**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C.  20549**





**FORM
      10-Q/A**


**Amendment
      1**




**x**
            **QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934**For
                the quarterly period ended May 31, 2007**o**
            **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** **o**





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.


**o** **** Large **** Accelerated
      Filer **o** **** 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** **o** **No** **x**





On
      May
      31, 2007 there were 38,188,486 shares outstanding of the registrant’s common
      stock, $.001 par value.








**IMPERIALI
      INC.**


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





For
      the
      quarterly period ended May 31, 2007





**EXPLANATORY
      NOTE**





This
      Amendment No. 1 on Form 10-Q/A to the Quarterly Report on Form 10-QSB of
      Imperiali, Inc. (the Company) for the quarterly period ended May 31, 2007 is
      being filed to restate the Company’s Financial Statements to reduce the
      valuation of investments.


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


2





**PART
      I.**





**Item
      1.  Financial Statements and Supplementary Data
      (Unaudited).**




**IMPERIALI,
      INC.**


**Balance
      Sheets**


**May
      31, 2007 and August 31, 2006**





As of May
              31,
              2007
            
            As of August
              31, 2006Restated**ASSETS**Portfolio
                At Value:Private
                FinanceCompanies
                more than 25% owned (cost: 2007 - $3,500,000)
            
            $
            -
            
            $
            -Current
                assets:Cash
            
            $
            183,320
            
            $
            609,541Prepaid
                Expenses
            
            
            17,773
            
            
            -Total
                current assets
            
            $
            201,093
            
            $
            609,541Total
                assets
            
            $
            201,093
            
            $
            609,541**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                liabilities:Accounts
                payable and other current liabilities
            
            $
            17,916
            
            $
            -Total
                current liabilities
            
            $
            17,916
            
            $
            -Stockholders'
                equity:Common
                stock; $.001 par value; authorized -500,000,000
                shares; 38,188,486 and 20,358,486shares
                issued and outstanding at May 31, 2007and
                August 31, 2006 respectively
            
            $
            38,188
            
            $
            20,358Additional
                paid in capital
            
            
            15,998,812
            
            
            11,760,605Accumulated
                deficit
            
            
            (11,171,422
            )
            
            (11,171,422
            )Undistributed
                Earnings
            
            
            (4,682,401
            )
            
            -Total
                shareholders' equity
            
            $
            183,177
            
            $
            609,541Total
                liabilities and shareholders' equity
            
            $
            201,093
            
            $
            609,541Net
                Asset Value per Common Share
            
            $
            .00
            
            $
            0.16




3





**IMPERIALI,
      INC.**


**Statement
      of Operations**





For the Three Months
            
            For the Nine MonthsEnded May 31,
            
            Ended May 31,2007
            
            2006
            
            2007
            
            2006Restated
            
            
            
            RestatedInterest
                and Related Portfolio Income:Interest
                and dividends
            
            $
            1,187
            
            $
            -
            
            $
            6,692
            
            $
            -Expenses:Employees
                and Consulting
            
            
            (268,924
            )
            
            (298,000
            )
            
            (1,022,630
            )
            
            (520,496
            )General
                and administrative
            
            
            (34,199
            )
            
            (44,197
            )
            
            (166,463
            )
            
            (99,624
            )Total
                Expenses
            
            $
            (303,123
            )
            $
            (342,197
            )
            $
            (1,189,093
            )
            $
            (620,120
            )Net
                investment income before income taxes
            
            $
            (301,936
            )
            $
            (342,197
            )
            $
            (1,182,401
            )
            $
            (620,120
            )Income
                tax expense
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                investment income
            
            $
            (301,936
            )
            $
            (342,197
            )
            $
            (1,182,401
            )
            $
            (620,120
            )Net
                Realized Gains(losses)
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                Change in unrealized appreciation
            
            
            -
            
            
            -
            
            
            (3,500,000
            )
            
            -Net
                increase in net assets resulting from
            
            $
            (301,936
            )
            $
            (342,197
            )
            $
            (4,682,401
            )
            $
            (620,120
            )operations
                (loss)Earnings
                (loss) per common share - basic
            
            $
            (0.012
            )
            $
            (0.014
            )
            $
            (0.181
            )
            $
            (0.031
            )Earnings
                (loss) per common share - diluted
            
