----

----

|  | [X] | QUARTERLY                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF                1934 |
|--|-----|-----------------------------------------------------------------------------------------------------------------|

|  | [                 ] | TRANSITION                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF                1934 |
|--|--------------------------|------------------------------------------------------------------------------------------------------------------|

| DELAWARE                                                                  |                                                       23-2442288 |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| State                or other jurisdiction of incorporation                or organization                                                                                                                                                                                                                                                                                                                     | I.R.S.                Employer Identification                Number                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                           |
| 6467                Zuma View Place, Suite 160, Malibu CA                                                                                                                                                                                                                                                                                                                                                      |                     90265                                                                                                                                                                                                                  |
| Address                of principal executive offices                                                                                                                                                                                                                                                                                                                                                          | Zip                Code                                                                                                                                                                                                                                        |

| Yes | X |  No |   |
|-----|---|----------|--------|

| Yes |   |  No | X |
|-----|--------|----------|---|

| Yes |   |  No | X |
|-----|--------|----------|---|

----

| **PART                I FINANCIAL STATEMENTS**                                                                                                                                                                           |                                                                                                                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                     |                                                                                                                      |   |
| Item                1.                                                                                                                                                                                                   | Financial                Statements (Unaudited):                                                                          |   |
|                                                                                                                                                                                                                     |                                                                                                                      |   |
| Consolidated                Balance Sheet as of June 30, 2006                                                                                                                                                            | 2                                                                                                                         |
|                                                                                                                                                                                                                     |                                                                                                                      |   |
| Consolidated                Statements of Operations for the Three Months Ended June 30, 2006                and June                30, 2005 (As Restated)                                                              | 3                                                                                                                         |
|                                                                                                                                                                                                                     |                                                                                                                      |   |
| Consolidated                Statements of Operations for the Nine months Ended June 30, 2006                and June                30, 2005 (As Restated) and April 1, 1998 (Inception) to June 30,                2006 | 4                                                                                                                         |
|                                                                                                                                                                                                                     |                                                                                                                      |   |
| Consolidated                Statement of Cash Flows for the Nine Months Ended June 30, 2006 and                June                30, 2005 (As Restated) and April 1, 1998 (Inception) to June 30,                2006  | 5                                                                                                                         |
|                                                                                                                                                                                                                     |                                                                                                                      |   |
| Notes                to the Consolidated Financial Statements                                                                                                                                                            | 7                                                                                                                         |
|                                                                                                                                                                                                                     |                                                                                                                      |   |
| Item                2.                                                                                                                                                                                                   | Management’s                Discussion and Analysis of Financial Condition and Results of                Operations | 13 |
|                                                                                                                                                                                                                     |                                                                                                                      |   |
| Item                3.                                                                                                                                                                                                   | Controls                and Procedures                                                                                    | 15 |
|                                                                                                                                                                                                                     |                                                                                                                      |   |
| **PART                II OTHER INFORMATION**                                                                                                                                                                             |                                                                                                                      |
|                                                                                                                                                                                                                     |                                                                                                                      |   |
| Item                6.                                                                                                                                                                                                   | Exhibits                                                                                                                  | 16 |
|                                                                                                                                                                                                                     |                                                                                                                      |   |
| Signature                Page                                                                                                                                                                                            | 17                                                                                                                        |

