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 March 31, 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.)

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

                                 (212) 355-5174
                                 --------------
              (Registrant's telephone number, including area code)


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 May 14, 2006, 19,642,110 shares of $.001 par value common stock of the
registrant were outstanding.

<PAGE>

               NATIONAL INVESTMENT MANAGERS INC. AND SUBSIDIARIES
               --------------------------------------------------

                                      INDEX
                                      -----

PART I. FINANCIAL INFORMATION
-----------------------------

Item 1. Financial Statements                                           Page No.
                                                                       --------

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

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations                                                 18-24

Item 3. Quantitative and Qualitative Disclosures about Market Risks       24,25

Item 4. Controls and Procedures                                              25



PART II.  OTHER INFORMATION
---------------------------

Item 1.     Legal Proceedings                                                25

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds   25,26

Item 3.     Defaults upon Senior Securities                                  26

Item 4.     Submission of Matters to a Vote of Security Holders              26

Item 5.     Other Information                                                26

Item 6.     Exhibits and Reports on Form 8-K                                 26

SIGNATURES                                                                   28





                                       2
<PAGE>

               NATIONAL INVESTMENT MANAGERS INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                     MARCH 31, 2006         DECEMBER 31, 2005


                                                                                       (UNAUDITED)              (AUDITED)
<S>                                                                                <C>                      <C>
CURRENT ASSETS:
  Cash                                                                             $      2,202,510         $      5,964,192
  Accounts receivable, net                                                                2,005,671                1,678,797
  Non-trade receivable                                                                      123,592                  150,000
  Prepaid financing costs                                                                    95,195                  142,375
  Prepaid directors and officers liability insurance                                        104,462                   12,222
  Prepaid expenses and other current assets                                                 263,616                  272,326
                                                                                   -----------------------------------------
      Total current assets                                                                4,795,046                8,219,912
                                                                                   -----------------------------------------
PROPERTY AND EQUIPMENT, net                                                                 809,746                  701,433
                                                                                   -----------------------------------------
OTHER ASSETS
Goodwill                                                                                 13,620,674                9,818,274
Customer lists/relationships                                                             16,715,467               13,984,332
Other intangibles                                                                         3,202,194                3,114,565
Deferred financing costs                                                                    311,208                  301,996
                                                                                   -----------------------------------------
                                                                                         33,849,543               27,219,167
                                                                                   -----------------------------------------
                                                                                   $     39,454,335         $     36,140,512
                                                                                   =========================================


CURRENT LIABILITIES:

  Long-term debt, current portion                                                  $      4,201,288         $      4,965,019
  Accounts payable                                                                          732,335                  623,124
  Unearned revenues                                                                       3,559,958                2,309,084
  Accrued expenses and other current liabilities                                          2,844,346                2,336,244
                                                                                   -----------------------------------------
      Total current liabilities                                                          11,337,927               10,233,471
                                                                                   -----------------------------------------
LONG-TERM LIABILITIES:
  Long-term debt, less current portion                                                    9,200,934                9,731,448
  Preferred dividends payable                                                               743,851                  413,101
  Derivative financial instruments                                                        1,296,422                1,296,422
  Deferred tax liability                                                                  4,376,788                2,676,788
                                                                                   -----------------------------------------
      Total long-term liabilities                                                        15,617,995               14,117,759
                                                                                   -----------------------------------------
                Total liabilities                                                        26,955,922               24,351,230
                                                                                   -----------------------------------------
COMMITMENTS  AND CONTINGENCIES

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

  Common Stock, $.001 par value 100,000,000,  shares authorized, 19,642,110                  19,642                   15,452
 and 15,452,110 shares issued and outstanding, respectively
  Additional paid-in capital                                                             18,959,095               15,058,742
  Accumulated deficit                                                                   (6,488,842)              (3,293,430)
                                                                                   -----------------------------------------
      Total stockholders' equity                                                         12,498,413               11,789,282
                                                                                   -----------------------------------------
                                                                                   $     39,454,335         $     36,140,512
                                                                                   =========================================
</TABLE>

