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 June 30, 2006 OR

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

For the transition period from _______ to ________

                        Commission file number 000-51252

                        NATIONAL INVESTMENT MANAGERS INC.
             (Exact name of registrant as specified in its charter)

                        Florida                        59-2091510
                        -------                        ----------
           (State or other jurisdiction of          (I.R.S.Employer
           incorporation or organization)         identification No.)

             420 Lexington Ave., Suite 2420 New York, New York 10170
                    (Address of principal executive offices)

                                 (212) 389-7832
              (Registrant's telephone number, including area code)

              830 Third Ave., 14th Floor, New York, New York 10022
                 (Former address of principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 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 |_|

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

                                 Yes |_| No |X|

As of August 14, 2006, 20,711,837 shares of $.001 par value common stock of the
registrant were outstanding.

<PAGE>

               NATIONAL INVESTMENT MANAGERS INC. AND SUBSIDIARIES

                                      INDEX

                                                                        Page No.
                                                                        --------

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets - June 30, 2006 (unaudited)
  and December 31, 2005 (audited)                                          3-4
Condensed Consolidated Statements of Operations - Six Months ended
  June 30, 2006 and 2005 (unaudited)                                         5
Condensed Consolidated Statements of Operations - Three Months ended
  June 30, 2006 and 2005 (unaudited)                                         6
Condensed Consolidated Statements of Cash Flows - Six Months ended
  June 30, 2006 and 2005 (unaudited)                                       7-8
Notes to Condensed Consolidated Financial Statements                      9-18

Item 2. Management's Discussion and Analysis of Financial Condition
  and Results of Operations                                              19-25

Item 3. Quantitative and Qualitative Disclosures about Market Risks         26

Item 4. Controls and Procedures                                             27

PART II. OTHER INFORMATION

Item 1. Legal Proceedings                                                   27

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds     27-29

Item 3. Defaults upon Senior Securities                                     29

Item 4.  Submission of Matters to a Vote of Security Holders                29

Item 5. Other Information                                                   29

Item 6. Exhibits                                                            29

SIGNATURES                                                                  30


                                        2

<PAGE>

Item 1. Financial Statements

               National Investment Managers Inc. and Subsidiaries
                      Condensed Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                          June 30,     December 31,
                                                           2006            2005
                                                        (Unaudited)     (Audited)
                                                       -------------   ------------
<S>                                                     <C>             <C>
CURRENT ASSETS:
  Cash                                                  $   892,293     $ 5,964,192
  Accounts receivable, net                                1,871,475       1,678,797
  Non-trade receivable                                           --         150,000
  Prepaid financing costs                                   230,039         142,375
  Prepaid directors and officers liability insurance         73,937          12,222
  Prepaid expenses and other current assets                 338,266         272,326
                                                        -----------     -----------
    Total current assets                                  3,406,010       8,219,912
                                                        -----------     -----------
PROPERTY AND EQUIPMENT, net                                 845,329         701,433
                                                        -----------     -----------
OTHER ASSETS
Goodwill                                                 13,630,674       9,818,274
Customer lists/relationships                             16,307,603      13,984,332
Other intangibles                                         2,894,223       3,114,565
Deferred financing costs                                    516,770         301,996
Restricted cash                                           6,618,000              --
                                                        -----------     -----------
                                                         39,967,270      27,219,167
                                                        -----------     -----------
                                                        $44,218,609     $36,140,512
                                                        ===========     ===========
CURRENT LIABILITIES:
  Short-term debt                                                                --
  Long-term debt, current portion                       $ 2,704,225     $ 4,965,019
  Accounts payable                                          796,734         623,124
  Unearned revenues                                       2,807,626       2,309,084
  Accrued expenses and other current liabilities          1,751,540       2,336,244
                                                        -----------     -----------
    Total current liabilities                             8,060,125      10,233,471
                                                        -----------     -----------
LONG-TERM LIABILITIES:
  Long-term debt, less current portion                   17,462,972       9,731,448
  Preferred dividends payable                             1,073,602         413,101
  Derivative financial instruments                          237,623       1,296,422
  Deferred tax liability                                  4,041,496       2,676,788
                                                        -----------     -----------
    Total long-term liabilities                          22,815,693      14,117,759
                                                        -----------     -----------
      Total liabilities                                  30,875,818      24,351,230
                                                        -----------     -----------
</TABLE>


                                        3

<PAGE>

COMMITMENTS  AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

<TABLE>
<S>                                                                              <C>            <C>
Preferred Stock, $.001 par value, 10,000,000 shares authorized; 4,000,000
  designated as Series A shares of which 3,620,000 and 3,820,000 shares issued
  and outstanding (liquidation preference $3,620,000 and $3,820,000),
  respectively, 4,000,000 designated as Series B shares of which 3,815,000
  shares issued and outstanding, liquidation preference $7,630,000) and
  1,000,000 designated as Series C shares of which 883,334 shares issued and
  outstanding respectively,  liquidation preference $10,600,008)                       8,318         8,518

Common Stock, $.001 par value 100,000,000 shares authorized, 20,711,837               20,712        15,452
  and 15,452,110 shares issued and outstanding, respectively
Additional paid-in capital                                                        19,204,583    15,058,742
Accumulated deficit                                                               (5,890,822)   (3,293,430)
                                                                                 -----------   -----------
    Total stockholders' equity                                                    13,342,791    11,789,282
                                                                                 -----------   -----------
                                                                                 $44,218,609   $36,140,512
                                                                                 ===========   ===========
</TABLE>

See accompanying notes to condensed consolidated financial statements


                                        4

<PAGE>

                        National Investment Managers Inc.
                 Condensed Consolidated Statements of Operations
                            For the six months ended,
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                             June 30, 2006   June 30, 2005
                                                             -------------   -------------
<S>                                                          <C>              <C>
Revenues:                                                     $10,690,313     $ 1,169,153
                                                              -----------     -----------
Operating expenses
  Selling                                                         203,158         199,630
  General and administrative                                   10,122,786       1,191,232
  Depreciation and amortization                                 1,681,385         185,408
  Stock-based compensation                                        595,734           4,429
                                                              -----------     -----------
                                                               12,603,063       1,580,699
                                                              -----------     -----------
Operating loss                                                 (1,912,750)       (411,546)
                                                              -----------     -----------
Other income (expense):
  Reverse acquisition costs                                            --        (215,000)
  Gain on sale of subsidiary                                      166,568              --
  Change in fair value of derivative financial instruments      1,464,270
  Interest expense                                             (1,902,578)       (229,426)
  Interest, dividend and rental income                             16,306          24,445
                                                              -----------     -----------
                                                                 (255,434)       (419,981)
                                                              -----------     -----------

Loss before provision for income taxes                         (2,168,184)       (831,527)

Deferred income tax benefit                                       231,292          91,393
                                                              -----------     -----------

Net loss                                                       (1,936,892)       (740,134)

Preferred dividends                                              (660,500)       (125,903)
                                                              -----------     -----------

Net loss available to common shareholders                     $(2,597,392)    $  (866,037)
                                                              ===========     ===========

Basic and diluted loss per common share                       $     (0.13)    $     (0.07)
                                                              ===========     ===========

Weighted average number of common shares outstanding           19,764,000      12,860,000
                                                              ===========     ===========
</TABLE>

See accompanying notes to condensed consolidated financial statements


                                        5

<PAGE>

                        National Investment Managers Inc.
                 Condensed Consolidated Statements of Operations
                           For the three months ended,
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                 June 30, 2006   June 30, 2005
                                                                 -------------   -------------
<S>                                                               <C>             <C>
Revenues:                                                         $ 6,056,006     $   613,489
                                                                  -----------     -----------
Operating expenses
  Selling                                                             122,208         126,296
  General and administrative                                        4,604,791         647,155
  Depreciation and amortization                                       845,484          97,869
  Stock based compensation                                            142,357           1,477
                                                                  -----------     -----------
                                                                    5,714,840         872,797
                                                                  -----------     -----------
Operating income (loss)                                               341,166        (259,308)
                                                                  -----------     -----------

Other income (expense):
  Change in fair value of derivative financial instruments          1,464,270              --
  Interest expense                                                 (1,114,304)       (191,906)
  Interest, dividend and rental income                                  5,349          21,362
                                                                  -----------     -----------
                                                                      355,315        (170,544)
                                                                  -----------     -----------

