**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q/A**


**Amendment
      1**





**x** **QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES** **EXCHANGE
      ACT OF 1934**





For
      the
      quarterly period ended February 28, 2007





** ̈** **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 of
              Incorporation
                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
      February 28, 2007 there were 25,879,986 shares outstanding of the registrant’s
      common stock, $.001 par value.





**IMPERIALI
      INC.**


**QUARTERLY
      REPORT ON FORM 10-Q/A**





For
      the
      quarterly period ended February 28, 2007





**EXPLANATORY
      NOTE**





This
      Amendment No. 1 on Form 10-Q/A to the Quarterly Report on Form 10-QSB of
      Imperiali, Inc. (the Company) for the quarterly period ended February 28, 2007
      is being filed to restate the Company’s Financial Statements to reduce the
      valuation of investments.


In
      regards to Exhibits 31 and 32, the original filings were signed by Charles
      A.
      Fiscina and Brad Hacker in their capacity as Financial Officers of the Company.
      These two individuals are no longer with the Company. Daniel Imperato, as
‘Interim Non-Executive Chairman Emeritus’ will sign the exhibits on the premise
      that the original exhibits were valid and fully complied with the requirements
      with appropriate sections of the Security Exchange Act of 1934 and that the
      information contained in such 10Q and 10K reports fairly represents the
      financial condition and results of operations of Imperiali Inc.


2





**PART
      I.**





**Item
      1. Financial Statements and Supplementary Data.**




**IMPERIALI,
      INC.**


**Balance
      Sheets**


February
      28, 2007 and August 31, 2006





As of
              February 28,
            
            As of
              August 31,2007
            
            2006Restated
            
            Restated**ASSETS**Portfolio
                at value:Private
                Finance
            
            $
            -
            
            $
            -Companies
                more than 25% owned (cost: 2006 -$3,500,000)
            
            
            -
            
            
            -Current
                assets:Cash
            
            $
            247,108
            
            $
            609,541Total
                current assets
            
            $
            247,108
            
            $
            609,541Total
                assets
            
            $
            247,108
            
            $
            609,541**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                liabilities:Accounts
                payable and other liabilities
            
            $
            26,996
            
            $
            -Total
                current liabilities
            
            $
            26,996
            
            $
            -Stockholders’
                equity:Common
                stock; $.001 par value; authorized-500,000,000
                shares; 25,879,986 and 20,358,486shares
                issued and outstanding at February 28,2007
                and August 31, 2006 respectively
            
            $
            25,880
            
            $
            20,358Additional
                paid in capital
            
            
            15,746,119
            
            
            11,760,605Accumulated
                deficit
            
            
            (11,171,422
            )
            
            (11,171,422
            )Undistributed
                Earnings
            
            
            (4,380,465
            )
            
            -Total
                shareholders’ equity
            
            $
            220,112
            
            $
            609,541Total
                liabilities and shareholders’ equity
            
            $
            247,108
            
            $
            609,541Net
                Asset Value per Common Share
            
            $
            .01
            
            $
            .03





See
      notes
      to financial statements





3





**IMPERIALI,
      INC.**


**Statements
      of Operations**





For the Three Months
              Ended February 28,
            
            For the Six Months
              Ended February 28,2007
            
            2006
            
            2007
            
            2006Restated
            
            
            
            RestatedInterest
                and Related Portfolio Income:Interest
                and dividends
            
            $
            699
            
            $
            -
            
            $
            5,505
            
            $
            -Expenses:General
                and administrative
            
            
            (438,251
            )
            
            (277,923
            )
            
            (885,970
            )
            
            (277,923
            )Net
                investment income before income taxes
            
            $
            (437,552
            )
            $
            (277,923
            )
            
            (880,465
            )
            $
            (277,923
            )Income
                tax expense
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                investment income
            
            $
            (437,552
            )
            $
            (277,923
            )
            $
            (880,465
            )
            $
            (277,923
            )Net
                Realized Gains (losses)
            
            
            -
            
            
            -
            
            
            (3,500,000
            )
            
            -Net
                Change in unrealized appreciation
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                increase in net assets resulting from operations (loss)
            
            $
            (437,552
            )
            $
            (277,923
            )
            $
            (4,380,465
            )
            $
            (277,923
            )Earnings
                (loss) per common share - basic
            
            $
            (.017
            )
            $
            (.015
            )
            $
            (.17
            )
            $
            (.015
            )Earnings
                (loss) per common share - diluted
            
            $
            (.017
            )
            $
            (.015
            )
            $
            (.17
            )
            $
            (.015
            )Weighted
                average common shares outstand.- basic
            
            
            25,809,569
            
            
            18,294,686
            
            
            25,683,778
            
            
            18,149,136Weighted
                average common shares outstand.- diluted
            
            
            25,809,569
            
            
            18,294,686
            
            
            25,683,778
            
            
            18,149,136





See
      notes
      to financial statements


4


**IMPERIALI,
      INC.**


**Statements
      of Change in Net Assets**





For the Six
              Months Ended
              February 28,2007
            
            For the Six
              Months Ended
              February 28, 2006RestatedOperations:
            
            $
            (880,465
            
            $
            (277,923
            )Net
                Investment Income
            
            
            -
            
            
            -Net
                Realized Gains (losses)
            
            
            (3,500,000
            )
            
            -Shareholder
                Distributions:Common
                Stock Dividends
            
            
            -
            
            
            -Capital
                share transactions:Sales
                of Common Stock
            
            
            491,036
            
            
            549,396Common
                stock issued for investments
            
            
            3,500,000
            
            
            -Total
                Increase in Net Assets
            
            $
            (389,429
            )
            $
            271,473Net
                assets at beginning of period
            