            $
            (0.012
            )
            $
            (0.014
            )
            $
            (0.181
            )
            $
            (0.031
            )Weighted
                avg. common shares out. - basic
            
            
            26,210,653
            
            
            23,792,836
            
            
            25,888,375
            
            
            20,030,369Weighted
                avg. common shares out. - diluted
            
            
            26,210,653
            
            
            23,792,836
            
            
            25,888,375
            
            
            20,030,369




4





**IMPERIALI,
      INC.**


**Statement
      of Change in Net Assets**




For the Nine
              Months Ended
              May 31, 2007
            
            For the Nine
              Months Ended
              May 31, 2006RestatedOperations:Net
                Investment Income
            
            $
            (1,182,401
            )
            $
            (620,120
            )Net
                Realized Gains (losses)
            
            
            -
            
            
            -Net
                Change in unrealized appreciation
            
            
            (3,500,000
            )
            
            -Shareholder
                Distributions:Common
                Stock Dividends
            
            
            -
            
            
            -Capital
                share transactions:Common
                stock issued for investments
            
            
            3,500,000Sales
                of Common Stock
            
            
            756,037
            
            
            951,896Total
                Increase in Net Assets
            
            $
            (426,364
            )
            $
            331,776Net
                assets at beginning of period
            
            $
            609,541
            
            $
            -Net
                assets at end of period
            
            $
            183,177
            
            $
            331,776Net
                asset value per common share
            
            $
            0.00
            
            $
            0.01Common
                shares outstanding at the end of period
            
            
            38,188,486
            
            
            24,007,486




**IMPERIALI,
      INC.**


**Statement
      of Investments**




Private Finance Portfolio Company
            
            Investment
            
            Cost
            
            ValueImperiali Organization
            
            Common
              Stock
            
            $
            3,500,000
            
            $
            -




5





**IMPERIALI,
      INC.**


**Statement
      of Cash Flows**




For the Nine
              Months Ended
              May 31, 2007
            
            For the Nine
              Months Ended
              May 31, 2006RestatedCash
                flow from operating activities:Net
                income (loss)
            
            $
            (4,682,401
            )
            $
            (620,120
            )Adjustments
                to reconcile net income (loss) tonet
                cash provided by operation activities:
            
            
            
            
            
            (304
            )Prepaid
                and other assets
            
            
            (17,773
            )
            
            -Accounts payable and accrued expenses
            
            
            (17,916
            
            
            -Net
                cash used by operating activities
            
            $
            (4,682,258
            )
            $
            (620,424
            )Cash
                flows from investing activities:Net
                cash used in investing activities
            
            $
            -
            
            $
            -Cash
                flows from financing activitiesCommon
                stock issued for investments
            
            
            3,500,000
            
            
            -Proceeds
                from common stock
            
            
            756,037
            
            
            952,200Net
                cash provided by financing activities
            
            $
            4,256,037
            
            $
            952,200Net
                increase in cash
            
            $
            (426,221
            )
            $
            331,776Cash
                at beginning of period
            
            $
            609,541
            
            $
            -Cash
                at end of period
            
            $
            183,320
            
            $
            331,776




6





**ITEM
      2. NOTES TO FINANCIAL STATEMENTS**





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




**Note
      1. Organization:**





**General
      Development of the Business**


We
      were
      incorporated in Florida on September 27, 1994 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.


7




In
      November 2005, we changed our name to Imperiali, Inc. and commenced operations
      as an investment company.  To date, the activities of our principals
      have largely been limited to organizational matters and fund
      raising.  We have commenced the private placement of up to 10 million
      of the Company's common shares in an offering (the "Offering") exempt from
      the
      registration requirements of the Securities Act of 1933 ("1933 Act") pursuant
      to
      Section 4(2) thereof and Regulation D ("Regulation D") there
      under.  At August 31, 2006, the Company’s total assets were $4,104,541
      and its net asset value per share (“NAV”) was $0.16.  Upon the closing
      of the Offering, the Company's common shares will be owned by numerous persons
      that are both "accredited investors," as that term is defined in Regulation
      D,
      and "qualified clients" within the meaning of the Investment Advisers Act of
      1940 (the "1940 Act"),





**Note
      2. Summary of Significant Accounting Policies:**





**Background**


Imperiali,
      Inc. (the Company) was formed in Florida on September 27, 1994 as Automated
      Energy Security, Inc.  On March 22, 1999 the Company’s name was
      changed to New Millennium Development Group, Inc.  On August 24, 2004
      the Company’s name was changed to Hercules Global Interests, Inc.





