (f) whether
we will be able to keep pace with the rapid development of technology in the
wireless communications services area; (g) whether our existing technology will
become obsolete or too expensive to upgrade; (h) the possibility that our
business will be subject to increasing government regulation and related
increasing costs; and (i) our dependency upon third party providers, including
roaming partners, wireless network companies, and our switch hosting provider,
through which we obtain our interconnections throughout North America and
international markets; should we lose the services of these third party
providers, our operations may be negatively affected, including interruptions in
our service.

Statements
are made as of the filing of this Form 10-QSB with the Securities and Exchange
Commission and should not be relied upon as of any subsequent date. Unless
otherwise required by applicable law, we do not undertake, and we specifically
disclaim any obligation, to update any forward-looking statements to reflect
occurrences, developments, unanticipated events or circumstances after the date
of such statement.

Overview

Until
August 2002, our revenues were primarily generated from one way wireless
communication (paging) services. Beginning in September 2002, we ceased research
and development on telemetry related hardware products; instead, we began
focusing on using our Personal Communications System network (PCS) to provide
Global Systems for Mobile communications (GSM) network access for telemetry
devices from third party providers. At that time, we began providing telemetry
services, which consist of sending and receiving Short Messages, including
actual text messages transmitted to and from wireless modems, the sale of and
service for subscriber identity module (SIM) cards, a cost per short message,
and an activation fee for subscriber/customers.

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We
also provide professional, back office, and switch sharing services to medium
and smaller size wireless carriers through our Network Services Division. In
June 2006 we discontinued providing one way wire communication (paging)
services. In September 2006 we discontinued providing professional, back office,
and switch sharing services through our Network Services Division

DivisionsWe
operate the following divisions:

|o |  | Telemetry  Our Telemetry Division offers wholesale and retail messaging services.
For businesses and end users, we provide cellular roaming services. For wholesale
customers, we provide short messaging services (SMS). Wholesale SMS are sold through
agreements with agents and resellers that purchase our telemetry and data services at
wholesale and then resell such services at retail rates.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | Pager Services  Our Paging Division offers wholesale and retail messaging services.
For businesses and end users, we provide regional paging services. We discontinued
providing Pager Services in June 2006.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | Network Services  Our Network Services Division provides professional, back office,
and switch sharing services to medium and smaller size wireless service providers. These
services include system upgrades and integration that offer call processing, calling
feature enhancements, roamer clearing and settlement, billing and other network services.
We discontinued providing Network Services to Wilkes Cellular in August 2006.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Type of CustomersExcept
for consumer Pager Services contracts, all of our customers are commercial
customers. We have three major types of commercial customers:

|o |  | Resellers  Our resellers resell our short message services, which are often resold
in combination with a specific device that the reseller offers as a part of an integrated
hardware/communication service package;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|o |  | Wholesale Users  We have wholesale users, such as hardware and software developers
that use our short message services for testing and development of hardware and messaging
solution services; and
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

RevenuesOur
revenues consist of the following:

|o |  | Pager  Pager revenue is derived from monthly paging service contracts with
businesses and end consumers. Pager services were discontinued during June 2006.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | Network Services  Network Services revenue is produced by our Network Services
Division through incremental charges for the shared use of our central office wireless
switch, which enables certain of our customers to operate a remotely located media gateway
in their location via a connection with our switch in Gering, Nebraska. We discontinued
providing Network services in August 2006; and
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | Other  Other revenue is derived from the rental of our towers, cellular roaming
revenue, and telemetry revenue that results from wholesale contracts with resellers of
network access and short message services.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During
the three month period ending September 30, 2006, our total revenues of $64,635
were derived from the following:

|o |  | $390 from our pager related services; and
|- |  | -----------------------------------------

|o |  | $0
from our network services; and
|- |  | ---------------------------------

|o |  | $64,245 from other revenue.
|- |  | ---------------------------

During
the nine month period ending September 30, 2006, our total revenues of $342,626
were derived from the following:

|o |  | $ 27,081 from our pager related services; and
|- |  | ---------------------------------------------

|o |  | $122,577
from our network services; and
|- |  | ---------------------------------------

|o |  | $192,968 from other revenue
|- |  | ---------------------------

We
believe that during the year 2006 pager related revenues will continue to
decline as the overall North American pager market continues the revenue decline
it has experienced over the past several years. We discontinued providing paging
services in June 2006. We also discontinued providing network services in August
2006.