Income (loss) before provision for income taxes                       696,481        (429,852)

Deferred income tax benefit                                           231,292          69,421
                                                                  -----------     -----------

Net income (loss)                                                     927,773        (360,431)

Preferred dividends                                                  (329,750)        (57,300)
                                                                  -----------     -----------

Net income (loss) available to common shareholders                $   598,023     $  (417,731)
                                                                  ===========     ===========

Basic income (loss) per common share                              $      0.03     $     (0.03)
                                                                  ===========     ===========

Diluted income (loss) per common share                            $      0.02     $     (0.03)
                                                                  ===========     ===========

Weighted average number of common shares outstanding - basic       20,022,000      13,319,000
                                                                  ===========     ===========

Weighted average number of common shares outstanding - diluted     45,394,000      13,319,000
                                                                  ===========     ===========
</TABLE>

See accompanying notes to condensed consolidated financial statements


                                        6

<PAGE>

               National Investment Managers Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                              Six Months Ended   Six Months Ended
                                                June 30, 2006      June 30, 2005
                                              ----------------   ----------------
<S>                                             <C>                <C>
Net cash used in operating activities           $  (291,053)       $  (595,300)
                                                -----------        -----------
Cash flows from investing activities:
Purchases of property and equipment                (151,192)           (32,879)
Acquisition of PAS, net of cash acquired
  of $81,509                                              0            (69,054)
Acquisition of Valley Forge                      (3,397,500)                --
Acquisition of ABR                                  (10,000)                --
Proceeds from sale of MLK Group                     900,000
Decrease in receivable from ABR trustee              26,408
Cash acquired (reverse merger
  transaction)                                            0             10,618
Increase in restricted cash (for
  acquisition purposes)                          (6,618,000)        (2,500,000)
                                                -----------        -----------
Net cash used in investing activities            (9,250,284)        (2,591,315)
                                                -----------        -----------
Cash flows from financing activities:

Proceeds from convertible notes                           0          3,500,000
Proceeds from short-term debt                             0            110,000
Proceeds from long-term debt                      7,000,000
Payments on short-term debt and notes            (2,155,229)           (71,357)
Proceeds (costs) from common and
  preferred stock sales, net                          6,667            (58,242)
Payment of deferred financing
  costs                                            (382,000)          (179,000)
                                                -----------        -----------
Net cash provided by financing activities         4,469,438          3,301,401
                                                -----------        -----------
(Decrease) Increase in cash                      (5,071,899)           114,786
Cash, beginning of period                         5,964,192             89,779
                                                -----------        -----------
Cash, end of period                             $   892,293        $   204,565
                                                ===========        ===========
Supplemental disclosure of cash flow
  information:
Interest paid                                   $   800,901        $   144,568
                                                ===========        ===========
Supplemental disclosures of noncash
  investing and financing activities:
Accrued preferred dividends                     $   660,500        $   125,903
                                                ===========        ===========
Conversion of debt and accrued interest
  into common stock                             $        --        $   221,109
                                                ===========        ===========
Non-cash component of proceeds from sale of
  MLK Group                                     $   290,000        $        --
                                                ===========        ===========

Warrants and embedded conversion feature
  associated with debt financing                $   405,471        $ 1,180,000
                                                ===========        ===========
</TABLE>

See accompanying notes to consolidated financial statements

In conjunction with the Company's acquisition of Valley Forge, common stock was
issued and liabilities were assumed as follows:

Fair value of assets acquired                                       $ 8,542,000
Cash paid                                                            (3,397,500)
Common stock issued                                                  (3,444,500)
                                                                    -----------
Liabilities assumed                                                 $ 1,700,000
                                                                    ===========


                                        7

<PAGE>

               NATIONAL INVESTMENT MANAGERS INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1. Unaudited Statements

The accompanying unaudited condensed consolidated financial statements included
herein have been prepared in accordance with generally accepted accounting
principles for interim period reporting in conjunction with the instructions to
Form 10-QSB. Accordingly, these statements do not include all of the information
required by generally accepted accounting principles for annual financial
statements. In the opinion of management, all known adjustments (consisting of
normal recurring accruals and reserves) necessary to present fairly the
financial position, results of operations and cash flows as of and for the
interim periods have been included. It is suggested that these interim condensed
consolidated financial statements be read in conjunction with the consolidated
financial statements and related notes included in National Investment Managers
Inc. ("NIVM" or the "Company") Form 10-KSB for the year ended December 31, 2005.

The operating results for the three months and six months ended June 30, 2006
are not necessarily indicative of the results to be expected for the December
31, 2006 year end.

The condensed consolidated balance sheet as of December 31, 2005, as presented
herein was derived from audited consolidated financial statements but does not
include all disclosures required by generally accepted accounting principles.

Note 2. Background

National Investment Managers Inc. ("NIM" or the "Company") is in the principal
business of acquiring and managing operating entities that offer third party
administration primarily of retirement plans, financial and investment advisory
services and insurance products to small and medium sized businesses in the
United States and to high-net worth individuals. As of June 30, 2006, the
Company owned 14 operating units in seven states.

In order to pursue our strategy of purchasing small to medium-sized pension
advisory, investment management and insurance organizations, we will need to
seek additional equity or debt financing in the near future.

All significant intercompany transactions and balances have been eliminated in
consolidation.

Note 3. Debt

Convertible Notes Payable -

In January 2005, we entered into an agreement to borrow up to $500,000 in senior
secured notes (the "2005 Notes") from a principal stockholder. In January 2005,
we borrowed $350,000 pursuant to this agreement. In May 2005, we borrowed an
additional $150,000 under this facility. The 2005 Notes bore interest at the
rate of 12% per annum and interest was payable quarterly in arrears on the last
day of each quarter. Effective June 30, 2005, the lender elected to convert the
2005 Notes into convertible notes (the "2005 Convertible Notes"). The 2005
Convertible Notes had a term of three years and were convertible into common
stock at $.68 per share. The 2005 Convertible Notes bore interest only for the
first six months and amortized 1/30th per month thereafter, commencing October
10, 2005. The 2005 Convertible Notes were secured by a second lien on all of the
Company's assets and guaranteed by each of the subsidiaries, subordinate in
right of payment to the Laurus Master Fund, Ltd. convertible term note issued by
the Company. The 2005 Convertible Notes were pre-payable in cash, at 115% of the
principal amount thereof. The 2005 Convertible Notes were issued with a five
year warrant (the "Five Year Warrant") to purchase 367,647 shares of common
stock of the Company at $.1667 per share.


                                        8

<PAGE>

The Company determined the initial carrying value of the 2005 Convertible Notes
by a two-step allocation process: first to the associated Five Year Warrant and
second, to an embedded conversion option. First, the Company allocated the
proceeds from the sale of the Note between the Note and the Five Year Warrant
based upon their relative fair values, which resulted in recording a discount on
the Note. The value of the Five Year Warrant was computed using the
Black-Scholes option pricing model. Second, in accordance with Emerging Issues
Task Force No. 00-27, "Application of Issue 98-5 to Certain Convertible
Instruments", after allocating the Note proceeds as described above, the Company
calculated the embedded conversion price and used it to measure the intrinsic
value of the embedded conversion option. Since the conversion price was less
than the fair value of the Company's stock at the closing date, an embedded
conversion option was recorded as paid in capital.

As a result of the Company's allocations above, $350,000 of the principal amount
of the Note was allocated to the Five Year Warrant and embedded conversion
option. This amount was amortized as additional (non-cash) interest expense with
a corresponding increase to the Note over the life of the Note until the Note
was repaid.

On June 9, 2006, the Company prepaid the 2005 Convertible Notes in full by
payment in the amount of $430,500.25, which represented 115% of the then
outstanding principal amount of the Note and all accrued interest thereon.

During the six months ended June 30, 2006 and 2005, the Company amortized
approximately $270,000 and $30,000, respectively, of non-cash interest expense
related to this Note. During the three months ended June 30, 2006 and 2005, the
Company amortized approximately $240,000 and $30,000, respectively, of non-cash
interest expense related to this Note.

Note 4. Notes Payable - Laurus Master Fund, Ltd.

