UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                              ____________________

                                    FORM 10-Q

(Mark One)

/X/          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended September 30, 2006

                                       OR

/ /           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                For the transition period from _______ to _______


                         Commission file number 0-21874

                           Berkeley Technology Limited

             (Exact name of registrant as specified in its charter)
                             ______________________


   Jersey, Channel Islands                            Not applicable
   (State or other jurisdiction             (I.R.S. Employer Identification No.)
  of incorporation or organization)

                          Minden House, 6 Minden Place
                           St. Helier, Jersey JE2 4WQ
                                 Channel Islands
                    (Address of principal executive offices)
                                   (Zip Code)

                              011 44 (1534) 607700
              (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 an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes ____ No |X|

     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 November 14, 2006, the registrant had outstanding 64,439,073 Ordinary
Shares, par value $0.05 per share.
<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                     PART I

                              FINANCIAL INFORMATION

                                                                                                             Page
<S>                                                                                                           <C>
Item 1.    Financial Statements:

           Unaudited Condensed Consolidated Balance Sheets as of September 30, 2006 and
               December 31, 2005............................................................................    3

           Unaudited Condensed Consolidated Statements of Operations for the three and nine months
               ended September 30, 2006 and 2005............................................................    4

           Unaudited Condensed Consolidated Statements of Cash Flows for the nine months
               ended September 30, 2006 and 2005............................................................    5

           Unaudited Consolidated Statement of Changes in Shareholders' Equity for the nine months
               ended September 30, 2006.....................................................................    6

           Unaudited Consolidated Statements of Comprehensive Income for the three and nine months
               ended September 30, 2006 and 2005............................................................    7

           Notes to Unaudited Condensed Consolidated Financial Statements...................................    8

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

Item 3.    Quantitative and Qualitative Disclosures About Market Risk ......................................   27

Item 4.    Controls and Procedures..........................................................................   28


                                     PART II

                                OTHER INFORMATION

Item 1.    Legal Proceedings................................................................................   28

Item 1A.   Risk Factors.....................................................................................   29

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

Item 6.    Exhibits.........................................................................................   29

Signature  .................................................................................................   30

Exhibit Index ..............................................................................................   31

</TABLE>



                                       2
<PAGE>





                         PART I - FINANCIAL INFORMATION

Item 1.   FINANCIAL STATEMENTS

                  BERKELEY TECHNOLOGY LIMITED AND SUBSIDIARIES

                 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                      (In thousands, except share amounts)
<TABLE>
<CAPTION>

                                                                                    September 30,      December 31,
                                                                                        2006              2005
                                                                                    -------------     -------------
                                            ASSETS

<S>                                                                                 <C>               <C>
Investments (principally of life insurance subsidiary):
   Fixed maturities:
     Available-for-sale, at fair value (amortized cost: $14,654 and $13,809
       as of September 30, 2006 and December 31, 2005, respectively)..............  $      14,638     $      13,829
     Held-to-maturity, at amortized cost (fair value: $3,010 and $6,982 as of
       September 30, 2006 and December 31, 2005, respectively)....................          3,017             7,011
   Equity securities:
     Trading, at fair value (cost: $0 and $102 as of September 30, 2006
       and December 31, 2005, respectively).......................................              -                84
     Available-for-sale, at estimated fair value (cost: $844 and $850 as of
       September 30, 2006 and December 31, 2005, respectively)....................            844               850
                                                                                    -------------     -------------
Total investments.................................................................         18,499(1)         21,774

Cash and cash equivalents.........................................................          4,051(1)         10,039
Cash held in escrow...............................................................              -             1,027
Accrued investment income.........................................................            429               609
Other assets......................................................................            284               354
                                                                                    -------------     -------------
Total assets......................................................................  $      23,263     $      33,803
                                                                                    -------------     -------------
                                                                                    -------------     -------------
                        LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Life insurance policy liabilities.................................................  $       6,317     $      13,573
Accounts payable and accruals.....................................................            644               627
                                                                                    -------------     -------------
Total liabilities.................................................................          6,961            14,200
                                                                                    -------------     -------------
Commitments and contingencies (see Note 6)

Shareholders' equity:
Ordinary shares, $0.05 par value per share: 86,400,000 shares authorized;
   64,439,073 shares issued and outstanding as of September 30, 2006 and
   December 31, 2005..............................................................          3,222             3,222
Additional paid-in capital........................................................         67,714            67,660
Retained earnings.................................................................          8,380            11,682
Employee benefit trusts, at cost (13,522,381 shares as of
   September 30, 2006 and December 31, 2005)......................................        (62,598)          (62,598)
Accumulated other comprehensive loss..............................................           (416)             (363)
                                                                                    -------------     -------------
Total shareholders' equity........................................................         16,302            19,603
                                                                                    -------------     -------------
Total liabilities and shareholders' equity........................................  $      23,263     $      33,803
                                                                                    -------------     -------------
                                                                                    -------------     -------------
<FN>
(1) Includes  $15,482 of investments  and $1,350 of cash and cash  equivalents in the Company's  insurance  subsidiary
    (London Pacific Assurance  Limited  ("LPAL"))  which are not currently  available to fund the operations or commitments
    of the Company or its other subsidiaries.
</FN>
</TABLE>

 See accompanying Notes which are an integral part of these Unaudited Condensed
                       Consolidated Financial Statements.

                                       3
<PAGE>



                  BERKELEY TECHNOLOGY LIMITED AND SUBSIDIARIES

            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (In thousands, except per share and ADS amounts)


<TABLE>
<CAPTION>
                                                                       Three Months Ended       Nine Months Ended
                                                                          September 30,           September 30,
                                                                    ----------------------   ----------------------
                                                                        2006        2005        2006        2005
                                                                    ----------  ----------   ----------  ----------
Revenues:
<S>                                                                  <C>         <C>          <C>           <C>
Investment income.................................................   $     300   $     383    $     938     $ 1,185
Insurance policy charges..........................................           -           1            2           4
Consulting and other fee income...................................         163         105          477         429
Net realized investment losses....................................           -           -            -         (43)
Change in net unrealized investment gains and losses
   on trading securities..........................................          (6)         16           18           6
                                                                    ----------  ----------   ----------  ----------
                                                                           457         505        1,435       1,581
Expenses:
Amounts credited on insurance policyholder accounts...............          95         222          402         779
Operating expenses................................................         920         981        3,330       3,328
Interest expense..................................................           -           -            -           3
                                                                    ----------  ----------   ----------  ----------
                                                                         1,015       1,203        3,732       4,110
                                                                    ----------  ----------   ----------  ----------
Loss from continuing operations
   before income tax expense......................................        (558)       (698)      (2,297)     (2,529)

Income tax expense................................................           -           -            5           5
                                                                    ----------  ----------   ----------  ----------
Loss from continuing operations...................................        (558)       (698)      (2,302)     (2,534)

Discontinued operations:
Loss on disposal of discontinued operations,
   net of income tax expense (benefit) of $0......................           -           -       (1,000)          -
                                                                    ----------  ----------   ----------  ----------
Loss on discontinued operations...................................           -           -       (1,000)          -
                                                                    ----------  ----------   ----------  ----------
Net loss..........................................................   $    (558)  $    (698)    $ (3,302)  $  (2,534)
                                                                    ----------  ----------   ----------  ----------
                                                                    ----------  ----------   ----------  ----------


Basic and diluted loss per share:
Continuing operations.............................................   $   (0.01)  $   (0.01)   $   (0.05)  $   (0.05)
Discontinued operations...........................................           -           -        (0.02)          -
                                                                    ----------  ----------   ----------  ----------
                                                                     $   (0.01)  $   (0.01)   $   (0.07)  $   (0.05)
                                                                    ----------  ----------   ----------  ----------
                                                                    ----------  ----------   ----------  ----------
Basic and diluted loss per ADS:
Continuing operations.............................................   $   (0.11)  $   (0.14)   $   (0.45)  $   (0.50)
Discontinued operations...........................................           -           -        (0.20)          -
                                                                    ----------  ----------   ----------  ----------
                                                                     $   (0.11)  $   (0.14)   $   (0.65)  $   (0.50)
                                                                    ----------  ----------   ----------  ----------
                                                                    ----------  ----------   ----------  ----------

</TABLE>

 See accompanying Notes which are an integral part of these Unaudited Condensed
                       Consolidated Financial Statements.


                                       4
<PAGE>

                  BERKELEY TECHNOLOGY LIMITED AND SUBSIDIARIES

            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                           Nine Months Ended
                                                                                              September 30,
                                                                                     ------------------------------
                                                                                         2006              2005
                                                                                     ------------      ------------


<S>                                                                                  <C>               <C>
Net cash used in operating activities.............................................   $       (898)     $       (120)


Cash flows from investing activities:
Purchases of held-to-maturity fixed maturity securities...........................         (3,035)           (8,510)
Purchases of available-for-sale fixed maturity securities.........................         (9,082)           (5,121)
Proceeds from maturity of held-to-maturity fixed maturity securities..............          7,000             1,350
Proceeds from sale and maturity of available-for-sale fixed maturity securities...          8,701             8,284
Capital expenditures..............................................................             (5)               (2)
                                                                                     ------------      ------------
Net cash provided by (used in) investing activities...............................          3,579            (3,999)
                                                                                     ------------      ------------

Cash flows from financing activities:
Insurance policyholder benefits paid..............................................         (8,703)           (5,221)
Proceeds from disposal of shares by the employee benefit trusts...................              -                18
                                                                                     ------------      ------------
Net cash used in financing activities ............................................         (8,703)           (5,203)
                                                                                     ------------      ------------

Net decrease in cash and cash equivalents ........................................         (6,022)           (9,322)
Cash and cash equivalents at beginning of period..................................         10,039            19,495
Foreign currency translation adjustment ..........................................             34              (313)
                                                                                     ------------      ------------
Cash and cash equivalents at end of period (1)....................................   $      4,051      $      9,860
                                                                                     ------------      ------------
                                                                                     ------------      ------------

<FN>
(1) The amount for September 30, 2006 includes $1,350 in the Company's insurance  subsidiary (LPAL) which is not
    currently available to fund the operations or commitments of the Company or its other subsidiaries.
</FN>
</TABLE>



 See accompanying Notes which are an integral part of these Unaudited Condensed
                       Consolidated Financial Statements.