     See accompanying notes to condensed consolidated financial statements



                                       3
<PAGE>

               NATIONAL INVESTMENT MANAGERS INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED          THREE MONTHS ENDED
                                                                MARCH 31, 2006               MARCH 31, 2005
<S>                                                               <C>                        <C>
REVENUES:                                                         $  4,634,307               $    555,664
                                                            ------------------------     ------------------------
OPERATING EXPENSES

     Selling                                                            80,950                     73,333
     General and administrative                                      5,517,992                    544,078
     Depreciation and amortization                                     835,902                     87,539
     Stock-based compensation                                          453,376                      2,953
                                                            ------------------------     ------------------------
                                                                     6,888,220                    707,903
                                                            ------------------------     ------------------------
OPERATING LOSS                                                      (2,253,913)                  (152,239)
                                                            ------------------------     ------------------------

OTHER INCOME (EXPENSE):
     Reverse acquisition costs                                              --                   (215,000)
     Gain on disposal of subsidiary                                    166,568                         --
     Interest expense                                                 (788,274)                   (37,519)
     Interest, dividend and sub-rental income                           10,957                      3,081
                                                            ------------------------     ------------------------
                                                                      (610,749)                  (249,438)
                                                            ------------------------     ------------------------
LOSS BEFORE DEFERRED INCOME TAX BENEFIT                             (2,864,662)                  (401,677)

DEFERRED INCOME TAX BENEFIT                                                 --                     21,973
                                                            ------------------------     ------------------------
NET LOSS                                                            (2,864,662)                  (379,704)

PREFERRED DIVIDENDS                                                   (330,750)                   (68,603)
                                                            ------------------------     ------------------------
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS                         $ (3,195,412)              $   (448,307)
                                                            ========================     ========================
BASIC AND DILUTED LOSS PER COMMON SHARE                           $      (0.15)              $      (0.03)
                                                            ========================     ========================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING                19,504,000                 12,396,000
                                                            ========================     ========================
</TABLE>

      See accompanying notes to condensed consolidated financial statements



                                       4
<PAGE>

               NATIONAL INVESTMENT MANAGERS INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                THREE MONTHS      THREE MONTHS
                                                                               ENDED MARCH 31,   ENDED MARCH 31,
                                                                                    2006              2005
                                                                               --------------    -------------
<S>                                                                               <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                          $(2,864,662)   $  (379,704)
Adjustments to reconcile net loss to net
          cash used in operating activities:
                  Depreciation and amortization                                       835,902        109,653
                  Noncash interest                                                    453,472         15,000
                  Stock-based compensation                                            453,376          2,953
                  Gain on sale of MLK Group                                          (166,568)            --

                  Stock issued for services                                                --         25,000

                  Deferred income tax benefit                                              --        (21,973)
Increase (decrease) in cash attributable to changes
          in operating assets and liabilities:
                  Accounts receivable, net                                           (326,874)       (41,389)

                  Accrued interest receivable                                              --         (2,778)
                  Prepaid expenses and other current assets                           (79,197)      (146,041)
                  Accounts payable                                                    144,378          8,243

                  Unearned revenues                                                 1,250,874             --
                  Accrued expenses and other current liabilities                      256,132        (43,493)

                  Accrued interest payable                                                 --          6,070
                                                                               --------------    -------------
NET CASH USED IN OPERATING ACTIVITIES                                                 (43,167)      (468,459)
                                                                               --------------    -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment                                                   (61,147)        (8,358)

Acquisition of PAS                                                                         --        (27,500)

Acquisition of Valley Forge                                                        (3,387,500)            --

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)                                                 --         10,618

Increase in restricted cash (for acquisition purposes)                                     --     (2,500,000)
                                                                               --------------    -------------
NET CASH USED IN INVESTING ACTIVITIES                                              (2,532,239)    (2,525,240)
                                                                               --------------    -------------
CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from convertible notes                                                            --      3,000,000

Proceeds from short-term debt                                                              --        460,000
</TABLE>

                                       5
<PAGE>

<TABLE>

<S>                                                                                <C>               <C>
Payments on short-term debt and notes                                              (1,192,943)       (23,831)
Proceeds (costs) from common and preferred                                              6,667        (58,242)
          stock sales, net

Payment of deferred financing costs                                                        --       (179,000)

