**UNITED
                  STATES**
 **SECURITIES
                  AND EXCHANGE COMMISSION**
 **Washington,
                  D.C. 20549**
 
 **FORM
                  10-QA**
 AMENDMENT
                      NO. 3
 **[
                  X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                  SECURITIES**
 **EXCHANGE ACT OF 1934**
 
 For
                  the
                  quarterly period ended November 30, 2006
 
 **[   
                  ] TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE
                  EXCHANGE** **ACT**
 
 
 **Imperiali
                  Inc.**
 **-------------------------------------------------------------------**
 (Exact
                  Name Registrant as Specified in Its Charter)
 
 **Florida**
                        
                        **65-0574887****-------------------------------------------------**
                        
                        **-------------------------------------------------**(State
                            or Other Jurisdiction
                            ofIncorporation or Organization)
                        
                        (I.R.S. Employer Identification
                            No.)
   **777
                  South Flagler Drive, Suite 800W**
 **West
                  Palm Beach, Florida 33401**
 **-------------------------------------------------------**
 (Address
                  of Principal Executive Offices)
 
 **(561)805-9494**
 **---------------------------------------------------------------------**
 (Issuer’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 such shorter periods as the registrant
                  was required to
                  file such reports), and (2) has been subject to such filing requirements
                  for the
                  past 90 days. **Yes
                  [** **X]
                  No [   ]**
 
 Indicate
                  by check mark whether the registrant is a large accelerated filer,
                  an
                  accelerated filer, of a non-accelerated filer. See definition of
“accelerated
                  filer” and “large accelerated filer” in Rule 12b-2 of the exchange
                  Act.
 **[** **]** Large **** Accelerated
                  Filer **[** **]** Accelerated
                  Filer **[X** **]** Non-Accelerated
                  Filer
 
 Indicate
                  by check mark whether the registrant is a shell company (as defined
                  in Rule 12b-2 of the Exchange Act). **Yes
                  [** **] No [X]**
 
 On
                  November 7, 2006 there were 25,757,486 shares outstanding of the
                  registrant’s
                  common stock, $.001 par value.
 
 
 1
 **PART
                  I.**
 
 **Item
                  1. Financial Statements and Supplementary Data.**
  **IMPERIALI,
                  INC.**
 **Balance
                  Sheets**
 November
                  30, 2006 and August 31, 2006
 
 **ASSETS**
 As
                            of November 30,
                        
                        As
                            of August 31,2006
                        
                        2006Portfolio
                            At value:Private
                            FinanceCompanies
                            more than 25% owned (cost: 2006 -$3,500,000)
                        
                        $
                        3,500,000Current
                            assets:Cash
                        
                        $
                        431,664
                        
                        $
                        609,541Total
                            current assets
                        
                        $
                        431,664
                        
                        $
                        609,541Total
                            assets
                        
                        $
                        3,931,664
                        
                        $
                        609,541LIABILITIES
                            AND STOCKHOLDERS’ EQUITYCurrent
                            liabilities:Due
                            to officer
                        
                        $
                        -
                        
                        $
                        -Total
                            current liabilities
                        
                        $
                        -
                        
                        
                        -Stockholders’
                            equity:Common
                            stock; $.001 par value; authorized-500,000,000
                            shares; 25,757,486 and 20,358,486shares
                            issued and outstanding at November 30,2006
                            and August 31, 2006 respectively
                        
                        
                        25,757
                        
                        
                        20,358Additional
                            paid in capital
                        
                        
                        15,520,242
                        
                        
                        11,760,605Accumulated
                            deficit
                        
                        
                        (11,171,422
                        )
                        
                        (11,171,422
                        )Undistributed
                            Earnings
                        
                        
                        (442,913
                        )Total
                            shareholders’ equity
                        
                        
                        3,931,664
                        
                        
                        609,541Total
                            liabilities and shareholders’ equity
                        
                        $
                        3,931,664
                        
                        $
                        609,541Net
                            Asset Value per Common Share
                        
                        $
                        .15
                        
                        $
                        .03
 
 See
                      notes
                      to financial statements
 
 2
 **IMPERIALI,
                  INC.**
 **Statements
                  of Operations**
 For
                            the Three Months Ended November 30, 2006
                        
                        For
                            the Three Months Ended November 30, 2005Interest
                            and Related Portfolio Income:Interest
                            and dividends
                        
                        $
                        4,806
                        
                        $
                        0Expenses:Employees
                            and Consultants
                        
                        
                        377,300
                        
                        
                        0General
                            and administrative
                        
                        
                        70,419
                        
                        
                        0Total
                            Expenses
                        
                        $
                        447,719
                        
                        
                        0Net
                            investment income before income taxes
                        
                        $
                        (442,913
                        )
                        $
                        0Income
                            tax expense
                        
                        
                        0
                        
                        
                        0Net
                            investment income
                        
                        $
                        (442,913
                        )
                        $
                        0Net
                            Realized Gains (losses)
                        
                        
                        -
                        
                        
                        -Net
                            Change in unrealized appreciation
                        
                        
                        -
                        
                        
                        -Net
                            increase in net assets resulting from operations (loss)
                        
                        $
                        (442,913
                        )
                        $
                        0Earnings
                            (loss) per common share - basic
                        
                        $
                        (.017
                        )
                        $
                        0Earnings
                            (loss) per common share - diluted
                        
                        $
                        (.017
                        )
                        $
                        0Weighted
                            average common shares outstand.- basic
                        
                        
                        25,557,986
                        
                        
                        18,003,586Weighted
                            average common shares outstand.- diluted
                        
                        
                        25,557,986
                        
                        
                        18,003,586
 See
                      notes
                      to financial statements
  3
 **IMPERIALI,
                  INC.**
 **Statements
                  of Change in Net Assets**
 For
                            the Three Months Ended November 30, 2006
                        
                        For
                            the Three Months Ended November 30, 2005Operations:Net
                            Investment Income
                        
                        $
                        (442,913
                        )
                        $
                        0Net
                            Realized Gains (losses)
                        
                        
                        -
                        
                        
                        -Net
                            Change in unrealized appreciation
                        
                        
                        -
                        
                        
                        -Shareholder
                            Distributions:Common
                            Stock Dividends
                        
                        
                        -
                        
                        
                        -Capital
                            share transactions:Sales
                            of Common Stock
                        
                        $
                        265,036
                        
                        $
                        15,200Common
                            stock issued for investments
                        
                        
                        3,500,000Total
                            Increase in Net Assets
                        
                        $
                        3,322,123
                        
                        $
                        15,200Net
                            assets at beginning of period
                        
                        $
                        609,541
                        
                        $
                        0Net
                            assets at end of period
                        
                        $
                        3,931,664
                        
                        $
                        15,200Net
                            asset value per common share
                        
                        $
                        0.15
                        
                        $
                        0.00Common
                            shares outstanding at the end of period
                        
                        
                        25,757,486
                        
                        
                        18,003,486
   
 **IMPERIALI,
                    INC.**
 **Statements
                    of Investments**
 Private
                              Finance
                            Portfolio
                              Company
                          Investment
                          Cost
                          ValueI1Search
                          Common
                              Stock
                          $2,000,000
                          $2,000,000I1Connect
                          Common
                              Stock
                          $1,500,000
                          $1,500,000
   See
                      notes
                      to financial statements
 4
  **IMPERIALI,
                  INC.**
 **Statements
                  of Cash Flows**
 
 For
                            the Three
                          Months
                            Ended November 30, 2006
                        
                        For
                            the Three Months Ended November 30, 2005Cash
                            flows from operating activities:Net
                            income (loss)
                        
                        $
                        (442,913
                        )
                        $
                        0Adjustments
                            to reconcile net income (loss) to
                          net
                            cash provided by operating activities:Increase
                            (decrease) in:Due
                            to officerNet
                            cash used by operating activities
                        
                        
                        (442,913
                        )
                        $
                        0Cash
                            flows from investing activities:Net
                            cash used in investing activities
                        
                        
                        -
                        
                        
                        -Cash
                            flows from financing activities:Proceeds
                            from common stock
                        
                        
                        265,036
                        
                        
                        15,200Net
                            cash provided by financing activities
                        
                        
                        265,036
                        
                        
                        15,200Net
                            increase in cash
                        
                        
                        (177,877
                        )
                        
                        15,200Cash
                            at beginning of year
                        
                        
                        609,541
                        
                        
                        0Cash
                            at end of quarter
                        
                        $
                        431,664
                        
                        $
                        15,200
 
 See
                      notes
                      to financial statements
 5
 **Imperiali
                      Inc.**
 **Notes
                      To Financial Statements (Unaudited)**
  Basis
                  of
                  presentation:
 