                                        5
<PAGE>

                  BERKELEY TECHNOLOGY LIMITED AND SUBSIDIARIES

       UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                            Accumulated
                                                                                               Other
                                    Ordinary Shares    Additional               Employee      Compre-       Total
                                 -------------------    Paid-in    Retained      Benefit      hensive   Shareholders'
                                   Number    Amount     Capital    Earnings      Trusts        Loss        Equity
                                 --------  ---------   ----------  ---------    ---------    ----------  ------------
Balance as of
<S>                               <C>       <C>         <C>         <C>          <C>          <C>         <C>
   December 31, 2005............   64,439   $  3,222    $ 67,660    $ 11,682     $(62,598)    $    (363)  $  19,603

Net loss........................        -          -           -      (3,302)           -             -      (3,302)
Vesting of employee share
   options, including income
   tax effect...................        -          -          54           -            -             -          54
Change in net unrealized
   gains and losses on
   available-for-sale securities        -          -           -           -            -           (36)        (36)
Foreign currency translation
   adjustment...................        -          -           -           -            -           (17)        (17)
                                 --------  ---------   ---------   ---------    ---------    ----------  ----------
Balance as of
   September 30, 2006...........   64,439   $  3,222    $ 67,714    $  8,380     $(62,598)    $    (416)  $  16,302
                                 --------  ---------   ---------   ---------    ---------    ----------  ----------
                                 --------  ---------   ---------   ---------    ---------    ----------  ----------


</TABLE>


 See accompanying Notes which are an integral part of these Unaudited Condensed
                       Consolidated Financial Statements.


                                       6
<PAGE>


                  BERKELEY TECHNOLOGY LIMITED AND SUBSIDIARIES

            UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                       Three Months Ended       Nine Months Ended
                                                                          September 30,           September 30,
                                                                    ----------------------   ----------------------
                                                                        2006        2005        2006        2005
                                                                    ----------  ----------   ----------  ----------
<S>                                                                   <C>         <C>          <C>         <C>
Net loss..........................................................    $   (558)   $   (698)    $ (3,302)   $ (2,534)

Other comprehensive income (loss), net of deferred
   income taxes:

Foreign currency translation adjustments, net of income
   taxes of $0....................................................          (3)        (11)         (17)        (46)

Change in net unrealized gains and losses:
   Unrealized holding gains and losses on available-for-sale
     securities...................................................          21          (6)         (46)        (12)
   Reclassification adjustment for gains and losses included
     in net loss..................................................           -           8           10          15
   Deferred income taxes..........................................           -           -            -           -

                                                                    ----------  ----------   ----------  ----------
Other comprehensive income (loss).................................          18          (9)         (53)        (43)
                                                                    ----------  ----------   ----------  ----------
Comprehensive loss................................................    $   (540)   $   (707)    $ (3,355)   $ (2,577)
                                                                    ----------  ----------   ----------  ----------
                                                                    ----------  ----------   ----------  ----------



</TABLE>



 See accompanying Notes which are an integral part of these Unaudited Condensed
                       Consolidated Financial Statements.


                                       7
<PAGE>

                  BERKELEY TECHNOLOGY LIMITED AND SUBSIDIARIES

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2006

     As used herein,  the terms  "registrant,"  "Company,"  "we," "us" and "our"
refer to Berkeley Technology Limited.  Except as the context otherwise requires,
the term "Group" refers collectively to the registrant and its subsidiaries.


Note 1.   Basis of Presentation and Principles of Consolidation

     The accompanying  condensed consolidated financial statements are unaudited
and have been prepared by the Company in conformity with United States generally
accepted  accounting   principles  ("U.S.   GAAP").  These  unaudited  condensed
consolidated  financial  statements  include the  accounts of the  Company,  its
subsidiaries,  the Employee  Share Option Trust  ("ESOT") and the Agent  Loyalty
Opportunity Trust ("ALOT").  Significant subsidiaries included in the operations
of the Group and discussed in this document  include  London  Pacific  Assurance
Limited ("LPAL") and Berkeley  International Capital Corporation  ("BICC").  All
intercompany transactions and balances have been eliminated in consolidation.

     Certain information and note disclosures normally included in the Company's
annual consolidated  financial statements have been condensed or omitted. In the
opinion of management, the unaudited condensed consolidated financial statements
reflect all  adjustments  (consisting of normal  recurring  accruals)  which are
necessary for a fair statement of the results for the interim periods presented.

     While the Company's management believes that the disclosures  presented are
adequate to make the  information  not  misleading,  these  unaudited  condensed
consolidated financial statements should be read in conjunction with the audited
financial  statements  and related  notes for the year ended  December 31, 2005,
which are contained in the Company's  Annual Report on Form 10-K, filed with the
U.S.  Securities and Exchange Commission ("SEC") on March 30, 2006. The December
31,  2005  condensed  balance  sheet data was  derived  from  audited  financial
statements but does not include all disclosures required by U.S. GAAP.

     The  results for the nine month  period  ended  September  30, 2006 are not
indicative of the results to be expected for the full fiscal year.

     The unaudited  condensed  consolidated  balance  sheets are presented in an
unclassified  format as the  majority of the Group's  assets  relate to its life
insurance and annuities business.  The Group's other business is venture capital
and consulting.

     The Company is incorporated under the laws of Jersey,  Channel Islands. Its
Ordinary  Shares are traded on the London Stock  Exchange and in the U.S. on the
Over-the-Counter  Bulletin  Board  in the  form of  American  Depositary  Shares
("ADSs"), which are evidenced by American Depositary Receipts ("ADRs"). Pursuant
to the  regulations  of the SEC,  the  Company  is  considered  a U.S.  domestic
registrant and must file financial statements prepared under U.S. GAAP.

Use of Estimates

     The  preparation  of financial  statements  in  conformity  with U.S.  GAAP
requires  management to make estimates and assumptions  that affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities as of the date of these unaudited condensed  consolidated  financial
statements as well as the reported  amount of revenues and expenses  during this
reporting  period.  Actual  results could differ from these  estimates.  Certain
estimates such as fair value and actuarial assumptions have a significant impact
on the  gains  and  losses  recorded  on  investments  and the  balance  of life
insurance policy liabilities.

                                       8
<PAGE>



                  BERKELEY TECHNOLOGY LIMITED AND SUBSIDIARIES

   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Share Based Compensation

Equity compensation plan

     The London Pacific Group 1990 Employee Share Option Trust  ("ESOT"),  which
was approved by shareholders in 1990, provides for the granting of share options
to employees and directors. Options are generally granted with an exercise price
equal to the fair market  value of the  underlying  shares at the date of grant.
Such  grants  to  employees  are  generally  exercisable  in four  equal  annual
installments  beginning  one year from the date of grant,  subject to employment
continuation,  and expire seven to ten years from the date of grant. Such grants
to directors are fully vested on the date of grant and expire seven or ten years
from the date of grant.

Share based compensation expense

     On January 1, 2006, the Company adopted  Statement of Financial  Accounting
Standards No. 123 (revised 2004) ("SFAS  123R"),  "Share-Based  Payment,"  which
establishes  standards  for the  accounting of  transactions  in which an entity
exchanges its equity  instruments for goods or services,  primarily  focusing on
accounting for transactions  where an entity obtains employee  services in share
based  payment  transactions.  SFAS 123R requires a public entity to measure the
cost  of  employee  services  received  in  exchange  for  an  award  of  equity
instruments,  including  share options,  based on the fair value of the award on
the grant date, and to recognize it as compensation  expense over the period the
employee is required to provide  service in exchange for the award,  usually the
vesting period.  SFAS 123R supersedes the Company's  previous  accounting  under
Accounting  Principles  Board Opinion No. 25 ("APB 25"),  "Accounting  for Stock
Issued to  Employees,"  and related  interpretations,  for periods  beginning in
fiscal 2006.  In March 2005,  the SEC issued Staff  Accounting  Bulletin No. 107
("SAB 107") relating to SFAS 123R. The Company has applied the provisions of SAB
107 in its adoption of SFAS 123R.

     The Company  adopted  SFAS 123R using the modified  prospective  transition
method,  which requires the application of the accounting standard as of January
1,  2006,  the  first day of the  Company's  fiscal  year  2006.  The  Company's
consolidated  financial statements as of and for the three and nine months ended
September  30, 2006  reflect  the impact of SFAS 123R.  In  accordance  with the
modified  prospective  transition method, the Company's  consolidated  financial
statements  for prior  periods  have not been  restated to  reflect,  and do not
include, the impact of SFAS 123R.

     SFAS 123R  requires  companies  to  estimate  the fair value of share based
payment awards on the date of grant using an option pricing model.  The value of
the portion of the award that is  ultimately  expected to vest is  recognized as
expense  over  the  requisite  service  periods  in the  Company's  consolidated
statement  of  operations.  Prior to the  adoption  of SFAS  123R,  the  Company
accounted for share based awards to employees and directors  using the intrinsic
value method in accordance  with APB 25, as allowed under Statement of Financial
Accounting   Standards  No.  123  ("SFAS  123"),   "Accounting  for  Stock-Based
Compensation."  Under the intrinsic  value method,  no share based  compensation
expense  had  been  recognized  in  the  Company's   consolidated  statement  of
operations.

     Share based compensation  expense recognized in the Company's  consolidated
statement of operations  for the three and nine months ended  September 30, 2006
includes  compensation  expense for share options  granted prior to, but not yet
vested as of December 31, 2005, based on the fair value estimated as of the date
of grant in  accordance  with the  provisions  of SFAS 123R.  SFAS 123R requires
forfeitures to be estimated at the time of grant and revised,  if necessary,  in
subsequent  periods if actual  forfeitures  differ from those  estimates.  Share
based  compensation  expense  calculated in  accordance  with SFAS 123R is to be
based on awards ultimately expected to vest, and therefore the expense should be
reduced for estimated  forfeitures.  The Company's estimated forfeiture rate for
the three and nine months ended September 30, 2006 of zero

                                       9
<PAGE>

                  BERKELEY TECHNOLOGY LIMITED AND SUBSIDIARIES

   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

percent is based upon the short  remaining  vesting periods of the option grants
(all but one option  grant will be fully  vested by the end of 2006) and because
all of the unvested options relate to longstanding  employees.  In the Company's
pro forma  information  required to be disclosed  under SFAS 123 for the periods
prior to 2006, the Company accounted for forfeitures as they occurred.

     SFAS 123R requires the cash flows resulting from the tax benefits resulting
from tax  deductions in excess of the  compensation  cost  recognized  for those
options to be classified  as financing  cash flows.  Due to the  Company's  loss
position,  and as the  Company  had no tax  deductions  related to share  option
exercises, there were no such tax benefits during the first nine months of 2006.
Prior to the adoption of SFAS 123R,  those tax benefits would have been reported
as operating  cash flows had the Company  received  any tax benefits  related to
share option exercises.