----

| ASSETS                                                                                                                                                    |   |   |        |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|
| Current                Assets:                                                                                                                            |   |   |        |   |
| Cash                and cash equivalents                                                                                                                  |   | $      | 962         |   |
| Other                current assets                                                                                                                       |   |   | 24,149      |   |
| Total                Current Assets                                                                                                                       |   |   | 25,111      |   |
|                                                                                                                                                      |   |   |        |   |
| Production                costs                                                                                                                           |   |   | 1,751,917   |   |
| Property                and equipment, net of accumulated depreciation of $767                                                                            |   |   | 383         |   |
|                                                                                                                                                      |   |   |        |   |
| Total                Assets                                                                                                                               |   | $      | 1,777,411   |   |
|                                                                                                                                                      |   |   |        |   |
|                                                                                                                                                      |   |   |        |   |
| LIABILITIES                & NET CAPITAL DEFICIENCY                                                                                                   |   |   |        |   |
| Current                Liabilities:                                                                                                                       |   |   |        |   |
| Accounts                payable and accrued expenses                                                                                                      |   | $      | 247,513     |   |
| Accrued                salaries                                                                                                                           |   |   | 580,141     |   |
| Deferred                revenue                                                                                                                           |   |   | 37,534      |   |
| Accrued                interest                                                                                                                           |   |   | 108,714     |   |
| Accrued                interest to officers                                                                                                               |   |   | 41,811      |   |
| Convertible                debentures, net of discount of $19,584                                                                                         |   |   | 1,346,249   |   |
| Convertible                debentures, payable to officers                                                                                                |   |   | 200,000     |   |
| Total                Current Liabilities                                                                                                                  |   |   | 2,561,962   |   |
|                                                                                                                                                      |   |   |        |   |
| Minority                Interest                                                                                                                          |   |   | 580,086     |   |
|                                                                                                                                                      |   |   |        |   |
| Net                Capital Deficiency                                                                                                                     |   |   |        |   |
| Common                stock, par value $.0015 per share; authorized 100,000,000 shares,                67,705,894 shares issued and outstanding           |   |   | 101,559     |   |
| Convertible                preferred stock, authorized 1,000,000 shares, par value $10.00; no                shares                issued and outstanding |   |   | --          |   |
| Additional                paid in capital                                                                                                                 |   |   | 16,417,284  |   |
| Members’                capital                                                                                                                     |   |   | 1,189,500   |   |
| Stock                subscription receivable                                                                                                              |   |   | (216,633    | ) |
| Prepaid                consulting fees                                                                                                                    |   |   | (66,959     | ) |
| Deficit                accumulated during development stage                                                                                               |   |   | (18,789,388 | ) |
| Total                Net Capital Deficiency                                                                                                               |   |   | (1,364,637  | ) |
|                                                                                                                                                      |   |   |        |   |
| Total                Liabilities and Net Capital Deficiency                                                                                               |   | $      | 1,777,411   |   |

----

|                                                                                                     |   | Three                Months Ended |       |
|----------------------------------------------------------------------------------------------------------|--------|-----------------------------------|------------|
|                                                                                                     |   | June                30,           |       |
|                                                                                                     |   | 2006                              |       | 2005 |   |
|                                                                                                     |   |                              |       | (As                Restated) |   |
|                                                                                                     |   |                              |       |   |   |
| Net                revenues                                                                              |   | $                                 | --         |   | $ | -- |   |
|                                                                                                     |   |                              |       |   |   |   |   |
| Direct                Costs and Expenses:                                                                |   |                              |       |   |   |   |   |
| General                and administrative                                                                |   |                              | 247,090    |   |   | 372,666 |   |
| Depreciation                and amortization                                                             |   |                              | 95         |   |   | 95 |   |
| Total                Costs and Expenses                                                                  |   |                              | 247,185    |   |   | 372,761 |   |
|                                                                                                     |   |                              |       |   |   |   |   |
| Loss                from operations before other expenses and provisions for income                taxes |   |                              | (247,185   | ) |   | (372,761 | ) |
|                                                                                                     |   |                              |       |   |   |   |   |
| Other                Operating Income (Expense):                                                         |   |                              |       |   |   |   |   |
| Interest                income                                                                           |   |                              | 651        |   |   | 2,386 |   |
| Interest                expense                                                                          |   |                              | (88,134    | ) |   | (247,392 | ) |
| Minority                interest in consolidated loss                                                    |   |                              | 410        |   |   | 8,928 |   |
|                                                                                                     |   |                              |       |   |   |   |   |
| Total                Other Operating Income (Expense)                                                    |   |                              | (87,073    | ) |   | (236,078 | ) |
|                                                                                                     |   |                              |       |   |   |   |   |
| Net                Loss                                                                                  |   | $                                 | (334,258   | ) | $ | (608,839 | ) |
|                                                                                                     |   |                              |       |   |   |   |   |
| Weighted                average common shares outstanding, basic and diluted                             |   |                              | 67,489,227 |   |   | 65,340,846 |   |
|                                                                                                     |   |                              |       |   |   |   |   |
| Loss                per common share, basic and diluted                                                  |   | $                                 | (.01       | ) | $ | (.01 | ) |