 The
                  accompanying unaudited financial statements have been prepared
                  in accordance
                  with the accounting principles generally accepted in the United
                  States of
                  America for interim financial information and with the instructions
                  to Form
                  10-Q. Accordingly, they do not include all of the information and
                  footnotes
                  required by accounting principles generally accepted in the United
                  States of
                  America for annual financial statements. In the opinion of management,
                  all
                  adjustments, consisting of normal recurring accruals considered
                  necessary for a
                  fair presentation, have been included. Operating results for the
                  three months
                  ended November 30, 2006 are not necessarily indicative of the results
                  that may
                  be expected for the year ending August 31, 2007.
  Note
                  1.
                  Organiztion:  General
                  Development of the Business
  We
                  were
                  incorporated in Florida on September 27, 1994 by Daniel J. Imperato
                  under the
                  name Automated Energy Security Inc.
  From
                  September 1994 through March 1999, the Company provided energy
                  management
                  services and intelligent security for residential dwellings, commercial
                  buildings and government facilities. In 1994, the Company purchased
                  all of the
                  patented technology, software and patents pending on the Wide Area
                  Energy
                  Savings System known as “TESS” (Total Energy Security System) from Associated
                  Data Consultants, Inc. In 1998, after Bell Atlantic (one of our
                  strategic
                  partners) withdrew from the development of TESS and engaged in
                  litigation with
                  Associated Data, the Company abandoned our business operations
                  related to
                  TESS.
  In
                  March
                  1999, we changed our name to New Millennium Development Group,
                  Inc. and our
                  business operations to media and telecommunications, focusing on
                  connectivity
                  solutions, storage, fiber optic cable systems, security and the
                  international
                  long distance market. Our plan was to spearhead a sub sea fiber
                  optic cable
                  system connecting 70 countries around the globe. In furtherance
                  of the plan the
                  Company entered into Memoranda of Understanding with 30 countries,
                  completed
                  landing party site and ocean surveys, arranged long-term financing
                  and selected
                  vendors and subcontractors for fiber optic cable and equipment.
                  During the
                  process, however, the price of cable systems skyrocketed, forcing
                  us to
                  reconsider our business plans and projections. The Company retained
                  the services
                  of an independent consultant who concluded that not only would
                  increasing cable
                  prices decrease long-term gains, the rapid development of the internet
                  and
                  Intellectual Property systems would render obsolete the market
                  for fiber optic
                  cable. Accordingly, in mid 2001 we shifted our focus away from
                  fiber optic cable
                  systems and concentrated on Voice over Internet Protocol (VOIP)
                  and related
                  services including high-speed wireless standard ISP and broadband
                  services;
                  international calling cards; video conferencing and related IP
                  products.
  Failed
                  corporate history, management infighting, the tragedy of September
                  11, 2001 and
                  the general economic downturn especially related to technology,
                  led us to cease
                  business operations in mid-2002 until mid-2005. However, during
                  this time, Mr.
                  Imperato, the Company’s Chairman, at the time, and majority shareholder, worked
                  to maintain management relationships with previous businesses,
                  associates and
                  professionals for the eventual resurrection of business operations.
  In
                  November 2005, we changed our name to Imperiali, Inc. and commenced
                  operations
                  as an investment company. To date, the activities of our principals
                  have largely
                  been limited to organizational matters and fund raising. We have
                  commenced the
                  private placement of up to 10 million of the Company's common shares
                  in an
                  offering (the "Offering") exempt from the registration requirements
                  of the
                  Securities Act of 1933 ("1933 Act") pursuant to Section 4(2) thereof
                  and
                  Regulation D ("Regulation D") thereunder. At August 31, 2006, the
                  Company’s
                  total assets were $4,104,541 and its net asset value per share
                  (“NAV”) was
                  $0.16. Upon the closing of the Offering, the Company's common shares
                  will be
                  owned by numerous persons that are both "accredited investors,"
                  as that term is
                  defined in Regulation D, and "qualified clients" within the meaning
                  of the
                  Investment Advisers Act of 1940 (the "1940 Act"),
  6
 **Imperiali
                      Inc.**
 **Notes
                      To Financial Statements (Unaudited)**
  Note
                  2.
                  Summary of Significant Accounting Policies:
 
 Background
 Imperiali,
                  Inc. (the Company) was formed in Florida on September 27, 1994
                  as Automated
                  Energy Security, Inc. On March 22, 1999 the Company’s name was changed to New
                  Millennium Development Group, Inc. On August 24, 2004 the Company’s name was
                  changed to Hercules Global Interests, Inc.
 
 The
                  Company has been dormant since 2002 and was started up again in
                  the fall of 2005
                  by Christ Investment Group, LLC, the Company’s business manager and a related
                  company, which is controlled by the Company’s major shareholder Mr. Daniel
                  Imperato. On November 18, 2005 the name of the company was changed
                  to Imperiali,
                  Inc.
 
 Nature
                  of
                  Business
 Imperiali,
                  Inc. is a team of global expansion and business development experts
                  that are
                  strategically positioned around the globe to identify emerging
                  companies that
                  wish to align with strategic partners to grow their businesses,
                  and raise
                  capital for business development and telecommunications
                  infrastructure.
 
 Imperiali
                  revenues will come from sales of products and services rendered
                  to
                  telecommunications companies worldwide. Infrastructure, equipment
                  and consulting
                  services will be supplied on a contract basis.
 
 Inventory
 Inventories
                  are stated at lower of cost or market, with cost generally determined
                  on a
                  first-in, first-out basis. Currently the Company carries no
                  inventory.
 
 Depreciation
 Depreciation
                  is calculated using straight-line methods over the estimated useful
                  life of the
                  equipment, furniture and fixtures.
 
 Income
                  Taxes
 The
                  Company is recognized as a corporation under the Internal Revenue
                  Code. As such,
                  the corporation must report income and expenses properly on their
                  tax return and
                  pay all the related income taxes. As of August 31, 2006 the Company
                  has an
                  approximately $7,200,000 net operating loss carryover which can
                  be used against
                  future income through 2018. No provisions for income taxes are
                  provided in these
                  financial statements since the Company was dormant for the years
                  ending August
                  31, 2006 and 2005.
 
 Concentration
                  of Credit Risk
 The
                  Company maintains cash accounts in commercial banks. Total cash
                  deposits are
                  secured by the Federal Deposit Insurance Corporation
 
 
 7
 **Imperiali
                      Inc.**
 **Notes
                      To Financial Statements (Unaudited)**
  (FDIC)
                  up
                  to a limit of $100,000 per company. At August 31, 2006, the Company’s cash
                  balances exceeded insured amounts by approximately $510,000.
 
 Use
                  of
                  Estimates
 The
                  preparation of financial statements in conformity with accounting
                  principles
                  generally accepted in the United States of America requires management
                  to make
                  estimates and assumptions that affect certain reported amounts
                  and disclosures.
                  Accordingly, actual results could differ from those estimates.
  Cash
                  and
                  Cash Equivalents
 The
                  Organization considers all highly liquid investments with a maturity
                  of three
                  months or less when acquired to be cash equivalents.
  Recently
                  Issued Accounting Pronouncements
  In
                  May
                  2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
                  - an amendment
                  of APB Opinion No. 29." This Statement applies to all voluntary
                  changes in
                  accounting principle.  It also applies to changes required by an accounting
                  pronouncement in the usual instance that the pronouncement does
                  not include
                  specific transition provisions. When a pronouncement includes specific
                  transition provisions, those provisions should be followed.  Opinion 20
                  previously required that most voluntary changes in accounting principle
                  be
                  recognized by including in net income of the period of the change
                  the cumulative
                  effect of changing to the new accounting principle. This Statement
                  requires
                  retrospective application to prior period’s financial statements of changes in
                  accounting principle, unless it is impracticable to determine either
                  the
                  period-specific effects of the cumulative effect of the change.
                  This Statement is effective for accounting changes and
                  corrections of errors made in fiscal years beginning after December
                  15, 2005.
                  The Company does not expect application of SFAS No. 154 to have a material
                  affect on its financial statements.
 
 In
                  February 2006, the FASB issued SFAS No. 155. This Statement amends
                  FASB
                  Statements No. 133, Accounting for Derivative Instruments and Hedging
                  Activities, and No. 140, Accounting for Transfers and Servicing
                  of Financial
                  Assets and Extinguishments of Liabilities. This Statement resolves
                  issues
                  addressed in Statement 133 Implementation Issue No. D1, “Application of
                  Statement 133 to Beneficial Interests in Securitized Financial
                  Assets.” The
                  Company does not expect application of SFAS No. 155 to have a material
                  affect on its financial statements.
 
 In
                  March
                  2006, the FASB issued SFAS No. 156. This Statement amends FASB
                  Statement No.
                  140, Accounting for Transfers and Servicing of
  Financial
                  Assets and Extinguishments of Liabilities, with respect to the
                  accounting for
                  separately recognized servicing assets and servicing liabilities.
                  This Statement is effective as of the beginning of its first fiscal
                  year that begins after September 15, 2006. An entity should apply
                  the
                  requirements for recognition and initial measurement of servicing
                  assets and
                  servicing liabilities prospectively to all transactions after the
                  effective date
                  of this Statement. The Company does not expect application of SFAS No. 156
                  to have a material affect on its financial statements.
 
