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

| [                ] | Transition                report under Section 13 or 15(d) of the Exchange Act for the transition                period from __________ to                __________. |
|------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NEVADA                                                                                      |   | 95-4756822                                                        |
|---------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
| (State                or other jurisdiction ofincorporation                or organization) |   | (I.R.S.                EmployerIdentification                No.) |

----

| ITEM                1.                     | FINANCIAL                STATEMENTS                                                                                              | 3      |
|--------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------|--------|
|                                       |                                                                                                                             |   |
|                                       | Consolidated                Unaudited Balance Sheets as of September 30,                2006 and June 30, 2006                   | 3      |
|                                       |                                                                                                                             |   |
|                                       | Consolidated                Unaudited Statements of Operations for the                Quarters ended September 30, 2006 and 2005 | 4      |
|                                       |                                                                                                                             |   |
|                                       | Consolidated                Unaudited Statement of Cash Flows for the                Quarters ended September 30, 2006 and 2005  | 5      |
|                                       |                                                                                                                             |   |
|                                       | Notes                to Consolidated Financial                Statements                                                         | 6      |
|                                       |                                                                                                                             |   |
| ITEM                2.                     | MANAGEMENT'S              DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION              AND RESULTS OF OPERATIONS                  | 10     |
|                                       |                                                                                                                             |   |
| ITEM                3.                     | CONTROLS                AND PROCEDURES                                                                                           | 12     |
|                                       |                                                                                                                             |   |
| PART                II - OTHER INFORMATION |
|                                       |                                                                                                                             |   |
| ITEM                2.                     | UNREGISTERED                SALES OF EQUITY SECURITIES AND USE OF                PROCEEDS                                        | 12     |
|                                       |                                                                                                                             |   |
| ITEM                6.                     | EXHIBITS                                                                                                                         | 12     |
|                                       |                                                                                                                             |
| SIGNATURES                                 | 13                                                                                                                               |

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ENCOMPASS      HOLDINGS, INC.