     The fair value of share option grants to employees is calculated  using the
Black-Scholes  option  pricing  model,  even though this model was  developed to
estimate the fair value of freely tradable,  fully transferable  options without
vesting  restrictions,  which  differ  significantly  from the  Company's  share
options. The Black-Scholes model also requires subjective assumptions, including
future share price  volatility  and expected  time to  exercise,  which  greatly
affect the calculated  values.  The expected term of options  granted is derived
from  historical  data  on  employee   exercises  and  post-vesting   employment
termination behavior.  The risk-free rate is based on the U.S. Treasury rates in
effect  during the  corresponding  period of grant.  The expected  volatility is
based on the historical  volatility of the Company's share price.  These factors
could  change in the  future,  which would  affect the share based  compensation
expense in future  periods,  if the  Company,  through  the ESOT,  should  grant
additional share options.

Valuation and expense information under SFAS 123R

     The estimated fair value of share option  compensation awards to employees,
as calculated  using the  Black-Scholes  option  pricing model as of the date of
grant,  is amortized using the  straight-line  method over the vesting period of
the  options.   For  the  three  and  nine  months  ended  September  30,  2006,
compensation  expense  related to employee share options under SFAS 123R totaled
$7,000 and $54,000,  respectively,  and is included in operating expenses in the
accompanying statement of operations.



                                       10
<PAGE>





                  BERKELEY TECHNOLOGY LIMITED AND SUBSIDIARIES

   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     The table below  reflects net loss and basic and diluted loss per share and
ADS for the three and nine months ended  September  30, 2006,  compared with the
pro forma information for the three and nine months ended September 30, 2005:

<TABLE>
<CAPTION>
                                                                       Three Months Ended       Nine Months Ended
                                                                          September 30,           September 30,
                                                                    ----------------------   ----------------------
                                                                        2006        2005        2006        2005
                                                                    ----------  ----------   ----------  ----------
                                                                    (In thousands, except per share and ADS amounts)

<S>                                                                  <C>          <C>         <C>         <C>
Net loss as reported for the prior period (1).....................         N/A    $   (698)         N/A   $  (2,534)
Share based compensation expense related to employee
   share options (2)..............................................          (7)        (32)         (54)         (7) (4)
                                                                    ----------  ----------   ----------  ----------
Net loss, including the effect of share based
  compensation expense (3)........................................    $   (558)   $   (730)   $  (3,302)  $  (2,541)
                                                                    ----------  ----------   ----------  ----------
                                                                    ----------  ----------   ----------  ----------

Basic and diluted loss per share, as reported for the
  prior period (1)................................................                   (0.01)                   (0.05)
Basic and diluted loss per share, including the effect of share
  based compensation..............................................       (0.01)      (0.01)       (0.07)      (0.05)
Basic and diluted loss per ADS, as reported for the
  prior period (1)................................................                   (0.14)                   (0.50)
Basic and diluted loss per ADS, including the effect of share
  based compensation..............................................       (0.11)      (0.14)       (0.65)      (0.50)

<FN>
(1) Net loss and loss per share and ADS prior to 2006 did not include  share based  compensation  expense for  employee
    share  options under SFAS 123R because the Company did not adopt the recognition provisions of SFAS 123.

(2) Share based compensation expense prior to 2006 is calculated based on the pro forma application of SFAS 123.

(3) Net loss and net loss per share and ADS prior to 2006 represents pro forma information based on SFAS 123.

(4) Compensation  expense was lower for the nine month period ended  September 30, 2005 due to the reversal of $85,000
    in compensation expense  recognized in prior periods  primarily  related to the forfeiture  during the first quarter
    of 2005 of all of the unvested and out-of-the-money vested options held by employees who terminated employment during
    the first quarter of 2005.
</FN>
</TABLE>

     During  the  first  nine  months  of 2006,  there  were no  option  grants,
exercises or  forfeitures.  During the third quarter of 2006, no options expired
and 125,000 options vested.  At September 30, 2006, there were 5,285,000 options
outstanding  with a weighted  average exercise price of $2.63. Of these options,
4,486,250  were  exercisable  at September  30, 2006,  and these have a weighted
average exercise price of $3.07. The remaining  798,750 options were unvested at
September 30, 2006.  These  unvested  options have a weighted  average  exercise
price of $0.15.  As of  September  30,  2006,  total  unrecognized  compensation
expense  related to unvested  share  options  was  $40,000,  of which  $4,000 is
expected  to be  recognized  during  the  remainder  of 2006 and the  balance of
$36,000 is expected to be recognized  ratably over 2007, 2008 and the first half
of 2009.

     Option  grants  have not been made  since the second  quarter of 2005.  The
options granted in May 2005 were valued using the  Black-Scholes  option pricing
model with the following  assumptions:  expected share price  volatility of 34%,
risk-free  interest rate of 3.89%,  weighted average expected life of 6.25 years
and expected dividend yield of zero percent.

                                       11
<PAGE>


                  BERKELEY TECHNOLOGY LIMITED AND SUBSIDIARIES

   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     For additional information relating to our employee share options, see Note
13 to the Company's  consolidated financial statements included in our Form 10-K
for the year ended December 31, 2005.

Recently Issued Accounting Pronouncements

     In July 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"),  "Accounting for Uncertainty in Income Taxes -
an  Interpretation  of FASB  Statement No, 109." FIN 48 clarifies the accounting
for uncertainty in income taxes recognized in a company's  financial  statements
in  accordance  with  Statement  of  Financial  Accounting  Standards  No.  109,
"Accounting  for Income  Taxes." FIN 48 prescribes a  recognition  threshold and
measurement attribute for the financial statement recognition and measurement of
a tax position  taken or expected to be taken in a tax return.  It also provides
guidance on derecognition, classification, interest and penalties, accounting in
interim periods, disclosure and transition. FIN 48 is effective for fiscal years
beginning after December 15, 2006. The Company's  management does not expect the
adoption  of FIN 48 to have a  material  effect  on its  consolidated  financial
statements.

     In  September  2006,  the FASB issued  Statement  of  Financial  Accounting
Standards No. 157 ("SFAS 157"),  "Fair Value  Measurements,"  which defines fair
value,  establishes  guidelines for measuring fair value and expands disclosures
regarding fair value measurements.  SFAS 157 does not require any new fair value
measurements but rather eliminates  inconsistencies in guidance found in various
prior  accounting  pronouncements.  SFAS  157  is  effective  for  fiscal  years
beginning after November 15, 2007.  Earlier adoption is permitted,  provided the
company has not yet issued financial statements,  including for interim periods,
for that fiscal  year.  The Company is currently  evaluating  the impact of SFAS
157, but does not expect the  adoption of SFAS 157 to have a material  impact on
its consolidated financial position, results of operations or cash flows.


Note 2.   Earnings Per Share and ADS

     The Company  calculates  earnings per share in accordance with Statement of
Financial Accounting Standards No. 128 ("SFAS 128"),  "Earnings per Share." This
statement  requires the  presentation  of basic and diluted  earnings per share.
Basic  earnings  per share is  calculated  by dividing net income or loss by the
weighted-average  number of Ordinary  Shares  outstanding  during the applicable
period,  excluding  shares  held by the ESOT and the ALOT which are  regarded as
treasury  stock for the  purposes  of this  calculation.  The Company has issued
employee share options,  which are considered  potential common stock under SFAS
128.

     The Company has also issued Ordinary Share warrants to the Bank of Scotland
in connection with the Company's bank facility (now terminated),  which are also
considered  potential common stock under SFAS 128. Diluted earnings per share is
calculated  by dividing  net income by the  weighted-average  number of Ordinary
Shares   outstanding   during  the  applicable  period  as  adjusted  for  these
potentially  dilutive  options and warrants  which are  determined  based on the
"Treasury Stock Method." As the Company recorded a net loss for all of the three
and nine month periods ended  September 30, 2006 and 2005, the  calculations  of
diluted  loss per share for these  periods do not include  potentially  dilutive
employee  share options and warrants  issued to the Bank of Scotland as they are
anti-dilutive  and, if included,  would have  resulted in a reduction of the net
loss per share.  If the  Company had  reported  net income for both of the three
month periods ended  September 30, 2006 and 2005, and for both of the nine month
periods ended  September 30, 2006 and 2005,  there would have been an additional
16,250,  52,000,  10,833  and  88,530  shares,  respectively,  included  in  the
calculations of diluted earnings per share for these periods.

                                       12
<PAGE>


                  BERKELEY TECHNOLOGY LIMITED AND SUBSIDIARIES

   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     A  reconciliation  of the  numerators  and  denominators  for the basic and
diluted earnings (loss) per share calculations is as follows:

<TABLE>
<CAPTION>
                                                                       Three Months Ended       Nine Months Ended
                                                                          September 30,           September 30,
                                                                    ----------------------   ----------------------
                                                                        2006        2005        2006        2005
                                                                    ----------  ----------   ----------  ----------
                                                                              (In thousands, except share,
                                                                               per share and ADS amounts)

<S>                                                                  <C>         <C>          <C>         <C>
Loss from continuing operations...................................   $    (558)  $    (698)   $  (2,302)  $  (2,534)
Loss on discontinued operations...................................           -           -       (1,000)          -
                                                                    ----------  ----------   ----------  ----------
Net loss..........................................................   $    (558)  $    (698)   $  (3,302)  $  (2,534)
                                                                    ----------  ----------   ----------  ----------
                                                                    ----------  ----------   ----------  ----------


Basic and diluted loss per share and ADS:
Weighted-average number of Ordinary Shares outstanding,
   excluding shares held by the employee benefit trusts...........  50,916,692  50,916,692   50,916,692  50,916,692
                                                                    ----------  ----------   ----------  ----------
                                                                    ----------  ----------   ----------  ----------

Basic and diluted loss per share:
Continuing operations.............................................   $   (0.01)  $   (0.01)   $   (0.05)  $   (0.05)
Discontinued operations...........................................           -           -        (0.02)          -
                                                                    ----------  ----------   ----------  ----------
                                                                     $   (0.01)  $   (0.01)   $   (0.07)  $   (0.05)
                                                                    ----------  ----------   ----------  ----------
                                                                    ----------  ----------   ----------  ----------

Basic and diluted loss per ADS:
Continuing operations.............................................   $   (0.11)  $   (0.14)   $   (0.45)  $   (0.50)
Discontinued operations...........................................           -         -          (0.20)          -
                                                                    ----------  ----------   ----------  ----------
                                                                     $   (0.11)  $   (0.14)   $   (0.65)     $(0.50)
                                                                    ----------  ----------   ----------  ----------
                                                                    ----------  ----------   ----------  ----------
</TABLE>

                                       13
<PAGE>


                  BERKELEY TECHNOLOGY LIMITED AND SUBSIDIARIES

   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 3.   Investments

     The Group's  investments  consist of fixed maturity and equity  securities.
Fixed  maturity  securities  are  classified  as  either  available-for-sale  or
held-to-maturity,  and equity  securities  are  classified as either  trading or
available-for-sale. The investments are accounted for as follows:

     i)   available-for-sale securities are recorded at fair value, with changes
          in unrealized gains and losses excluded from net income,  but reported
          net of  applicable  income taxes and  adjustments  to deferred  policy
          acquisition cost  amortization as a separate  component of accumulated
          other comprehensive income;

     ii)  held-to-maturity  securities  are  recorded at  amortized  cost unless
          these securities become other-than-temporarily impaired; and

     iii) trading  securities  are  recorded  at  fair  value  with  changes  in
          unrealized gains and losses included in net income.