The
      Company has been dormant since 2002 and was started up again in the fall of
      2005
      by Christ Investment Group, LLC, the Company’s business manager and a related
      company, which is controlled by the Company’s major shareholder Mr. Daniel
      Imperato.  On November 18, 2005 the name of the company was changed to
      Imperiali, Inc.





**Nature
      of Business**


Imperiali,
      Inc. is a team of global expansion and business development experts that are
      strategically positioned around the globe to identify emerging companies that
      wish to align with strategic partners to grow their businesses, and raise
      capital for business development and telecommunications
      infrastructure.





Imperiali
      revenues will come from sales of products and services rendered to
      telecommunications companies worldwide.  Infrastructure, equipment and
      consulting services will be supplied on a contract basis.





**Inventory**


Inventories
      are stated at lower of cost or market, with cost generally determined on a
      first-in, first-out basis. Currently the Company carries no
      inventory.





**Depreciation**


Depreciation
      is calculated using straight-line methods over the estimated useful life of
      the
      equipment, furniture and fixtures.





**Income
      Taxes**


The
      Company is recognized as a corporation under the Internal Revenue
      Code.  As such, the corporation must report income and expenses
      properly on their tax return and pay all the related income taxes.  As
      of August 31, 2006 the Company has an approximately $7,200,000 net operating
      loss carryover which can be used against future income through
      2018.  No provisions for income taxes are provided in these financial
      statements since the Company was dormant for the years ending August 31, 2006
      and 2005.


8




**Concentration
      of Credit Risk**


The
      Company maintains cash accounts in commercial banks.  Total cash
      deposits are secured by the Federal Deposit Insurance Corporation (FDIC) up
      to a
      limit of $100,000 per company.  At May 31, 2007, the Company’s cash
      balances exceeded insured amounts by approximately $83,000.





**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.


9





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.





The
      Company does not expect application of SFAS No. 157 to have a material
      affect on its financial statements.





In
      September 2006, the FASB issued SFAS No. 158 Employers’ Accounting for Defined
      Benefit Pension and Other Postretirement Plans.  This Statement amends
      FASB Statements No. 87, 88, 106, and 132(R). This Statement is
      effective as of the beginning of its first fiscal year that begins after
      December 15, 2006, but before June 16, 2007.  This Statement improves
      financial reporting by requiring an employer to recognize the over funded or
      under funded status of a defined benefit postretirement plan (other than a
      multiemployer plan) as an asset or liability in its statement of financial
      position and to recognize changes in that funded status in the year in which
      the
      changes occur through comprehensive income of a business entity or changes
      in
      unrestricted net assets of a not-for-profit organization.  The Company
      does not expect application of SFAS No. 158 to have a material affect on
      its financial statements.





**Note
      3. Investments:**





Investments
      are carried at Fair Market Value.





**Valuation
      Policies**




**Valuation
      of Portfolio Investments**




As
      a
      Business Development Company, our business plan calls for us to invest primarily
      in illiquid securities issued by private companies (“Private Investments”) (we
      are required to invest at least an aggregate of 70% of our assets Private
      Investments and in companies listed on the OTCBB). Private Investments are
      generally subject to restrictions on resale and generally have no established
      trading market.  The Company values our Private Investments at fair
      value as determined in good faith by our Board of Directors in accordance with
      our valuation policy. That policy calls for the determination of fair value
      at
“the amount for which an investment could be sold in an orderly disposition
      over
      a reasonable period of time between willing parties other than in a forced
      or
      liquidation sale.” Our valuation policy may require subjective judgments. Our
      determination of fair value may possibly differ materially from the value
      realized on an actual sale. Our valuation policy is intended to provide a
      consistent basis for establishing the fair value of the
      portfolio.  The Company will record unrealized depreciation on
      investments when we believe that an asset has been impaired and full collection
      for the loan or realization of an equity security is doubtful. Conversely,
      the
      Company will record unrealized appreciation if we have a clear indication that
      the underlying portfolio company appreciates and, therefore, our security has
      appreciated. Under this valuation policy, the Company sets valuations based
      on
      policies consistent with Section 2(a) of the 1940 Act. The value of investments
      in public securities is determined using quoted market prices discounted for
      restrictions on resale.