|                                                                                                                                                                                                                                                                                                 |   | September                30,2006 |        | June                30,2006 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|-------------|-----------------------------|--------|
| Assets                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                 |   |                             |        |                        |   |
| Current                assets:                                                                                                                                                                                                                                                                       |   |                             |        |                        |   |
|     Cash                                                                                                                                                                                                                                                                         |   | $                                | 53,373      |                        | $      | 146,935 |   |
|     Accounts                receivable, less allowance for uncollectible accounts                                                                                                                                                                                                |   |                             | 394,732     |                        |   | 405,545 |   |
|     Receivable                from                related party                                                                                                                                                                                                                  |   |                             | -           |                        |   | - |   |
|     Prepaid                expenses                                                                                                                                                                                                                                              |   |                             | 353,294     |                        |   | 335,063 |   |
|     Other                current assets                                                                                                                                                                                                                                          |   |                             | -           |                        |   | - |   |
|                                                                                                                                                                                                                                                                                                 |   |                             |        |                        |   |   |   |
|         Total                current assets                                                                                                                                                                                                                  |   |                             | 801,399     |                        |   | 887,543 |   |
|                                                                                                                                                                                                                                                                                                 |   |                             |        |                        |   |   |   |
| Equipment,                net                                                                                                                                                                                                                                                                        |   |                             | 13,116,602  |                        |   | 13,363,914 |   |
| Other                assets:                                                                                                                                                                                                                                                                         |   |                             |        |                        |   |   |   |
|     Note                receivable                                                                                                                                                                                                                                               |   |                             | -           |                        |   | - |   |
|     Deposits&                other                                                                                                                                                                                                                                           |   |                             | 403,084     |                        |   | 403,084 |   |
|      **Other                assets**                                                                                                                                                                                                                                        |   |                             | 4,503,664   |                        |   | 4,497,308 |   |
|                                                                                                                                                                                                                                                                                                 |   |                             |        |                        |   |   |   |
|         Total                other assets                                                                                                                                                                                                                    |   |                             | 4,906,748   |                        |   | 4,900,392 |   |
|                                                                                                                                                                                                                                                                                                 |   | $                                | 18,824,749  |                        | $      | 19,151,849 |   |
|                                                                                                                                                                                                                                                                                                 |   |                             |        |                        |   |   |   |
| Liabilities                and Stockholders' Equity                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                 |   |                             |        |                        |   |   |   |
| Current                liabilities:                                                                                                                                                                                                                                                                  |   |                             |        |                        |   |   |   |
|     Accounts                payable                                                                                                                                                                                                                                              |   | $                                | 1,918,072   |                        | $      | 2,019,394 |   |
|     Accrued                liabilities                                                                                                                                                                                                                                           |   |                             | 2,157,345   |                        |   | 1,879,280 |   |
|     Unearned                revenue                                                                                                                                                                                                                                              |   |                             | 264,039     |                        |   | 286,318 |   |
|     Notes                payable and accrued interest subject to conversion into                       an indeterminable number of shares of common stock                                                                                     |   |                             | 1,035,906   |                        |   | 995,851 |   |
|     Derivative                liabilities                                                                                                                                                                                                                                        |   |                             | 981         |                        |   | 6,371 |   |
|     Long-term                debt                due within one year                                                                                                                                                                                                             |   |                             | 3,800,505   |                        |   | 3,803,666 |   |
|     Other                current liabilities                                                                                                                                                                                                                                     |   |                             | -           |                        |   | - |   |
|         Total                current liabilities                                                                                                                                                                                                             |   |                             | 9,176,850   |                        |   | 8,990,880 |   |
|                                                                                                                                                                                                                                                                                                 |   |                             |        |                        |   |   |   |
| Long-term                debt to related parties                                                                                                                                                                                                                                                     |   |                             | 84,464      |                        |   | 84,464 |   |
| Long-term                debt                                                                                                                                                                                                                                                                        |   |                             | 2,691,300   |                        |   | 1,911,313 |   |
| Accrued                Interest                                                                                                                                                                                                                                                                      |   |                             |        |                        |   | 71,847 |   |
| Minority                interest                                                                                                                                                                                                                                                                     |   |                             | 5,307,065   |                        |   | 5,306,746 |   |
| Stockholders'                equity:                                                                                                                                                                                                                                                                 |   |                             |        |                        |   |   |   |
|     Preferred                stock; $.001 par value; authorized 200,000 shares;                       outstanding 200,000 shares                                                                                                              |   |                             | 200         |                        |   | 200 |   |
|     Common                stock; $.001 par value; authorized 500,000,000                       shares; issued and outstanding 29,570,035 shares (28,820,035                       shares at June 30, 2006) |   |                             | 29,570      |                        |   | 28,820 |   |
|     Common                stock to be issued                                                                                                                                                                                                                                     |   |                             | -           |                        |   | - |   |
|     Convertible                promissory note and accrued interest                                                                                                                                                                                                              |   |                             | 107,140     |                        |   | 107,140 |   |
|     Additional                paid                in capital                                                                                                                                                                                                                     |   |                             | 34,829,923  |                        |   | 34,810,660 |   |
|     Retained                deficit                                                                                                                                                                                                                                              |   |                             | (33,401,764 | )                           |   | (32,160,221 | ) |
|         Total                stockholders' equity                                                                                                                                                                                                            |   |                             | 1,565,069   |                        |   | 2,786,599 |   |
|                                                                                                                                                                                                                                                                                                 |   | $                                | 18,824,749  |                        | $      | 19,151,849 |   |

----

ENCOMPASS      HOLDINGS, INC.

|                                                                                         |   | Three                months endedSeptember                30 |       |
|----------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|------------|
|                                                                                         |   | 2006                                                         |       | 2005 |   |
|                                                                                         |   |                                                         |       |   |   |
|                                                                                         |   |                                                         |       |   |   |
| Revenues                                                                                     |   | $                                                            | 791,319    |   | $ | 1,119,416 |   |
|                                                                                         |   |                                                         |       |   |   |   |   |
| Cost                of goods sold                                                            |   |                                                         | 275,977    |   |   | 276,039 |   |
|                                                                                         |   |                                                         |       |   |   |   |   |
| Gross                profit                                                                  |   |                                                         | 515,342    |   |   | 843,377 |   |
|                                                                                         |   |                                                         |       |   |   |   |   |
| General                and administrative expenses                                           |   |                                                         | 1,634,776  |   |   | 1,685,593 |   |
| Research                and development expenses                                             |   |                                                         | 53,823     |   |   | 647 |   |
|                                                                                         |   |                                                         |       |   |   |   |   |
| Net                loss from operations                                                      |   |                                                         | (1,173,257 | ) |   | (842,863 | ) |
|                                                                                         |   |                                                         |       |   |   |   |   |
| Other                income (expenses):                                                      |   |                                                         |       |   |   |   |   |
|     Change                in fair value of derivative liabilities        |   |                                                         | 5,390      |   |   | (8,808 | ) |
|     Interest                expense                                      |   |                                                         | (153,676   | ) |   | (22,684 | ) |
|     Other                income                                          |   |                                                         | 80,000     |   |   | - |   |
|         Total                other income (expenses) |   |                                                         | (68,286    | ) |   | (31,492 | ) |
|                                                                                         |   |                                                         |       |   |   |   |   |
| Net                loss from operations before provision for income taxes                    |   |                                                         | (1,241,543 | ) |   | (874,355 | ) |
|                                                                                         |   |                                                         |       |   |   |   |   |
| Provision                for income taxes - State of California                              |   |                                                         |       |   |   |   |   |
|                                                                                         |   |                                                         |       |   |   |   |   |
| Net                loss                                                                      |   |                                                         | (1,241,543 | ) | $ | (874,355 | ) |
| Net                loss per common share                                                     |   |                                                         | (.043      | ) | $ | (.145 | ) |