     When a quoted market price is available for a security, the Group uses this
price to determine  fair value.  If a quoted market price is not available for a
security,  management  estimates the security's  fair value based on appropriate
valuation methodologies.

     For a discussion of the Company's  accounting  policies with respect to the
determination of fair value of investments and other-than-temporary impairments,
see the  section  entitled  "Critical  Accounting  Policies"  in Part I,  Item 2
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  below.  The  Group's  private   securities   primarily  consist  of
convertible  preferred  stock  holdings  in  technology  companies.   Management
periodically reviews financial information with respect to the issuers of equity
securities held by the Group. In addition, management maintains contact with the
management of these  issuers  through  ongoing  dialogue to examine the issuers'
future plans and prospects.

Fixed Maturity Securities

     The Group's fixed  maturity  securities  are comprised of U.S. and non-U.S.
corporate  debt  securities.  Generally,  quoted market prices are available for
these securities.

     An analysis of fixed maturity securities is as follows:
<TABLE>
<CAPTION>

                                            September 30, 2006                               December 31, 2005
                                ------------------------------------------      ------------------------------------------
                                             Gross      Gross    Estimated                   Gross      Gross    Estimated
                                Amortized  Unrealized Unrealized   Fair         Amortized  Unrealized Unrealized    Fair
                                  Cost       Gains      Losses     Value         Cost       Gains       Losses      Value
                                ---------  ---------  ---------  ---------      ---------  ---------  ---------  ---------
                                                                      (In thousands)
Available-for-Sale:
Non-U.S. corporate
<S>                             <C>        <C>        <C>        <C>            <C>        <C>        <C>        <C>
   debt securities.........     $   9,646  $       -  $      (9)    $9,637      $   8,500  $      38  $       -  $   8,538
Corporate debt securities..         5,008          1         (8)     5,001          5,309          -        (18)     5,291
                                ---------  ---------  ---------  ---------      ---------  ---------  ---------  ---------
                                   14,654          1        (17)    14,638         13,809         38        (18)    13,829
                                ---------  ---------  ---------  ---------      ---------  ---------  ---------  ---------
Held-to-Maturity:
Corporate debt securities..         3,017          -         (7)     3,010          7,011          -        (29)     6,982
                                ---------  ---------  ---------  ---------      ---------  ---------  ---------  ---------
                                    3,017          -         (7)     3,010          7,011          -        (29)     6,982
                                ---------  ---------  ---------  ---------      ---------  ---------  ---------  ---------
Total fixed maturity securities $  17,671  $       1  $     (24) $  17,648      $  20,820  $      38  $     (47) $  20,811
                                ---------  ---------  ---------  ---------      ---------  ---------  ---------  ---------
                                ---------  ---------  ---------  ---------      ---------  ---------  ---------  ---------
</TABLE>

                                       14
<PAGE>


                  BERKELEY TECHNOLOGY LIMITED AND SUBSIDIARIES

   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Investment Concentration and Risk

     As of  September  30, 2006,  fixed  maturity  securities  held by the Group
included  investments  in Cadbury  Schweppes of $3,865,000,  British  Telecom of
$3,029,000, AOL Time Warner of $2,006,000, General Mills of $1,996,000, Tesco of
$1,872,000 and Scottish & Newcastle of $1,870,000.  These six corporate  issuers
each represented more than 10% of shareholders' equity as of September 30, 2006.
However, all of these bonds mature on or before June 26, 2007.

     As of  September  30,  2006,  the  Company's  Jersey  based life  insurance
subsidiary,  LPAL,  owned 83% of the  Group's  $17.7  million in fixed  maturity
securities  and 100% of the Group's $0.8 million in  available-for-sale  private
equity securities.  LPAL is a regulated  insurance company,  and as such it must
meet  stringent   capital  adequacy   requirements  and  it  may  not  make  any
distributions  without  the  consent  of  LPAL's  independent  actuary.   LPAL's
investments  are  therefore not  currently  available to fund the  operations or
commitments of the Company or its other subsidiaries.

     As of  September  30,  2006,  the Group held no fixed  maturity  securities
considered less than investment grade.


Note 4.    Cash Held in Escrow

     Cash held in escrow at December  31, 2005  consisted of $1.0 million of the
cash  proceeds  from the sale of London  Pacific  Advisors  ("LPA")  to  SunGard
Business Systems Inc.  ("SunGard") on June 5, 2003 which were held back to cover
any of the Group's  indemnity  obligations  within the 18 month period following
the close of the  transaction.  The  Company  was made aware on March 8, 2005 of
SunGard's  complaint  with  respect to alleged  losses in an amount  equal to at
least $7.2  million  resulting  from  alleged  breaches of  representations  and
warranties contained in the sale and purchase agreement. After consultation with
its legal advisors,  the Group's management believed that this claim was without
merit and defended the matter vigorously.  Accordingly, the Company did not make
any reserve against the $1.0 million in cash and accrued interest held in escrow
as of December  31,  2005.  On August 9, 2006,  the Company  (and certain of its
subsidiaries)  reached a settlement with SunGard on all outstanding  litigation.
The Company and SunGard have  dismissed all lawsuits  against the other and both
parties  have  entered  into a mutual  general  release.  Under the terms of the
settlement,  the Company will forego the $1.0 million escrow account,  including
accrued interest.  As such, the $1.0 million of cash held in escrow (and $56,000
of interest  earned on the escrow  account) was written off as of June 30, 2006.
The  write-off of the $1.0 million  original  escrow  amount has been shown as a
loss on  discontinued  operations,  and the write-off of the $56,000 of interest
earned on the escrow account has been netted against  investment  income, in the
Company's consolidated statement of operations for the second quarter of 2006.

     For further information, see Part II, Item 1 "Legal Proceedings" below.

                                       15
<PAGE>


                  BERKELEY TECHNOLOGY LIMITED AND SUBSIDIARIES

   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 5.    Other Assets

     An analysis of other assets is as follows:
<TABLE>
<CAPTION>

                                                                                    September 30,      December 31,
                                                                                          2006            2005
                                                                                    -------------      ------------
                                                                                             (In thousands)

<S>                                                                                   <C>               <C>
Property, equipment and leasehold improvements, net...............................    $        17       $        43
Prepayments.......................................................................             86               202
Receivables:
   Due from broker................................................................             79                 -
   Fee income receivable..........................................................            111                84
   Other receivables..............................................................             25                25
   Allowance for doubtful accounts................................................            (34)                -
                                                                                     ------------      ------------
Total other assets................................................................     $      284        $      354
                                                                                     ------------      ------------
                                                                                     ------------      ------------
</TABLE>


Note 6.  Commitments and Contingencies

     As previously  disclosed in the Company's 2002 to 2005 audited consolidated
financial statements, and notes thereto, included in the Company's Annual Report
on Form 10-K for each of those years, the Company's primary  insurance  company,
London Pacific Life & Annuity Company ("LPLA"),  in August 2002 was placed under
regulatory  control and  rehabilitation  based on LPLA's  statutory  capital and
surplus as of June 30, 2002. On July 9, 2004, a court order was issued approving
a plan of liquidation for LPLA and also approving exchange agreements which give
policyholders  the option of exchanging their existing policies for new policies
in another  insurance  company.  In the course of the  administration of LPLA in
rehabilitation,  the North Carolina  Department of Insurance ("NCDOI") requested
information  concerning  the  history  of a  limited  number of  investments  in
securities  of  portfolio   companies  during  November  2002.  These  portfolio
investments  have  been  associated  with LPLA for more than  seven  years,  and
involve intercompany transfers.  The history of their investment performance and
ownership is complex. The Company has complied with these requests.  The Company
is not able at this time to predict what  conclusions the NCDOI will reach after
evaluation of this information.

Guarantees

     In November  2002, the FASB issued FASB  Interpretation  No. 45 ("FIN 45"),
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect  Guarantees  of  Indebtedness  of  Others - an  interpretation  of FASB
Statements No. 5, 57 and 107 and rescission of FASB  Interpretation No. 34." The
following  is a  summary  of the  Company's  agreements  that  the  Company  has
determined are within the scope of FIN 45.

     Under its Memorandum and Articles of Association, the Company has agreed to
indemnify its officers and directors for certain events or  occurrences  arising
as a result of the officer or  director  serving in such  capacity.  The maximum
potential  amount of future payments the Company could be required to make under
these  indemnification  agreements is unlimited.  However, the Company maintains
directors and officers  liability  insurance that limits the Company's  exposure
and enables it to recover a portion of any future  amounts  paid. As a result of
its insurance  coverage,  the Company believes the estimated fair value of these
indemnification  agreements is minimal and has no liabilities recorded for these
agreements as of September 30, 2006.

                                       16
<PAGE>


                  BERKELEY TECHNOLOGY LIMITED AND SUBSIDIARIES

   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     The Company  enters into  indemnification  provisions  under its agreements
with other companies in its ordinary course of business, typically with business
partners,  clients and landlords.  Under these provisions, the Company generally
indemnifies  and holds  harmless the  indemnified  party for losses  suffered or
incurred by the indemnified party as a result of the Company's activities. These
indemnification   provisions  sometime  include  indemnifications   relating  to
representations made by the Company with regard to intellectual property rights.
These indemnification provisions generally survive termination of the underlying
agreement.  The maximum potential amount of future payments the Company could be
required  to make under  these  indemnification  provisions  is  unlimited.  The
Company  believes  the  estimated  fair value of these  agreements  is  minimal.
Accordingly,  the Company has no liabilities recorded for these agreements as of
September 30, 2006.