                                                                               --------------    -------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                                (1,186,276)     3,198,927
                                                                               --------------    -------------
Increase (decrease) in cash                                                        (3,761,682)       205,228

Cash, beginning of period                                                           5,964,192         89,779
                                                                               --------------    -------------
Cash, end of period                                                               $ 2,202,510    $   295,007
                                                                               ==============    =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid                                                                     $   313,844    $    16,449
                                                                               ==============    =============
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
FINANCING ACTIVITIES:

Accrued preferred dividends                                                       $   330,750    $    68,603
                                                                               ==============    =============


Non-cash component of proceeds from sale of MLK Group                             $   290,000    $        --
                                                                               ==============    =============

Conversion of debt and accrued interest into

          common stock                                                            $        --    $   221,109
                                                                               ==============    =============
Warrants and embedded conversion feature associated with

          debt financing                                                          $        --    $ 1,200,000
                                                                               ==============    =============

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                                                     $ 8,532,000
Cash paid                                                                          (3,387,500)
Common stock issued                                                                (3,444,500)
                                                                                 --------------
Liabilities assumed                                                               $ 1,700,000
                                                                                 ==============
</TABLE>

     See accompanying notes to condensed consolidated financial statements


                                       6
<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 the National Investment
Managers Inc. ("NIVM" or the "Company") Form 10-KSB.


The operating results for the three months ended March 31, 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, Basis of Presentation and Reverse Acquisition Transaction

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 March 31, 2006, the
Company owned 16 operating units in eight states.

On February 18, 2005, Fast Eddie Racing Stables, Inc. ("FEST"), a public "Shell
Company", entered into an Agreement and Plan of Reorganization (the
"Acquisition") with Duncan Capital Financial Group, Inc. ("DCFG"). On March 9,
2005, FEST completed the acquisition of DCFG. On March 15, 2005, FEST changed
its name to National Investment Managers Inc. The Acquisition was effected
through the exchange of 12,040,000 shares of common stock of FEST for 12,040,000
shares of common stock of DCFG and DCFG effectively became a wholly-owned
subsidiary of FEST. Under the terms of the Agreement, the former shareholders of
DCFG held approximately 94% of the outstanding common shares of FEST immediately
after the effective time of the merger. In addition, each outstanding option and
warrant to purchase DCFG common stock was converted into an option or warrant to
purchase the number of shares of FEST common stock equal to the number of DCFG
common shares underlying the option or warrant immediately prior to the closing
of the transaction. Subsequent to the Acquisition, 3,820,000 shares of Series A
Preferred stock of DCFG was surrendered in exchange for an equivalent number of
preferred shares of NIM containing identical terms. As the former shareholders
of DCFG control FEST after the transaction, the merger was accounted for as a
reverse acquisition. This transaction is considered to be a capital transaction
in substance, rather than a business combination. This transaction results in
the owners of DCFG (the "accounting acquirer") having actual or effective
operating control of the Company after the transaction, with the shareholders of
FEST (the "legal acquirer") continuing only as passive investors. No goodwill
was recognized since FEST was a "Shell Company."

                                       7
<PAGE>

On December 13, 2004, DCFG, a recently incorporated company with no operations,
acquired 100% of the capital stock of its wholly-owned subsidiaries, Pension
Administration Services, Inc., Complete Investment Management Inc. of
Philadelphia and MD Bluestein, Inc., (collectively, the "PAS Group").

On August 2, 2005, NIM acquired 100% of the capital stock of its wholly-owned
subsidiaries, Stephen H. Rosen & Associates, Inc. ("Rosen"), and Haddon
Strategic Alliance, Inc. ("Haddon") (collectively, the "SHRA Group").

On November 30, 2005, NIM acquired certain assets and liabilities of American
Benefit Resources, Inc. ("ABR") and 100% of the capital stock of the
wholly-owned subsidiaries of ABR, National Associates, Inc. N.W. ("National"),
ABR Advisors, Inc. ("Advisors"), BPI/PPA, Inc. ("BPI"), Benefit Management, Inc.
("BMI"), MLK Capital Management, Inc. ("MLK Capital"), VEBA Administrators, Inc.
dba Benefit Planning, Inc. ("VEBA") and AFC Enterprises, Inc. ("AFC"),
(collectively the "ABR Group").