10




**Equity
      Securities**




Equity
      interests in portfolio companies for which there is no liquid public market
      are
      valued based on the enterprise value of the portfolio company, which is
      determined using accepted accounting factors, including net cash flow from
      operations of the portfolio company, and other pertinent factors such as recent
      offers to purchase a portfolio company’s securities or other liquidation events.
      The determined fair values are generally discounted to account for restrictions
      on resale and minority control positions.




The
      value
      of our equity interests in public companies for which market quotations are
      readily available is based upon the closing public market price for the last
      day
      up to and including the balance sheet date. Securities that carry certain
      restrictions on sale are typically valued at a discount from the public market
      value of the security.




Dividend
      income, if any, is recorded on cumulative preferred equity securities on an
      accrual basis to the extent that such amounts are expected to be collected
      and
      on common equity, securities on the record date for private companies or on
      the
      ex-dividend date for publicly traded companies.





**Loans
      and Debt Securities**




It
      is our
      loan policy to only invest in secured and properly collateralized
      loans.




For
      loans
      and debt securities, to the extent that the Company invests in them, fair value
      generally approximates cost unless the borrower’s condition or external factors
      lead to a determination of fair value at a lower amount. When the Company
      receives nominal cost warrants or free equity securities (“nominal cost
      equity”), we allocate our cost basis in our investment between the debt
      securities and the nominal cost equity at the time of origination.  At
      that time, the original issue discount basis of the nominal cost equity is
      recorded by increasing the cost basis in the equity and decreasing the cost
      basis in the related debt securities.




Interest
      income is recorded on an accrual basis to the extent that such amounts are
      expected to be collected. For loans and debt securities with contractual
      payment-in-kind interest, which represents contractual interest accrued and
      added to the loan balance that generally becomes due at maturity, we will not
      accrue payment-in-kind interest if the portfolio company valuation indicates
      that the payment-in-kind interest is not collectible. Loan origination fees,
      original issue discount, and market discount are capitalized and then amortized
      into interest income using the effective interest method.




The
      weighted average yield on loans and debt securities is computed as the (a)
      annual stated interest rate earned plus the annual amortization of loan
      origination fees, original issue discount and market discount earned on accruing
      loans and debt securities, divided by (b) total loans and debt securities at
      value. The weighted average yield is computed as of the balance sheet
      date.  Prepayment premiums are recorded on loans when
      received.




**Portfolio
      Valuation Process**




Our
      methodology includes the examination of, among other things, the underlying
      investment performance, financial condition, and market-changing events that
      affect valuation. Because of the type of investments that the Company makes
      and
      the nature of our business, this valuation process requires an analysis of
      various factors consistent with the provisions of section (2) of the 1940
      Act.


11




Our
      process for determining the fair value for a private finance investment is
      applied consistently across our portfolio. The process is as
      follows.




·
            First,
                the Company determines the portfolio company’s enterprise value as if the
                Company were to sell it in a “current sale.” In our valuation process, the
                Company uses the AICPA’s definition of “current sale,” which means an
                “orderly disposition over a reasonable period of time between willing
                parties other than in a forced or liquidation
                sale.”




·
            The
                Company then evaluates the amount of our debt and the position of
                our debt
                in the portfolio company’s capital
                structure.




·
            If
                the enterprise value of the portfolio company is in excess of the
                amount
                of our last dollar of investment capital given our priority in the
                capital
                structure, the fair value of our investment will be considered to
                be our
                cost or perhaps, given the structure of our particular security,
                greater
                than cost if we are to share in equity
                appreciation.




·
            If
                the enterprise value of the portfolio company is less than our last
                dollar
                of investment capital in the capital structure, then our investment
                has
                declined in value and the Company needs to reduce the fair value
                of our
                investment and incur a charge to our earnings by recognizing unrealized
                depreciation.