Note 7.   Business Segment and Geographical Information

     The Company's reportable operating segments are classified according to its
businesses of venture capital and consulting, and life insurance and annuities.

     Intercompany  transfers between reportable operating segments are accounted
for at prices  which are designed to be  representative  of  unaffiliated  third
party transactions.

     Summary  revenue and  investment  gain  (loss)  information  by  geographic
segment,  based on the domicile of the Group company  generating those revenues,
is as follows:

<TABLE>
<CAPTION>
                                                                       Three Months Ended       Nine Months Ended
                                                                          September 30,           September 30,
                                                                    ----------------------   ----------------------
                                                                        2006        2005        2006        2005
                                                                    ----------  ----------   ----------  ----------
                                                                                     (In thousands)

<S>                                                                  <C>         <C>          <C>         <C>
Jersey............................................................   $     232   $     295    $     767   $     926
Guernsey..........................................................          21          31           76          77
United States.....................................................         204         179          592         578
                                                                    ----------  ----------   ----------  ----------
Consolidated revenues and net investment gains and
   losses.........................................................   $     457   $     505    $   1,435   $   1,581
                                                                    ----------  ----------   ----------  ----------
                                                                    ----------  ----------   ----------  ----------
</TABLE>

                                       17
<PAGE>


                  BERKELEY TECHNOLOGY LIMITED AND SUBSIDIARIES

   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     Revenues and income  (loss) for  continuing  operations  before  income tax
expense for the Company's reportable  operating segments,  based on management's
internal reporting structure, were as follows:
<TABLE>
<CAPTION>
                                                                       Three Months Ended       Nine Months Ended
                                                                          September 30,           September 30,
                                                                    ----------------------   ----------------------
                                                                        2006        2005        2006        2005
                                                                    ----------  ----------   ----------  ----------
                                                                                     (In thousands)
Revenues and net investment gains and losses:
<S>                                                                  <C>         <C>          <C>         <C>
Venture capital and consulting ...................................   $     153   $     117    $     483   $     404
Life insurance and annuities .....................................         222         293          745         906
                                                                    ----------  ----------   ----------  ----------
                                                                           375         410        1,228       1,310
Reconciliation of segment amounts to consolidated amounts:
Interest and other fee income.....................................          82          95          207         271
                                                                    ----------  ----------   ----------  ----------
Consolidated revenues and net investment gains
   and losses.....................................................   $     457   $     505    $   1,435   $   1,581
                                                                    ----------  ----------   ----------  ----------
                                                                    ----------  ----------   ----------  ----------


Loss before income taxes:
Venture capital and consulting ...................................   $    (164)  $    (151)   $    (337)  $    (341)
Life insurance and annuities .....................................         (41)        (65)        (185)       (610)
                                                                    ----------  ----------   ----------  ----------
                                                                          (205)       (216)        (522)       (951)
Reconciliation of segment amounts to consolidated amounts:
Interest and other fee income ....................................          82          95          207         271
Corporate expenses ...............................................        (435)       (577)      (1,982)     (1,846)
Interest expense..................................................           -           -            -          (3)
                                                                    ----------  ----------   ----------  ----------
Consolidated loss from continuing operations
   before income tax expense......................................   $    (558)  $    (698)   $  (2,297)  $  (2,529)
                                                                    ----------  ----------   ----------  ----------
                                                                    ----------  ----------   ----------  ----------

</TABLE>


                                       18
<PAGE>






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

     As used herein,  the terms  "registrant,"  "Company,"  "we," "us" and "our"
refer to Berkeley Technology Limited.  Except as the context otherwise requires,
the term "Group" refers collectively to the registrant and its subsidiaries.

     This  Management's  Discussion  and  Analysis of  Financial  Condition  and
Results of Operations should be read in conjunction with the unaudited condensed
consolidated  financial  statements,  and the notes  thereto,  included  in this
quarterly  report,  and the  December 31, 2005  audited  consolidated  financial
statements,  and the notes  thereto,  included in our 2005 Annual Report on Form
10-K filed with the SEC on March 30, 2006. The unaudited condensed  consolidated
financial statements are prepared in accordance with U.S. GAAP. This item should
also be read in  conjunction  with the  "Forward-Looking  Statements and Factors
That May  Affect  Future  Results"  which are set  forth  below and in our other
filings with the SEC.

Forward-Looking Statements and Factors That May Affect Future Results

     This  Management's  Discussion  and  Analysis of  Financial  Condition  and
Results of Operations and other sections of this report contain  forward-looking
statements  within the meaning of Section 21E of the Securities  Exchange Act of
1934,  as  amended.  Such  forward-looking   statements  are  based  on  current
expectations, estimates, forecasts and projections about the industries in which
we operate,  management's  current beliefs and  assumptions  made by management.
Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates,"  "goals,"  variations  of such words and  similar  expressions  are
intended to identify such forward-looking  statements.  These statements are not
guarantees of future  performance and involve certain risks,  uncertainties  and
assumptions  that are  difficult  to predict.  Future  outcomes  and results may
differ  materially from what is expressed or forecasted in such  forward-looking
statements. We undertake no obligation to update any forward-looking statements,
whether as a result of new information, future developments or otherwise.

     Factors   that  could  cause  or   contribute   to   deviations   from  the
forward-looking statements include those discussed in this section, elsewhere in
this report and in our other filings with the SEC. The factors include,  but are
not limited to, (i) the risks described in Item 3 "Quantitative  and Qualitative
Disclosures  About Market Risk," (ii)  variations in demand for our products and
services,  (iii) the success of our new products and services,  (iv) significant
changes in net cash flows in or out of our businesses,  (v)  fluctuations in the
performance of debt and equity markets worldwide,  (vi) the enactment of adverse
state,  federal  or  foreign  regulation  or  changes  in  government  policy or
regulation (including accounting standards) affecting our operations,  (vii) the
effect of  economic  conditions  and  interest  rates in the U.S.,  the U.K.  or
internationally,  (viii)  the  ability of our  subsidiaries  to compete in their
respective businesses, (ix) our ability to attract and retain key personnel, and
(x) actions by governmental authorities that regulate our businesses,  including
insurance commissions.


                                       19
<PAGE>





RESULTS OF OPERATIONS BY BUSINESS SEGMENT

Venture Capital and Consulting

     Certain information  regarding our venture capital and consulting segment's
results of operations is as follows:
<TABLE>
<CAPTION>
                                                                       Three Months Ended       Nine Months Ended
                                                                          September 30,           September 30,
                                                                    ----------------------   ----------------------
                                                                        2006        2005        2006        2005
                                                                    ----------  ----------   ----------  ----------
                                                                                     (In thousands)
Revenues and net investment gains (losses):
<S>                                                                   <C>         <C>          <C>         <C>
Consulting fees...................................................    $    159    $    101     $    465    $    416
Change in net unrealized investment gains and losses on
   trading securities.............................................          (6)         16           18         (12)
                                                                    ----------  ----------   ----------  ----------
Total revenues and net investment gains (losses)..................         153         117          483         404

Operating expenses................................................         317         268          820         745
                                                                    ----------  ----------   ----------  ----------
Loss from continuing operations before income
    tax expense...................................................    $   (164)   $   (151)    $   (337)   $   (341)
                                                                    ----------  ----------   ----------  ----------
                                                                    ----------  ----------   ----------  ----------
</TABLE>

Third quarter of 2006 compared to third quarter of 2005

     In the third quarter of 2006, the venture  capital and  consulting  segment
contributed  a loss before  income  taxes of  $164,000 to our overall  loss from
continuing  operations  before  income  taxes,  compared to a loss before income
taxes of $151,000 in the third quarter of 2005.

     The venture  capital  and  consulting  segment  earned  consulting  fees of
$159,000  during the third  quarter of 2006  compared  to  $101,000 in the third
quarter  of  2005,  by  advising  Silicon  Valley  telecommunications  equipment
companies   in   dealing   with   large   incumbent    European   and   Japanese
telecommunications  companies. BICC's objective is to use consulting revenues to
finance the development of large telecommunications company relationships, which
will  eventually  lead  to  equity  based  transactions,  with  fees  or  direct
investment  opportunities  for the Group.  There is also the  possibility of new
venture  funds  raised in  partnership  with  international  sources  of capital
leading to management fees and carried interests.

     Operating  expenses in this  segment  continued  to exceed  consulting  fee
revenues in the third quarter of 2006.

     In prior  years,  this  segment's  results were  significantly  impacted by
fluctuations  in the market value of its portfolio of listed equity  securities.
As of the end of the third quarter of 2006, all listed equity  investments  have
been sold, and our results will no longer be impact by equity market volatility.

First nine months of 2006 compared to first nine months of 2005

     In both the first nine  months of 2006 and the first  nine  months of 2005,
the venture  capital and  consulting  segment  contributed  a loss before income
taxes of $0.3  million to our overall  loss from  continuing  operations  before
income taxes.  Consulting fee revenues increased slightly in the current period,
however,  operating  expenses  also  increased  in the first nine months of 2006
compared  to the first  nine  months of 2005,  primarily  due to a $0.1  million
non-recurring insurance claim reimbursement in the second quarter of 2005.

     In prior  years,  this  segment's  results were  significantly  impacted by
fluctuations  in the market value of its portfolio of listed equity  securities.
As of the end of the third quarter of 2006, all listed equity  investments  have
been sold, and our results will no longer be impact by equity market volatility.