Convertible Notes Payable

On March 9, 2005, we entered into a Securities Purchase Agreement with Laurus
Master Fund, Ltd. ("Laurus"), under which we issued and delivered to Laurus (i)
a secured convertible term note in the principal amount of $3,000,000 (the
"Note"), (ii) a Common Stock Purchase Warrant (the "Warrant"), entitling Laurus
to purchase up to 1,084,338 shares of our Common Stock at a per share exercise
price of $1.00, which exercise price was reduced to $.50 in connection with the
May 30, 2006 financing (see below), and (iii) an option ("Option") entitling
Laurus to purchase up to 643,700 shares of Common Stock at a per share purchase
price of $0.01. The issuance and sale of the Note, the Warrant and the Option
were made pursuant to the exemption from registration under Section 4(2) under
the Securities Act of 1933, as amended (the "Act"), and Regulation D promulgated
under the Act. Laurus has represented to the Company that Laurus is an
accredited investor under the Act and the rules promulgated thereunder. Laurus
has a lien on substantially all the assets of the Company.


                                        9

<PAGE>

At closing, $500,000 of Note proceeds were disbursed to the Company for working
capital purposes. The Company paid fees to Laurus of $134,000 out of these gross
proceeds and also paid $200,000 to settle outstanding liabilities of the
registrant in connection with the acquisition of Duncan Capital Financial Group,
Inc. We retained $166,000 of the proceeds for working capital purposes. The
remaining $2,500,000 of Note proceeds were deposited by us at a bank in a
restricted cash account under the control of Laurus ("Restricted Account"). The
remaining funds were released by Laurus to the Company on August 2, 2005 in
connection with an acquisition.

Laurus may, at any time, convert the outstanding indebtedness of the Note into
shares of Common Stock at a price of $0.83 per share ("Fixed Conversion Price"),
subject to adjustment for subsequent lower price issuances by the Company
(subject to certain exceptions), as well as customary adjustment provisions for
stock splits, combinations, dividends and the like. Subject to the restrictions
on conversion by Laurus described below, Laurus is required to convert the
monthly payment due on account of principal and interest, plus any other amounts
under the Note that are due and unpaid ("Monthly Amount"), into shares of Common
Stock if the following criteria ("Conversion Criteria") are met:(i) the average
closing price of the Common Stock for the five consecutive trading days
preceding such due date is greater than 120% of the Fixed Conversion Price, and
(ii) the amount of such conversion does not exceed 25% of the aggregate dollar
trading volume of the Common Stock for the 22-day trading period immediately
preceding the due date of the applicable Monthly Amount. If the Conversion
Criteria are not met, Laurus must convert only such part of the Monthly Amount
that meets the Conversion Criteria. Any part of the Monthly Amount due on a
Repayment Date that Laurus has not been able to convert into shares of Common
Stock due to failure to meet the Conversion Criteria must be paid by the Company
in cash within three business days of the applicable monthly payment date.

The Warrant grants Laurus the right to purchase up to 1,084,338 shares of Common
Stock at an exercise price of $.50 per share. The Warrant expires at the close
of business on March 9, 2012. The exercise price of the Warrant is subject to
adjustment for stock splits, combinations, dividends and the like.

The Option grants Laurus the right to purchase for cash up to 643,700 shares of
Common Stock at an exercise price of $0.01 per share on or after the 75th day
after Laurus delivers a notice to the Company stating that Laurus wishes to
exercise all or a portion of the underlying Common Stock. The Option expires at
the close of business on March 9, 2013. The exercise price of the Warrant is
subject to adjustment for stock splits, combinations, dividends and the like.

The Company may pay amounts due under the Note in shares of Common Stock only so
long as there is an effective registration statement under the Act covering the
resale of such shares or an exemption from such registration is available under
Rule 144 of the Act. In addition, Laurus is not entitled to receive shares of
Common Stock upon exercise of the Warrant or the Option, upon payment of
principal or interest on the Note, or upon conversion of the Note if such
receipt would cause Laurus to be deemed to beneficially own in excess of 4.99%
of the outstanding shares of Common Stock on the date of issuance of such
shares.

Under the terms of a Registration Rights Agreement between Laurus and the
Company, the Company is obligated to register the resale of the shares of Common
Stock issuable upon payment or conversion of the Note and exercise of the
Warrant and Option and have the registration statement declared effective by the
Securities and Exchange Commission on or prior to July 7, 2005, which date was
extended to August 15, 2006. If the registration statement is not declared
effective within the time frame described, or if the registration is suspended
other than as permitted in the registration rights agreement, the Company will
be obligated to pay Laurus a fee equal to 1.5% of the outstanding principal
amount of the Note for each 30-day period (pro rated for partial periods) that
such registration obligations are not satisfied. Laurus has subsequently agreed
to waive this provision. The Registration Rights Agreement was amended in
connection with our entering into the November 30, 2005 term loan described
below.


                                       10

<PAGE>

Pursuant to Paragraph 14 of EITF No. 00-19, "Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company's Own Stock", the
Warrant and option issued in connection with the convertible notes payable meet
the requirements of and are accounted for as a liability since the option and
warrant contain registration rights where significant liquidated damages would
be required to be paid to the holder in the event the Company failed to receive
an effective registration. The embedded conversion option is also accounted for
as a liability since the convertible notes payable are not considered
"conventional convertible debt" under EITF 00-19 because of the anti-dilutive
conversion price reset provision. The initial value of the option, warrant and
embedded conversion option (collectively, "derivative financial instruments")
was treated as a discount to the convertible notes payable and recorded as a
liability. The Company calculated the initial value of the derivative financial
instruments on the closing date of the transaction as being $1,172,688 as
determined using a Black-Scholes option pricing model with the following
assumptions: expected term - 3-8 years, volatility - 25%, risk free rate - 4%,
and zero dividend yield. Using the Black-Scholes option-pricing method, the
value of the derivative financial instruments are reassessed at each balance
sheet date and marked to market as a derivative gain or loss until exercised or
expiration. Upon exercise or conversion of the derivative financial instruments,
the related liability is removed by recording an adjustment to additional
paid-in-capital. The derivative financial instruments have a value of $165,099
at June 30, 2006.

The carrying value of the Note was initially recorded at $1,827,312. The debt
discount amount will be amortized as additional (non-cash) interest expense with
a corresponding increase to the Note over the life of the Note until such Note
is repaid or converted to common stock. During the six months ended June 30,
2006 and 2005, the Company amortized approximately $251,000 and $167,000 of
non-cash interest expense related to this Note. During the three months ended
June 30, 2006 and 2005, the Company amortized approximately $120,000 and
$119,000 of non-cash interest expense related to this Note.

Secured Term Loan - November 30, 2005

On November 30, 2005, the Company entered into a Securities Purchase Agreement
for the sale of (i) $9,200,000 in a secured term note (the "Term Note") and (ii)
1,108,338 shares of the Company's common stock (the "November 2005 Shares"). The
closing of this financing occurred on November 30, 2005. The Term Note matures
on November 30, 2009. The term Note bears interest at an aggregate rate of 17.5%
per annum, which is payable in two tranches. The first tranche bears interest at
the rate of 10% and is payable on a monthly basis commencing December 1, 2005.
The second tranche bears interest at the rate of 7.5% and is payable on a
monthly basis commencing December 1, 2005, provided, however, the Company may
elect to add the second tranche to the principal of the Term Note. Commencing
June 1, 2006, which date was subsequently extended to April 1, 2007, the Company
is required to commence making monthly amortizing payments in the amount of
$219,047.62. The Company may prepay at anytime the Term Note together with the
secured convertible term note that the Company previously issued to Laurus in
March 2005.


                                       11

<PAGE>

In addition, the Company also entered into an Amended and Restated Registration
Rights Agreement (the "Amended Agreement") with Laurus pursuant to which it
agreed to file a registration statement registering the November 2005 Shares and
the shares of common stock issuable upon conversion or exercise of the secured
convertible term note (the "March 2005 Term Note"), stock option and common
stock purchase warrant issued to Laurus in March 2005. The Company must file
such registration statement within 15 days of filing its Form 10-KSB for the
year ended December 31, 2005 (which registration statement was filed in February
2006) and have the registration statement declared effective by August 15, 2006,
which date was extended to September 15, 2006. The Company will be required to
pay liquidated damages equal to 1.5% of the March 2005 Term Note on a monthly
basis. The Amended Agreement extended the required filing and effective dates
initially set forth in the registration rights agreement entered between the
Company and Laurus in March 2005 that required the registration of the shares of
common stock issuable upon conversion or exercise of the March 2005 Term Note,
stock option and common stock purchase warrant issued to Laurus in March 2005.