----

ENCOMPASS      HOLDINGS, INC.

|                                                                                                                     |   | Three                months endedSeptember                30 |       |
|--------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|------------|
|                                                                                                                     |   | 2006                                                         |       | 2005 |   |
|                                                                                                                     |   |                                                         |       |   |   |
| Cash                flows from operating activities:                                                                     |   |                                                         |       |   |   |
|     Net                loss                                                                          |   | $                                                            | (1,241,543 | ) | $ | (874,355 | ) |
|     Adjustment                to                reconcile net loss to net cash provided by           |   |                                                         |       |   |   |   |   |
|     (used                in) operating activities:                                                   |   |                                                         |       |   |   |   |   |
|         Depreciation                & amortization                           |   |                                                         | 296,077    |   |   | 295,017 |   |
|         Shares                issued in exchange for compensation & services |   |                                                         |       |   |   | 226,056 |   |
|         Change                in fair value of derivative liabilities            |   |                                                         | (5,390     | ) |   | 8,808 |   |
|         Unearned                revenue                                          |   |                                                         | (22,279    | ) |   | (70,893 | ) |
|         Provision                for                bad debts                    |   |                                                         | 21,000     |   |   | - |   |
|         Minority                interest in subsidiaries                         |   |                                                         | 319        |   |   |   |   |
|         Changes                in assets and liabilities:                        |   |                                                         |       |   |   |   |   |
|             Receivables                                      |   |                                                         | (10,187    | ) |   | 43,323 |   |
|             Prepaid                expenses                  |   |                                                         | (18,231    | ) |   | 16,299 |   |
|                                                                                                                     |   |                                                         |       |   |   |   |   |
|             Accounts                payable                  |   |                                                         | (101,319   | ) |   | 383,600 |   |
|             Accrued                liabilities               |   |                                                         | 210,904    |   |   | 387,242 |   |
|                                                                                                                     |   |                                                         | (870,649   | ) |   | 415,097 |   |
|                                                                                                                     |   |                                                         |       |   |   |   |   |
| Cash                flows from investing activities:                                                                     |   |                                                         |       |   |   |   |   |
|     Capital                expenditures                                                              |   |                                                         | (55,121    | ) |   | (351,937 | ) |
|     Repayment                of                advances to related parties                           |   |                                                         |       |   |   | 7,113 |   |
|     Net                advances to related parties                                                   |   |                                                         | (17,792    | ) |   | (80,653 | ) |
|                                                                                                                     |   |                                                         | (943,562   | ) |   | (425,477 | ) |
|                                                                                                                     |   |                                                         |       |   |   |   |   |
| Cash                flows from financing activities:                                                                     |   |                                                         |       |   |   |   |   |
|     Proceeds                from                long-term debt                                       |   |                                                         | 800,000    |   |   |   |   |
|     Proceeds                from                notes payable                                        |   |                                                         | 50,000     |   |   | - |   |
|     Repayment                to                related parties                                       |   |                                                         |       |   |   | (45,916 | ) |
|     Proceeds                from                convertible notes payable                            |   |                                                         |       |   |   | 10,000 |   |
|                                                                                                                     |   |                                                         | 850,000    |   |   | (35,916 | ) |
|                                                                                                                     |   |                                                         |       |   |   |   |   |
| Net                change in cash                                                                                        |   |                                                         | (93,562    | ) |   | (46,296 | ) |
|                                                                                                                     |   |                                                         |       |   |   |   |   |
| Cash                at beginning of period                                                                               |   |                                                         | 146,935    |   |   | 46,296 |   |
|                                                                                                                     |   |                                                         |       |   |   |   |   |
| Cash                at end of period                                                                                     |   |                                                         | 53,373     |   | $ | - |   |
|                                                                                                                     |   |                                                         |       |   |   |   |   |
| Supplemental                schedule of noncash financing activities:                                                    |   |                                                         |       |   |   |   |   |
|                                                                                                                     |   |                                                         |       |   |   |   |   |
|     Notes                and accrued interest converted into common stock                            |   |                                                         |       |   | $ | 9,774 |   |

----

ENCOMPASS      HOLDINGS, INC.

| 1. | Summary                of significant accounting                policies |
|----|--------------------------------------------------------------------------|