----

|                                                                                                     |   | Nine                months Ended |       | April                1, 1998 (Inception) |   |
|----------------------------------------------------------------------------------------------------------|--------|----------------------------------|------------|------------------------------------------|--------|
|                                                                                                     |   | June                30,          |       | To                June 30,               |   |
|                                                                                                     |   | 2006                             |       | 2005                                     |   | 2006 |   |
|                                                                                                     |   |                             |       | (As                Restated)             |   |   |   |
|                                                                                                     |   |                             |       |                                     |   |   |   |
| Net                revenues                                                                              |   | $                                | --         |                                     | $      | -- |   | $ | -- |   |
|                                                                                                     |   |                             |       |                                     |   |   |   |   |   |   |
| Direct                Costs and Expenses:                                                                |   |                             |       |                                     |   |   |   |   |   |   |
| Production                costs                                                                          |   |                             | --         |                                     |   | -- |   |   | 2,474,445 |   |
| General                and administrative                                                                |   |                             | 1,014,360  |                                     |   | 1,029,629 |   |   | 13,827,596 |   |
| Depreciation                and amortization                                                             |   |                             | 287        |                                     |   | 287 |   |   | 133,689 |   |
| Total                Costs and Expenses                                                                  |   |                             | 1,014,647  |                                     |   | 1,029,916 |   |   | 16,435,730 |   |
|                                                                                                     |   |                             |       |                                     |   |   |   |   |   |   |
| Loss                from operations before other expenses and provisions for income                taxes |   |                             | (1,014,647 | )                                        |   | (1,029,916 | ) |   | (16,435,730 | ) |
|                                                                                                     |   |                             |       |                                     |   |   |   |   |   |   |
| Other                Operating Income (Expense):                                                         |   |                             |       |                                     |   |   |   |   |   |   |
| Interest                income                                                                           |   |                             | 2,245      |                                     |   | 7,534 |   |   | 14,576 |   |
| Settlement                income                                                                         |   |                             | --         |                                     |   | -- |   |   | 1,345,490 |   |
| Interest                expense                                                                          |   |                             | (345,099   | )                                        |   | (812,968 | ) |   | (1,813,014 | ) |
| Equity                in earnings of unconsolidated subsidiary                                           |   |                             | --         |                                     |   | -- |   |   | 96,774 |   |
| Loss                from termination of interest in unconsolidated subsidiary                            |   |                             | --         |                                     |   | -- |   |   | (1,985,901 | ) |
| Minority                interest in consolidated loss                                                    |   |                             | 3,315      |                                     |   | 28,857 |   |   | (45,622 | ) |
| Loss                on disposal of assets                                                                |   |                             | --         |                                     |   | -- |   |   | 34,039 |   |
|                                                                                                     |   |                             |       |                                     |   |   |   |   |   |   |
| Total                Other Operating Income (Expense)                                                    |   |                             | (339,539   | )                                        |   | (776,577 | ) |   | (2,353,658 | ) |
|                                                                                                     |   |                             |       |                                     |   |   |   |   |   |   |
| Net                Loss                                                                                  |   | $                                | (1,354,186 | )                                        | $      | (1,806,493 | ) | $ | (18,789,388 | ) |
|                                                                                                     |   |                             |       |                                     |   |   |   |   |   |   |
| Weighted                average common shares outstanding, basic and diluted                             |   |                             | 67,093,257 |                                     |   | 64,531,017 |   |   |   |   |
|                                                                                                     |   |                             |       |                                     |   |   |   |   |   |   |
| Loss                per common share, basic and diluted                                                  |   | $                                | (.02       | )                                        | $      | (.03 | ) |   |   |   |