 In
                  September 2006, the FASB issued SFAS No. 157, Fair Value Measurements.
                  This
                  Statement is effective as of the beginning of its first fiscal
                  year that begins
                  after November 15, 2007. This Statement defines fair value, establishes
                  a
                  framework for measuring fair value in generally accepted accounting
                  principles
                  (GAAP), and expands disclosures about fair value measurements.
                  This Statement
                  applies
 under
                  other accounting pronouncements that require or permit fair value
                  measurements,
                  the Board having previously concluded in those accounting pronouncements
                  that
                  fair value is the relevant measurement attribute. Accordingly,
                  this Statement
                  does not require any new fair value measurements. However, for
                  some entities,
                  the application of this Statement will change current practice.
 
 8
 **Imperiali
                      Inc.**
 **Notes
                      To Financial Statements (Unaudited)**
  The
                  Company does not expect application of SFAS No. 157 to have a material
                  affect on its financial statements.
 
 In
                  September 2006, the FASB issued SFAS No. 158 Employers’ Accounting for Defined
                  Benefit Pension and Other Postretirement Plans. This Statement
                  amends FASB
                  Statements No. 87, 88, 106, and 132(R). This Statement is effective as
                  of the beginning of its first fiscal year that begins after December
                  15, 2006,
                  but before June 16, 2007. This Statement improves financial reporting
                  by
                  requiring an employer to recognize the over funded or under funded
                  status of a
                  defined benefit postretirement plan (other than a multiemployer
                  plan) as an
                  asset or liability in its statement of financial position and to
                  recognize
                  changes in that funded status in the year in which the changes
                  occur through
                  comprehensive income of a business entity or changes in unrestricted
                  net assets
                  of a not-for-profit organization. The Company does not expect application
                  of SFAS No. 158 to have a material affect on its financial
                  statements.
 
 3.
                  Investments:
 
 Investments
                  are carried at Fair Market Value.
 
 Valuation
                  Policies
  Valuation
                  of Portfolio Investments
  As
                  a
                  Business Development Company, our business plan calls for us to
                  invest primarily
                  in illiquid securities issued by private companies (“Private Investments”) (we
                  are required to invest at least an aggregate of 70% of our assets
                  Private
                  Investments and in companies listed on the OTCBB). Private Investments
                  are
                  generally subject to restrictions on resale and generally have
                  no established
                  trading market. The Company values our Private Investments at fair
                  value as
                  determined in good faith by our Board of Directors in accordance
                  with our
                  valuation policy. That policy calls for the determination of fair
                  value at “the
                  amount for which an investment could be sold in an orderly disposition
                  over a
                  reasonable period of time between willing parties other than in
                  a forced or
                  liquidation sale.” Our valuation policy may require subjective judgments. Our
                  determination of fair value may possibly differ materially from
                  the value
                  realized on an actual sale. Our valuation policy is intended to
                  provide a
                  consistent basis for establishing the fair value of the portfolio.
                  The Company
                  will record unrealized depreciation on investments when we believe
                  that an asset
                  has been impaired and full collection for the loan or realization
                  of an equity
                  security is doubtful. Conversely, the Company will record unrealized
                  appreciation if we have a clear indication that the underlying
                  portfolio company
                  appreciates and, therefore, our security has appreciated. Under
                  this valuation
                  policy, the Company sets valuations based on policies consistent
                  with Section
                  2(a) of the 1940 Act. The value of investments in public securities
                  is
                  determined using quoted market prices discounted for restrictions
                  on
                  resale.
  Equity
                  Securities
  Equity
                  interests in portfolio companies for which there is no liquid public
                  market are
                  valued based on the enterprise value of the portfolio company,
                  which is
                  determined using accepted accounting factors, including net cash
                  flow from
                  operations of the portfolio company, and other pertinent factors
                  such as recent
                  offers to purchase a portfolio company’s securities or other liquidation events.
                  The determined fair values are generally discounted to account
                  for restrictions
                  on resale and minority control positions.
  9
 **Imperiali
                      Inc.**
 **Notes
                      To Financial Statements (Unaudited)**
  The
                  value
                  of our equity interests in public companies for which market quotations
                  are
                  readily available is based upon the closing public market price
                  for the last day
                  up to and including the balance sheet date. Securities that carry
                  certain
                  restrictions on sale are typically valued at a discount from the
                  public market
                  value of the security.
  Dividend
                  income, if any, is recorded on cumulative preferred equity securities
                  on an
                  accrual basis to the extent that such amounts are expected to be
                  collected and
                  on common equity, securities on the record date for private companies
                  or on the
                  ex-dividend date for publicly traded companies.
  Loans
                  and
                  Debt Securities
  It
                  is our
                  loan policy to only invest in secured and properly collateralized
                  loans.
  For
                  loans
                  and debt securities, to the extent that the Company invests in
                  them, fair value
                  generally approximates cost unless the borrower’s condition or external factors
                  lead to a determination of fair value at a lower amount. When the
                  Company
                  receives nominal cost warrants or free equity securities (“nominal cost
                  equity”), we allocate our cost basis in our investment between the debt
                  securities and the nominal cost equity at the time of origination.
                  At that time,
                  the original issue discount basis of the nominal cost equity is
                  recorded by
                  increasing the cost basis in the equity and decreasing the cost
                  basis in the
                  related debt securities.
  Interest
                  income is recorded on an accrual basis to the extent that such
                  amounts are
                  expected to be collected. For loans and debt securities with contractual
                  payment-in-kind interest, which represents contractual interest
                  accrued and
                  added to the loan balance that generally becomes due at maturity,
                  we will not
                  accrue payment-in-kind interest if the portfolio company valuation
                  indicates
                  that the payment-in-kind interest is not collectible. Loan origination
                  fees,
                  original issue discount, and market discount are capitalized and
                  then amortized
                  into interest income using the effective interest method.
  The
                  weighted average yield on loans and debt securities is computed
                  as the (a)
                  annual stated interest rate earned plus the annual amortization
                  of loan
                  origination fees, original issue discount and market discount earned
                  on accruing
                  loans and debt securities, divided by (b) total loans and debt
                  securities at
                  value. The weighted average yield is computed as of the balance
                  sheet date.
                  Prepayment premiums are recorded on loans when received.
  Portfolio
                  Valuation Process
  Our
                  methodology includes the examination of, among other things, the
                  underlying
                  investment performance, financial condition, and market-changing
                  events that
                  affect valuation. Because of the type of investments that the Company
                  makes and
                  the nature of our business, this valuation process requires an
                  analysis of
                  various factors consistent with the provisions of section (2) of
                  the 1940
                  Act.
  Our
                  process for determining the fair value for a private finance investment
                  is
                  applied consistently across our portfolio. The process is as follows.
  ·
                      First,
                          the Company determines the portfolio company’s enterprise value as if the
                          Company were to sell it in a “current sale.” In our valuation process, the
                          Company uses the AICPA’s definition of “current sale,” which means an
                          “orderly disposition over a reasonable period of time between
                          willing
                          parties other than in a forced or liquidation
                          sale.”  ·
                      The
                          Company then evaluates the amount of our debt and the position
                          of our debt
                          in the portfolio company’s capital structure.  10
 **Imperiali
                          Inc.**
 **Notes
                          To Financial Statements
                          (Unaudited)**
 ·
                      If
                          the enterprise value of the portfolio company is in excess
                          of the amount
                          of our last dollar of investment capital given our priority
                          in the capital
                          structure, the fair value of our investment will be considered
                          to be our
                          cost or perhaps, given the structure of our particular
                          security, greater
                          than cost if we are to share in equity appreciation.  ·
                      If
                          the enterprise value of the portfolio company is less than
                          our last dollar
                          of investment capital in the capital structure, then our
                          investment has
                          declined in value and the Company needs to reduce the fair
                          value of our
                          investment and incur a charge to our earnings by recognizing
                          unrealized
                          depreciation.  Determining
                  the enterprise value of a portfolio company, as if that portfolio
                  company were
                  to be sold in a “current sale,” is a very complex process, where we must analyze
                  the historical and projected financial results of the portfolio
                  company and
                  analyze the public trading market and private merger and acquisition
                  market to
                  determine appropriate purchase price multiples. In addition, a
                  reasonable
                  discount to the value of our securities must also be reflected
                  when the Company
                  may have restrictions such as vesting periods for warrants or other
                  factors. We
                  also take into account the collectibility of non-cash interest
                  to determine if
                  the Company will continue to accrue such interest.
  Specific
                  Considerations
  The
                  valuation of illiquid private securities is inherently subjective,
                  and as a
                  result, the Company intends to exercise good judgment in our valuation
                  process.
                  Specifically, we will exercise care to assure that the Company
                  has considered
                  the position of the portfolio company today and the position of
                  our security
                  today given the data we have available. We will also exercise care
                  to assure
                  that the process is not too mechanical; however, there are some
                  specific
                  considerations to be addressed in our valuation process. The ultimate
                  goal is a
                  reasonable estimate of fair value determined in good faith.
  Typically,
                  in the private equity business, companies are bought and sold based
                  upon
                  multiples of EBITDA, cash flow, revenues and in limited instances
                  book value. In
                  determining a multiple to use for valuation purposes, we will look
                  to private
                  M&A statistics, reported public trading multiples and industry practices.
                  In
                  determining the right multiple, we intend to consider not only
                  the fact that our
                  portfolio company may be private relative to a peer group, but
                  also the size and
                  scope of our portfolio company and its specific strengths and weaknesses.
                  In
                  some cases, when a portfolio company is at EBITDA breakeven or
                  slightly below
                  but has excellent future prospects, we believe the best valuation
                  methodology
                  may be a discounted cash flow analysis based upon future projections.
                  If a
                  portfolio company is distressed, we believe a liquidation analysis
                  may provide
                  the best indication of enterprise value.
  Discounts
                  on common equity securities.
  When
                  determining the value of common equity securities or warrants to
                  purchase such
                  securities, we intend to consider what type of discount to apply
                  to the value of
                  the security if the Company is in a minority position, has restrictions
                  on
                  resale, has specific concerns about the receptivity of the M&A market to a
                  specific portfolio company at a certain time and other factors.
                  Generally, we
                  find that the Company should apply larger discounts when we are
                  new to an
                  investment, and therefore, we have not yet developed an exit strategy.
                  As an
                  investment in the portfolio matures, we intend to consider whether
                  or not the
                  Company should begin to reduce discounts, especially if we are
                  generally aware
                  that either we or a controlling shareholder group has begun to
                  develop an exit
                  strategy.
  When
                  we
                  have begun to develop an exit strategy of the Company is the controlling
                  shareholder, the discount imposed should generally be less than
                  in the case of a
                  minority position. We may still contemplate the need to discount
                  for the current
                  state of the M&A market or restrictions imposed on us due to our
                  relationship with management of the portfolio company or other
                  capital
                  providers.
  11
 **Imperiali
                      Inc.**
 **Notes
                      To Financial Statements (Unaudited)**
  3.
                  Portfolio -
 