            
            609,541
            
            
            -Net
                assets at end of period
            
            
            220,112
            
            
            271,473Net
                asset value per common share
            
            $
            0.01
            
            $
            0.01Common
                shares outstanding at the end of period
            
            
            25,879,986
            
            
            19,177,000





See
      notes
      to financial statements





5




**IMPERIALI,
      INC.**


**Statements
      of Investments**




Private Finance
              Portfolio Company
            
            Investment
            
            Cost
            
            ValueI1Search
            
            
            Common Stock
            
            $
            2,000,000
            
            $
            0I1Connect
            
            
            Common
                Stock
            
            $
            1,500,000
            
            $
            0





See
      notes
      to financial statements





6





**IMPERIALI,
      INC.**


**Statements
      of Cash Flows**





For
                the Six
              Months
              Ended
              February
              28,
                2007
            
            For
                the Six
              Months
              Ended
              February
              28,
                2006RestatedCash
                flows from operating activities:Net
                income (loss)
            
            $
            (4,380,465
            )
            $
            (277,923
            )Adjustments
                to reconcile net income (loss) to
              net
                cash provided by operating activities:
            
            
            26,996
            
            
            (12,591
            )Increase
                (decrease) in:Due
                to officer
            
            
            -
            
            
            -Net
                cash used by operating activities
            
            $
            (4,353,469
            )
            $
            (290,514
            )Cash
                flows from investing activities:Net
                cash used in investing activities
            
            
            -
            
            
            -Cash
                flows from financing activities:Common
                stock issued for investments
            
            $
            3,500,000
            
            $
            -Proceeds
                from common stock
            
            
            491,036
            
            
            549,700Net
                cash provided by financing activities
            
            $
            4,991,036
            
            $
            549,700Net
                increase in cash
            
            $
            (362,433
            )
            $
            259,186Cash
                at beginning of period
            
            $
            609,541
            
            $
            -Cash
                at end of period
            
            $
            247,108
            
            $
            259,186





See
      notes
      to financial statements





7





**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 six months
      ended February 28, 2007 are not necessarily indicative of the results that
      may
      be expected for the year ending August 31, 2007.




**Note
      1. Organization:** ****





**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.




8




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") there under. 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"),





**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.




9




**Concentration
      of Credit Risk**


The
      Company maintains cash accounts in commercial banks. Total cash deposits are
      secured by the Federal Deposit Insurance Corporation





(FDIC)
      up
      to a limit of $100,000 per company. At February 28, 2007 the Company’s cash
      balances exceeded insured amounts by approximately $147,000.





**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.





10




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.





**Note
      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.




11





**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.





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.




12




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.





·
            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 collectability 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.




13




**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.




**Note
      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
      February 28, 2007 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.





14




**Note
      6. Employee Compensation Plans** –


The
      Company has no Defined Benefit or Defined Contribution Pension
      Plans.





**Note
      7. Stock Option Plans** –


The
      Company has no Stock Option Plans.




**Note
      8. Financial Highlights** -





Six MonthsEnded
            
            Year EndedFeb.28,
            
            Aug. 31,2007
            
            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)
            
            
            0.01
            
            
            0.08Net
                asset (deficit) value, end of period
            
            
            0.01
            
            
            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
            
            
            247,108
            
            
            609,541Common
                shares outstanding at end of period
            
            
            25,879,986
            
            
            20,358,486Diluted
                weighted average number of sharesoutstanding
                during the year
            
            
            25,757,986
            
            
            19,177,000Ratio
                of expenses to average net assets (3)
            
            
            17
            %
            
            334
            %Ratio
                of net increase (decrease) in net assets fromoperations
                to average net assets (3)
            
            
            -16
            %
            
            -331
            %





Average
      Debt Outstanding


Average
      Debt per Share





(1)  Calculated
      based on diluted weighted average number of shares outstanding during the
      year.





(2)
            Not
                applicable - prior to public trading of
                shares


(3)
            Annualized
                for interim period




15




During
      the quarter ended February 28, 2007, we incurred a net loss of $437,552. General
      and administrative expenses related primarily to rent, salaries, telephone,
      other office costs and costs associated with being a reporting company and
      amounted to $438,251.




**Liquidity
      and Capital Resources**





We
      had
      cash on hand of $247,108 at February 28, 2007 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. For the six months ended February 28,
      2007
      we had expenses totaling $ 885,970.





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
      9 Hedging Activities** :
      The
      Company did not engage in Hedging Activity.




**Note
      10 Litigation** :
      The
      Company has no lawsuits pending.


16




**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 is 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
      are
      regulated as a business development company under the 1940 Act. 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.





17




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.





18





**Results
      of Operations**





During
      the quarter ended February 28, 2007, we incurred a net loss of
      $437,552.


General
      and administrative expenses related primarily to rent, salaries, telephone,
      other office costs and costs associated with being a reporting company and
      amounted to $438,351.





***Liquidity
      and Capital Resources***





We
      had
      cash on hand of $247,108 at February 28, 2007 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. For the six months ended February 28,
      2007
      we had expenses totaling $ 885,970.





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.




19




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.





**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.




20




**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 an 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 additional
      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.




21




·
            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.





**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.




22




**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.




**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.




23




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.





**BUSINESS
      DEVELOPMENT COMPANY RISKS**




**Investing
      in small and growth stage companies is inherently 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 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.




24


·
              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 additional 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.




**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.




25




**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.




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.




26




**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.




**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 February
      28,
      2007, 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.





27




**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





**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:
      September 19, 2008





**Imperiali
      Inc**





By
            /s/
              Daniel ImperatoInterim
              Non-Executive Chairman Emeritus




28