                                       20
<PAGE>


Life Insurance and Annuities

     Certain  information  regarding our life insurance and annuities  segment's
results of operations is as follows:
<TABLE>
<CAPTION>
                                                                       Three Months Ended       Nine Months Ended
                                                                          September 30,           September 30,
                                                                    ----------------------   ----------------------
                                                                        2006        2005        2006        2005
                                                                    ----------  ----------   ----------  ----------
                                                                                     (In thousands)
Revenues and net investment gains (losses):
<S>                                                                  <C>         <C>          <C>         <C>
Investment income.................................................   $   222     $     292    $     743   $     927
Insurance policy charges..........................................           -           1            2           4
Net realized investment losses....................................           -           -            -         (43)
Change in net unrealized investment gains and losses on
   trading securities.............................................           -           -            -          18
                                                                    ----------  ----------   ----------  ----------
Total revenues and net investment gains (losses)..................         222         293          745         906

Expenses:
Amounts credited on insurance policyholder accounts...............          95         222          402         779
General and administrative expenses...............................         168         136          528         737
                                                                    ----------  ----------   ----------  ----------
Total expenses....................................................         263         358          930       1,516
                                                                    ----------  ----------   ----------  ----------
Loss from continuing operations
    before income tax expense.....................................   $     (41)  $     (65)   $    (185)  $    (610)
                                                                    ----------  ----------   ----------  ----------
                                                                    ----------  ----------   ----------  ----------
</TABLE>

     As  previously  disclosed in our 2002  through 2005 Annual  Reports on Form
10-K,  on July 2, 2002,  we announced  that LPAL would  discontinue  writing new
policies effective immediately.  The decision to discontinue the issuance of new
policies  was  made to avoid  the  increased  capital  requirements  created  by
additional  policyholder  liabilities.  Subsequent  to this  announcement,  LPAL
policy surrenders  increased  substantially.  Approximately 96% of LPAL's $140.2
million in policyholder liabilities as of June 30, 2002 have been surrendered or
have matured as of September 30, 2006. Policyholder  liabilities as of September
30, 2006 were $6.3  million.  Almost all of the  surrenders  since June 30, 2002
occurred  in the  second  half of 2002;  most of the  decrease  in  policyholder
liabilities since the end of 2002 is attributable to policy maturities.

     LPAL  now  focuses  on  managing  the  remaining   block  of   policyholder
liabilities. There are no plans currently to write new policies.

Third quarter of 2006 compared to third quarter of 2005

     In the third quarter of 2006,  LPAL  contributed a loss before income taxes
of $41,000 to our overall loss from continuing  operations  before income taxes,
compared to a loss of $65,000 in the third quarter of 2005.

     The spread between  investment income and amounts credited to policyholders
improved during the third quarter of 2006 compared to the third quarter of 2005,
from $70,000 to $127,000.  Interest credited on policyholder  accounts decreased
by $127,000  to $95,000 in the third  quarter of 2006,  compared  with the third
quarter of 2005. This decrease was primarily due to policy  maturities since the
third  quarter of 2005.  The average  rate  credited to  policyholders  was 4.7%
during the third  quarter of 2006,  compared  with 5.5% in the third  quarter of
2005.  Interest  income on investments  fell by $70,000 to $222,000 in the third
quarter of 2006,  compared to the third  quarter of 2005,  primarily  due to the
decline in LPAL's  corporate  bond  investments  which was  consistent  with the
decline in its policyholder  liabilities over the period. The level of corporate
bonds held by LPAL  decreased  from $16.5 million at September 30, 2005 to $14.6
million at September 30, 2006.

     Total invested assets  decreased to $17.2 million as of September 30, 2006,
compared  with $20.2 million as of June 30, 2006  primarily due to  policyholder
benefits paid of $3.2 million during the third quarter of 2006.

                                       21
<PAGE>

On total  average  invested  assets in the third  quarter of 2006,  the  average
annualized net return was 4.9%, compared with 4.3% in the third quarter of 2005.

     Policyholder  liabilities  as of  September  30, 2006 were $6.3  million of
which $3.2 million is scheduled to mature during the  remaining  three months of
2006.  The  maturity  profile  of  LPAL's  corporate  bond  portfolio  has  been
structured to match  approximately  the maturity profile of LPAL's policies.  In
the absence of significant  redemptions,  policyholder liabilities are projected
to be approximately $3.2 million at the end of 2006.

     General  and  administrative  expenses  increased  by  $32,000 in the third
quarter  of 2006  compared  to the third  quarter of 2005  primarily  due to the
partial  allocation  of corporate  insurance  expense to this segment  since the
fourth quarter of 2005.

First nine months of 2006 compared to first nine months of 2005

     In the first nine months of 2006,  LPAL  contributed  a loss before  income
taxes of $0.2  million to our overall  loss from  continuing  operations  before
income  taxes,  compared to a loss before  income  taxes of $0.6  million in the
first nine months of 2005. In the first nine months of 2006,  the spread between
investment  income and  amounts  credited  to  policyholders  increased  by $0.2
million; and general and administrative expenses decreased by $0.2 million, each
as compared to the first nine months of 2005.

     The spread between  investment income and amounts credited to policyholders
improved  during the first nine months of 2006 compared to the first nine months
of 2005, from $148,000 to $341,000.  Interest credited on policyholder  accounts
decreased by $377,000 to $0.4 million in the first nine months of 2006, compared
with the first nine months of 2005.  This  decrease was  primarily due to policy
maturities since the end of the third quarter of 2005. The average rate credited
to  policyholders  was 5.1% during the first nine months of 2006,  compared with
5.7%  during  the first  nine  months of 2005.  Interest  income on  investments
decreased  by $0.2  million to $0.7  million  in the first  nine  months of 2006
compared  to the first  nine  months of 2005,  primarily  due to the  decline in
LPAL's corporate bond  investments  which was consistent with the decline in its
policyholder liabilities over the period.

     There were no net  investment  gains or losses in the first nine  months of
2006, compared with net investment losses of $25,000 in the first nine months of
2005.  During 2004, LPAL held  significant  levels of listed equity  securities,
causing LPAL's results to be impacted by equity market volatility. By the end of
January 2005, LPAL sold all of its listed equity  securities and as such, LPAL's
equity market risk has been reduced significantly.

     Total invested assets  decreased to $17.2 million as of September 30, 2006,
compared  with  $24.7  million  as  of  December  31,  2005   primarily  due  to
policyholder benefits paid of $8.7 million during the first nine months of 2006.
On total average  invested  assets in the first nine months of 2006, the average
annualized  net return was 4.5%,  compared with 4.1% in the first nine months of
2005.

     Policyholder  liabilities  as of  September  30, 2006 were $6.3  million of
which $3.2 million is scheduled to mature during the  remaining  three months of
2006.  The  maturity  profile  of  LPAL's  corporate  bond  portfolio  has  been
structured to match  approximately  the maturity profile of LPAL's policies.  In
the absence of significant  redemptions,  policyholder liabilities are projected
to be approximately $3.2 million at the end of 2006.

     Included in general and  administrative  expenses for the first nine months
of 2005 are $293,000 of employee  severance  costs. In order to reduce operating
costs and to conserve  cash,  and in light of the decrease in the size of LPAL's
operations,  LPAL reduced its staff in January  2005.  Excluding the $293,000 of
employee severance costs, general and administrative expenses for the first nine
months of 2005 were $444,000,  compared to $528,000 for the first nine months of
2006. This $84,000 increase was due primarily to corporate insurance costs which
have been partially  allocated to the life insurance and annuities segment since
the fourth quarter of 2005.

                                       22
<PAGE>


Corporate and Other

Third quarter of 2006 compared to third quarter of 2005

     Corporate  expenses  decreased by $0.1 million to $0.4 million in the third
quarter of 2006,  compared to the third  quarter of 2005.  This decrease was due
primarily to a $0.1 million  reduction in legal expenses  related to the SunGard
matter as described below in Part II, Item 1, "Legal Proceedings."

First nine months of 2006 compared to first nine months of 2005

     Corporate  expenses  increased by $0.1 million to $2.0 million in the first
nine months of 2006,  compared to the first nine months of 2005.  This  increase
was due primarily to $0.2 million of losses  associated with the sublease of our
Jersey  office  and  $54,000  of SFAS  123R  compensation  expense,  which  were
partially  offset  by lower  corporate  insurance  costs  due to  their  partial
allocation to the life  insurance and annuities  segment from the fourth quarter
of 2005.

     The  amount  of  interest  we  earned  (excluding  the life  insurance  and
annuities segment) decreased by $63,000 to $0.2 million in the first nine months
of 2006,  compared  to the first  nine  months of 2005.  This  decrease  was due
primarily to the  write-off  of interest  earned on the cash held in escrow (see
Note 4 "Cash Held in Escrow" to our Unaudited Condensed  Consolidated  Financial
Statements).

Consolidated Loss from Continuing Operations Before Income Tax Expense

Third quarter of 2006 compared to third quarter of 2005

     Our consolidated loss from continuing  operations before income tax expense
was $0.6 million in the third quarter of 2006,  compared to a loss before income
tax expense of $0.7  million in the third  quarter of 2005.  This lower loss was
due  primarily to a decline in operating  expenses of $61,000  (primarily  lower
legal expenses related to the SunGard matter as discussed above), an increase in
consulting  fee  income  of  $58,000  and  an  increase  in the  spread  between
investment income and amounts credited to policyholders of $44,000.

     As we no longer hold listed  equity  securities,  our results are no longer
impacted by equity market volatility.

     We continue  to pursue  opportunities  to grow the  business in the future,
however,  there is no guarantee that we will be successful in  redeveloping  our
venture capital and consulting operations.

First nine months of 2006 compared to first nine months of 2005

     Our consolidated loss from continuing  operations before income tax expense
was $2.3  million in the first nine  months of 2006,  compared to a loss of $2.5
million in the first nine months of 2005.  This lower loss was due  primarily to
higher net investment  income after amounts  credited on insurance  policyholder
accounts of $130,000,  net investment  gains of $18,000 in the first nine months
of 2006 compared to net investment losses of $37,000 in the first nine months of
2005, and an increase in consulting fee revenues of $48,000.

Income Taxes

     We are  subject  to  taxation  on our income in all  countries  in which we
operate based upon the taxable income arising in each country. However, realized
gains on certain  investments are exempt from Jersey and Guernsey  taxation.  We
are subject to income tax in Jersey at a rate of 20%. In the United  States,  we
are subject to both federal and  California  taxes at rates up to 34% and 8.84%,
respectively.

                                       23
<PAGE>





Third quarter of 2006 compared to third quarter of 2005

     We had no tax expense and recorded no tax benefits in the third  quarter of
2006,  though we had a $0.6  million loss before  income  taxes.  Although  $0.3
million of losses were contributed by our Jersey and Guernsey  operations during
the third  quarter of 2006,  we did not  recognize  any tax  benefits due to the
uncertainty  surrounding  their recovery  before expiry.  Losses of $0.3 million
were contributed by our U.S. subsidiaries during the period; however, we did not
recognize  any U.S. tax benefits due to the 100%  valuation  allowances  that we
have provided for all deferred tax assets.