We
will attempt to expand our revenues by marketing our Telemetry Divisions
short message service network data access.

Our
revenues are dependent upon the following factors:

|o |  | Our ability to secure additional agreements for wholesale reseller customers using our
nationwide network access for short message service and data as well as our ability to
generate an increase in usage by our existing customers;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | Our ability to hire and maintain qualified engineering and Information Technology staff
that will be able to install and maintain and support the equipment and software necessary
for our Telemetry Division services.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | Demand for our services;
|- |  | ------------------------

|o |  | Individual
economic conditions in our markets; and
|- |  | --------------------------------------------------

|o |  | Our general ability to market our services.
|- |  | -------------------------------------------

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Capital Expenditures and RequirementsDuring
2005, we did not commit to any significant capital expenditures. During the
first nine months of 2006, we have made capital expenditures of $872,441 for a
media gateway and new base station equipment.

Critical Accounting Policies and EstimatesThe
preparation of our financial statements requires us to make estimates and
assumptions that affect the reported amounts. These estimates and assumptions
are evaluated on an on-going basis and are based on historical experience and
various other factors that are believed to be reasonable. Estimates and
assumptions include, but are not limited to, fixed asset lives, intangible
assets, income taxes, and contingencies, which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. Critical accounting
policies affect our more significant judgments and estimates used in the
preparation of the financial statements. Our principal critical accounting
policies consist of revenue recognition and stock compensation. Our critical
accounting policies are outlined in our audited financial statements contained
in our Form 10-KSB for the year ended December 31, 2005.

Results of
Operations

Comparison of
Three Months Ended September 30, 2006 and 2005

Revenues.   
Revenues for the three months ended September 30, 2006 decreased by $3,203 or
4.7% to $64,635 from $67,838 for the three months ended September 30, 2005. The
decrease in revenue is primarily attributable to discontinuing providing pager
services in June 2006. Other revenue increased $16,412 or 34.3% due to increased
volumes of our customers in short message reselling.

Cost of
Revenues.    Cost of revenues currently consists primarily of signaling charges and
short  message processing. Cost of revenues decreased by 21.3% or $13,085 to $48,334  for
the three months ended September 30, 2006 from $61,419 for the comparable  2005 period,
representing 74.8% and 90.5% of the total revenues for the three  months ended September
30, 2006 and 2005, respectively. The decrease in the cost  of revenues is attributable to
transitioning our switching services to Pario  Solutions in Texas in September 2006
versus maintaining our own switching  engineers in Nebraska.

Operating
Income/(Losses).    Operating income for the three months ended September 30,
2006 reflected a loss of ($285,908) compared to an operating loss of ($247,538)
during the comparable 2005 period. On a year over year basis for the third
quarter, our operating losses increased by 15.5% or $38,370. The increase in
operating loss was primarily due to increased cost of general and administrative
expenses.

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Selling,
General and Administrative Expense.    General and administrative expense
increased by $48,252 or 19.0% to $302,209 for the three month period ended
September 30, 2006, from $253,957 for the three-month period ended September 30,
2005. The increase in our general and administrative expenses is primarily
attributable to increased costs in the accounting and legal services area
relating to the 14A Application filed with the Securities and Exchange
Commission in the third quarter of 2006.

Loss
on Disposal of Assets.    A $661,210 loss on disposal of assets was recorded
during the third quarter of 2006 attributed to replacing our existing switching
equipment and base station equipment with new Nokia equipment to work in
conjunction with Pario Solutions switch in Texas.