The securities purchased by Laurus were offered and sold in a private placement
transaction made in reliance upon exemptions from registration pursuant to
Section 4(2) under the Securities Act of 1933 and Rule 506 promulgated
thereunder. Laurus is an accredited investor as defined in Rule 501 of
Regulation D promulgated under the Securities Act of 1933.

Of the $9,200,000 principal amount of the Term Note and November 2005 Shares,
the Company has allocated $554,217 as the estimated value of the November 2005
Shares issued with the Term Note. This amount is being amortized as additional
interest expense with a corresponding increase to notes payable over the life of
the Term Note using the effective interest method until the Term Note is repaid.
At June 30, 2006, approximately $78,000 has been amortized and the remaining
balance of approximately $476,000 at June 30, 2006 is reflected as a reduction
of notes payable.

Secured Term Loan - May 30, 2006

On May 30, 2006, the Company entered into agreements with Laurus, pursuant to
which the Company sold debt and a warrant to purchase common stock of the
Company to Laurus in a private offering pursuant to exemption from registration
under Section 4(2) of the Securities Act of 1933, as amended. The securities
being sold to Laurus include the following:

      o     A secured term note with a principal amount of $7,000,000 (the "May
            2006 Secured Note"); and

      o     A common stock purchase warrant to purchase 700,000 shares of common
            stock of the Company, at a purchase price of $0.01 per share,
            exercisable until May 30, 2011 (the "May 2006 Warrant").

On June 12, 2006, the Company and Laurus entered into an agreement pursuant to
which the May 2006 Warrant was rescinded and a new common stock purchase warrant
(the "New Warrant") was issued to Laurus. The New Warrant, dated May 30, 2006,
is exercisable to purchase up to 700,000 shares of common stock of the Company,
at an exercise price of $0.1667 per share, exercisable until May 30, 2011.

The $6.6 million proceeds from the May 2006 Secured Term Note, net of deferred
financing costs, was placed into a restricted account with North Fork Bank. Such
funds will be held in the restricted account and only released to the Company
upon the Company (i) delivering audited financial statements for the most recent
ended fiscal year and unaudited financial statements for all months that have
elapsed since the end of such year for acquisition targets the Company intends
to acquire (the "Financials") and (ii) the consummation of an equity financing
in the amount of $3,500,000 by the Company (the "Equity Financing"). Upon
delivery of the Financials and definitive documentation relating to the Equity
Financing, Laurus shall authorize North Fork Bank to release an amount of funds
solely within its discretion.


                                       12

<PAGE>

The May 2006 Secured Note is secured by a lien on substantially all of the
Company's assets, the assets of the Company's subsidiaries and the cash held in
the restricted account at North Fork Bank. Each of the Company's subsidiaries
delivered to Laurus a guarantee of the Company's obligations to Laurus and the
Company pledged its ownership interests in its subsidiaries to Laurus in
connection with the March 2005 financing, which such guarantees and pledges also
cover the May 2006 Secured Note. In the event of a default, Laurus has the right
to accelerate payments under the May 2006 Secured Note and, in addition to any
other remedies available to it, to foreclose upon the assets securing the May
2006 Secured Note.

The May 2006 Secured Note matures on May 30, 2010 and bears interest at a rate
of up to 17.5% per annum, which is payable in two tranches. The first tranche
bears interest at the rate of 10% and is payable on a monthly basis commencing
July 1, 2006. Any amounts due under the first tranche shall be reduced by the
dollar amount of interest earned on funds on deposit with North Fork Bank. The
second tranche bears interest at the rate of 7.5% and is payable on a monthly
basis commencing on the date the funds are released to the Company from the
restricted account, provided, that the Company may elect to add the second
tranche to the principal of the May 2006 Secured Note. Commencing April 1, 2007,
the Company is required to commence making monthly amortizing payments equal to
1/60th of amounts outstanding under the May 2006 Secured Note that are not
contained in the restricted account. If the funds have not been released from
the restricted account by March 31, 2007, then the funds may be returned to
Laurus. The Company may prepay the May 2006 Secured Note at any time without
penalty.

Laurus has contractually agreed to restrict its ability to exercise its warrant
and receive shares of the Company's common stock such that the number of shares
of the Company common stock held by it after such exercise does not exceed 4.99%
of the Company's then issued and outstanding shares of common stock.

The Company is obligated to file a registration statement registering the resale
of shares of the Company's common stock issuable upon exercise of the Warrant.
If the registration statement is not filed within 60 days of closing, or
declared effective within 160 days of closing, or if the registration is
suspended other than as permitted, in the registration rights agreement between
the Company and Laurus, the Company is obligated to pay Laurus certain fees and
the obligations may be deemed to be in default.

The Company paid a cash fee to Laurus Capital Management LLC, the manager of the
Laurus Master Funds, Ltd., of $382,000.

Of the $7,000,000 principal amount of the May 2006 Secured Note and the May 2006
Warrant, the Company has allocated $405,471 as the estimated value of the
November 2005 Shares issued with the Term Note. This amount is being amortized
as additional interest expense with a corresponding increase to notes payable
over the life of the Term Note using the effective interest method until the
Term Note is repaid.


                                       13

<PAGE>

Pursuant to Paragraph 14 of EITF No. 00-19, "Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company's Own Stock", the
May 2006 Warrant issued in connection with the note payable meets the
requirements of and are accounted for as a liability since the May 2006 Warrant
contains registration rights where significant liquidated damages would be
required to be paid to the holder in the event the Company failed to receive an
effective registration. The initial value of the May 2006 Warrant was treated as
a discount to the convertible notes payable and recorded as a liability. The
Company calculated the initial value of the derivative financial instrument on
the closing date of the transaction as being $405,471 as determined using a
Black-Scholes option pricing model with the following assumptions: expected term
- 5 years, volatility - 25%, risk free rate - 4%, and zero dividend yield. Using
the Black-Scholes option-pricing method, the value of the derivative financial
instruments are reassessed at each balance sheet date and marked to market as a
derivative gain or loss until exercised or expiration. Upon exercise or
conversion of the derivative financial instruments, the related liability is
removed by recording an adjustment to additional paid-in-capital. The derivative
financial instruments have a value of $72,525 at June 30, 2006.

Amendment to Previous Laurus Financings in Connection with May 2006 Loan

March 2005 Loan

      On March 9, 2005, the Company issued to Laurus (i) a secured convertible
term note in the principal amount of $3,000,000 (the "March 2005 Convertible
Note"), (ii) warrants entitling Laurus to purchase up to 1,084,338 shares of our
common stock at a per share exercise price of $1.00 (the "March 2005 Warrant")
and (iii) an option to purchase up to 643,700 shares of our common stock at a
per share purchase price of $0.01.

      Amortizing payments of the outstanding principal amount of the March 2005
Convertible Note contained in the restricted account, referred to as the
"Amortizing Principal Amount", began on July 1, 2005, in monthly installments of
$ 14,705.88, which was increased to $100,912.78 following the release of funds
from the restricted account, on the first day of each succeeding calendar month
until paid, together with accrued and unpaid interest (whether by the payment of
cash or by the conversion of such principal into common stock). In connection
with the May 2006 financing, Laurus and the Company agreed that the Company will
not be required to make its Amortizing Principal Amount payments commencing on
June 1, 2006 through March 31, 2007. Such payments shall resume on April 1,
2007. In addition, the exercise price of the March 2005 Warrant was reduced from
$1.00 to $0.50.

November 2005 Loan

      On November 30, 2005, we issued to Laurus (i) a $9,200,000 in a secured
term note (the "November 2005 Term Note") and (ii) 1,108,434 shares of our
common stock. Commencing June 1, 2006, the Company was required to commence
making monthly amortizing payments in the amount of $219,047.62. In connection
with the May 2006 financing, Laurus and the Company agreed that the Company will
not be required to make its monthly amortizing payments commencing on June 1,
2006 through March 31, 2007. Such payments shall resume on April 1, 2007.

August 10, 2006 Amendment

On August 10, 2006, the Company entered into an Amendment Agreement with Laurus
pursuant to which Laurus agreed to remove its contractual ability to waive its
ownership limitation of 4.99% of the Company's issued and outstanding shares of
common stock as provided under the March 2005 Note, the March 2005 Warrant and
the March 2005 Option and the May 2006 Warrant. Further, the effectiveness date
as set forth in the Amended and Restated Registration Rights Agreement entered
with Laurus pursuant to which it agreed to file a registration statement
registering the November 2005 Shares and the shares of common stock issuable
upon conversion or exercise of the March 2005 Term Note, March 2005 Option and
the March 2005 Warrant was extended to September 15, 2006.