----

|                                                                                                                           |   | Nine                months Ended |       | April                1, 1998 (Inception) |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|------------|------------------------------------------|--------|
|                                                                                                                           |   | June                30,          |       | To                June 30,               |   |
|                                                                                                                           |   | 2006                             |       | 2005                                     |   | 2006 |   |
|                                                                                                                           |   |                             |       | (As                Restated)             |   |   |   |
|                                                                                                                           |   |                             |       |                                     |   |   |   |
| Cash                flows from operating activities:                                                                           |   |                             |       |                                     |   |   |   |   |   |   |
| Net                Loss                                                                                                        |   | $                                | (1,345,186 | )                                        | $      | (1,806,493 | ) | $ | (18,789,388 | ) |
| Adjustments                to reconcile net loss to net cash and cash equivalents used in operating                activities: |   |                             |       |                                     |   |   |   |   |   |   |
| Depreciation                and amortization                                                                                   |   |                             | 287        |                                     |   | 287 |   |   | 133,689 |   |
| Amortization                of prepaid consulting fees paid with equity                                                        |   |                             | 109,974    |                                     |   | 135,897 |   |   | 333,384 |   |
| Amortization                of deferred compensation paid with equity                                                          |   |                             | 49,583     |                                     |   | 52,500 |   |   | 119,583 |   |
| Amortization                of loan discount                                                                                   |   |                             | 64,722     |                                     |   | 694,006 |   |   | 1,120,918 |   |
| Amortization                of prepaid financing costs                                                                         |   |                             | 166,180    |                                     |   | 37,820 |   |   | 272,000 |   |
| Loan                fees                                                                                                       |   |                             | --         |                                     |   | -- |   |   | 25,000 |   |
| Loss                on abandonment of equipment                                                                                |   |                             | --         |                                     |   | -- |   |   | 45,622 |   |
| Stock                based compensation and expenses paid with equity                                                          |   |                             | 4,408      |                                     |   | 65,500 |   |   | 8,637,530 |   |
| Minority                interest in loss of consolidated subsidiary                                                            |   |                             | (3,315     | )                                        |   | (28,857 | )  |   | (34,038 | ) |
| Equity                in earnings of unconsolidated subsidiary                                                                 |   |                             | --         |                                     |   | -- |   |   | (96,774 | ) |
| Settlement                income relating to stock                                                                             |   |                             | --         |                                     |   | -- |   |   | (1,504,150 | ) |
| Loss                on termination of interest in unconsolidated subsidiary                                                    |   |                             | --         |                                     |   | -- |   |   | 1,985,909 |   |
| Changes                in assets and liabilities:                                                                              |   |                             |       |                                     |   |   |   |   |   |   |
| Deferred                charges and other current assets                                                                       |   |                             | (12,818    | )                                        |   | (5,176 | ) |   | 477,334 |   |
| Production                costs                                                                                                |   |                             | (129,960   | )                                        |   | (1,529,315 | ) |   | (1,729,733 | ) |
| Accounts                payable and accrued expenses                                                                           |   |                             | 197,335    |                                     |   | 246,039 |   |   | 943,433 |   |
| Other                liabilities                                                                                               |   |                             | 520,233    |                                     |   | 62,142 |   |   | 1,392,781 |   |
| Net                cash and cash equivalents used in operating activities                                                      |   |                             | (387,557   | )                                        |   | (2,075,650 | ) |   | (6,666,900 | ) |
|                                                                                                                           |   |                             |       |                                     |   |   |   |   |   |   |
| Cash                flows from investing activities:                                                                           |   |                             |       |                                     |   |   |   |   |   |   |
| Investment                in intangible assets                                                                                 |   |                             | --         |                                     |   | -- |   |   | (90,481 | ) |
| Investment                in property and equipment                                                                            |   |                             | --         |                                     |   | -- |   |   | (68,528 | ) |
| Advance                on production rights                                                                                    |   |                             | --         |                                     |   | -- |   |   | (337,500 | ) |
| Investment                in subsidiary paid through warrants                                                                  |   |                             | --         |                                     |   | -- |   |   | (1,850,000 | ) |
| Net                cash and cash equivalents used in investing activities                                                      |   |                             | --         |                                     |   | -- |   |   | (2,346,509 | ) |
|                                                                                                                           |   |                             |       |                                     |   |   |   |   |   |   |
| Cash                flows from financing activities:                                                                           |   |                             |       |                                     |   |   |   |   |   |   |
| Net                proceeds from issuance of common stock                                                                      |   |                             | 55,000     |                                     |   | -- |   |   | 4,853,911 |   |
| Proceeds                from investment in subsidiary                                                                          |   |                             | --         |                                     |   | 2,278,908 |   |   | 2,278,908 |   |
| Proceeds                from loans                                                                                             |   |                             | 200,060    |                                     |   | 50,000 |   |   | 1,860,273 |   |
| Advances                from officers and stockholders                                                                         |   |                             | --         |                                     |   | -- |   |   | 400,954 |   |
| Repayment                of loans                                                                                              |   |                             | --         |                                     |   | -- |   |   | (379,675 | ) |
| Net                cash and cash equivalents provided by financing activities                                                  |   |                             | 255,060    |                                     |   | 2,328,908 |   |   | 9,014,371 |   |
|                                                                                                                           |   |                             |       |                                     |   |   |   |   |   |   |
| Net                increase (decrease) in cash and cash equivalents                                                            |   |                             | (132,497   | )                                        |   | 253,258 |   |   | 962 |   |
|                                                                                                                           |   |                             |       |                                     |   |   |   |   |   |   |
| Cash                and cash equivalents, beginning of period                                                                  |   |                             | 133,459    |                                     |   | 142,731 |   |   | -- |   |
|                                                                                                                           |   |                             |       |                                     |   |   |   |   |   |   |
| Cash                and cash equivalents, end of period                                                                        |   | $                                | 962        |                                     | $      | 395,989 |   | $ | 962 |   |