Determining
      the enterprise value of a portfolio company, as if that portfolio company were
      to be sold in a “current sale,” is a very complex process, where we must analyze
      the historical and projected financial results of the portfolio company and
      analyze the public trading market and private merger and acquisition market
      to
      determine appropriate purchase price multiples. In addition, a reasonable
      discount to the value of our securities must also be reflected when the Company
      may have restrictions such as vesting periods for warrants or other factors.
      We
      also take into account the collectability of non-cash interest to determine
      if
      the Company will continue to accrue such interest.




**Specific
      Considerations**




The
      valuation of illiquid private securities is inherently subjective, and as a
      result, the Company intends to exercise good judgment in our valuation process.
      Specifically, we will exercise care to assure that the Company has considered
      the position of the portfolio company today and the position of our security
      today given the data we have available. We will also exercise care to assure
      that the process is not too mechanical; however, there are some specific
      considerations to be addressed in our valuation process. The ultimate goal
      is a
      reasonable estimate of fair value determined in good faith.




Typically,
      in the private equity business, companies are bought and sold based upon
      multiples of EBITDA, cash flow, revenues and in limited instances book value.
      In
      determining a multiple to use for valuation purposes, we will look to private
      M&A statistics, reported public trading multiples and industry
      practices.  In determining the right multiple, we intend to consider
      not only the fact that our portfolio company may be private relative to a peer
      group, but also the size and scope of our portfolio company and its specific
      strengths and weaknesses. In some cases, when a portfolio company is at EBITDA
      breakeven or slightly below but has excellent future prospects, we believe
      the
      best valuation methodology may be a discounted cash flow analysis based upon
      future projections. If a portfolio company is distressed, we believe a
      liquidation analysis may provide the best indication of enterprise
      value.


12




**Discounts
      on common equity securities**




When
      determining the value of common equity securities or warrants to purchase such
      securities, we intend to consider what type of discount to apply to the value
      of
      the security if the Company is in a minority position, has restrictions on
      resale, has specific concerns about the receptivity of the M&A market to a
      specific portfolio company at a certain time and other factors. Generally,
      we
      find that the Company should apply larger discounts when we are new to an
      investment, and therefore, we have not yet developed an exit
      strategy.  As an investment in the portfolio matures, we intend to
      consider whether or not the Company should begin to reduce discounts, especially
      if we are generally aware that either we or a controlling shareholder group
      has
      begun to develop an exit strategy.




When
      we
      have begun to develop an exit strategy of the Company is the controlling
      shareholder, the discount imposed should generally be less than in the case
      of a
      minority position.  We may still contemplate the need to discount for
      the current state of the M&A market or restrictions imposed on us due to our
      relationship with management of the portfolio company or other capital
      providers.




**Note
      4.  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
      5. Debt**





As
      of May
      31, 2007 the company has no debt.





**Note
      6. 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.


13





**Note
      7. Employee Compensation Plans**





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





**Note
      8. Stock Option Plans**





The
      Company has no Stock Option Plans.





**Note
      9 Financial Highlights –**





Nine
              Months
              Ended
              May 31,
              2007
            
            Year
              Ended
              Aug. 31,
              2006RestatedPer
                share informationNet
                asset value, beginning of period
            
            
            0.03
            
            
            0.00Net
                investment income (loss)  (1)
            
            
            (0.05
            )
            
            (0.05
            )Net
                realized and unrealized gain (loss)  (1)
            
            
            1.41Net
                increase (decrease) in net assetsresulting
                from operations  (1)
            
            
            1.36
            
            
            (0.05
            )Issuance
                of common stock, warrantsand
                other new equity  (1)
            
            
            0.45
            
            
            0.08Net
                asset (deficit) value, end of period
            
            
            1.84
            
            
            0.03Per
                share market value, end of period  (2)
            
            
            N/A
            
            
            N/ATotal
                Return Based Upon Net Asset Value
            
            
            —
            %
            
            NCRatios
                and Supplemental DataNet
                assets, end of period
            
            
            201,093
            
            
            609,541Common
                shares outstanding at end of period
            
            
            38,188,486
            
            
            20,358,486Diluted
                weighted average number of sharesoutstanding
                during the year
            