 i1search
                  - Search Engine and Internet Portal - (i1search.com)
 
 i1search.com
                  utilizes the vast telecommunications capabilities of the Imperiali
                  Organization
                  to provide a global search engine that is unparalleled in features
                  and content.
                  The search engine will first look to strategically partner with
                  local search
                  engines around the world, to provide i1search users with localized
                  results, and
                  global capability. i1search.com will also be linked to the Imperiali
                  Organization portal, to allow its users easy access to business
                  information, and
                  the power to crawl the web for specialized information.
 
 i1connect
                  - Online Media and Public Relations - (i1connect.com)
 
 i1connect.com
                  allows companies to connect to media in their community, state,
                  country, and
                  around the globe. With global media relations, spanning six continents,
                  and over
                  50 countries, i1connect facilitates ‘going global’ for many companies by
                  establishing international presence through targeted media coverage
                  and public
                  relations in domestic and foreign markets around the globe. In
                  addition,
                  i1connect can help with investor relations and email marketing.
                  Through its
                  diverse email list server, which features personal contacts, consumers,
                  global
                  media, and venture capitalists.
 
 Note
                  4.
                  Debt - As of November 30, 2006 the company has no debt.
 
 Note
                  5:
                  Guaranteed Commitments: The Company leases approximately 688 square
                  feet of
                  space at 777 S Flagler Drive, Suite 800W, West Palm Beach, Florida
                  USA 33401.
                  The office space is used for sales, administrative offices, and
                  customer
                  support.
 
 Note
                  5.
                  Employee Compensation Plans - The Company has no Defined Benefit
                  or Defined
                  Contribution PensionPlans.
 
 Note
                  6.
                  Stock Option Plans - The Company has no Stock Option Plans.
 
 Note
                  7.
                  Financial Highlights -
  12
 
 Three
                            MonthsEnded
                        
                        Year
                            EndedNov.
                            30,
                        
                        Aug.
                            31,2006
                        
                        2006Per
                            share informationNet
                            asset value, beginning of period
                        
                        
                        0.03
                        
                        
                        0.00Net
                            investment income (loss) (1)
                        
                        
                        (0.02
                        )
                        
                        (0.05
                        )Net
                            realized and unrealized gain (loss) (1)Net
                            increase (decrease) in net assetsresulting
                            from operations (1)
                        
                        
                        (0.02
                        )
                        
                        (0.05
                        )Issuance
                            of common stock, warrantsAnd
                            other new equity (1)
                        
                        
                        0.14
                        
                        
                        0.08Net
                            asset (deficit) value, end of period
                        
                        
                        0.15
                        
                        
                        0.03Per
                            share market value, end of period (2)
                        
                        
                        N/A
                        
                        
                        N/ATotal
                            Return Based Upon Net Asset Value
                        
                        
                        -67
                        %
                        
                        NCRatios
                            and Supplemental DataNet
                            assets, end of period
                        
                        
                        2
                        
                        
                        609,541Common
                            shares outstanding at end of period
                        
                        
                        3,931,664
                        
                        
                        20,358,486Diluted
                            weighted average number of sharesoutstanding
                            during the year
                        
                        
                        25,557,986
                        
                        
                        19,177,000Ratio
                            of expenses to average net assets (3)
                        
                        
                        20
                        %
                        
                        334
                        %Ratio
                            of net increase (decrease) in net assets fromoperations
                            to average net assets (3)
                        
                        
                        -20
                        %
                        
                        -331
                        %Average
                            Debt OutstandingAverage
                            Debt per Share
  (1)
                        Calculated
                            based on diluted weighted average number of shares
                            outstandingduring
                            the year.(2)
                        Not
                            applicable - prior to public trading of shares(3)
                        Annualized
                            for interim period
  LAST
                  QUARTER 2006 - During the quarter ended November 30, 2006, we incurred
                  a net
                  loss of $442,912.51
 General
                  and administrative expenses related primarily to rent, salaries,
                  telephone,
                  other office costs and costs associated with being a reporting
                  company.
 13
 **Imperiali
                      Inc.**
 **Notes
                      To Financial Statements (Unaudited)**
 Liquidity
                  and Capital Resources
 
 We
                  had
                  cash on hand of $431,663.87 at November 30, 2006 and had no other
                  assets to meet
                  ongoing expenses or debts that may accumulate. As of such date,
                  we have
                  accumulated a deficit of $11,171,422.28. As of November 30, 2006
                  we had expenses
                  totaling $ 447,718.51.
 
 We
                  have
                  no commitment for any capital expenditure and foresee none. However,
                  we will
                  incur routine fees and expenses incident to our reporting duties
                  as a reporting
                  company, and we will incur expenses in finding and investigating
                  possible
                  acquisitions and other fees and expenses in the event we make an
                  acquisition or
                  attempt but are unable to complete an acquisition. Our cash requirements
                  for the
                  next twelve months are relatively modest, principally operational
                  accounting
                  expenses and other expenses relating to making filings required
                  under the
                  Securities Exchange Act of 1934 (the "Exchange Act"), which should
                  not exceed
                  $2,500,000 in the fiscal year ending August 31, 2007. Any travel,
                  lodging or
                  other expenses which may arise related to finding, investigating
                  and attempting
                  to complete a combination with one or more potential acquisitions
                  could also
                  amount to thousands of dollars.
 
 Note
                  8
                  Hedging Activities: The Company did not engage in Hedging Activity.
  
 Note
                  9
                  Litigation: The Company has no lawsuits pending.
 14
  **ITEM
                  2. MANAGEMENT'S DISCUSSION and ANALYSIS or PLAN of
                  OPERATIONS.**
 
 The
                  following discussion should be read in conjunction with our unaudited
                  financial
                  statements and notes thereto.
 