                                       14

<PAGE>

Note 5. Stockholders' equity

During the six months ended June 30, 2006, stockholders' equity was increased as
a result of

      o     stock-based compensation in the amount of approximately $596,000

      o     issuance of 4,150,000 shares of common stock valued at $3,444,500 in
            connection with the VFE acquisition

      o     the exercise of stock options in the amount of $6,667.

During the six months ended June 30, 2006, stockholders' equity was decreased as
a result of preferred dividends of approximately $660,000 and the net loss.

Note 6. Stock-Based Compensation

The Company complies with the fair value recognition provisions of Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation". SFAS No. 123 requires that compensation cost for all stock awards
be calculated and recognized over the service period (generally equal to the
vesting period). This compensation cost is determined using option pricing
models intended to estimate the fair value of the awards at the grant date. An
offsetting increase to stockholders' equity is recorded equal to the amount of
the compensation expense charge. The fair value of issued stock options and
warrants are estimated on the date of grant using the Black-Scholes
option-pricing model including the following assumptions: expected volatility of
25.0%, expected dividend yield rate of 0%, expected life over the term,
generally, 5 or 10 years, and a risk-free interest rate of 4.2%.

There was no cash flow effect resulting from these arrangements.

Note 7. Net Income (Loss) Per Common Share

The Company complies with the accounting and reporting requirements of SFAS No.
128, "Earnings Per Share". Basic net income (loss) per common share includes no
dilution and is computed by dividing net loss by the weighted average number of
shares of common stock outstanding for the period. Diluted net income per common
share reflects, in the periods in which they have a dilutive effect, the
dilution which would occur upon the exercise of stock options. A reconciliation
of the shares used in calculating basic and diluted net income per common share
for the three months ended June 30, 2006 is as follows:

Weighted average shares outstanding - basic                      20,022,000
Shares issued on the assumed exercise of stock options            4,100,000
Shares issued on the assumed conversion of preferred shares      22,050,000
Less: assumed shares purchased under the treasury stock method     (778,000)
                                                                 ----------
Weighted average shares outstanding - diluted                    45,394,000
                                                                 ==========


                                       15

<PAGE>

Unexercised stock options and warrants to purchase common stock and Notes
convertible into common stock as of June 30, 2006 and 2005, are as follows:

                    June 30, 2006   June 30, 2005
                    -------------   -------------
Options                3,567,163       1,007,295
Warrants               4,379,185       5,301,985
Preferred stock       21,850,008       3,820,000
Convertible notes      2,796,379       4,332,034
                      ----------      ----------
                      32,592,735      14,461,314
                      ==========      ==========

The foregoing common stock equivalents were excluded from the calculation of
diluted net loss per common share for the six months ended June 30, 2006 and
2005 and for the three months ended June 30, 2005 since their inclusion would be
anti-dilutive.

Note 8. Acquisition of Valley Forge Enterprises, Ltd.

On January 4, 2006 (effective January 1, 2006), NIM and its wholly-owned
subsidiary, VFE Merger Corp. ("Merger Company"), a Pennsylvania corporation,
entered into an Agreement and Plan of Merger (the "Agreement") with Valley Forge
Enterprises, Ltd., a Pennsylvania corporation ("Valley Forge"), Jack C. Holland
("Holland") and Steven R. Eyer ("Eyer"). Holland and Eyer collectively owned
100% of the issued and outstanding capital stock of Valley Forge and are
hereinafter sometimes referred to as the "Valley Forge Shareholders". Concurrent
with the execution of the Agreement, Valley Forge merged into Merger Company
resulting in the separate existence of Valley Forge ceasing and all rights,
liabilities and assets being transferred to Merger Company (the "Merger") and
the name of Merger Company being changed to "Valley Forge Enterprises, Ltd." In
consideration for the Valley Forge Shareholders entering into the Merger, the
Company issued an aggregate of 4,150,000 shares valued at $.83 per share of
common stock of the Company to the Valley Forge Shareholders and made an
aggregate payment in the amount of $3,155,500 to the Valley Forge Shareholders,
for total consideration of $6,600,000.

The Company's strategy in purchasing Valley Forge was to acquire a pension
advisory, investment management and general insurance agency organization with
recurring revenue streams, and consolidate these businesses to take advantage of
economies of scale, efficiencies, and cross-selling opportunities. Valley Forge
had demonstrated stable revenue growth and cash flow with low client attrition
rates. The Company plans to enhance revenues in Valley Forge through
cross-selling within a more diversified service and product base, the
introduction of higher-margin, non-traditional investment management services
and products and higher client retention through improved service.


                                       16

<PAGE>

As part of the consideration received for the sale of Valley Forge to us,
Holland and Eyer were each awarded a one year employment agreement, and agreed
to be bound by three year non-compete and non-solicit agreements.

The acquisition of Valley Forge is accounted for under the purchase method of
accounting in accordance with SFAS No. 141, "Business Combinations." Under the
purchase method, assets acquired and liabilities assumed are recorded at their
estimated fair values. Goodwill is recorded to the extent the purchase price,
including certain acquisition and closing costs, exceeds the fair value of the
net identifiable tangible and intangible assets acquired at the date of the
acquisition.

The total purchase price for the acquisition of Valley Forge of $8,542,000
(including $242,000 of acquisition costs) is being allocated as follows:

Assets acquired:
  Property and equipment         $  100,000
  Customer lists/relationships    3,680,000
  Covenant not to compete           384,000
  Employment agreements             200,000
  Goodwill                        4,178,000
                                 ----------
                                  8,542,000
Liabilities assumed:
  Deferred tax liability          1,700,000
                                 ----------
Net purchase price               $6,842,000
                                 ==========

The identifiable intangible assets listed above will be amortized for book
purposes over the estimated useful lives of the assets. The amortization of the
identifiable intangible assets and goodwill are not deductible for tax purposes.
Additional consideration or adjustments will be recorded in the consolidated
financial statements as goodwill.

In connection with the Valley Forge acquisition, the Company became obligated to
make an aggregate annual payment of $75,000 under a one-year employment
agreement with each of Holland and Eyer. The Company also became obligated to
issue options to purchase 50,000 shares of common stock at an exercise price of
$1.00 per share and 50,000 shares of common stock at an exercise price of $.83
per share to Holland, 50,000 shares of common stock at an exercise price of
$1.00 per share to Eyer and 21,500 shares of common stock at an exercise price
of $1.00 per share to the employees of Valley Forge.


                                       17

<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Six Month Period ended June 30, 2006 Compared to June 30, 2005

<TABLE>
<CAPTION>
                                                                                                   $ Change     % Change
                                                                 % of                    % of       2006 to      2006 to
For the six months ended June 30,                    2006      Revenues      2005      Revenues      2005          2005
----------------------------------------------   -----------   --------   ----------   --------   -----------   --------
<S>                                              <C>            <C>       <C>           <C>       <C>             <C>
Revenues:                                        $10,690,313    100.00%   $1,169,153    100.00%   $ 9,521,160     814.36%
                                                 -----------   -------    ----------    -------   ------------  ---------
Operating expenses
  Selling                                            203,158     1.90%       199,630     17.07%         3,528       1.77%
  General and administrative                      10,122,786    94.69%     1,191,232    101.89%     8,931,554     749.77%
  Depreciation and amortization                    1,681,385    15.73%       185,408     15.86%     1,495,977     806.86%
  Stock based compensation                           595,734     5.57%         4,429      0.38%       591,305   13350.75%
                                                 -----------   ------     ----------    ------    -----------   --------
                                                  12,603,063   117.89%     1,580,699    135.20%    11,022,364     697.31%
                                                 -----------   ------     ----------    ------    -----------   --------
Operating (loss)                                  (1,912,750)  -17.89%      (411,546)   -35.20%    (1,501,204)    364.77%
                                                 -----------   ------     ----------    ------    -----------   --------
Other income (expense):
  Reverse acquisition costs                               --     0.00%      (215,000)   -18.39%       215,000         NM
  Gain on sale of subsidiary                         166,568     1.56%            --      0.00%       166,568         NM
  Change in fair value of derivative financial
    instruments                                    1,464,270    13.70%            --        --      1,464,270         NM
  Interest expense                                (1,902,578)  -17.80%      (229,426)   -19.62%    (1,673,152)    729.28%
  Interest, dividend and rental income                16,306     0.15%        24,445      2.09%        (8,139)    -33.29%
                                                 -----------   ------     ----------    ------    -----------   --------
                                                    (255,434)   -2.39%      (419,981)   -35.92%       164,547     -39.18%
                                                 -----------   ------     ----------    ------    -----------   --------
Loss before provision for income taxes            (2,168,184)  -20.28%      (831,527)   -71.12%    (1,336,657)    160.75%