Interest
Expense.    Interest expense for the three-month period ended September 30,
2006 increased by $168,871 or 273.1% to $230,703 as compared to $61,832 for the
three-month period ended September 30, 2005. The increase in interest expense is
due to related party advances and third party loans that carry interest rates of
10% to 15% as compared to lower balances of advances and loans in 2005.

Net
Loss.    Net loss for the three-month period ended September 30, 2006 increased
by 280.7% or $868,451 to ($1,177,821) from ($309,370) for the three months ended
September 30, 2005. Net loss per share increased to $(0.05) for the three months
ended September 30, 2006, as compared to ($0.01) for the three months ended
September 30, 2005. The net loss increase is due to increased selling and
general and administrative costs as well as increased interest expense and the
loss on the disposal of assets.

Comparison of
Nine months ended September 30, 2006 and 2005

Revenues.   
Revenues for the nine months ended September 30, 2006 increased by $92,981 or
37.3% to $342,626 from $249,645 for the nine months ended September 30, 2005.
The increase in revenue is primarily attributable to an increase in network
services to $122,577 in the nine months ended September 30, 2006, from $22,500
for the comparable period in 2005. The increase is primarily due to renegotiated
switch sharing services provided to Wilkes Cellular. Pager revenue decreased
57.1% to $27,081 from $63,177 due to customer notification of the companys
intention to discontinue providing the service in June 2006.

Cost
of Revenues. Cost of revenues currently consists primarily of signaling
charges and short message processing. Cost of revenues increased by $82,850 or
46.5% to $261,155 for the nine months ended September 30, 2006 from $178,305 for
the comparable 2005 period, representing 76.2% and 71.4% of the total revenues
for the nine months ended September 30, 2006 and 2005, respectively. The
increase in the cost of revenues is attributable to increased revenues as well
as increased engineering costs due to running two switching functions during the
transition to the switch in Texas.

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Operating
Income/(Losses).    Operating income for the nine months ended September 30,
2006 reflected a loss of ($1,141,068) compared to an operating loss of
($621,690) during the comparable 2005 period. On a year over year basis for the
first three quarters, our operating losses increased by 83.5% or $519,378. The
increase in operating loss was due to increased costs in the accounting and
legal services area relating to the Form 14A Application filed with the
Securities and Exchange Commission, the FCC application for transfer of control,
and the increased costs due to relocation of our. switching operations from
Gering, Nebraska to Dallas, Texas.

Selling,
General and Administrative Expense.    General and administrative expense
increased by $529,509 or 76.4% to $1,222,539 for the nine month period ended
September 30, 2006, from $693,030 for the nine month period ended September 30,
2005. The increase in our general and administrative expenses is primarily
attributable to increased costs in the accounting and legal services area
relating to the Form 14A Application filed with the Securities and Exchange
Commission, the FCC application for transfer of control, and increased costs due
to relocation of our switching operations from Gering, Nebraska to Dallas,
Texas.

Gain
on the settlement of debt.    Gain on the settlement of debt increased $145,108
to $151,608 for the nine month period ended September 30, 2006 from $6,500 for
the same period in 2005. Gain on the settlement of debt is related to two vendor
lawsuits that were settled in the second quarter 2006 versus one lawsuit settled
in second quarter of 2005.

Loss
on Disposal of Assets.    A $661,210 loss on disposal of assets was recorded
during the third quarter of 2006 attributed to replacing our existing switching
equipment and base station equipment with new Nokia equipment to work in
conjunction with Pario Solutions switch in Texas.

Bad
Debt Recovery.    Bad debt recovery was $40,284 for the nine month period ended
September 30, 2006 as compared with $0 for the same period in 2005. The bad debt
recovery resulted from the collection of accounts receivable previously written
off as bad debt.

Interest
Expense.    Interest expense for the nine month period ended September 30, 2006
increased by $418,060 or 278.4% to $568,230 as compared to $150,170 for the nine
month period ended September 30, 2005. The increase in interest expense is due
to increased related party advances and third party loans that carry interest
rates of 10% to 15% as compared to lower balances of advances and loans in 2005.