 **Forward-Looking
                  Statements**
 
 This
                      quarterly report contains forward-looking statements and information
                      relating to
                      us that are based on the beliefs of our management as well
                      as assumptions made
                      by, and information currently available to, our management.
                      When used in this
                      report, the words "anticipate", "believe", "estimate", "expect",
                      "intend",
                      "plan" and similar expressions, as they relate to us or our
                      management, are
                      intended to identify forward-looking statements. These statements
                      reflect
                      management's current view of us concerning future events and
                      are subject to
                      certain risks, uncertainties and assumptions, including among
                      many others: a
                      general economic downturn; a downturn in the securities markets;
                      federal or
                      state laws or regulations having an adverse effect on proposed
                      transactions that
                      we desire to effect; Securities and Exchange Commission regulations
                      which affect
                      trading in the securities of "penny stocks,"; and other risks
                      and uncertainties.
                      Should any of these risks or uncertainties materialize, or
                      should underlying
                      assumptions prove incorrect, actual results may vary materially
                      from those
                      described in this report as anticipated, estimated or expected.
                      All
                      forward-looking statements attributable to us are expressly
                      qualified in their
                      entirety by the forgoing cautionary statement.
 **Overview**
 
 Our
                  investment objective is to generate both current income and capital
                  appreciation
                  to deliver superior, risk adjusted returns to investors through
                  investment in
                  the debt and equity securities of privately and publicly held micro-cap
                  companies (market capitalization below $50 million) that are based
                  in the U.S.
                  and that offer products and services that can be successfully expanded,
                  marketed
                  and sold in commercially viable international markets. Our principals’
experience combines economic and financial analysis with expertise
                  in business
                  strategy and planning, market and demand forecasting, policy analysis,
                  and
                  technology development strategy. They have worked on a variety
                  of matters, such
                  as mergers and acquisitions, new product introductions, strategy
                  and capital
                  investment decisions, the outcomes of which often have significant
                  implications
                  or consequences for the parties involved. We will offer our portfolio
                  companies
                  a wide array of services such as strategy development, performance
                  improvement,
                  corporate portfolio analysis, market demand and new product strategies,
                  evaluation of intellectual property and other assets and competition
                  analysis.
                  Matters such as these often require independent analysis, and as
                  a result,
                  companies (such as our portfolio companies) must outsource this
                  work to outside
                  experts. We expect that our portfolio companies will turn to us
                  because we can
                  provide qualified economic and financial experts to address a wide
                  variety of
                  matters.
 
 **Plan
                  of Operation**
 
 In
                  addition to our internal Company resources, we believe that we
                  will be able to
                  provide such advice and assistance by using our extensive international
                  network
                  of agents and affiliates, located in many countries and regions
                  and spanning
                  more than five continents. This network, which we refer to as Imperiali
                  Inc.’s
                  Global Advisory Team, is able to monitor and in some cases influence
                  events,
                  prudently utilizing the tools and leverage that the portfolio company’s business
                  model affords, endeavoring to mitigate risks and safeguard investments,
                  with the
                  idea of protecting the Company’s shareholders’ interest.
 We
                  have
                  filed an election with the Securities and Exchange Commission to
                  be regulated as
                  a business development company under the 1940 Act and expect that
                  election to
                  become effective after the effective date of this Registration
                  Statement. As a
                  business development company, we intend to focus primarily on micro-cap
                  companies with sales of $25-$50 million and a strong domestic presence,
                  with a
                  key product or service that is globally marketable.  Micro-cap companies
                  (market capitalization below $50 million) are more likely than
                  larger companies
                  to focus on innovative products and services. Due to the high cost
                  of
                  competition on a global scale, these micro-caps are losing market
                  share. They
                  may not have the advertising dollars to compete, may lack access
                  to long-term
                  debt financing for expansion and manufacturing and, more generally,
                  they lack
                  the experience and contacts to access new global markets.
  15
 We
                  view
                  this problem for micro-cap companies to be an opportunity for us
                  to assist them
                  with the competitive edge they require, to expand and to grow top-line
                  revenues.
                  Extending the assistance of Company management personnel by the
                  use of our
                  Global Advisory Team, we can assist our portfolio companies expand
                  globally,
                  identify capital and political resources, adapt to local customs
                  and operating
                  requirements in international markets, access new consumers, new
                  sources of
                  materials and remote manufacturing options, and generally make
                  the best possible
                  business decisions.
 We
                  favor
                  companies that present opportunities for superior performance through
                  internal
                  growth, product or geographic expansion, the completion of complementary
                  add-on
                  acquisitions, or industry consolidations. We would prefer to be
                  a majority
                  investor, without a fixed time horizon for the liquidation of our
                  investments.
                  We may continue to provide capital for add-on acquisitions that
                  help build value
                  after the initial closing.
 Once
                  we
                  have identified a target portfolio company, we will conduct our
                  due diligence,
                  and, as appropriate, determine whether to either (i) invest and
                  advise or (ii)
                  merely advise the portfolio company for a fee. Once we have decided
                  to advise
                  the portfolio company, we can distribute the portfolio company’s business plan
                  or other corporate literature to our agents and affiliates in over
                  70 countries.
                  Based upon the feedback from the various local agents and their
                  local markets,
                  we will determine how to proceed to assist the portfolio company
                  in pursuing and
                  executing viable growth opportunities and strategies in the countries
                  where our
                  business contacts have indicated clear business interest and market
                  viability.
                  Methods of expansion we may recommend to our portfolio companies
                  include, but
                  are not limited to, strategic partnering, joint venture, licensing
                  with royalty
                  agreement, regional distribution networks, regionalized manufacturing,
                  and entry
                  into the public markets.
 In
                  addition to investing in and assisting portfolio companies, we
                  will have
                  opportunities created through our relationship with the Imperiali
                  Organization,
                  which has contractually agreed to serve as the development team
                  for Imperiali
                  Inc. The Imperiali Organization has an ongoing series of projects
                  which have (or
                  may have) application to the global marketplace.  Through an agreement
                  between Imperiali Organization and the Company, we will have the
                  first right of
                  refusal on any and all projects created and developed by the Imperiali
                  Organization.
 In
                  summary, as a business development company Imperiali Inc. looks
                  to globalize and
                  grow viable micro-cap companies by investing in them and/or advising
                  them by
                  utilizing our international teams, residing in many international
                  markets and
                  who have the intellectual, cultural, financial, political and operational
                  capabilities, combined with a global vision, to connect growing
                  companies to the
                  world’s markets.
 This
                  plan
                  of operation has been adopted in order to attempt to create value
                  for our
                  shareholders. For further information on our plan of operation
                  and business, see
                  Form 10 filed January 18, 2007.
  **Results
                  of Operations**
 
 *LAST
                  QUARTER 2006* - During
                  the quarter ended November 30, 2006, we incurred a net loss of $ 442,912.51
 General
                  and administrative expenses related primarily to rent, salaries,
                  telephone,
                  other office costs and costs associated with being a reporting
                  company.
  16
 ***Liquidity
                  and Capital Resources***
 
 We
                  had
                  cash on hand of $431,663.87 at November 30, 2006 and had no other
                  assets to meet
                  ongoing expenses or debts that may accumulate. As of such date,
                  we have
                  accumulated a deficit of $ 11,171,422.28 .
                  As of
                  November 30, 2006 we had expenses totaling $ 447,718.51 .
 
 We
                  have
                  no commitment for any capital expenditure and foresee none. However,
                  we will
                  incur routine fees and expenses incident to our reporting duties
                  as a reporting
                  company, and we will incur expenses in finding and investigating
                  possible
                  acquisitions and other fees and expenses in the event we make an
                  acquisition or
                  attempt but are unable to complete an acquisition. Our cash requirements
                  for the
                  next twelve months are relatively modest, principally operational
                  accounting
                  expenses and other expenses relating to making filings required
                  under the
                  Securities Exchange Act of 1934 (the "Exchange Act"), which should
                  not exceed
                  $2,500,000 in the fiscal year ending August 31, 2007. Any travel,
                  lodging or
                  other expenses which may arise related to finding, investigating
                  and attempting
                  to complete a combination with one or more potential acquisitions
                  could also
                  amount to thousands of dollars.
 
 We
                  will
                  only be able to pay our future debts and meet operating expenses
                  by raising
                  additional funds, acquiring a profitable company or otherwise generating
                  positive cash flow. As a practical matter, we are unlikely to generate
                  positive
                  cash flow by any means other than acquiring a company with such
                  cash flow. We
                  believe that management members or shareholders will loan funds
                  to us as needed
                  for operations prior to completion of an acquisition. Management
                  and the
                  shareholders are not obligated to provide funds to us, however,
                  and it is not
                  certain they will always want or be financially able to do so.
                  Our shareholders
                  and management members who advance money to us to cover operating
                  expenses will
                  expect to be reimbursed, either by us or by the company acquired,
                  prior to or at
                  the time of completing a combination. We have no intention of borrowing
                  money to
                  reimburse or pay salaries to any of our officers, directors or
                  shareholders or
                  their affiliates.
 