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") and 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."

On March 24, 2006, NIM and its wholly-owned subsidiaries, ABR Advisors, Inc.
("Advisors") and Benefit Management, Inc. ("BMI"), entered into an Asset
Purchase Agreement (the "Agreement") with M. Lane Kerns ("M. Kerns"), Billie
Kerns ("B. Kerns") and Kerns Asset Management, LLC ("KAM") (collectively, M.
Kerns, B. Kerns and KAM are referred to as the "Buyers"). Pursuant to the
Agreement, the Company sold and, the Buyers purchased, (i) 100% of issued and
outstanding shares of MLK Capital Management, Inc., a wholly-owned subsidiary of
Advisors, and (ii) certain assets, client relationships and liabilities of BMI
related to the third party administrator business ("MLK Group"). The purchase
price paid by the buyers included $900,000 in cash and the assumption of various
liabilities by KAM. The closing of this sale occurred on March 24, 2006.

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.

                                       8
<PAGE>

Note 3. Use of Estimates

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

Note 4. Accounts Receivable

We carry our accounts receivable at cost less an allowance for doubtful
accounts.

Note 5. Allowance for Doubtful Accounts

We maintain allowances for doubtful accounts for estimated losses from
customers' inability to make payments. We assess each account that is more than
60 days delinquent and other accounts when information known to us indicates
amounts may be uncollectible. In order to estimate the appropriate level of the
allowance, we consider such factors as historical bad debts, current customer
creditworthiness, changes in customer payment patterns and any correspondence
with the customer. If the financial condition of our customers were to
deteriorate and impair their ability to make payments, additional allowances
might be required in future periods.

Note 6. Goodwill

Goodwill, recognized in connection with the PAS Group, the SHRA Group, the ABR
Group, and Valley Forge acquisitions, will not be amortized; rather goodwill
will be subject to at least an annual assessment for impairment applying a
fair-value based test.

Note 7. Other Intangible Assets

Other intangible assets recognized in connection with the PAS Group acquisition
include the following:

                                                                       Estimated
                              Cost         Amortization        Net       Life
Customer lists /
Relationships             $3,100,000        $258,333       $2,841,667   15 years
Covenants not to
compete                      200,000          83,333          116,667   3 years
Employment
agreements                    50,000          50,000                -   1 year

Other intangible assets recognized in connection with the Rosen acquisition
include the following:

                                                                       Estimated
                              Cost         Amortization        Net       Life
Customer lists /
Relationships             $2,666,884        $118,528       $2,548,356   15 years
Covenants not to
compete                      200,000          66,667          133,333   2 years
Employment
agreements                   100,000          66,667           33,333   1 year

Other intangible assets recognized in connection with the Haddon acquisition
include the following:

                                       9
<PAGE>

                                                                       Estimated
                              Cost        Amortization         Net        Life
Customer lists /
Relationships                $500,000         $66,667         $433,333  5 years


Other intangible assets recognized in connection with the ABR acquisition
include the following:

                                                                       Estimated
                              Cost        Amortization         Net        Life
Customer lists /
Relationships             $7,574,000(a)     $300,555       $7,273,445    9 years
Covenants not to
compete                    2,637,600(a)      245,739        2,391,861    2 years

(a) Net of amounts sold during March 2006




Other intangible assets recognized in connection with the Valley Forge
acquisition include the following:


                                                                       Estimated
                              Cost        Amortization         Net        Life
Customer lists /
relationships             $3,680,000        $61,333        $3,618,667   15 years
Covenants not to
compete                      384,000         32,000           352,000   3 years
Employment
agreements                   200,000         25,000           175,000   2 years


These other intangible assets will be amortized by use of the straight-line
method over the estimated lives of the assets. During the three month periods
ended March 31, 2006 and 2005, amortization expense related to customer
lists/relationships and other intangible assets acquired in connection with the
PAS Group, SHRA Group, ABR Group, and Valley Forge acquisitions were
approximately $716,000 and $81,000, respectively. We will periodically evaluate
the recoverability of intangible assets, taking into account events or
circumstances that may warrant a revision to estimated useful lives or
impairment conditions.