Net
Loss.    Net loss for the nine month period ended September 30, 2006 increased
by 184.7% or $1,413,256 to ($2,178,616) from ($765,360) for the nine months
ended September 30, 2005. The net loss increase is due to increased selling and
general and administrative costs as well as increased interest expense and the
loss on the disposal of assets. Net loss per share increased to $(0.09) for the
nine months ended September 30, 2006, as compared to ($0.03) for the nine months
ended September 30, 2005.

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Balance Sheet

Current
Assets.    Current Assets amounted to $73,313 as of September 30, 2006
representing a decrease of $142,367 or 66.0% from Current Assets of $215,680 as
of December 31, 2005. The decrease is due to decreased Accounts Receivable.

Current
Liabilities.    As of September 30, 2006, Current Liabilities are $7,279,775
representing an increase of $2,225,072 or 44.0%, from Current Liabilities of
$5,054,703 as of December 31, 2005. Decreases in Accounts Payable and increases
in demand notes payable to related parties account for the majority of the
change from year-end 2005.

Liquidity
and Capital Resources

Net
cash used in operating activities for the period ending September 30, 2006 was
($1,227,396) compared with ($937,185) for the same period in 2005. This change
can be primarily explained by the increased net loss in the first three quarters
of 2006 versus the same period in 2005.

Cash
used in investing activities for the periods ended September 30, 2006 was
$872,441 compared to $0 for the same period in 2005. The increase in cash used
in investing activities is due to the purchase of telecommunication equipment.

Cash
provided by financing activities was for the period ended September 30, 2006 was
$2,126,117 as compared to $915,539 for the period ended September 30, 2005. The
cash provided in both periods is from the proceeds of convertible notes and
advances from affiliates reduced by the payments on long-term debt.

Cash
at September 30, 2006 amounted to $26,395 from $115 at December 31, 2005. Cash
at October 30, 2006 amounted to $0. The advances from related parties and third
party loans are advanced to the company as needed.

At
September 30, 2006, we have material commitments for capital expenditures of
$109,000. Additionally, we have material commitments of $14,202 for the final
payments of our FCC F Block license. We shall continue to finance our operations
mainly from loans and fundraising activities. We do not believe that our future
cash flow from operations together with our current cash will be sufficient to
finance our activities through the year 2006; therefore, we plan to raise money
through a private placement to fund the implementation of an expanding
operational plan.

As of
September 30, 2006, we had an accumulated deficit of $$79,018,608 and working
capital and stockholders deficits of $7,206,462 and $6,340,3182
respectively.

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##### Table of Contents

Our
ability to continue as a going concern is contingent upon our ability to attain
profitable operations and secure adequate financing.

We
cannot continue to satisfy our current cash requirements for a period of twelve
(12) months through our existing capital. We anticipate total estimated
operating expenditures of approximately $540,000 over the next six (6) months,
in the following areas:

|o |  | Salaries and labor = $300,000
|- |  | -----------------------------

|o |  | Network
operating costs = $150,000
|- |  | ----------------------------------

|o |  | G&A (exclusive of salaries) = $90,000
|- |  | -------------------------------------

Our
current cash of $26,395 as of September 30, 2006 as well as our cash of $0 as of
October 30, 2006 will satisfy our cash requirements for less than a day.

Accordingly,
we will be unable to fund our expenses through our existing assets or cash. In
order to acquire funding, we may be required to issue shares of our common
stock, which will dilute the interest of current shareholders. Moreover, we may
still need additional financing through traditional bank financing or a debt or
equity offering; however, because we have limited revenues, and a poor financial
condition, we may be unsuccessful in obtaining such financing or the amount of
the financing may be minimal and therefore inadequate to implement our business
plans. In the event that we do not receive financing or our financing is
inadequate, we may have to liquidate our business and undertake any or all of
the following actions:

|o |  | Significantly reduce, eliminate or curtail our business, operating and research and
development activities so as to reduce operating costs;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------