 Should
                  existing management or shareholders refuse to advance needed funds,
                  however, we
                  would be forced to turn to outside parties to either loan money
                  to us or buy our
                  securities. There is no assurance whatsoever that we will be able
                  to raise
                  necessary funds from outside sources. Such a lack of funds could
                  result in
                  severe consequences to us, including among others:
 
 ·
                      failure
                          to make timely filings with the SEC as required by the
                          Exchange Act, which
                          also probably would result in suspension of trading or
                          quotation in our
                          stock and could result in fines and penalties to us under
                          the Exchange
                          Act;  ·
                      curtailing
                          or eliminating our ability to locate and perform suitable
                          investigations
                          of potential acquisitions; or  ·
                      inability
                          to complete a desirable acquisition due to lack of funds
                          to pay legal and
                          accounting fees and acquisition-related expenses.  We
                  hope
                  to require potential candidate companies to deposit funds with
                  us that we can
                  use to defray professional fees and travel, lodging and other due
                  diligence
                  expenses incurred by our management related to finding and investigating
                  a
                  candidate company and negotiating and consummating a business combination.
                  There
                  is no assurance that any potential candidate will agree to make
                  such a
                  deposit.
 
 *Critical
                  Accounting Policies*
 
 Financial
                  Reporting Release No. 60 of the SEC encourages all companies to
                  include a
                  discussion of critical accounting policies or methods used in the
                  preparation of
                  the financial statements. There are no current business operations
                  or revenue
                  generating activities that give rise to significant assumptions
                  or estimates.
                  Our most critical accounting policies relate to the accounting
                  and disclosure of
                  related party transactions. Our financial statements filed as part
                  of this
                  report include a summary of the significant accounting policies
                  and methods used
                  in the preparation of our financial statements.
 
 17
 **Risk
                  Factors that May Affect Future Operating Results**
 
 You
                  should carefully consider the risks described below before making
                  an investment
                  decision. The risks and uncertainties described below are not the
                  only ones
                  facing our Company. Additional risks and uncertainties not presently
                  known to us
                  or what we currently deem immaterial may also impair our business
                  operations. If
                  any of the following risks actually occur, our business, financial
                  condition, or
                  results of operations could be materially adversely affected. In
                  such case, the
                  trading price of our common stock could decline and you could lose
                  all or part
                  of your investment. You should also refer to the other information
                  about us
                  contained in this Form 10, including our financial statements and
                  related
                  notes.
 
 **We
                  have only a minimal operating history.**
  Our
                  operations are subject to all the risks inherent in any new business,
                  including
                  the risk that the Company will not achieve its investment objective
                  and that its
                  net asset value could decline substantially. Although we have identified,
                  on a
                  preliminary basis, certain micro-cap companies in which we may
                  be interested in
                  investing, the Company anticipates that it will take up to 90 days
                  after the
                  completion of the Offering to invest substantially all of the net
                  proceeds
                  received by the Company from the Offering due to the time necessary
                  to complete
                  our due diligence, evaluate, structure, negotiate, and close suitable
                  investments. In the interim, the Company will invest in temporary
                  investments,
                  such as cash and cash equivalents, U.S. government securities and
                  other high
                  quality debt investments that mature in one year or less from the
                  date of
                  investment, which will earn yields substantially lower than the
                  interest income
                  anticipated from investments in portfolio companies. If the expenses
                  of the
                  Company exceed the return on the temporary investments, the equity
                  capital of
                  the Company will be eroded. Additionally, the Company may not be
                  able to pay any
                  dividends during this period or such dividends may be substantially
                  lower than
                  the dividends the Company expects to pay when its portfolio is
                  fully
                  invested.
  **Competition
                  could hurt our business.**
  Many
                  entities, including public and private funds, commercial and investment
                  banks,
                  commercial financing companies, business development companies
                  and insurance
                  companies will compete with the Company to make the types of investments
                  that it
                  plans to make in micro-cap companies. Many of these competitors
                  are
                  substantially larger, have considerably greater financial, technical
                  and
                  marketing resources than the Company will have and offer a wider
                  array of
                  financial services. For example, some competitors may have a lower
                  cost of funds
                  and access to funding sources that are not available to the Company.
                  In
                  addition, some competitors may have higher risk tolerances or different
                  risk
                  assessments, which could allow them to consider a wider variety
                  of investments
                  and establish more relationships. Many competitors are not subject
                  to the
                  regulatory restrictions that the 1940 Act will impose on the Company
                  as a
                  business development company or the restrictions that the Code
                  will impose on
                  the Company as a regulated investment company. Some competitors
                  may make loans
                  with interest rates that are lower than the rates the Company wishes
                  to offer.
                  The competitive pressures the Company faces may have a material
                  adverse effect
                  on our business, financial condition and results of operations.
                  Also, as a
                  result of this competition, the Company may not be able to take
                  advantage of
                  attractive investment opportunities from time to time, and can
                  offer no
                  assurance that it will be able to identify and make investments
                  that are
                  consistent with our investment objective. We have not finally determined
                  any
                  potential investments for the Company's portfolio, although the
                  Company's
                  competitors are likely to have identified and begun to pursue potential
                  investments in which the Company may be interested.
  18
 **Voting
                  control is centralized in our Board of Directors and
                  Officers.**
  Nearly
                  64% of the Company’s Common Stock is owned directly by our officers and
                  directors. Such ownership could block a change of control of the
                  Company. In
                  addition, Mr. Imperato’s friends and family own nearly an additional
                  4%.
 
 **We
                  are dependent on a key person.**
  Daniel
                    J.
                    Imperato has principally conducted the development stage activities
                    of the
                    Company. Although he is not an employee of the Company, the loss
                    of his services
                    as advisor could negatively affect the Company. The Company has
                    purchased “key
                    man” life insurance on the life of Mr. Imperato.
  **We
                  anticipate future capital needs but have no certain source of
                  add** **itional
                  financing.**
  Our
                  capital requirements will be significant. Management believes that
                  the net
                  proceeds of the Offering should suffice to fund operations and
                  our business plan
                  for a period of 12 months if the maximum number of shares is sold.
                  However, no
                  assurance can be given that such proceeds will in fact be sufficient
                  to fund
                  operations for such period. The Company has no commitments for
                  long-term
                  financing. There can be no assurance that such financing will be
                  available on
                  favorable terms or at all.
  **We
                  may face leverage risk.**
  The
                  Company may borrow money or issue debt securities to leverage its
                  capital
                  structure. If the Company does so:
  ·
                      The
                          Company's common shares will be exposed to incremental
                          risk of loss. In
                          these circumstances, a decrease in the value of the Company's
                          investments
                          would have a greater negative impact on the value of its
                          common shares
                          than if it did not use leverage.  ·
                      Adverse
                          changes in interest rates could reduce or eliminate the
                          incremental income
                          the Company expects to make with the proceeds of any
                          leverage.  ·
                      The
                          Company's ability to pay dividends on its common shares
                          will be restricted
                          if its asset coverage ratio is not at least 200% and any
                          amounts used to
                          service indebtedness would not be available for such
                          dividends.  ·
                      It
                          is likely that such securities will be governed by an indenture
                          or other
                          instrument containing covenants restricting the Company's
                          operating
                          flexibility.  ·
                      The
                          Company, and indirectly its shareholders, will bear the
                          cost of issuing
                          and paying interest on such securities.  **We
                  depend upon key employees to generate revenue.**
  We
                  are an
                  economic and business development firm that will apply analytic
                  techniques and
                  industry knowledge to various investments in a broad range of portfolio
                  companies. Accordingly, our success depends heavily on the efforts,
                  abilities,
                  business generation capabilities, and project execution capabilities
                  of our
                  employees. In particular, our employees’ personal relationships with our
                  portfolio companies are a critical element in obtaining and maintaining
                  portfolio companies’ investments. If the Company loses the services of any
                  employee or if our employees fail to generate business or otherwise
                  fail to
                  perform effectively, that loss or failure could adversely affect
                  our revenues
                  and results of operations.
  19
 **Much
                  of our business plan depends on our non-employee experts.**
  The
                  Company depends on our relationships with members of our Global
                  Advisory Teams
                  and our non-employee consultants to execute our business plan.
                  We believe that
                  these people are highly regarded in their fields and locales and
                  that each
                  offers a combination of knowledge, experience, and expertise that
                  would be very
                  difficult to replace. We also believe that the Company will be
                  able to secure
                  some investments in portfolio companies and attract other professionals
                  to join
                  our team in part because the Company can offer the services of
                  these experts.
                  Most of these experts can limit their relationships with us at
                  any time for any
                  or no reason.
  **Our
                  failure to manage growth successfully could adversely affect our
                  revenues and
                  results of operations**
  We
                  anticipate that providing global services will require that we
                  open additional
                  offices. Opening and managing new offices often requires extensive
                  management
                  supervision and increases our overall selling, general, and administrative
                  expenses. Expansion creates new and increased management, investment,
                  and
                  training responsibilities for our employees. Expansion also increases
                  the
                  demands on our internal systems, procedures, and controls, and
                  on our
                  managerial, administrative, financial, marketing, and other resources.
                  Any
                  failure on our part to manage growth successfully could adversely
                  affect our
                  revenues and results of operations.
 