                                       10
<PAGE>

Note 8. 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 bear interest at the
rate of 12% per annum and interest is 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 have a term of three years and are convertible into common
stock at $.68 per share. The 2005 Convertible Notes shall be interest only for
the first six months and shall amortize 1/30th per month thereafter, commencing
October 10, 2005. The 2005 Convertible Notes shall be 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 are pre-payable in cash,
at 115% of the principal amount thereof. The 2005 Convertible Notes are to be
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.

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 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 three months ended March
31, 2006 and 2005, the Company amortized approximately $30,000 and $0,
respectively, of non-cash interest expense related to this Note.


Insurance Premium Financing -

In February 2006, we entered into an agreement to finance a $110,000 annual
premium for directors' and officers' liability insurance with an unrelated third
party. The notes are payable monthly, with a payment stream of $20,563 in March
2006 and payments of $10,283 from April through December 2006.

Note 9. Note Payables - 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, 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.

                                       11
<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 the SHRA Group 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 $1.00 per share commencing March 9, 2005. 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. Such provision may be waived by Laurus upon 75 days prior written notice
to the Company.

                                       12
<PAGE>

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.

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 $1,296,422
at March 31, 2006.

The carrying value of the Note was initially recorded at $1,827,312. This 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 three months ended March 31, 2006, the
Company amortized approximately $130,000 of non-cash interest expense related to
this Note.

Secured Term Loan

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, 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.

                                       13
<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.
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 March 31, 2006, approximately $44,792 has been amortized and the remaining
balance of approximately $509,425 at March 31, 2006 is reflected as a reduction
of notes payable.


Note 10 - Stockholders' equity

During the three months ended March 31, 2006, stockholders' equity was increased
as a result of (i) the issuance of 4,150,000 shares of common stock in
consideration for $3,444,500 in connection with the acquisition of Valley Forge,
(ii) stock-based compensation of $453,000, and (iii) the issuance of 40,000
shares at a price of $.1667 in connection with an option being exercised by a
director.

During the three months ended March 31, 2006, stockholders' equity was decreased
as a result of preferred dividends of approximately $331,000.

Note 11. Fair Value of Financial Instruments

The fair value of the Company's assets and liabilities, which qualify as
financial instruments under SFAS No. 107, "Disclosures About Fair Value of
Financial Instruments," approximate the carrying amounts presented in the
condensed consolidated balance sheets.

                                       14
<PAGE>

Note 12. Arrangements with Off-Balance Sheet Risk - Guarantees

FASB Interpretation No. 45 (FIN 45), Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of the Indebtedness
of Others, clarified the requirements of SFAS No. 5, Accounting for
Contingencies, relating to a guarantor's accounting for and disclosures of
certain guarantees issued. FIN 45 requires enhanced disclosures for certain
guarantees. It also requires certain guarantees that are issued or modified
after December 31, 2002, including certain third-party guarantees, to be
initially recorded on the balance sheet at fair value. For guarantees issued on
or before December 31, 2002, liabilities are recorded when and if payments
become probable and estimable. FIN 45 has the general effect of delaying
recognition for a portion of the revenue for product sales that are accompanied
by certain third-party guarantees. The financial statement recognition
provisions became effective prospectively beginning January 1, 2003. The Company
has not entered into any guarantees.

Note 13. Revenue Recognition

The Company complies with the requirements of SEC SAB 101, Revenue Recognition,
as amended by SAB 104. We generate revenue primarily from the following sources:


      o     THIRD PARTY ADMINISTRATION. We earn fees for the development and
            implementation of corporate and executive benefit programs as well
            as fees for the duration that these programs are administered.

      o     FINANCIAL PLANNING AND INVESTMENT ADVISORY FEES AND SECURITIES
            COMMISSIONS. We receive commissions related to the sale of
            securities and certain investment-related insurance products as well
            as fees for offering financial advice through financial
            intermediaries and related services. These fees are based on a
            percentage of assets under management and are generally paid
            quarterly. We also charge fees for evaluations of the performance of
            portfolios.

      o     INSURANCE COMMISSIONS. Insurance and annuity commissions paid by
            insurance companies are based on a percentage of the premium that
            the insurance company charges to the policyholder. First-year
            commissions are calculated as a percentage of the first twelve
            months premium on the policy and are earned in the year that the
            policy is originated. In many cases, we receive renewal commissions
            for a period following the first year, if the policy remains in
            force.

