**UNITED
          STATES**
 **SECURITIES
          AND EXCHANGE COMMISSION**
 **Washington,
          D.C. 20549**
 
 **FORM
          10-Q**
 
 **[
          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 7, 2007 there were 25,879,986 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**
 February
          28, 2007 and August 31, 2006
 
 **ASSETS**
 As
                    of February 28,
                
                As
                    of August 31,2007
                
                2006Portfolio
                    At value:Private
                    FinanceCompanies
                    more than 25% owned (cost: 2006 -$3,500,000)
                
                $
                3,500,000Current
                    assets:Cash
                
                $
                247,108
                
                $
                609,541Total
                    current assets
                
                $
                247,108
                
                $
                609,541Total
                    assets
                
                $
                3,747,108
                
                $
                609,541LIABILITIES
                    AND STOCKHOLDERS’ EQUITYCurrent
                    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
                
                
                (880,465
                )Total
                    shareholders’ equity
                
                
                3,720,112
                
                
                609,541Total
                    liabilities and shareholders’ equity
                
                $
                3,747,108
                
                $
                609,541Net
                    Asset Value per Common Share
                
                $
                .14
                
                $
                .03
 
 See
              notes
              to financial statements
  2
 **IMPERIALI,
          INC.**
 **Statements
          of Operations**
 
 
 For
                    the Three Months Ended February 28,
                
                For
                    the Six Months Ended February 28,2007
                
                2006
                
                2007
                
                2006Interest
                    and Related Portfolio Income:Interest
                    and dividends
                
                $
                699
                
                $
                0
                
                $
                5,505
                
                $
                0Expenses: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
                
                
                0
                
                
                0
                
                
                0
                
                
                0Net
                    investment income
                
                $
                (437,552
                )
                $
                (277,923
                )
                $
                (880,465
                )
                $
                (277,923
                )Net
                    Realized Gains (losses)
                
                
                -
                
                
                -
                
                
                -
                
                
                -Net
                    Change in unrealized appreciation
                
                
                -
                
                
                -
                
                
                -
                
                
                -Net
                    increase in net assets resulting from operations (loss)
                
                $
                (437,552
                )
                $
                (277,923
                )
                $
                (880,465
                )
                $
                (277,923
                )Earnings
                    (loss) per common share - basic
                
                $
                (.017
                )
                $
                (.015
                )
                $
                (.034
                )
                $
                (.015
                )Earnings
                    (loss) per common share - diluted
                
                $
                (.017
                )
                $
                (.015
                )
                $
                (.034
                )
                $
                (.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
  3
 **IMPERIALI,
          INC.**
 **Statements
          of Change in Net Assets**
 
 
 For
                    the Six Months Ended February 28, 2007
                
                For
                    the Six Months Ended February 28, 2006Operations:Net
                    Investment Income
                
                $
                (880,465
                )
                $
                (277,923
                )Net
                    Realized Gains (losses)
                
                
                -
                
                
                -Net
                    Change in unrealized appreciation
                
                
                -
                
                
                -Shareholder
                    Distributions:Common
                    Stock Dividends
                
                
                -
                
                
                -Capital
                    share transactions:Sales
                    of Common Stock
                
                $
                491,036
                
                $
                549,396Common
                    stock issued for investments
                
                
                3,500,000Total
                    Increase in Net Assets
                
                $
                3,110,571
                
                $
                271,473Net
                    assets at beginning of period
                
                $
                609,541
                
                $
                0Net
                    assets at end of period
                
                $
                3,720,112
                
                $
                271,473Net
                    asset value per common share
                
                $
                0.14
                
                $
                0.01Common
                    shares outstanding at the end of period
                
                
                25,879,986
                
                
                19,177,000
 
 See
              notes
              to financial statements
 
 4
 **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
 5
 **IMPERIALI,
          INC.**
 **Statements
          of Cash Flows**
 
 
 For
                    the Six Months Ended February 28, 2007
                
                For
                    the Six Months Ended February 28, 2006Cash
                    flows from operating activities:Net
                    income (loss)
                
                $
                (880,465
                )
                $
                (277,923
                )Adjustments
                    to reconcile net income (loss) to
                  net
                    cash provided by operating activities:
                
                
                26,996
                
                
                (12,591
                )Increase
                    (decrease) in:Due
                    to officerNet
                    cash used by operating activities
                
                
                (853,469
                )
                $
                (290,514
                )Cash
                    flows from investing activities:Net
                    cash used in investing activities
                
                
                -Cash
                    flows from financing activities:Proceeds
                    from common stock
                
                
                491,036
                
                
                549,700Net
                    cash provided by financing activities
                
                
                491,036
                
                
                549,700Net
                    increase in cash
                
                
                (362,433
                )
                
                259,186Cash
                    at beginning of period
                
                
                609,541
                
                
                0Cash
                    at end of period
                
                $
                247,108
                
                $
                259,186
 
 See
              notes
              to financial statements
 6
 **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.
          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"),
  7
 **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
 
 8
 **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.
 
 9
 **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.
  10
 **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.  11
 **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.
  12
 **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 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.
 
 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.
 
  13
 **Imperiali
              Inc.**
 **Notes
              To Financial Statements (Unaudited)**
 
 Note
          7.
          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)
                
                
                0.14
                
                
                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
                
                
                3,720,112
                
                
                609,541Common
                    shares outstanding at end of period
                
                
                25,879,986
                
                
                20,358,486Diluted
                    weighted average number of sharesoutstanding
                    during the year
                
                
                25,557,986
                
                
                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 OutstandingAverage
                    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
 
 14
 **Imperiali
              Inc.**
 **Notes
              To Financial Statements (Unaudited)**
  LAST
          QUARTER 2007 - 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.
  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 $11,171,422.28. 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
          8
          Hedging Activities: The Company did not engage in Hedging Activity.
 
 Note
          9
          Litigation: The Company has no lawsuits pending.
 15
    **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.
  16
 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 2007* - 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.
 
 17
 ***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 $ 11,171,422.28 .
          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.  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.
 
 18
 **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.
  
 19
  **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
          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.
  20
  **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.
  21
 **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.
  22
 **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 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.
  23
 **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.
  **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.
  24
 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.
   25
  **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.
 
 
 
 
 
 
 26
 
 **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
  
 27
 **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:
          March 24, 2007
 
 **Imperiali
          Inc**
 
 /s/ Charles
          A. Fiscina
 By
          ______________________________________
 Charles
          A. Fiscina, Chief
          Financial Officer
       28