 **Maintaining
                  our professional reputation is crucial to our future success**
  Our
                  ability to secure new investments and hire qualified persons as
                  employees
                  depends heavily on our overall reputation as well as the individual
                  reputations
                  of our employees, the members of our Global Advisory Teams and
                  our non-employee
                  consultants. Because we expect that in the future the Company will
                  obtain a
                  majority of our new investments from existing portfolio companies
                  or from
                  referrals by those portfolio companies, any portfolio company that
                  is
                  dissatisfied with our performance on a single matter could seriously
                  impair our
                  ability to secure new investments. Given the frequently high-profile
                  nature of
                  the matters on which the Company will work, any factor that diminishes
                  our
                  reputation or the reputations of any of our employees, the members
                  of our Global
                  Advisory Teams and our non-employee consultants could make it substantially
                  more
                  difficult for us to compete successfully for both new investments
                  and qualified
                  persons to hire as employees.
  **Our
                  investments may result in professional liability**
  Our
                  services will typically involve difficult analytical assignments
                  and carry risks
                  of professional and other liability. Many of our investments will
                  involve
                  matters that could have a severe impact on a portfolio company’s business, cause
                  the portfolio company to lose significant amounts of money, or
                  prevent the
                  portfolio company from pursuing desirable business opportunities.
                  Accordingly,
                  if a portfolio company is dissatisfied with our performance, that
                  company could
                  threaten or bring litigation in order to recover damages or to
                  contest its
                  obligation to pay our fees. Litigation alleging that we performed
                  negligently or
                  otherwise breached our obligations to a portfolio company could
                  expose us to
                  significant liabilities and tarnish our reputation.
  **Our
                  common stock has no prior trading market or liquidity, and the
                  Company cannot
                  assure you that any trading market will develop.**
  Prior
                  to
                  the date of this Registration Statement, there has not been any
                  established
                  trading market for our common stock. If the Company can qualify,
                  we will attempt
                  to register our shares for trading on the American Stock Exchange,
                  although the
                  Company cannot assure you as to the timing of that application
                  or the likelihood
                  of it being accepted. If the application is accepted, we cannot
                  predict the
                  extent to which investor interest will lead to the development
                  of an active,
                  liquid trading market. Active trading markets generally result
                  in lower price
                  volatility and more efficient execution of buy and sell orders
                  for
                  investors.
  20
 **The
                  Company has filed a notice of intent to elect business development
                  company
                  status that, once effective, will require us to comply with significant
                  regulatory requirements.**
  The
                  Company filed notice with the Securities and Exchange Commission
                  of our intent
                  to elect in good faith, within 90 days from the date of such filing
                  but after
                  the effective date of this Registration Statement, to be regulated
                  as a Business
                  Development Company under the 1940 Act and be subject to Sections
                  54 through 65
                  of said Act. Being subject to the business development company
                  provisions
                  requires us to meet significant numbers of regulatory and financial
                  requirements
                  as discussed in Item 1(c) -- Regulation of the Company. Compliance
                  with these
                  regulations is expensive and may create financial problems for
                  us in the future.
                  These laws and regulations, as well as their interpretation, may
                  be changed from
                  time to time. Accordingly, any change in these laws or regulations
                  could have a
                  material adverse effect on our business.
  If
                  the
                  Company does not remain a business development company, the Company
                  might be
                  regulated as a closed-end investment company under the 1940 Act,
                  which would
                  decrease our operating flexibility. The Company cannot assure you
                  that the
                  Company will successfully retain our business development company
                  status.
  **The
                  Company’s election to be and qualification to be treated as a regulated
                  investment company presents tax risks.**
  To
                  maintain its qualification as a regulated investment company under
                  the Code,
                  which is required in order for the Company to distribute its income
                  without tax
                  at the Company level, the Company must meet certain income source,
                  asset
                  diversification and annual distribution requirements. Satisfying
                  these
                  requirements may require the Company to take actions it would not
                  otherwise
                  take, such as selling investments at unattractive prices to satisfy
                  diversification, distribution or source of income requirements.
                  In addition,
                  while the Company is authorized to borrow funds in order to make
                  distributions,
                  under the 1940 Act it is not permitted to make distributions to
                  shareholders
                  while its debt obligations and other senior securities are outstanding
                  unless
                  certain "asset coverage" tests are met. If the Company fails to
                  qualify as a
                  regulated investment company for any reason and becomes or remains
                  subject to
                  corporate income tax, the resulting corporate taxes could substantially
                  reduce
                  its net assets, the amount of income available for distribution
                  and the amount
                  of its distributions. Such a failure would have a material adverse
                  effect on the
                  Company and its shareholders.
  For
                  U.S.
                  federal income tax purposes, the Company will include in income
                  certain amounts
                  that it has not yet received in cash, such as original issue discount,
                  which may
                  arise if the Company invests in zero coupon securities, deferred
                  interest
                  securities or certain other securities, or if the Company receives
                  warrants in
                  connection with the making of a loan or possibly in other circumstances.
                  Such
                  original issue discount, which could but is not expected to be
                  significant
                  relative to the Company's overall investment activities, generally
                  will be
                  included in income before the Company receives any corresponding
                  cash payments.
                  The Company also may be required to include in income certain other
                  amounts that
                  the Company will not receive in cash.
  Since
                  in
                  certain cases the Company may recognize income before or without
                  receiving cash
                  representing such income, it may have difficulty making distributions
                  in the
                  amounts necessary to satisfy the requirements for maintaining regulated
                  investment company status and for avoiding income and excise taxes.
                  Accordingly,
                  the Company may have to sell some of its investments at times we
                  would not
                  consider advantageous, raise additional debt or equity capital
                  or reduce new
                  investment originations to meet these distribution requirements.
                  If the Company
                  is not able to obtain cash from other sources, the Company may
                  fail to qualify
                  as a regulated investment company and thus be subject to corporate-level
                  income
                  tax. Such a failure would have a material adverse effect on the
                  Company and its
                  shareholders.
  21
 **BUSINESS
                  DEVELOPMENT COMPANY RISKS**
  **Investing
                  in small and growth stage companies is inheren** **tly
                  risky.**
  Investments
                  in micro-cap companies and growth stage companies offer the opportunity
                  for
                  significant gains. However, each investment involves a high degree
                  of business
                  and financial risk that can result in substantial losses,
                  including:
  ·
                      These
                          companies may have limited financial resources and may
                          be unable to meet
                          their obligations under their securities that the Company
                          holds, which may
                          be accompanied by a deterioration in the value of any
                          collateral.  ·
                      They
                          typically have shorter operating histories, narrower product
                          lines and
                          smaller market shares than larger businesses, which tend
                          to render them
                          more vulnerable to competitors' actions and market conditions,
                          as well as
                          general economic downturns.  ·
                      They
                          are more likely to depend on the management talents and
                          efforts of a small
                          group of persons; therefore, the death, disability, resignation
                          or
                          termination of one or more of these persons could have
                          a material adverse
                          impact on the portfolio company and, in turn, on the
                          Company.  ·
                      They
                          generally have less predictable operating results, may
                          from time to time
                          be parties to litigation, may be engaged in rapidly changing
                          businesses
                          with products subject to a substantial risk of obsolescence,
                          and may
                          require substantial additional capital to support their
                          operations,
                          finance expansion or maintain their competitive
                          position.  ·
                      They
                          may cease to be treated as private companies for purposes
                          of the
                          regulatory restrictions applicable to the Company, in which
                          case the
                          Company may not be able to invest additional amounts in
                          them.  ·
                      Little
                          public information exists about these companies. The greater
                          difficulty in
                          making a fully informed investment decision raises the
                          risk of misjudging
                          the credit quality of the company, and the Company may
                          lose money on its
                          investments.  **Investing
                  in small and growth stage companies presents valuation difficulties.**
  A
                  large
                  percentage of the Company's portfolio investments will be in the
                  form of
                  securities that are not publicly traded. The fair value of securities
                  and other
                  investments that are not publicly traded may not be readily determinable.
                  The
                  Company will value these securities at least quarterly at fair
                  value as
                  determined in good faith by the Board of Directors, possibly with
                  the assistance
                  of an independent valuation firm. However, because fair valuations,
                  and
                  particularly fair valuations of private securities and private
                  companies, are
                  inherently uncertain, may fluctuate over short periods of time
                  and are often
                  based to a large extent on estimates, comparisons and qualitative
                  evaluations of
                  private information, the Company's determinations of fair value
                  may differ
                  materially from the values that would have been determined if a
                  ready market for
                  these securities existed. This could make it more difficult for
                  investors to
                  accurately value the Company's portfolio investments and could
                  lead to
                  under-valuation or over-valuation of its common shares.
  **Portfolio
                  companies are likely to need a** **dditional
                  funding.**
  The
                  Company expects that many portfolio companies will require additional
                  financing
                  to satisfy their working capital requirements. The amount of additional
                  financing needed will depend upon the maturity and objectives of
                  the particular
                  company. Each round of venture financing, whether from us or other
                  investors, is
                  typically intended to provide a portfolio company with enough capital
                  to reach
                  the next major valuation milestone. If the funds provided are not
                  sufficient, a
                  portfolio company may have to raise additional capital at a price
                  unfavorable to
                  the existing investors. The availability of capital is generally
                  a function of
                  capital market conditions that are beyond the control of any portfolio
                  company.
                  The Company cannot assure you that our management or the managements
                  of
                  portfolio companies will be able to predict accurately the future
                  capital
                  requirements necessary for success or those additional funds will
                  be available
                  to portfolio companies from any source. If funding is not available,
                  some
                  portfolio companies may be forced to cease operations.
  22
 **Business
                  development companies’ investments are generally illiquid** .
  The
                  Company expects to make the majority of our investments in micro-cap
                  companies
                  and growth stage companies. Substantially all of the securities
                  of such
                  portfolio companies will be subject to legal and other restrictions
                  on resale or
                  will otherwise be less liquid than publicly traded securities.
                  The illiquidity
                  of these investments may make it difficult for the Company to sell
                  such
                  investments if the need arises. In addition, if the Company is
                  required to
                  liquidate all or a portion of its portfolio quickly, it may realize
                  significantly less than the value at which it has previously recorded
                  such
                  investments. In addition, the Company may face other restrictions
                  on its ability
                  to liquidate an investment in a portfolio company to the extent
                  that it has
                  material non-public information regarding such portfolio company.
  **Business
                  development companies generally require substantial amounts of
                  time to realize
                  the benefits from investments** .
  The
                  Company anticipates that there will be a significant period of
                  time ranging from
                  one to three years before the Company has obtained funding and
                  completed the
                  initial selection of portfolio companies for our first round of
                  equity
                  investments. Venture capital investments typically take from four
                  to eight years
                  from the date of initial investment to reach a state of maturity
                  at which
                  liquidation can be considered practical. In light of the foregoing,
                  it is
                  unlikely that any significant distributions of the proceeds from
                  the liquidation
                  of equity investments will be made for several years after inception,
                  if at
                  all.
  **The
                  Company has not made any commitments to**  **any
                  prospective portfolio companies** .
  Because
                  the Company has not made any commitments to any prospective portfolio
                  company,
                  investors will not have an opportunity to carefully evaluate any
                  of the
                  portfolio companies that the Company may eventually invest in and
                  such
                  evaluation will be entirely dependent upon our management for selecting
                  and
                  negotiating with these portfolio companies. The Company cannot
                  assure you that
                  we will successfully negotiate a transaction with a portfolio
                  company.
  **Portfolio
                  companies may be more sensitive to economic recessions or downturns.**
  Many
                  of
                  the Company's portfolio companies may be susceptible to economic
                  slowdowns or
                  recessions and may be unable to repay loans or pay dividends during
                  these
                  periods. Therefore, the Company's non-performing assets are likely
                  to increase
                  and the value of its portfolio is likely to decrease during these
                  periods.
                  Adverse economic conditions also may decrease the value of collateral
                  securing
                  some of the Company's loans and the value of its equity investments.
                  Economic
                  slowdowns or recessions could lead to financial losses in its portfolio
                  and a
                  decrease in revenues, net income and assets. Unfavorable economic
                  conditions
                  also could increase funding costs, limit access to the capital
                  markets or result
                  in a decision by lenders not to extend credit to the Company. These
                  events could
                  prevent the Company from increasing investments and harm its operating
                  results.
  23
 A
                  portfolio company's failure to satisfy financial or operating covenants
                  could
                  lead to defaults and, potentially, termination of its loans and
                  foreclosure on
                  its secured assets, which could trigger cross-defaults under other
                  agreements
                  and jeopardize the portfolio company's ability to meet its obligations
                  under the
                  debt or equity securities that the Company holds. The Company may
                  need to incur
                  additional expenses to seek recovery upon default or to negotiate
                  new terms with
                  a defaulting portfolio company. In addition, if one of the Company's
                  portfolio
                  companies were to go bankrupt, even though the Company may have
                  structured its
                  interest as senior debt, depending on the facts and circumstances,
                  including the
                  extent to which the Company actually provided significant managerial
                  assistance
                  to that portfolio company, a bankruptcy court might re-characterize
                  the
                  Company's debt holding and subordinate all or a portion of our
                  claim to that of
                  other creditors.
  **Our
                  investment decisions may present industry, sector and issuer risk.**
  The
                  Company may, from time to time, invest a substantial portion of
                  its assets in
                  the securities of issuers in any single industry or sector of the
                  economy or in
                  only a few issuers. The Company cannot predict the industries or
                  sectors in
                  which its investment strategy may cause it to concentrate and cannot
                  predict the
                  level of its diversification among issuers, although over time
                  the Company
                  anticipates investing in a minimum of 15 to 20 issuers to ensure
                  it satisfies
                  diversification requirements for qualification as a regulated investment
                  company
                  for U.S. federal income tax purposes. Concentration of the Company's
                  assets in
                  an industry or sector may present more risks than if it were broadly
                  diversified
                  over numerous industries and sectors of the economy. A downturn
                  in an industry
                  or sector in which the Company is concentrated would have a larger
                  impact on us
                  than on a company that does not concentrate in industry or sector.
                  As a result
                  of investing a greater portion of the Company's assets in the securities
                  of a
                  smaller number of issuers, the Company would be classified as a
                  non-diversified
                  company under the 1940 Act. The Company may be more vulnerable
                  to events
                  affecting a single issuer or industry and therefore subject to
                  greater
                  volatility than a company whose investments are more broadly diversified.
                  Accordingly, an investment in the Company may present greater risk
                  than an
                  investment in a diversified company. Furthermore, we have not made
                  and do not
                  intend to make any determination as to the allocation of assets
                  among different
                  classes of securities. Consequently, at any point in time the Company
                  may be
                  highly concentrated in a single type of asset and events which
                  affect a
                  particular asset class disproportionately could have an equally
                  disproportionate
                  effect on the Company.
  **There
                  may be changes in laws or regulations governing portfolio companies.**
  The
                  Company's portfolio companies will be subject to regulation by
                  laws at the
                  local, state and federal level and, to the extent that we are successful
                  in
                  expanding our portfolio companies’ operations globally, the laws of foreign
                  countries as well. These laws and regulations, as well as their
                  interpretation,
                  may be changed from time to time. Any change in these laws or regulations,
                  or
                  any failure to comply with them by the Company's portfolio companies,
                  could have
                  a material adverse affect on the Company's business.
     24
 **ITEM
                  3.**  **CONTROLS
                  and PROCEDURES.**
 