----

| Interest                paid     |   | $      | --     |   | $      | --     |   | $      | 94,004 |   |
|----------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                             |   |   |   |   |   |   |   |   |   |   |
| Income                taxes paid |   | $      | --     |   | $      | --     |   | $      | --     |   |

| SCHEDULE                OF NONCASH INVESTING AND FINANCING ACTIVITIES:                                                                                  |   |   |    |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|
|                                                                                                                                                    |   |   |    |   |
| During                the nine months ended June 30, 2006, the Company had the following                non-cash investing and financing activity:      |
|                                                                                                                                                    |   |   |    |   |
| Debt                discount relating to issuance of warrants and beneficial conversion                of                convertible debentures payable |   | $      | 47,779  |   |
|                                                                                                                                                    |   |   |    |   |
| Vesting                of common stock options in exchange for services                                                                                 |   | $      | 4,408   |   |
|                                                                                                                                                    |   |   |    |   |
| During                the nine months ended June 30, 2005, the Company had the following                non-cash investing and financing activities:    |
|                                                                                                                                                    |   |   |    |   |
| Issuance                of 590,000 shares of common stock to settle bridge notes and accrued                interest                                    |   | $      | 71,775  |   |
|                                                                                                                                                    |   |   |    |   |
| Issuance                of 250,000 shares of common stock and 2,000,000 warrants in exchange                for                prepaid consulting       |   | $      | 198,305 |   |
|                                                                                                                                                    |   |   |    |   |
| Debt                discount relating to issuance of warrants and beneficial conversion                of                convertible debentures payable |   | $      | 46,040  |   |
|                                                                                                                                                    |   |   |    |   |
| Issuance                of common stock in exchange for stock subscription                receivable                                                    |   | $      | 197,633 |   |
|                                                                                                                                                    |   |   |    |   |
| Issuance                of warrant in connection with investment in Z-Force                                                                             |   | $      | 475,284 |   |
|                                                                                                                                                    |   |   |    |   |
| Issuance                of 733,125 shares of common stock to settle bridge notes and accrued                interest                                    |   | $      | 90,000  |   |
|                                                                                                                                                    |   |   |    |   |
| Prepaid                financing costs related to issuance of 2,666,6667 warrants                                                                       |   | $      | 272,000 |   |
|                                                                                                                                                    |   |   |    |   |
| Issuance                of 100,000 shares of common stock and 400,000 warrants in exchange                for                prepaid consulting         |   | $      | 63,486  |   |
|                                                                                                                                                    |   |   |    |   |
| Issuance                of 300,000 warrants in exchange for prepaid consulting                                                                          |   | $      | 36,485  |   |