|o |  | Sell, assign or otherwise dispose of our assets, if any, to raise cash or to settle claims
by creditors;
|- |  | --------------------------------------------------------------------------------------------------------

|o |  | Pay our liabilities in order of priority, if we have available cash to pay such
liabilities;
|- |  | --------------------------------------------------------------------------------------------

|o |  | If any cash remains after we satisfy amounts due to our creditors, distribute any
remaining cash to our shareholders in an amount equal to the net market value of our net
assets;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | File a Certificate of Dissolution with the State of Delaware to dissolve our corporation
and close our business;
|- |  | ----------------------------------------------------------------------------------------------------------------

|o |  | Make the appropriate filings with the Securities and Exchange Commission so that we will
no longer be required to file periodic and other required reports with the Securities and
Exchange Commission, if, in fact, we are a reporting company at that time; and
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | Make the appropriate filings with the National Association of Security Dealers to affect a
delisting of our stock.
|- |  | ------------------------------------------------------------------------------------------------------------------

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Based
upon our current assets, however, we would not have the ability to distribute
any cash to our shareholders.

If we
have any liabilities that we are unable to satisfy and we qualify for protection
under the U.S. Bankruptcy Code, we may voluntarily file for reorganization under
Chapter 11 or liquidation under Chapter 7. Our creditors may also file a Chapter
7 or Chapter 11 bankruptcy action against us. If our creditors or we file for
Chapter 7 or Chapter 11 bankruptcy, our creditors will take priority over our
shareholders. If we fail to file for bankruptcy under Chapter 7 or Chapter 11
and we have creditors; such creditors may institute proceedings against us
seeking forfeiture of our assets, if any. We do not know and cannot determine
which, if any, of these actions we will be forced to take. If any of these
foregoing events occur, you could lose your entire investment in our shares.

To
date, we have funded our activities principally from loans from related parties
and loans from third party lenders.

Contractual
Obligations and Commercial Commitments

We
have no contractual obligations, including lease obligations, apart from
agreements in the normal course of our business. On April 3, 2006, the Company
entered into a Hosting Agreement and an Equipment Services Agreement with a
Nokia value added reseller located in Texas. This three year agreement requires
a monthly payment of $8,500 per month for services to operate and maintain our
radio access network in Nebraska. Additionally, the company signed a three year
agreement on office space in Scottsbluff, Nebraska to host our media gateway
equipment. This lease requires a monthly payment of $805.00.

In
September 2006, the Company entered into an agreement with Verisign for output
billing services. This contract enables the Company to provide billing services
to our roaming partners, primarily Cingular and T-Mobile. The contract is for 36
months and the charges for this service are transaction based with certain
minimums.

In
September 2006, the Company entered into an agreement the ARS Informatica for
voice and data billing services. This contract enables the Company to provide
billing services to our voice and data customers. The contract is for two years
and the charges for this service are transaction based with certain minimums.

Item  3.    
Controls and Procedures

As of
September 30, 2006, an evaluation was performed under the supervision and with
the participation of our management, including our Chief Executive Officer and
Principal Financial Officer, of the effectiveness of the design and operation of
our disclosure controls and procedures. Based on that evaluation, our
management, including our Chief Executive Officer and Principal Financial
Officer, concluded that our disclosure controls and procedures were effective as
of September 30, 2006.

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There
has not been any change in our internal control over financial reporting during
the nine months ended September 30, 2006 that has materially affected or is
reasonably likely to materially affect, our internal control over financial
reporting.

PART II.  OTHER
INFORMATION

Item  1.    Legal
Proceedings

On April 12,
2006, Michael J. Tracy filed a complaint in the District Court for Scotts Bluff County,
Nebraska, against the Company,  in Case No. CI-06-291.  Mr. Tracy is the former CEO and
Director of the Company.  The Complaint alleges that the Company owes Mr.  Tracy
$3,378,129.42 as of April 1, 2006, including principal and interest for loans Mr. Tracy
made to the Company at various times in  2001 and 2002.  The loans are represented by
demand notes.  On May 26, 2003, Mr. Tracy and the Company entered into an agreement for
the exchange and conversion of these notes for preferred stock of Telemetrix.  The
Complaint alleges that Telemetrix has failed to  perform this agreement.  The Company has
meritorious defenses to the Complaint.  The Company has filed an Answer to the Complaint
asserting these defenses as well as Counterclaims against Mr. Tracy. Mr. Tracy has filed
a Reply to the Companys Counterclaims .The  Company intends to vigorously defend
the Complaint and the Counterclaims against Mr. Tracy. The parties are now conducting
discovery  in this case.