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 a completed product to the customer has occurred or the
      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

      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

                                       15
<PAGE>

Note 14. 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 15. Income Taxes

The Company complies with SFAS No. 109, "Accounting for Income Taxes," which
requires an asset and liability approach to financial accounting and reporting
for income taxes. Deferred income tax assets and liabilities are computed for
differences between the financial statement and tax bases of assets and
liabilities that will result in future taxable or deductible amounts, based on
enacted tax laws and rates applicable to the periods in which the differences
are expected to affect taxable income. Valuation allowances are established,
when necessary, to reduce deferred income tax assets to the amount expected to
be realized.

Note 16. Net Loss Per Share

The Company complies with the accounting and reporting requirements of SFAS No.
128, "Earnings Per Share". Basic net loss per 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.

Unexercised stock options and warrants to purchase common stock and Notes
convertible into common stock as of March 31, 2006 and 2005, are as follows:



                                   March 31, 2006             March 31, 2005

Options                                9,738,126                   718,700
Preferred Stock                       21,450,008                 4,090,638
Convertible notes                      3,533,940                 3,614,458
                                --------------------      ----------------------
                                      34,722,074                 8,423,796
                                ====================      ======================




The foregoing common stock equivalents were excluded from the calculation of
diluted net loss per common share since their inclusion would be anti-dilutive.

                                       16
<PAGE>

Note 17. 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.

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 will be 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 $8,532,000
(including $232,000 of acquisition costs) is being allocated on a preliminary
basis 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                               4,168,000
                                           ----------
                                            8,532,000

Liabilities assumed:
     Deferred tax liability                 1,700,000
                                           ----------

Net purchase price                         $6,832,000
                                           ==========

                                       17
<PAGE>

The identifiable intangible assets listed above will be amortized for book
purposes over the estimated useful lives of the assets (see Note 7). 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.



PROPERTIES

We currently lease approximately 5,738 square feet of office space in Horsham,
Pennsylvania under a lease agreement which expired on April 30, 2006, with a
one-year lease renewal option. We are currently leasing this space on a month to
month basis.

We also lease five offices, interior space and shared conference, reception and
information technology services in Manhattan on a month-to-month basis from an
entity controlled by a shareholder at the rate of $15,000 per month, which we
believe to be a fair market rate based upon our study of executive office suite
rates in the midtown Manhattan area.

Valley Forge leases 5,461 square feet of office space in Wayne, Pennsylvania.
Under the five-year lease, which expires in September 2007, Valley Forge pays a
monthly rent of $8,078.

Our subsidiaries acquired from ABR lease various properties in White Plains, New
York (6,751 square feet), Marina del Rey, California (15,666 square feet), and
Seattle, Washington (6,134 square feet). We pay $79,203 in aggregate rent per
month for the aforementioned premises.

Stephen H. Rosen & Associates, Inc. leases 6,682 sq. ft. of office space in
Haddonfield, New Jersey. Under the 10-year lease, which commenced Feb. 22, 2001,
the annual rent was $113,594, paid in monthly installments of $9,466. Per the
terms of the lease, each year the rent increases by 3%.

Haddon Strategic Alliances, Inc. is a sub-tenant of Stephen H. Rosen &
Associates, Inc., and has an informal inter-office lease arrangement. Haddon
pays Rosen $1,060 per month for rent.

In the opinion of our management, the leased properties are adequately insured.
Our existing properties are in good condition and suitable for the conduct of
our business.