First nine months of 2006 compared to first nine months of 2005

     We  recorded  only  $5,000 of tax expense in the first nine months of 2006,
related  to  minimum  California  taxes.  While  losses  of  $1.1  million  were
contributed by our Jersey and Guernsey  operations during the period, we did not
recognize any tax benefits due to the  uncertainty  surrounding  their  recovery
before expiry.  Losses of $1.1 million were contributed by our U.S. subsidiaries
during the period;  however,  we did not  recognize any U.S. tax benefits due to
the 100% valuation allowances that we have provided for all deferred tax assets.

Discontinued Operations

First nine months of 2006 compared to first nine months of 2005

     The $1.0 million  loss on  discontinued  operations  recorded in the second
quarter of 2006  resulted from the write-off of the $1.0 million of cash held in
escrow  which  was part of the  proceeds  from the sale of LPA in June 2003 held
back to cover any of the Group's indemnity obligations (see Note 4 "Cash Held in
Escrow" of the Unaudited Condensed  Consolidated  Financial Statements above and
Part II, Item 1 "Legal Proceedings" below.)


CRITICAL ACCOUNTING POLICIES

     Management has identified those accounting policies that are most important
to the accurate  portrayal of our financial  condition and results of operations
and that require management's most complex or subjective  judgments,  often as a
result of the need to make  estimates  about  the  effect  of  matters  that are
inherently  uncertain.  These most critical  accounting  policies pertain to our
investments, life insurance policy liabilities and contingent liabilities. These
critical accounting policies are described below.

Determination of Fair Values of Investments

     When a quoted market price is available  for a security,  we use this price
in the  determination  of fair value.  If a quoted market price is not available
for a  security,  management  estimates  the  security's  fair  value  based  on
valuation methodologies as described below.

     We  hold  investments  in  privately  held  equity  securities,   primarily
convertible  preferred  stock in venture  capital  companies  doing  business in
various segments of technology  industries.  Venture capital  investing  entails
making  investments in companies  that are  developing  products or services for
large  emerging  markets  with the  belief  that  these  investments  will yield
superior  returns if these  companies  are  successful.  These  investments  are
normally held for a number of years. When we make these investments, most of the
companies  are still  developing  the products they intend to bring to market or
are in the early stages of product  sales.  Venture  capital  companies  are net
consumers of cash and often dependent upon additional financing to execute their
business plans.  These  investments  involve  substantial risk and the companies
generally  lack  meaningful  historical  financial  results used in  traditional
valuation  models.  The process of pricing  these  securities  range from fierce
competitive  bidding  between  financial   institutions  to  existing  investors
negotiating  prices  with  the  company  without  outside  investor  validation.
Investments  in  convertible   preferred   stock  come  with  rights  that  vary
dramatically both from company to company and between rounds of financing within
the same company. These rights, such as anti-dilution,  redemption,  liquidation
preferences and participation, bear

                                       24
<PAGE>

directly on the price an investor is willing to pay for a security.  The returns
on these  investments are generally  realized through an initial public offering
of the company's shares or, more commonly,  through the company's acquisition by
a public company.

     One of the  factors  affecting  fair value is the  amount of time  before a
company  requires  additional  financing to support its  operations.  Management
believes that companies that are financed to the estimated  point of operational
profitability  or for a period  greater  than one year will most  likely  return
value to the investor through an acquisition between a willing buyer and seller,
as the company does not need to seek financing from an opportunistic investor or
insider in an adverse  investment  environment.  If a particular  company  needs
capital in the near term,  management  considers  a range of factors in its fair
value  analysis,  including  our  ability  to  recover  our  investment  through
surviving liquidation  preferences.  Management's  valuation  methodologies also
include  fundamental  analysis that evaluates the investee company's progress in
developing  products,  building  intellectual  property  portfolios and securing
customer  relationships,  as well as overall industry conditions,  conditions in
and prospects for the investee's  geographic  region,  and overall equity market
conditions.   This  is  combined  with   analysis  of   comparable   acquisition
transactions and values to determine if the security's  liquidation  preferences
will ensure full recovery of our investment in a likely acquisition  outcome. In
its valuation analysis, management also considers the most recent transaction in
a company's shares.

     The determination of fair values of investments requires the application of
significant  judgment.  It is possible that the factors  evaluated by management
and fair values will change in subsequent  periods,  especially  with respect to
our  privately  held equity  securities in  technology  companies,  resulting in
material impairment charges in future periods.

Other-than-temporary Impairments

     Management  performs an ongoing review of all  investments in the portfolio
to   determine   if   there   are  any   declines   in  fair   value   that  are
other-than-temporary.

     Since our listed equity  securities are  classified as trading  securities,
impairment  adjustments  are not  required as any change in the market  value of
these securities between reporting periods is included in earnings.

     In  relation  to  our  equity   securities  that  do  not  have  a  readily
determinable  fair value and are  classified as  available-for-sale,  factors we
consider in  impairment  reviews  include:  (i) the length of time and extent to
which  estimated  fair  values  have been  below  cost and the  reasons  for the
decline,  (ii)  the  investee's  recent  financial  performance  and  condition,
earnings trends and future  prospects,  (iii) the market condition of either the
investee's  geographic area or industry as a whole, and (iv) concerns  regarding
the investee's  ability to continue as a going concern (such as the inability to
obtain  additional  financing).  If the evidence supports that a decline in fair
value is  other-than-temporary,  then the investment is reduced to its estimated
fair value,  which becomes its new cost basis,  and a realized loss is reflected
in earnings.

     We determine that a fixed maturity security is impaired when it is probable
that we will  not be  able to  collect  amounts  due  (principal  and  interest)
according to the security's  contractual  terms. We make this  determination  by
considering  all  available  facts and  circumstances,  including our intent and
ability to continue to hold the investment to maturity.  The factors we consider
include:  (i) the length of time and extent to which the market values have been
below  amortized cost and the reasons for the decline,  (ii) the issuer's recent
financial performance and condition, earnings trends and future prospects in the
near to mid-term,  (iii) changes in the issuer's  debt rating and/or  regulatory
actions or other events that may effect the issuer's operations, (iv) the market
condition of either the issuer's geographic area or industry as a whole, and (v)
factors  that raise  doubt  about the  issuer's  ability to  continue as a going
concern.   If  the   evidence   supports   that  a  decline  in  fair  value  is
other-than-temporary,  then the fixed  maturity  security is written down to its
quoted market value,  if such a value is  available.  If a readily  determinable
fair value does not exist,  then the fixed maturity  security is written down to
management's  estimate  of its fair  value,  which  is  based  on the  valuation
methodologies  described above.  Write-downs are recorded as realized losses and
included in earnings.

                                       25
<PAGE>

     The   evaluations   for   other-than-temporary   impairments   require  the
application of significant  judgment. It is possible that the impairment factors
evaluated  by  management  and fair values will  change in  subsequent  periods,
especially  with  respect to  privately  held equity  securities  in  technology
companies, resulting in material impairment charges in future periods.

Life Insurance Policy Liabilities

     We  account  for life  insurance  policy  liabilities  in  accordance  with
Statement of Financial Accounting Standards No. 97, "Accounting and Reporting by
Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains
and Losses from the Sale of  Investments."  We account for life insurance policy
liabilities for deferred annuities as investment-type  insurance products and we
record these liabilities at accumulated value (premiums  received,  plus accrued
interest to the balance sheet date, less withdrawals and assessed fees).

Contingent Liabilities

     As discussed in Note 6 to our Unaudited  Condensed  Consolidated  Financial
Statements,  we are involved in various  matters that may or may not result in a
loss to the Group.  We account for  contingent  liabilities  in accordance  with
Statement  of   Financial   Accounting   Standards   No.  5,   "Accounting   for
Contingencies."  As such, in situations where we believe that a loss is probable
and where we can  reasonably  estimate the amount of the loss, we will recognize
that estimated loss in our financial  statements.  Because of the  uncertainties
that exist, we cannot predict the outcome of the pending matters with certainty.
Actual results may differ from our estimates,  and the ultimate outcome of these
matters  could  have a  significant  impact on our  results  of  operations  and
financial position.


LIQUIDITY AND CAPITAL RESOURCES

     Our cash and cash  equivalents  decreased  during the first nine  months of
2006 by $6.0 million to $4.1 million. This decrease in cash and cash equivalents
primarily  resulted from $0.9 million and $8.7 million of cash used in operating
activities  and financing  activities,  respectively,  partially  offset by $3.6
million  provided by investing  activities.  Cash used in  financing  activities
related to insurance  policyholder benefits paid by LPAL. Cash used in operating
activities  primarily  resulted  from  the  $2.3  million  operating  loss  from
continuing  operations for the first nine months of 2006, partially offset by an
increase in accrued  expenses,  a decrease in accrued  investment income and the
sale of trading  securities.  Cash  provided by investing  activities  primarily
related to the maturity of fixed maturity securities held by the Group and LPAL,
partially  offset by the purchase of fixed  maturity  securities by LPAL and the
Group.  As of September 30, 2006, our cash and cash  equivalents,  excluding the
amount held by LPAL,  amounted to $2.7 million, an increase of $2.2 million from
December 31, 2005. We reinvested $3.0 million of the $7.0 million  proceeds from
the  corporate  bonds that  matured  during  the first  nine  months of 2006 and
received $0.1 million from the sale of our remaining listed  equities.  The $3.0
million in corporate bonds will mature on or before June 26, 2007.

     Shareholders' equity decreased during the first nine months of 2006 by $3.3
million from $19.6  million at December  31, 2005 to $16.3  million at September
30, 2006,  primarily due to the net loss for the period of $3.3  million.  As of
September 30, 2006 and December 31, 2005,  $62.6 million of our Ordinary Shares,
at  cost,  held  by  the  employee  benefit  trusts  have  been  netted  against
shareholders' equity.

     As discussed  above in "Results of  Operations  by Business  Segment - Life
Insurance and Annuities," LPAL  discontinued  issuing new policies in July 2002.
During the first nine months of 2006,  LPAL  continued  to service its  existing
policyholders.  During this period,  policy surrenders  totaled $0.2 million and
policy  maturities  totaled $8.4  million.  Policyholder  liabilities  were $6.3
million as of September  30, 2006,  compared to $13.6 million as of December 31,
2005. We do not expect significant surrender activity during the remaining three
months of 2006; however,  approximately $3.2 million of policyholder liabilities
are scheduled to mature during this period. LPAL has sufficient liquid resources
to fund  these  maturities.  As of  September  30,  2006,  LPAL had cash of $1.4
million,  accrued  interest  receivable of $0.4 million and  corporate  bonds of
$14.6 million.