----

| 1. | Summary                of significant accounting policies                (continued) |
|----|--------------------------------------------------------------------------------------|

----

| 1. | Summary                of significant accounting policies                (continued) |
|----|--------------------------------------------------------------------------------------|

| 2. | Operations |
|----|------------|

| 3. | Notes                payable subject to conversion into an indeterminable number of shares                of                common stock |
|----|------------------------------------------------------------------------------------------------------------------------------------------|

----

| 3. | Notes                payable subject to conversion into an indeterminable number of shares                of                common stock (continued) |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------|

** **

| 4. | Long                Term Obligations |
|----|--------------------------------------|

|   | Included                in long term debit is $2,500,000 of notes payable to AJW Offshore,                Ltd;                AJW Partners, LLC AJW Qualified Partners, LLC; and Millennium Capital                Partners II., LLC. The entire amount is convertible in whole or in                part                into shares of common stock of the Company at the option of the Company                at                a conversion price equal to the average of the three lowest closing                bid                prices of the Company’s common stock during the 20 trading days prior to                the date of conversion at a discount of                45%. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company also granted AJW Offshore, Ltd; AJW Partners, LLC; AJW Qualified                Partners, LLC; and New Millennium Capital Partners II, LLC warrants                for                the purchase of an aggregate of 3,500,000 shares of common stock                of the                Company at an exercise price equal to $.50 per share. The warrants                are                exercisable in whole or in part and warrants for the purchase of                up to                1,400,000 shares expire on November 29, 2009; warrants for the purchase                of                up to 979,380 shares expire on January 17, 2010 if not exercised:                and                warrants for the purchase of 1,120,620 shares shall expire on August                8,                2010. The Company has reserved 3,500,000 shares of its common stock                for                issuance to these warrant holders. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | During                the three months ending, September 30, 2006, as partial repayment                of the                cash advances received from AJW Partners, LLC, AJW Qualified Partners,                LLC, and New Millennium Capital Partners II, LLC, the company issued                750,000 shares of its common stock in return for a principle reduction                of                $20,012.50. Subsequent to September 30, 2006 the Company has issued                an                additional 1,250,000 common shares for a further reduction of                $25,342.50. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5. | Common                stock |
|----|-----------------------------|

----

ITEM      2. MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATIONS

----

|   | Three                months ended September 30: |
|--------|-------------------------------------------------|
|   | 2006                                            |   | 2005 |   | Decrease |   | % |
| Sales  | $                791,319                        |   | $                1,119,416 |   | ($                328,097) |   | (29.31%) |

|                         | Three                months ended September 30: |
|------------------------------|-------------------------------------------------|
|                         | 2006                                            |   | 2005 |   | Decrease |   | % |
| Cost                of sales | $                275,978                        |   | $                276,039 |   | ($                61) |   | -% |

|                                               | Three                months ended September 30: |
|----------------------------------------------------|-------------------------------------------------|
|                                               | 2006                                            |   | 2005 |   | Decrease |   | % |
| General                and administrative expenses | $                1,634,776                      |   | $                1,686,240 |   | ($                51,464) |   | (3.05%) |

|                                    | September                30,2006 |   | September                30,2005 |   | Decrease                  |   | %       |
|-----------------------------------------|----------------------------------|--------|----------------------------------|--------|---------------------------|--------|---------|
| Accounts                receivable, net | $                394,732         |   | $                405,585         |   | ($                10,853) |   | (2.68%) |

----

ITEM      3. CONTROLS      AND PROCEDURES

ITEM      2. UNREGISTERED      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ITEM      6. EXHIBITS

| ExhibitNumber |                                                                                  | Description                of Document                               |
|---------------|---------------------------------------------------------------------------------------|----------------------------------------------------------------------|
|          |                                                                                  |                                                                 |
| 3.1           |                                                                                  | Articles                of Incorporation as Amended *                |
| 3.2           |                                                                                  | By                laws *                                             |
| 31.1          |                                                                                  | Rule                13a-14(a)/15d-14(a)                Certification |
| 31.2          |                                                                                  | Rule                13a-14(a)/15d-14(a)                Certification |
| 32.1          |                                                                                  | Section                1350                Certification             |
| 32.2          |                                                                                  | Section                1350                Certification             |
|          |                                                                                  |                                                                 |
| *             | Filed                by reference to a prior filing of the                Registrant. |

----

SIGNATURES

| November                15, 2006 | ENCOMPASS                HOLDINGS, INC. |
|----------------------------------|-----------------------------------------|
|                             |                                    |
|                             | By:                                     | /s/                ARTHUR N. ROBINSArthur                N. RobinsChief                Executive Officer |
|                             |                                    |   |
|                             | By:                                     | /s/                LESLIE I. HANDLERLeslie                I. Handler, President |