            
            25,888,375
            
            
            19,177,000Ratio
                of expenses to average net assets  (3)
            
            
            6
            %
            
            334
            %Ratio
                of net increase (decrease) in net assets fromoperations
                to average net assets  (3)
            
            
            -6
            %
            
            -331
            %Average
                Debt Outstanding
            
            
            0
            
            
            0Average
                Debt per Share




14





(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




During
      the quarter ended May 31, 2007, our Net Investment Income incurred a net loss
      of
      $301,936. Total expenses incurred were $303,123 of which $268,924 were for
      Employees and Consulting and $34,199 were for General and Administrative
      Expense.  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 $183,320 at May 31, 2007 and had no other assets to meet ongoing
      expenses or debts that may accumulate.  As of such date, we have
      accumulated a deficit of $11,171,422.  For the nine months ended May
      31, 2007 we had expenses totaling $ 1,189,093.





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
      10. Hedging Activities:**





The
      Company did not engage in Hedging Activity.





**Note
      11 Litigation:**





The
      Company has no lawsuits pending.




15




**ITEM
      3.    MANAGEMENT'S DISCUSSION and ANALYSIS or PLAN of
      OPERATIONS.**





The
      following discussion should be read in conjunction with our unaudited financial
      statements and notes thereto.





**Forward-Looking
      Statements**





This
      quarterly report contains forward-looking statements and information relating
      to
      us that are based on the beliefs of our management as well as assumptions made
      by, and information currently available to, our
      management.   When used in this report, the words "anticipate",
      "believe", "estimate", "expect", "intend", "plan" and similar expressions,
      as
      they relate to us or our management, are intended to identify forward-looking
      statements.  These statements reflect management's current view of us
      concerning future events and are subject to certain risks, uncertainties and
      assumptions, including among many others: a general economic downturn; a
      downturn in the securities markets; federal or state laws or regulations having
      an adverse effect on proposed transactions that we desire to effect; Securities
      and Exchange Commission regulations which affect trading in the securities
      of
      "penny stocks,"; and other risks and uncertainties. Should any of these risks
      or
      uncertainties materialize, or should underlying assumptions prove incorrect,
      actual results may vary materially from those described in this report as
      anticipated, estimated or expected.  All forward-looking statements
      attributable to us are expressly qualified in their entirety by the forgoing
      cautionary statement.





**Overview**





Our
      investment objective is to generate both current income and capital appreciation
      to deliver superior, risk adjusted returns to investors through investment
      in
      the debt and equity securities of privately and publicly held micro-cap
      companies (market capitalization below $50 million) that are based in the U.S.
      and that offer products and services that can be successfully expanded, marketed
      and sold in commercially viable international markets. Our principals’
experience combines economic and financial analysis with expertise in business
      strategy and planning, market and demand forecasting, policy analysis, and
      technology development strategy. They have worked on a variety of matters,
      such
      as mergers and acquisitions, new product introductions, strategy and capital
      investment decisions, the outcomes of which often have significant implications
      or consequences for the parties involved.  We will offer our portfolio
      companies a wide array of services such as strategy development, performance
      improvement, corporate portfolio analysis, market demand and new product
      strategies, evaluation of intellectual property and other assets and competition
      analysis.  Matters such as these often require independent analysis,
      and as a result, companies (such as our portfolio companies) must outsource
      this
      work to outside experts. We expect that our portfolio companies will turn to
      us
      because we can provide qualified economic and financial experts to address
      a
      wide variety of matters.





**Plan
      of Operation**





In
      addition to our internal Company resources, we believe that we will be able
      to
      provide such advice and assistance by using our extensive international network
      of agents and affiliates, located in many countries and regions and spanning
      more than five continents.  This network, which we refer to as
      Imperiali Inc.’s Global Advisory Team, is able to monitor and in some cases
      influence events, prudently utilizing the tools and leverage that the portfolio
      company’s business model affords, endeavoring to mitigate risks and safeguard
      investments, with the idea of protecting the Company’s shareholders’
interest.


16




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.





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.