                                       26
<PAGE>

     In prior  years,  LPAL held listed  equity  securities  at levels such that
fluctuations  in the market value of these listed equity  securities  could have
had a significant  impact on LPAL's statutory capital level.  Following the sale
of LPAL's remaining listed equity holdings in January 2005,  fluctuations in the
market  value of LPAL's  listed  equity  securities  no longer have an impact on
LPAL's required statutory capital level.

     As of September 30, 2006, we had no bank borrowings, guarantee obligations,
material commitments  outstanding for capital expenditures or additional funding
for private equity portfolio companies.

     As of September 30, 2006, we had $2.7 million of cash and cash  equivalents
and $3.0 million in short-term bonds,  excluding cash and bonds held by our life
insurance and annuities segment.  We believe that this cash balance and the bond
maturity  proceeds are  sufficient to fund our operations  (venture  capital and
corporate activities) over at least the next 12 months.

     In order to reduce  operating  costs and to conserve  cash, and in light of
the decrease in the size and complexity of our continuing operations, we reduced
our  staffing  levels in early 2005.  After the payment of all related  employee
severance  costs in 2005,  the impact of the staff cost  reductions is now being
fully realized during 2006. We implemented other cost reductions during 2005 and
are  continuing  to implement  further cost  reductions  in 2006,  including the
sublease  of our  Jersey  office  space for the  remainder  of our  lease  term,
effective from June 2006.


Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The nature of our businesses  exposes us to market risk. Market risk is the
risk of loss that may occur when  changes in  interest  rates and public  equity
prices adversely affect the value of invested assets.

Interest Rate Risk

     LPAL is subject to risk from interest rate  fluctuations  when payments due
to  policyholders  are not matched in respect of amount and duration with income
from investments.  LPAL attempts to minimize this risk by ensuring that payments
and income are matched as closely as possible while also  maximizing  investment
returns.  LPAL  has not used  derivative  financial  instruments  as part of its
investment strategy.

     For LPAL's business,  the amount of policyholder  liabilities is unaffected
by  changes in  interest  rates.  Given the  existing  policy and bond  maturity
profiles,  and that bonds will  generally  be held to maturity  and early policy
redemptions  are protected by a market value  adjustment and surrender  penalty,
the bonds and policies carry minimal interest rate risk.

     Interest  income  earned  on cash and cash  equivalents  in LPAL and in the
remainder  of the Group is  expected  to be less than $0.1  million  during  the
remainder of 2006,  therefore movements in market interest rates should not have
a material impact on our consolidated results.

Equity Price Risk

     In prior years, we held levels of listed equity securities which exposed us
to  significant  equity  price risk and  resulting  volatility  in our  reported
earnings.  By the end of  September  2006,  we  sold  all of our  listed  equity
holdings and thus we are no longer exposed to equity price risk on listed equity
securities.

     As of September 30, 2006, we held $0.8 million in private  corporate equity
securities  of  technology  companies  for which  liquid  markets  do not exist.
Private equity prices do not fluctuate directly with public equity markets,  but
significant  market  movements  may  trigger a review  for  other-than-temporary
adjustment of the carrying  values of our private equity  securities.  The risks
inherent in these private equity  investments  relate primarily to the viability
of the  investee  companies.  We try to mitigate  these  risks in various  ways,
including performing extensive due diligence prior to making an investment,  and
regularly reviewing the progress of the investee companies.

                                       27
<PAGE>

Item 4.   CONTROLS AND PROCEDURES

     We maintain  disclosure  controls  and  procedures  designed to ensure that
information  required  to be  disclosed  in our  filings  under  the  Securities
Exchange  Act of 1934,  as  amended,  is  recorded,  processed,  summarized  and
reported  within the periods  specified in the rules and forms of the SEC.  Such
information is accumulated and  communicated  to our  management,  including our
chief executive officer and chief financial  officer,  as appropriate,  to allow
timely decisions regarding required  disclosure.  Our management,  including the
chief executive officer and the chief financial officer, recognizes that any set
of controls  and  procedures,  no matter how well  designed  and  operated,  can
provide only reasonable assurance of achieving the desired control objectives.

     As of the end of the period covered by this quarterly  report on Form 10-Q,
we carried out an evaluation,  under the supervision and with the  participation
of our  management,  including our chief  executive  officer and chief financial
officer,  of the  effectiveness  of the design and  operation of our  disclosure
controls and procedures.  Based on such evaluation,  our chief executive officer
and  chief  financial  officer  concluded  that  our  disclosure   controls  and
procedures  were  effective as of the end of the period covered by the quarterly
report on Form 10-Q.

     There were no changes in our internal  controls  over  financial  reporting
during the quarter ended  September 30, 2006 that materially  affected,  or that
could reasonably likely materially  affect, our internal controls over financial
reporting.


                           PART II - OTHER INFORMATION

Item 1.    LEGAL PROCEEDINGS

     On February 17, 2005,  SunGard  Business Systems Inc.  ("SunGard")  filed a
lawsuit in the U.S.  District  Court in  Philadelphia  against  the  Company and
certain of its subsidiaries.  This lawsuit was later dismissed,  but re-filed in
the court of Common Pleas,  Chester County,  Pennsylvania.  SunGard's  complaint
alleged  losses in an  amount  equal to at least  $7.2  million  resulting  from
alleged  breaches of  representations  and warranties  contained in the May 2003
agreement  governing  the  sale to  SunGard  of  London  Pacific  Advisors,  our
financial advisory services business.

     On April 27, 2005,  we filed a lawsuit  against  SunGard and certain of its
affiliates in California  Superior  Court in San Francisco  accusing  SunGard of
wrongful  conduct and seeking  payment of $1.0  million of the initial  purchase
consideration  which  was  held in an  escrow  account,  up to $8.0  million  in
additional  earnout  payments,  and further damages for SunGard's prior wrongful
actions.  We also  asked  the  Court  to award us  compensatory,  exemplary  and
punitive damages.

     During the  remainder of 2005 and through  mid-2006,  we and SunGard  filed
various  motions,  appeals and  amendments  to complaints in response to various
court decisions. These were described in our Form 10-Q for the second quarter of
2006 filed with the SEC on August 11, 2006.

     On August 9, 2006,  we and  SunGard  entered  into a  settlement  agreement
covering all of the above actions. We, and SunGard,  have dismissed all lawsuits
against the other, and we have entered into a mutual general release.  Under the
terms of the  settlement,  we will  forego  the  $1.0  million  escrow  account,
including  accrued interest on the account.  Accordingly,  we wrote-off the $1.0
million of cash held in escrow (and accrued interest) as of June 30, 2006. While
we continue  to believe  that  SunGard's  claims  against us have no merit,  the
prospect of  significantly  escalating  legal costs and a probable  long horizon
(including any appeals) to resolution of our claims against SunGard caused us to
conclude  that  settlement  on  the  terms  agreed  was in  the  Company's  best
interests.

     Costs  relating to the above  matters were  recognized  in our statement of
operations as they were incurred.

                                       28
<PAGE>

Item 1A.   RISK FACTORS

     There are no material changes from the risk factors as previously disclosed
in our Form 10-K for the year ended  December 31, 2005 in response to Item 1A to
Part I of Form 10-K.


Item 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     On August 31, 2006, we held our annual general meeting of the  shareholders
where the following matters were submitted to a vote and approved:

     (1)  To receive the report of the directors  and the  financial  statements
          for the year ended December 31, 2005,  together with the report of the
          independent auditors thereon; votes received for: 37,707,527, against:
          154,305. There were 39,018 abstentions.

     (2)  For the  re-election  of one director,  Harold E. Hughes,  Jr.:  votes
          received  for:  37,583,744,   against:   288,046.  There  were  22,060
          abstentions.  Directors whose term of office  continued,  and who were
          not up for  re-election  at this annual general  meeting,  include Mr.
          Arthur I. Trueger, Mr. Victor A. Hebert and The Viscount Trenchard.

     (3)  To  re-appoint  BDO  Stoy  Hayward,   LLP  and  BDO  Seidman,  LLP  as
          independent  auditors of the Company and to authorize the directors to
          fix their  remuneration;  votes  received  for:  37,760,494,  against:
          120,826. There were 19,530 abstentions.


Item 6.    EXHIBITS

     The following exhibits are filed herewith:

Exhibit
Number   Description
-------  -----------------

31.1     Certification by the Company's Executive Chairman pursuant to 18 U.S.C.
         Section 1350, as adopted pursuant to Section 302  of the Sarbanes-Oxley
         Act of 2002.

31.2     Certification  by  the Company's  Chief Financial  Officer  pursuant to
         18 U.S.C.  Section 1350,  as adopted  pursuant  to Section  302 of  the
         Sarbanes-Oxley Act of 2002.

32.1     Certification by the Company's Executive Chairman pursuant to 18 U.S.C.
         Section 1350, as adopted pursuant to  Section 906 of the Sarbanes-Oxley
         Act of 2002.

32.2     Certification  by  the  Company's Chief Financial  Officer  pursuant to
         18 U.S.C.  Section 1350, as  adopted  pursuant  to Section 906  of  the
         Sarbanes-Oxley Act of 2002.


                                       29
<PAGE>


                                    SIGNATURE


     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.



                                 BERKELEY TECHNOLOGY LIMITED
                                 (Registrant)

Date:  November 14, 2006          By:    /s/  Ian K. Whitehead

                                         Ian K. Whitehead
                                         Chief Financial Officer

                                         (Principal Financial and Accounting
                                         Officer and Duly Authorized Officer
                                         of the Registrant)


                                       30
<PAGE>



                  BERKELEY TECHNOLOGY LIMITED AND SUBSIDIARIES

               EXHIBIT INDEX FOR THE QUARTERLY REPORT ON FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 30, 2006



Exhibit
Number   Description
-------  -----------------

31.1     Certification by the Company's Executive Chairman pursuant to 18 U.S.C.
         Section 1350, as adopted pursuant to Section 302  of the Sarbanes-Oxley
         Act of 2002.

31.2     Certification  by  the Company's  Chief Financial  Officer  pursuant to
         18 U.S.C.  Section 1350,  as adopted  pursuant  to Section  302 of  the
         Sarbanes-Oxley Act of 2002.

32.1     Certification by the Company's Executive Chairman pursuant to 18 U.S.C.
         Section 1350, as adopted pursuant to  Section 906 of the Sarbanes-Oxley
         Act of 2002.

32.2     Certification  by  the  Company's Chief Financial  Officer  pursuant to
         18 U.S.C.  Section 1350, as  adopted  pursuant  to Section 906  of  the
         Sarbanes-Oxley Act of 2002.


                                       31