----

**NOTE      1 BASIS OF PRESENTATION:**

**NOTE      2 GOING CONCERN**

----

**NOTE      2 GOING CONCERN (CONTINUED)**

**NOTE      3 RESTATEMENT OF PRIOR YEAR FINANCIAL STATEMENTS**

|                               |   | Three                Months Ended |        | Nine                months Ended |   |
|------------------------------------|--------|-----------------------------------|-------------|----------------------------------|--------|
|                               |   | June                30, 2005      |        | June                30, 2005     |   |
|                               |   | As                Reported        |        | As                Restated       |   | As                Reported |   | As                Restated |   |
|                               |   |                              |        |                             |   |   |   |   |   |
| Net                Revenues        |   | $                                 | --          |                             | $      | -- |   | $ | 49,637 |   | $ | -- |   |
| Accumulated                Deficit |   | $                                 | (17,249,457 | )                                | $      | (16,878,924 | ) | $ | (17,249,457 | ) | $ | (16,878,924 | ) |
| Net                Loss            |   | $                                 | (421,781    | )                                | $      | (608,839 | ) | $ | (1,182,636 | ) | $ | (1,806,493 | ) |
| Loss                Per Share      |   | $                                 | (.01        | )                                | $      | (.01 | ) | $ | (.01 | ) | $ | (.03 | ) |
| Total                Assets        |   | $                                 | 3,941,188   |                             | $      | 2,188,223 |   | $ | 3,941,188 |   | $ | 2,188,223 |   |

**NOTE      4 INVESTMENT IN Z-FORCE ENTERPRISES, LLC**

----

**NOTE      5 LOSS PER COMMON SHARE, BASIC AND DILUTED**

|                                          |   | June                30, |       | June                30, |   |
|-----------------------------------------------|--------|-------------------------|------------|-------------------------|--------|
|                                          |   | 2006                    |       | 2005                    |   |
|                                          |   |                    |       |                    |   |
| Stock                Options                  |   |                    | 700,000    |                    |   | 600,000 |   |
| Stock                Warrants                 |   |                    | 16,725,075 |                    |   | 15,033,075 |   |
| Convertible                debt, if converted |   |                    | 19,338,834 |                    |   | 13,125,000 |   |
|                                          |   |                    |       |                    |   |   |   |
| Total                                         |   |                    | 36,763,909 |                    |   | 28,758,075 |   |

**NOTE      6 REVENUE RECOGNITION**

|   | · | Persuasive                evidence of sale or licensing arrangement with customer                exists; |
|--------|--------|----------------------------------------------------------------------------------------------------------|

|   | · | the                television programming is complete and, in accordance with the terms                of                the arrangement, has been delivered or is available for immediate                and                unconditional delivery; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                license period of the arrangement has begun and customer can begin                its                exploitation, exhibition or sale; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                arrangement fee is fixed or determinable;                and |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | the                collection of arrangement fee is reasonably                assured. |
|--------|--------|----------------------------------------------------------------------------------------|

----

**NOTE      7 PRODUCTION COSTS**

**NOTE      8 COMMON STOCK WARRANTS**

|                                          |   | Number                Of Warrants |       | Weighted                Average Exercise Price |   |
|-----------------------------------------------|--------|-----------------------------------|------------|------------------------------------------------|--------|
|                                          |   |                              |       |                                           |   |
| Outstanding                at October 1, 2004 |   |                              | 10,939,189 |                                           | $      | .22 |   |
| Granted                                       |   |                              | 7,744,127  |                                           |   | .14 |   |
| Exercised                                     |   |                              | --         |                                           |   | -- |   |
| Canceled                or Expired            |   |                              | (3,650,241 | )                                              |   | 1.50 |   |
|                                          |   |                              |       |                                           |   |   |   |
| Outstanding                at June 30, 2005   |   |                              | 15,033,075 |                                           | $      | .18 |   |
|                                          |   |                              |       |                                           |   |   |   |
| Outstanding                at October 1, 2005 |   |                              | 15,713,075 |                                           | $      | .18 |   |
| Granted                                       |   |                              | 512,000    |                                           |   | .14 |   |
| Exercised                                     |   |                              | --         |                                           |   | -- |   |
| Canceled                or Expired            |   |                              | --         |                                           |   | -- |   |
|                                          |   |                              |       |                                           |   |   |   |
| Outstanding                at June 30, 2006   |   |                              | 16,225,075 |                                           | $      | .18 |   |