17


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**





During
      the quarter ended May 31, 2007, our Net Investment Income incurred a net loss
      of
      $301,936. Total expenses incurred were $303,123 of which $268,924 were for
      Employees and Consulting and $34,199 were for General and Administrative
      Expense.  General and administrative expenses related primarily to
      rent, salaries, telephone, other office costs and costs associated with being
      a
      reporting company.  Imperiali, Inc. also saw a substantial increase in
      the value of our portfolio companies.





**Liquidity
      and Capital Resources**





We
      had
      cash on hand of $183,320 at May 31, 2007 and had no other assets to meet ongoing
      expenses or debts that may accumulate.  As of such date, we have
      accumulated a deficit of $11,171,422.  For the nine months ended May
      31, 2007 we had expenses totaling $ 1,189,093.





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;




18





·
            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.





**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 our 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.


19




**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.




**We
      are dependent on a key person.**




Daniel
      J.
      Imperato has principally conducted the development stage activities of the
      Company. Although he is not an employee of the Company, the loss of his services
      as an advisor could negatively affect the Company.  The Company has
      purchased “key man” life insurance on the life of Mr. Imperato.




**We
      anticipate future capital needs but have no certain source of additional
      financing.**




Our
      capital requirements will be significant.  Management believes that
      the net proceeds of the Offering should suffice to fund operations and our
      business plan for a period of 12 months if the maximum number of shares is
      sold.  However, no assurance can be given that such proceeds will in
      fact be sufficient to fund operations for such period.  The Company
      has no commitments for long-term financing.  There can be no assurance
      that such financing will be available on favorable terms or at all.




**We
      may face leverage risk.**




The
      Company may borrow money or issue debt securities to leverage its capital
      structure. If the Company does so:




·
            The
                Company's common shares will be exposed to incremental risk of loss.
                In
                these circumstances, a decrease in the value of the Company's investments
                would have a greater negative impact on the value of its common shares
                than if it did not use leverage.




·
            Adverse
                changes in interest rates could reduce or eliminate the incremental
                income
                the Company expects to make with the proceeds of any
                leverage.




20





·
            The
                Company's ability to pay dividends on its common shares will be restricted
                if its asset coverage ratio is not at least 200% and any amounts
                used to
                service indebtedness would not be available for such
                dividends.




·
            It
                is likely that such securities will be governed by an indenture or
                other
                instrument containing covenants restricting the Company's operating
                flexibility.




·
            The
                Company, and indirectly its shareholders, will bear the cost of issuing
                and paying interest on such
                securities.




**We
      depend upon key employees to generate revenue.**




We
      are an
      economic and business development firm that will apply analytic techniques
      and
      industry knowledge to various investments in a broad range of portfolio
      companies.  Accordingly, our success depends heavily on the efforts,
      abilities, business generation capabilities, and project execution capabilities
      of our employees. In particular, our employees’ personal relationships with our
      portfolio companies are a critical element in obtaining and maintaining
      portfolio companies’ investments. If the Company loses the services of any
      employee or if our employees fail to generate business or otherwise fail to
      perform effectively, that loss or failure could adversely affect our revenues
      and results of operations.





**Much
      of our business plan depends on our non-employee experts.**




The
      Company depends on our relationships with members of our Global Advisory Teams
      and our non-employee consultants to execute our business plan.  We
      believe that these people are highly regarded in their fields and locales and
      that each offers a combination of knowledge, experience, and expertise that
      would be very difficult to replace. We also believe that the Company will be
      able to secure some investments in portfolio companies and attract other
      professionals to join our team in part because the Company can offer the
      services of these experts. Most of these experts can limit their relationships
      with us at any time for any or no reason.




**Our
      failure to manage growth successfully could adversely affect our revenues and
      results of operations**




We
      anticipate that providing global services will require that we open additional
      offices. Opening and managing new offices often requires extensive management
      supervision and increases our overall selling, general, and administrative
      expenses. Expansion creates new and increased management, investment, and
      training responsibilities for our employees. Expansion also increases the
      demands on our internal systems, procedures, and controls, and on our
      managerial, administrative, financial, marketing, and other resources. Any
      failure on our part to manage growth successfully could adversely affect our
      revenues and results of operations.