Deferred income tax benefit                          231,292     2.16%        91,393      7.82%       139,899     153.07%
                                                 -----------   ------     ----------    ------    -----------   --------

Net (loss)                                        (1,936,892)  -18.12%      (740,134)   -63.31%   $(1,196,758)    161.69%
                                                               ======                   ======    ===========   ========

Preferred dividends                                 (660,500)               (125,903)
                                                 -----------              ----------

Net (loss) available to common shareholders      $(2,597,392)             $ (866,037)
                                                 ===========              ==========
</TABLE>


                                       18

<PAGE>

Revenues for the six months ended June 30, 2006 increased $9,521,160 to
$10,690,313 compared to the six months ended June 30, 2005 as shown on the table
above. The increase in revenue and corresponding increases in operating expenses
was due to business generated and costs incurred by firms that were acquired in
2005 and the first quarter of 2006, which are being consolidated for the first
time.

Operating expenses increased $11,022,364 to $12,603,063 from the prior year's
comparable period. As a percentage of sales, operating expenses decreased to
117.89% in the 2006 period as compared to 135.20% in the same period last year.

Selling expenses increased $3,528 to $203,158 from the prior year's comparable
period. As a percentage of sales, selling expenses decreased to 1.90% in the
2006 period as compared to 17.07% in the same period last year.

General and administrative expenses increased $8,931,554 to $10,122,786 from the
prior year's comparable period. As a percentage of sales, general and
administrative expenses decreased to 94.69% in the period as compared to 101.89%
in the same period last year.

Depreciation and amortization increased $1,495,977 to $1,681,385 from the prior
year's comparable period primarily due to amortization of intangible assets
acquired in connection with acquisitions.

Stock based compensation increased $591,305 to $595,734 from the prior year's
comparable period due primarily to the issuances of options to executives and
employees.

Other income (expense)

Net other income (expense) decreased $164,547 to $(255,434) for the six months
ended June 30, 2006 as compared to net other income (expense) of $(419,981) for
the six months ended June 30, 2005. The change was mainly due to:

      o     An increase in interest expense of $1,673,152 which was primarily
            due to (i) a $9.2 million loan on November 30, 2005 and a $7.0
            million loan on May 30, 2006 from Laurus Master Fund, Ltd., (ii) a
            prepayment penalty and recognition of non-cash interest on the early
            retirement of debt from a secured lender.

      o     A reduction in interest, dividend and sub-rental income of $8,139
            due to lower cash balances collecting interest and dividends.

      o     These charges were offset by

            o     a gain on the change in the fair value of derivative financial
                  instruments of $1,464,270, which derivative instruments were
                  components of compensation to Laurus Master Fund, Ltd. in
                  connection with certain of their loans to us and

            o     a gain of $166,568 on the sale of MLK Capital Management, Inc.


                                       19

<PAGE>

Three Month Period ended June 30, 2006 Compared to June 30, 2005

<TABLE>
<CAPTION>
                                                                                                   $ Change    % Change
                                                                  % of                   % of       2006 to     2006 to
For the three months ended June 30,                  2006       Revenues      2005     Revenues      2005        2005
-----------------------------------------------   -----------   --------   ---------   --------   ----------   --------
<S>                                               <C>            <C>       <C>          <C>       <C>           <C>
Revenues:                                         $ 6,056,006    100.00%   $ 613,489    100.00%   $5,442,517    887.14%
                                                  -----------    ------    ---------    ------    ----------   -------
Operating expenses
  Selling                                             122,208      2.02%     126,296     20.59%       (4,088)    -3.24%
  General and administrative                        4,604,791     76.04%     647,155    105.49%    3,957,636    611.54%
  Depreciation and amortization                       845,484     13.96%      97,869     15.95%      747,615    763.89%
  Stock based compensation                            142,357      2.35%       1,477      0.24%      140,880   9538.28%
                                                  -----------    ------    ---------    ------    ----------   -------
                                                    5,714,840     94.37%     872,797    142.27%    4,842,043    554.77%
                                                  -----------    ------    ---------    ------    ----------   -------
Operating income (loss)                               341,166      5.63%    (259,308)   -42.27%      600,474   -231.57%
                                                  -----------    ------    ---------    ------    ----------   -------
Other income (expense):
  Change in fair value of derivative financial
    instruments                                     1,464,270     24.18%          --        --     1,464,270        NM
  Interest expense                                 (1,114,304)   -18.40%    (191,906)   -31.28%     (922,398)   480.65%
  Interest, dividend and rental income                  5,349      0.09%      21,362      3.48%      (16,013)   -74.96%
                                                  -----------    ------    ---------    ------    ----------   -------
                                                      355,315      5.87%    (170,544)   -27.80%      525,859   -308.34%
                                                  -----------    ------    ---------    ------    ----------   -------
Income (loss) before provision for income taxes       696,481     11.50%    (429,852)   -70.07%    1,126,333   -262.03%

Deferred income tax benefit                           231,292      3.82%      69,421     11.32%      161,871    233.17%
                                                  -----------    ------    ---------    ------    ----------   -------

Net income (loss)                                     927,773     15.32%    (360,431)   -58.75%   $1,288,204   -357.41%
                                                                 ======                 ======    ==========   =======

Preferred dividends                                  (329,750)               (57,300)
                                                  -----------              ---------

Net income (loss) available to common
  shareholders                                    $   598,023              $(417,731)
                                                  ===========              =========
</TABLE>

Revenues for the three months ended June 30, 2006 increased $5,442,517 to
$6,056,006 compared to the three months ended June 30, 2005 as shown on the
table above. The increase in revenue and corresponding increases in operating
expenses was due to business generated and costs incurred by firms that were
acquired in 2005 and the first quarter of 2006, which are being consolidated for
the first time.


                                       20

<PAGE>

Operating expenses increased $4,842,043 to $5,714,840 from the prior year's
comparable quarter. As a percentage of sales, operating expenses decreased to
94.37% in the 2006 quarter as compared to 142.27% in the same period last year.

Selling expenses decreased $4,088 to $122,208 from the prior year's comparable
quarter. As a percentage of sales, selling expenses decreased by 3.24% when
compared to the three months ended June 30, 2005.

General and administrative expenses increased $3,957,636 to $4,604,791 from the
prior year's comparable quarter. As a percentage of sales, general and
administrative expenses decreased to 76.04% in the quarter as compared to
105.49% in to the same period last year.

Depreciation and amortization increased $747,615 to $845,484 from the prior
year's comparable quarter primarily due to amortization of intangible assets
acquired in connection with acquisitions.

Stock based compensation increased $140,880 to $142,357 from the prior year's
comparable quarter due primarily to the issuances of options to executives and
employees.

Other income (expense)

Net other income (expense) increased $525,859 to $355,315 for the three months
ended June 30, 2006 as compared to net other income (expense) of $(170,544) for
the three months ended June 30, 2005. The change was mainly due to:

      o     An increase in interest expense of $922,398 which was primarily due
            to (i) a $9.2 million loan on November 30, 2005 and a $7.0 million
            loan on May 30, 2006 from Laurus Master Fund, Ltd., (ii) a
            prepayment penalty and recognition of non-cash interest on the early
            retirement of debt from a secured lender.

      o     A reduction in interest, dividend and sub-rental income of $16,013
            due to lower cash balances collecting interest and dividends.

      o     These charges were offset by a gain on the change in the fair value
            of derivative financial instruments of $1,464,270, which derivative
            instruments were components of compensation to Laurus Master Fund,
            Ltd. in connection with certain of their loans to us.