 Within
                  90
                  days of the filing of this Form 10-Q, an evaluation was carried
                  out by Charles
                  A. Fiscina, our Chief Financial Officer, of the effectiveness of
                  our disclosure
                  controls and procedures. Disclosure controls and procedures are
                  procedures that
                  are designed with the objective of ensuring that information required
                  to be
                  disclosed in our reports filed under the Securities Exchange Act
                  of 1934, such
                  as this Form 10-Q, is recorded, processed, summarized and reported
                  within the
                  time period specified in the Securities and Exchange Commission's
                  rules and
                  forms. Based on that evaluation, Mr. Fiscina concluded that as
                  of November 30,
                  2006, and as of the date that the evaluation of the effectiveness
                  of our
                  disclosure controls and procedures was completed, our disclosure
                  controls and
                  procedures were effective to satisfy the objectives for which they
                  are
                  intended.
 
 There
                  were no changes in our internal control over financial reporting
                  identified in
                  connection with the evaluation performed that occurred during the
                  fiscal quarter
                  covered by this report that has materially affected or is reasonably
                  likely to
                  materially affect, our internal control over financial reporting.
 
 
 
 
 
 
 
 
 25
  **PART
                  II.**  **OTHER
                  INFORMATION**
 
 **ITEM
                  6.**  **EXHIBITS
                  and REPORTS on FORM 8-K.**
 
 (a)
                      EXHIBITS.
                          The following exhibits are filed as part of this
                          report. 
 31   Certification
                  of Chief Executive Officer, President and Chief Financial Officer
                  filed pursuant
                  to Section 302 of the Sarbanes-Oxley Act of 2002
 
 32     
                    Certification of Chief Executive Officer, President and Chief
                  Financial Officer furnished pursuant to 18 U.S.C. Section 1350,
                  as adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 (b)  REPORTS
                  ON FORM 8-K. None
   26
 
 **SIGNATURES**
 
 In
                  accordance with the requirements of the Securities Exchange Act
                  of 1934, the
                  registrant caused this Report on Form 10-Q to be signed on its
                  behalf by the
                  undersigned, thereunto duly authorized.
 
 DATE:
                    April 13, 2007
 
  **Imperiali
                            Inc**By:
                        /s/ Charles
                          A. FiscinaCharles
                          A. Fiscina,Chief Financial Officer
 
   27