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

THREE MONTH PERIOD ENDED MARCH 31, 2006 COMPARED TO MARCH 31, 2005

                                       18
<PAGE>

Results of operations for the three months ended March 31, 2006 compared to
March 31, 2005 are as follows:
               NATIONAL INVESTMENT MANAGERS INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                           FOR THE THREE MONTHS ENDED

<TABLE>
<CAPTION>
                                                                                                       $ CHANGE
                                                               % OF                         % OF          2005
                                                MARCH 31,                MARCH 31,
                                                  2006       REVENUES       2005          REVENUES      TO 2006
<S>                                           <C>              <C>        <C>                <C>       <C>
REVENUES:                                     $4,634,307       100%       $555,664           100%      $4,078,643
                                              -----------  -----------   -----------    -----------   -----------

OPERATING EXPENSES

     Selling                                  80,950           1.7%      73,333             13.2%     7,617

     General and administrative               5,517,992      119.1%      544,078            97.9%     4,973,914

     Depreciation and amortization            835,902         18.0%      87,539             15.8%     748,363

     Stock based compensation                 453,376          9.8%      2,953               0.5%     450,423
                                              -----------  -----------   -----------    -----------   -----------


                                              6,888,220      148.6%      707,903           127.4%     6,180,317
                                              -----------  -----------   -----------    -----------   -----------


OPERATING  LOSS                               (2,253,913)    -48.6%      (152,239)         -27.4%     (2,101,674)
                                              -----------  -----------   -----------    -----------   -----------

OTHER INCOME (EXPENSE):

     Reverse acquisition costs                -             -            (215,000)         -38.7%     215,000

     Interest expense                         (788,274)      -17.0%      (37,519)           -6.8%     (750,755)

     Gain on disposal of subsidiary           166,568          3.6%      -             -              166,568
     Interest, dividend and sub-rental
     income                                   10,957           .02%      3,081               0.6%     7,876
                                              -----------  -----------   -----------    -----------   -----------

                                              (610,749)      -13.2%      (249,438)         -44.9%     (361,311)
                                              -----------  -----------   -----------    -----------   -----------

INCOME (LOSS) BEFORE DEFERRED INCOME TAX
BENEFIT                                       (2,864,662)    -61.7%      (401,677)         -72.3%     (2,462,985)


DEFERRED INCOME TAX BENEFIT                   -             -            21,973              4.0%     (21,973)
                                              -----------  -----------   -----------    -----------   -----------


NET LOSS                                      (2,864,662)    -61.7%      (379,704)         -68.3%     (2,484,958)
                                                            ========                   ===========    ============


PREFERRED DIVIDENDS                           (330,750)                  (68,603)
                                              -----------                -----------

NET LOSS AVAILABLE TO COMMON SHAREHOLDERS     $(3,195,412)               $(448,307)
                                              ===========                ==========


BASIC AND DILUTED LOSS PER COMMON SHARE       $(0.15)                    $(0.03)
                                              ===========                ==========

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING                                   19,504,000                 12,396,000
                                              ===========                ==========
</TABLE>


Revenues for the three months ended March 31, 2006 increased $4,078,643 to
$4,634,307 compared to the three months ended March 31, 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 $6,180,317 to $6,888,220 from the prior year's
first quarter. As a percentage of sales, operating expenses increased to 148.6%
in the 2006 quarter as compared to 127.40% in the same period last year.

                                       19
<PAGE>

Selling expenses increased $7,617 to $80,950 from the prior year's first
quarter. As a percentage of sales, selling expenses decreased by 46.2% when
compared to the three months ended March 31, 2005.

General and administrative expenses increased $4,973,914 to $5,517,992 from the
prior year's first quarter. As a percentage of sales, general and administrative
expenses increased to 119.1% in the quarter as compared to 97.9% in to the same
period last year.

Depreciation and amortization increased $748,363 to $835,902 from the prior
year's first quarter.

Stock based compensation increased $450,423 to $453,376 from the prior year's
first quarter.