Liquidity and Capital Resources

Our cash, working capital (deficit) and stockholders' equity position is
disclosed below:

                            June 30, 2006   December 31, 2005
                            -------------   -----------------
Unrestricted Cash           $    892,293      $  5,964,192
Working Capital (deficit)    ($4,654,115)      ($2,013,559)
Stockholders' Equity        $ 13,342,791      $ 11,789,282


                                       21

<PAGE>

The Company had unrestricted cash as of June 30, 2006 of $892,293, a decrease of
$5,071,899 from December 31, 2005.

The decrease in cash was due to:

Net cash used in operating activities                    $  (291,053)
                                                         -----------
Cash flows from investing activities:
Purchases of property and equipment                         (151,192)
Acquisition of Valley Forge                               (3,397,500)
Acquisition of ABR                                           (10,000)
Proceeds from sale of MLK Group                               900,000
Decrease in receivable from ABR trustee                       26,408
Increase in restricted cash (for acquisition purposes)    (6,618,000)
                                                         -----------
Net cash used in investing activities                     (9,250,284)
                                                         -----------
Cash flows from financing activities:
Proceeds from long-term debt                               7,000,000
Payments on short-term debt and notes                     (2,155,229)
Proceeds (costs) from common and preferred
  stock sales, net                                             6,667
Payment of deferred financing costs                         (382,000)
                                                         -----------
Net cash provided by financing activities                  4,469,438
                                                         -----------
(Decrease) in cash                                       $(5,071,899)
                                                         ===========

Net cash used in operating activities of $291,053 was primarily due to a net
loss of $1,936,892, offset by non-cash items of $1,516,666, increases in
receivables and prepaid expenses of $69,086 and $123,322 respectively, and an
increase in accounts payable and unearned revenues of $173,610 and $498,352
respectively and a decrease in accrued expenses of $350,570.

The non-cash items were primarily composed of:

      o     Depreciation and amortization of $1,681,385

      o     Noncash interest of $1,101,677

      o     Stock based compensation of $595,734

offset by a gain on the sale of a subsidiary of $166,568 and a change in
deferred income tax benefit of $231,292.

Net cash of $9,250,284 used in investing activities was primarily due to an
increase of cash restricted for acquisition purposes of $6,618,000 and
$3,397,500 of funds expended in the Valley Forge acquisition and the purchase of
fixed assets, offset by proceeds received from the sale of the MLK Group.

Net cash of $4,469,438 provided by financing activities was primarily due to the
receipt of a $7 million loan from our senior lender less payments of debt and
financing fees of $382,000 for the Laurus funding.

In order to pursue our strategy of purchasing small to medium-sized pension
advisory, investment management and insurance organizations, we will need to
seek additional equity or debt financing in the near future.


                                       22

<PAGE>

Future Contractual Obligations

The following table shows the Company's contractual obligations as of June 30,
2006:

<TABLE>
<CAPTION>
                                                       Payments due by period
                                     ---------------------------------------------------------
                                        Total      Less than 1 year    1-3 years     3-5 years
                                     -----------   ----------------   ----------    ----------
<S>                                  <C>              <C>             <C>           <C>
Operating Lease Obligations          $ 2,187,133      $1,090,764      $   998,040   $   98,329
                                     ===========      ==========      ===========   ==========

Employment Contracts                 $   401,665      $  401,665      $             $
                                     ===========      ==========      ===========   ==========

Long Term Debt                       $21,008,696      $2,631,346      $11,616,390   $6,760,960
                                     ===========      ==========      ===========   ==========

Total Contractual Cash Obligations   $23,597,494      $4,123,775      $12,614,430   $6,859,289
                                     ===========      ==========      ===========   ==========
</TABLE>

Critical Accounting Policies and Estimates

We believe the following critical accounting policies affect the significant
judgments and estimates used in the preparation of our financial statements:

      o     Revenue Recognition

      o     Management's estimates

Revenue Recognition

We generate revenue primarily from the following three sources:

      o     Third party administration.

      o     Financial planning and investment advisory fees and securities
            commissions.

      o     Insurance commissions

We recognize revenue from these sources, as follows:

           Third party administration.

o     Persuasive evidence of an arrangement between us and our client exists

o     Delivery of the product to the customer has occurred or service has been
      provided to the customer

o     The price to the customer is fixed and determinable

o     Collectibility of the sales price is reasonably assured

      Financial planning and investment advisory fees and securities
      commissions.

o     As services are rendered

o     Contingent commissions are recorded as revenue when received


                                       23

<PAGE>

      Insurance commissions.

o     The policy application is substantially complete

o     The premium is paid

o     The insured party is contractually committed to the purchase of the
      insurance policy

Management's Estimates

The discussion and analysis of our financial condition and results of operations
are based upon our condensed consolidated financial statements which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires management
to make estimates and judgments that affect the reported amounts of assets,
liabilities and related disclosure of contingent assets and liabilities at the
date of the condensed consolidated financial statements and the reported amounts
for revenues and expenses during the reporting period. On an ongoing basis,
management evaluates estimates, including those related to allowances for
doubtful accounts, as described above, income taxes, bad debts, and
contingencies. We base our estimates on historical data, when available,
experience, and on various other assumptions that are believed to be reasonable
under the circumstances, the combined results of which form the basis for making
judgments approximately the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates.

Inflation

While inflation has not had a material effect on our operations in the past,
there can be no assurance that we will be able to continue to offset the effects
of inflation on the costs of our services through price increases to our clients
without experiencing a reduction in the demand for our services; or that
inflation will not have an overall effect on the retirement market that would
have a material affect on us.

Special Note Regarding Forward Looking Statements

This Quarterly Report contains forward-looking statements as that term is
defined in the federal securities laws. The events described in forward-looking
statements contained in this Quarterly Report may not occur. Generally these
statements relate to business plans or strategies, projected or anticipated
benefits or other consequences of our plans or strategies, projected or
anticipated benefits from acquisitions to be made by us, or projections
involving anticipated revenues, earnings or other aspects of our operating
results. The words "may," "will," "expect," "believe," "anticipate," "project,"
"plan," "intend," "estimate," and "continue," and their opposites and similar
expressions are intended to identify forward-looking statements. We caution you
that these statements are not guarantees of future performance or events and are
subject to a number of uncertainties, risks and other influences (including, but
not limited to, those set forth in our Form 10-K), many of which are beyond our
control, that may influence the accuracy of the statements and the projections
upon which the statements are based. Any one or more of these uncertainties,
risks and other influences could materially affect our results of operations and
whether forward looking statements made by us ultimately prove to be accurate.
Our actual results, performance and achievements could differ materially from
those expressed or implied in these forward-looking statements. We undertake no
obligation to publicly update or revise any forward-looking statements, whether
from new information, future events or otherwise.


                                       24

<PAGE>

Item 3. Quantitative and Qualitative Disclosures about Market Risks

General economic and market factors, such as changes in interest rates or
declines or significant volatility in the securities markets, will affect our
commission and fee income. These factors can affect the volume of new investment
sales and the extent to which clients keep their investments and maintain funds
in accounts we manage. Equity returns and interest rates can have a significant
effect on the sale of many employee benefit programs whether they are financed
by life insurance or other financial instruments. For example, if interest rates
increase, competing products offering higher returns could become more
attractive to potential purchasers than the programs and policies we market and
distribute. Further, a decrease in stock prices can have a significant effect on
the sale of financial services products that are linked to the stock market,
such as variable life insurance, variable annuities, mutual funds and managed
accounts. In addition, a portion of our earnings will be derived from fees,
typically based on a percentage of assets under management, for offering
financial advice and related services to clients, and a decrease in stock prices
would reduces fees that are based on a percentage of assets under management.
Further, we will earn recurring commission revenue on certain products over a
period after the initial sale, provided the customer retains the product. These
factors may lead customers to surrender or terminate their products, ending
these recurring revenues. A portion of our earnings will be derived from
commissions and override payments from manufacturers of financial services
products that are based on the volume and profitability of business generated by
us. If investors were to seek alternatives to our investment advice and services
or to our insurance products and services, it could have a negative impact on
our revenue. We cannot guarantee that we will be able to compete with
alternative products if these market forces make our products and services
unattractive to clients. Finally, adverse general economic conditions may cause
potential customers to defer or forgo the purchase of products that we sell, for
example to invest more defensively or to surrender products to increase personal
cash flow.