On
October 19, 2006, the Company filed a Request for Arbitration with the World
Intellectual Property Organization against UT Starcom, Inc., the successor in
interest to Telos Technologies, Inc., the manufacturer of the Sonata SE
switching system. The Request for Arbitration was accepted on October 24, 2006.
The dispute relates to a Master Purchase and License Agreement dated October 22,
2003 for a Sonata SE Global System for Mobile Communications switching system.
The Company requests arbitration of the following claims: (1) breach of
contract; (2) breach of good faith and fair dealing; (3) fraudulent
misrepresentations; (4) fraudulent inducement; (5) negligent misrepresentation;
(6) intentional interference with existing contractual relations; (7) intention
interference with economic relations; and (8) negligent interference with
prospective economic relations. The Company claims that (a) UT Starcom failed to
perform from the time of installation and (b) UT Starcom failed to deliver five
significant features and functionality that Telos represented would be available
at the time the Company purchased the GSM switch and (c) UT Starcom failed to
include E911-Phase II functionality in the GSM Switch so that Telemetrix could
comply with the FCCs mandated 911 services requirement by June 30, 2006
and (d) UT Starcom represented to Telemetrix that the GSM Switch would include
CAMEL, a GSM feature including intelligent network functions into a GSM network
system and (e) UT Starcom failed to make available to Telemetrix software in the
GSM Switch to enable Telemetrix to comply with CALEA. CALEA imposes upon
Telemetrix a statutory obligation to ensure that its equipment, facilities or
services that provide a customer or subscriber with the ability to originate,
terminate or direct communications. Telemetrix requests entry of an award during
the arbitration in its favor and against UT Starcom as follows:

|A. |  | for
general damages in an amount to be established at trial;
|-- |  | ------------------------------------------------------------

|B. |  | alternatively,
a rescission of the Agreement;
|-- |  | ---------------------------------------------

|C. |  | for
cost of the arbitration, including attorneys fees; and
|-- |  | -----------------------------------------------------------

|D. |  | for
such other and further relief as the Arbitrator may deem just and fair.
|-- |  | ---------------------------------------------------------------------------

We are
subject to disputes and litigation in the ordinary course of our business. None
of these matters, in the opinion of our management, is material or likely to
result in a material effect on us based upon information available at this time.

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Item  2.   
Changes in Securities and Use of ProceedsNone

Item  3.   
Defaults Upon Senior SecuritiesNone

Item  4.   
Submission of Matters to a Vote of Securities Holders
The
Company received SEC approval of its Form 14A Proxy Statement -on September 15,
2006. The Company held its 2006 Annual Meeting of the Shareholders on October
27, 2006. The shareholders approved all six proposals on the proxy.

Item  5.   
Other InformationNone

Item  6.   
Exhibits and Reports on Form 8-K

|31 |  | Certification
pursuant to section 302 of the Sarbanes-Oxley Act of 2002
|-- |  | -----------------------------------------------------------------------

|32 |  | Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002
|-- |  | ----------------------------------------------------------------------------------------------------------------------

Reports in
Form 8-K(b)    
8-K, Item 8.01, Other Events. The Federal Communications Commission has granted Telemetrix Incs Petition for Declaratory
Ruling that foreign ownership in excess of 25% will serve the public interest filed on August 10, 2006.

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##### Table of Contents

SIGNATURES

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

October 31, 2006

Telemetrix Inc.

By:       /s/
William Becker           William
Becker
          Chief Executive Officer (Principal Executive Officer)

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