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**NOTE      9 STOCK OPTIONS**

|                               |   | Nine                months Ended |       | Three                Months Ended |   |
|------------------------------------|--------|----------------------------------|------------|-----------------------------------|--------|
|                               |   | June                30,          |       | June                30,           |   | June                30, |   | June                30, |   |
|                               |   | 2006                             |       | 2005                              |   | 2006 |   | 2005 |   |
| Net                loss:           |   |                             |       |                              |   |   |   |   |   |
| As                reported         |   | $                                | (1,345,186 | )                                 | $      | (1,806,493 | ) | $ | (334,258 | ) | $ | (608,839 | ) |
| Proforma                           |   | $                                | (1,345,186 | )                                 | $      | (1,815,311 | ) | $ | (334,258 | ) | $ | (617,657 | ) |
|                               |   |                             |       |                              |   |   |   |   |   |   |   |   |   |
| Earnings                Per Share: |   |                             |       |                              |   |   |   |   |   |   |   |   |   |
| As                reported         |   | $                                | (.02       | )                                 | $      | (.03 | ) | $ | (.01 | ) | $ | (.01 | ) |
| Proforma                           |   | $                                | (.02       | )                                 | $      | (.03 | ) | $ | (.01 | ) | $ | (.01 | ) |

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**NOTE      10 DEBENTURES TO RELATED PARTIES**

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***ITEM      2. MANAGEMENT’S DISCUSSION AND ANALYSIS***

***OVERVIEW***

***FORWARD-LOOKING      STATEMENTS***

|   | A. | Earthworks                lacks the capital necessary to expand its                operations. |
|--------|----|------------------------------------------------------------------------------------------------|

|   | B. | Earthworks                has limited marketing relationships to date that assure it of                revenue. |
|--------|----|-----------------------------------------------------------------------------------------------------------------|

|   | C. | Earthworks                is dependent on the efforts of the current management team to develop                revenue-generating business relationships for the Company. If the                team is                unsuccessful in its efforts, the business could                fail. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | D. | The                entertainment industry is highly competitive, and it is dominated                by a                small number of multinational corporations. We will be able to compete                successfully only if we establish our brand in a niche of the                market. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***RESULTS      OF OPERATIONS***

***THREE      MONTHS ENDED JUNE 30, 2006 VS. THREE MONTHS ENDED JUNE 30,      2005***

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***NINE      MONTHS ENDED JUNE 30, 2006 VS. NINE MONTHS ENDED JUNE 30,      2005***

***PLAN      OF OPERATIONS***

***LIQUIDITY      AND CAPITAL RESOURCES***

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***OFF-BALANCE      SHEET ARRANGEMENTS***

***ITEM      3. CONTROLS AND PROCEDURES***

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***PART      II OTHER INFORMATION***

***ITEM      2. UNREGISTERED SALES OF EQUITY SECURITIES***

***ITEM      6. EXHIBITS***

| REFERENCE | DESCRIPTION |
|-----------|-------------|

|   | 31a | Rule                13a-14(a) Certification - Chief Executive                Officer |
|--------|-----|--------------------------------------------------------------------------------------|

|   | 31b | Rule                13a-14(a) Certification - Chief Financial                Officer |
|--------|-----|--------------------------------------------------------------------------------------|

|   | 32a | Rule                13a-14(b) Certification - Chief Executive                Officer |
|--------|-----|--------------------------------------------------------------------------------------|

|   | 32b | Rule                13a-14(b) Certification - Chief Financial                Officer |
|--------|-----|--------------------------------------------------------------------------------------|

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**SIGNATURES**

|                                  | Earthworks                Entertainment, Inc.                                                                                                                                                                                                                                                                                   |
|---------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                  |                                                                                                                                                                                                                                                                                                                            |
| Dated:                August 14, 2006 |                                                                 /s/ Peter Keefe |
|                                  | Peter                Keefe, Chief Executive Officer                                                                                                                                                                                                                                                                             |
|                                  |                                                                                                                                                                                                                                                                                                                            |
| Dated:                August 14, 2006 |                                                    /s/ William H. Campbell                                                                       |
|                                  | William                Campbell, Chief Financial Officer                                                                                                                                                                                                                                                                        |

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