Legislation enacted in the spring of 2001 under the Economic Growth and Tax
Relief Reconciliation Act of 2001 ("EGTRRA") increased the size of estates
exempt from the federal estate tax and phases in additional increases between
2002 and 2009. EGTRRA also phases in reductions in the federal estate tax rate
between 2002 and 2009 and repeals the federal estate tax entirely in 2010. Under
EGTRRA, the federal estate tax will be reinstated, without the increased
exemption or reduced rate, in 2011 and thereafter. However, President Bush and
members of Congress have expressed a desire to modify the current legislation,
which could result in additional increases in the size of estates exempt from
the federal estate tax, further reductions in the federal estate tax rate or a
permanent repeal of the federal estate tax. As enacted, EGTRRA has had a modest
negative impact on our revenue from the sale of estate planning services and
products including certain life insurance products that are often used to fund
estate tax obligations and could have a further negative impact on our insurance
business in the future. The pending bill, if enacted in its current form, or any
additional increases in the size of estates exempt from the federal estate tax,
further reductions in the federal estate tax rate or other legislation to
permanently repeal the federal estate tax, could have a material adverse effect
on our revenue. There can be no assurance that the pending bill will not be
enacted in its current form or, alternatively, that other legislation will not
be enacted that would have a further negative impact on our revenue.


                                       25

<PAGE>

Item 4. Controls and Procedures

As of the end of the period covered by this report, our Chief Executive Officer
and Chief Financial Officer conducted an evaluation of the effectiveness of our
disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule
15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")). Based upon this evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures are
effective to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act are recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms.

In addition, no change in our internal control over financial reporting occurred
during the fiscal quarter ended June 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

From time to time, the Company may become a party to litigation or other legal
proceedings that it considers to be a part of the ordinary course of its
business. The Company is not involved currently in legal proceedings that could
reasonably be expected to have a material adverse effect on its business,
prospects, financial condition or results of operations. The Company may become
involved in material legal proceedings in the future.

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

As previously reported on our Form 8-K dated January 5, 2006, on January 4,
2006, NIM and its wholly-owned subsidiary, VFE Merger Corp. ("Merger Company"),
a Pennsylvania corporation, entered into an Agreement and Plan of Merger (the
"Agreement") with Valley Forge Enterprises, Ltd., a Pennsylvania corporation
("Valley Forge"), Jack C. Holland ("Holland") and Steven R. Eyer ("Eyer").
Holland and Eyer collectively own 100% of the issued and outstanding capital
stock of Valley Forge and are hereinafter sometimes referred to as the "Valley
Forge Shareholders". Concurrent with the execution of the Agreement, Valley
Forge merged into Merger Company resulting in the separate existence of Valley
Forge ceasing and all rights, liabilities and assets being transferred to Merger
Company (the "Merger") and the name of Merger Company being changed to "Valley
Forge Enterprises, Ltd.". In partial consideration for the Valley Forge
Shareholders entering into the Merger, the Company issued an aggregate of
4,150,000 shares (the "Merger Shares") of common stock of the Company to the
Valley Forge Shareholders. In addition, we issued 5-year options for an
aggregate of 100,000 shares of our common stock to the two former stockholders
of Valley Forge, based on an exercise price of $1.00 per share, and an
additional 50,000 shares of our common stock to the one former stockholder of
Valley Forge, based on an exercise price of $0.83 per share.


                                       26

<PAGE>

The issuance of our common stock and of convertible securities and options to
acquire common stock were made as a private placement in accordance with Section
4(2) under the Securities Act pursuant to an exemption from the registration
requirements under the Securities Act of 1933. The common stock and options we
issued in the acquisition, and the shares of our common stock underlying the
options and convertible notes, are 'restricted securities' under the Securities
Act of 1933 and will not be eligible for resale unless we file a registration
covering such securities or another exemption from the registration requirements
under the Securities Act of 1933 is available to a particular selling
stockholder.

Secured Term Loan - May 30, 2006

On May 30, 2006, the Company entered into agreements with Laurus, pursuant to
which the Company sold debt and a warrant to purchase common stock of the
Company to Laurus in a private offering pursuant to exemption from registration
under Section 4(2) of the Securities Act of 1933, as amended. The securities
being sold to Laurus include the following:

      o     A secured term note with a principal amount of $7,000,000 (the "May
            2006 Secured Note"); and

      o     A common stock purchase warrant to purchase 700,000 shares of common
            stock of the Company, at a purchase price of $0.01 per share,
            exercisable until May 30, 2011 (the "May 2006 Warrant").

On June 12, 2006, the Company and Laurus entered into an agreement pursuant to
which the May 2006 Warrant was rescinded and a new common stock purchase warrant
(the "New Warrant") was issued to Laurus. The New Warrant, dated May 30, 2006,
is exercisable to purchase up to 700,000 shares of common stock of the Company,
at an exercise price of $0.1667 per share, exercisable until May 30, 2011.

The $6.6 million proceeds from the May 2006 Secured Term Note, net of deferred
financing costs, was placed into a restricted account with North Fork Bank. Such
funds will be held in the restricted account and only released to the Company
upon the Company (i) delivering audited financial statements for the most recent
ended fiscal year and unaudited financial statements for all months that have
elapsed since the end of such year for acquisition targets the Company intends
to acquire (the "Financials") and (ii) the consummation of an equity financing
in the amount of $3,500,000 by the Company (the "Equity Financing"). Upon
delivery of the Financials and definitive documentation relating to the Equity
Financing, Laurus shall authorize North Fork Bank to release an amount of funds
solely within its discretion.

The May 2006 Secured Note is secured by a lien on substantially all of the
Company's assets, the assets of the Company's subsidiaries and the cash held in
the restricted account at North Fork Bank. Each of the Company's subsidiaries
delivered to Laurus a guarantee of the Company's obligations to Laurus and the
Company pledged its ownership interests in its subsidiaries to Laurus in
connection with the March 2005 financing, which such guarantees and pledges also
cover the May 2006 Secured Note. In the event of a default, Laurus has the right
to accelerate payments under the May 2006 Secured Note and, in addition to any
other remedies available to it, to foreclose upon the assets securing the May
2006 Secured Note.


                                       27

<PAGE>

The May 2006 Secured Note matures on May 30, 2010 and bears interest at a rate
of up to 17.5% per annum, which is payable in two tranches. The first tranche
bears interest at the rate of 10% and is payable on a monthly basis commencing
July 1, 2006. Any amounts due under the first tranche shall be reduced by the
dollar amount of interest earned on funds on deposit with North Fork Bank. The
second tranche bears interest at the rate of 7.5% and is payable on a monthly
basis commencing on the date the funds are released to the Company from the
restricted account, provided, that the Company may elect to add the second
tranche to the principal of the May 2006 Secured Note. Commencing April 1, 2007,
the Company is required to commence making monthly amortizing payments equal to
1/60th of amounts outstanding under the May 2006 Secured Note that are not
contained in the restricted account. If the funds have not been released from
the restricted account by March 31, 2007, then the funds may be returned to
Laurus. The Company may prepay the May 2006 Secured Note at any time without
penalty.

Laurus has contractually agreed to restrict its ability to exercise its warrant
and receive shares of the Company's common stock such that the number of shares
of the Company common stock held by it after such exercise does not exceed 4.99%
of the Company's then issued and outstanding shares of common stock.

The Company is obligated to file a registration statement registering the resale
of shares of the Company's common stock issuable upon exercise of the Warrant.
If the registration statement is not filed within 60 days of closing, or
declared effective within 160 days of closing, or if the registration is
suspended other than as permitted, in the registration rights agreement between
the Company and Laurus, the Company is obligated to pay Laurus certain fees and
the obligations may be deemed to be in default.

The Company paid a cash fee to Laurus Capital Management LLC, the manager of the
Laurus Master Funds, Ltd., of $382,000.

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 and Reports on Form 8-K

Exhibits

31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule
15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or
Rule 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002

32 Certification of Chief Executive Officer and Chief Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002


                                       28

<PAGE>

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.

                                  NATIONAL INVESTMENT MANAGERS INC.
                                    Registrant


Date: August 14, 2006             By /s/ Steven Ross
                                     -------------------------------------------
                                     STEVEN ROSS
                                     Chief Executive Officer and Director


Date: August 14, 2006             By /s/ Leonard Neuhaus
                                     -------------------------------------------
                                     LEONARD NEUHAUS
                                     Chief Operating and Financial Officer


                                       29