Other income (expense)

Net other expense increased $361,311 to $610,749 for the three months ended
March 31, 2006 as compared to net other expense of $249,438 for the three months
ended March 31, 2005. The change was mainly due to:

      o     Interest expense of approximately $788,000 which was due to (i)
            $601,000 in both cash and non-cash interest on the secured
            convertible term note and the secured term loan from Laurus Master
            Fund, Ltd., (ii) $105,000 as a penalty for failing to have a
            registration effective by July 7, 2005, (iii) $16,000 paid to former
            owners of certain subsidiaries, and (iv) $42,000 on our senior
            secured notes.
      o     Interest, dividend and sub-rental income of $10,759 including
            interest earned on our cash balances of $6,511 and sub-rental income
            of $4,248 from an unrelated third party.
      o     These charges were offset by a gain on the sale of a subsidiary in
            the amount of approximately $166,000


LIQUIDITY AND CAPITAL RESOURCES

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

                           March 31, 2006               December 31, 2005
                           --------------               -----------------
Unrestricted Cash             $2,202,510                     $5,964,192
Working Capital (deficit)    ($6,542,881)                   ($2,013,559)
Stockholders' Equity         $12,498,413                    $11,789,282


The Company had cash as of March 31, 2006 of $2,202,510, a decrease of
$3,761,682 from December 31, 2005.

The decrease in cash was due to:

                                       20
<PAGE>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                        $  (2,864,662)
Adjustments to reconcile net loss to net
                 cash used in operating activities:
                       Depreciation and amortization                  835,902
                       Noncash interest                               453,472

                       Stock-based compensation                       453,376

                       Gain on sale of MLK Group                     (166,568)
Increase (decrease) in cash attributable to changes
                 in operating assets and liabilities
                       Accounts receivable, net                      (326,874)
                       Prepaid expenses and other
                       current assets                                 (79,197)

                       Accounts payable                               144,378

                       Unearned revenues                            1,250,874
                       Accrued expenses and other current
                       liabilities                                    256,132
                                                                ----------------
NET CASH USED IN OPERATING ACTIVITIES                                 (43,167)
                                                                ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment                                   (61,147)
Acquisition of Valley Forge                                        (3,387,500)
Acquisition of ABR                                                    (10,000)
Proceeds from sale of MLK Group                                       900,000
Decrease in
receivable from
ABR Trustee                                                            26,408
                                                                ----------------
NET CASH USED IN INVESTING ACTIVITIES                              (2,532,239)
                                                                ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:

Payments on short-term debt and notes                              (1,192,943)
Proceeds from common and preferred                                      6,667
                 Stock sales, net

                                                                ----------------
NET CASH USED IN FINANCING ACTIVITIES                              (1,186,276)
                                                                ----------------

Decrease in cash                                                   (3,761,682)

Cash, beginning of period                                           5,964,192
                                                                ----------------
Cash, end of period                                             $   2,202,510
                                                                ================

                                       21
<PAGE>

Net cash used in operating activities of $43,167 was primarily due to a net loss
available to common shareholders, offset by non-cash items of $1,576,182,
increases in receivables and prepaid expenses of $326,874 and $79,197
respectively, and an increase in accounts payable and accrued expenses of
$144,378 and $256,132 respectively.

Net cash of $2,532,239 used in investing activities was primarily due to 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 $1,186,276 used in financing activities was primarily due to the
payments of debt which came due.

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.



Future Contractual Obligations

The following table shows the Company's contractual obligations as of March 31,
2006:

<TABLE>
<CAPTION>
                                                                  Payments due by period
                                                  -----------------------------------------------------
                                 Total            Less than 1 year       1-3 years        3 to 5 years
                          -----------------       ---------------    ---------------    ---------------
<S>                       <C>                     <C>                <C>                <C>
Operating Lease           $      3,385,616        $      906,567     $    2,154,194     $      324,855
Obligations
                          =================       ===============    ===============    ===============

Long-Term Debt            $     13,402,221        $    4,201,288     $    7,200,974     $    1,999,959
                          =================       ===============    ===============    ===============

Total Contractual
Cash Obligations          $     16,787,837        $    5,107,855     $    9,355,168     $    2,324,814
                          =================       ===============    ===============    ===============
</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

                                       22
<PAGE>

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

      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.

                                       23
<PAGE>

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.




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.

                                       24
<PAGE>

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.


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 March 31, 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.

                                       25
<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.


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


                                       26
<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:  May 12, 2006             By    /s/ Steven Ross
-------------------             ----------------------------------
                                          STEVEN ROSS
                                          Chief Executive Officer and Director


Date:  May 12, 2006             By   /s/ Leonard Neuhaus
-------------------             ---------------------------------
                                          LEONARD NEUHAUS
                                          Chief Operating and Financial Officer