**Maintaining
      our professional reputation is crucial to our future
      success**




Our
      ability to secure new investments and hire qualified persons as employees
      depends heavily on our overall reputation as well as the individual reputations
      of our employees, the members of our Global Advisory Teams and our non-employee
      consultants. Because we expect that in the future the Company will obtain a
      majority of our new investments from existing portfolio companies or from
      referrals by those portfolio companies, any portfolio company that is
      dissatisfied with our performance on a single matter could seriously impair
      our
      ability to secure new investments. Given the frequently high-profile nature
      of
      the matters on which the Company will work, any factor that diminishes our
      reputation or the reputations of any of our employees, the members of our Global
      Advisory Teams and our non-employee consultants could make it substantially
      more
      difficult for us to compete successfully for both new investments and qualified
      persons to hire as employees.


21




**Our
      investments may result in professional liability**




Our
      services will typically involve difficult analytical assignments and carry
      risks
      of professional and other liability. Many of our investments will involve
      matters that could have a severe impact on a portfolio company’s business, cause
      the portfolio company to lose significant amounts of money, or prevent the
      portfolio company from pursuing desirable business opportunities. Accordingly,
      if a portfolio company is dissatisfied with our performance, that company could
      threaten or bring litigation in order to recover damages or to contest its
      obligation to pay our fees. Litigation alleging that we performed negligently
      or
      otherwise breached our obligations to a portfolio company could expose us to
      significant liabilities and tarnish our reputation.




**Our
      common stock has no prior trading market or liquidity, and the Company cannot
      assure you that any trading market will develop.**




Prior
      to
      the date of this Registration Statement, there has not been any established
      trading market for our common stock.    If the Company can
      qualify, we will attempt to register our shares for trading on the American
      Stock Exchange, although the Company cannot assure you as to the timing of
      that
      application or the likelihood of it being accepted.   If the
      application is accepted, we cannot predict the extent to which investor interest
      will lead to the development of an active, liquid trading
      market.   Active trading markets generally result in lower price
      volatility and more efficient execution of buy and sell orders for
      investors.




**The
      Company has filed a notice of intent to elect business development company
      status that, once effective, will require us to comply with significant
      regulatory requirements.**




The
      Company filed notice with the Securities and Exchange Commission elected 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.


22


**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.




**BUSINESS
      DEVELOPMENT COMPANY RISKS**




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




Investments
      in micro-cap companies and growth stage companies offer the opportunity for
      significant gains.   However, each investment involves a high
      degree of business and financial risk that can result in substantial losses,
      including:




·
            These
                companies may have limited financial resources and may be unable
                to meet
                their obligations under their securities that the Company holds,
                which may
                be accompanied by a deterioration in the value of any
                collateral.




·
            They
                typically have shorter operating histories, narrower product lines
                and
                smaller market shares than larger businesses, which tend to render
                them
                more vulnerable to competitors' actions and market conditions, as
                well as
                general economic downturns.




·
            They
                are more likely to depend on the management talents and efforts of
                a small
                group of persons; therefore, the death, disability, resignation or
                termination of one or more of these persons could have a material
                adverse
                impact on the portfolio company and, in turn, on the
                Company.




23





·
            They
                generally have less predictable operating results, may from time
                to time
                be parties to litigation, may be engaged in rapidly changing businesses
                with products subject to a substantial risk of obsolescence, and
                may
                require substantial additional capital to support their operations,
                finance expansion or maintain their competitive
                position.




·
            They
                may cease to be treated as private companies for purposes of the
                regulatory restrictions applicable to the Company, in which case
                the
                Company may not be able to invest additional amounts in
                them.




·
            Little
                public information exists about these companies. The greater difficulty
                in
                making a fully informed investment decision raises the risk of misjudging
                the credit quality of the company, and the Company may lose money
                on its
                investments.




**Investing
      in small and growth stage companies presents valuation
      difficulties.**




A
      large
      percentage of the Company's portfolio investments will be in the form of
      securities that are not publicly traded. The fair value of securities and other
      investments that are not publicly traded may not be readily determinable. The
      Company will value these securities at least quarterly at fair value as
      determined in good faith by the Board of Directors, possibly with the assistance
      of an independent valuation firm. However, because fair valuations, and
      particularly fair valuations of private securities and private companies, are
      inherently uncertain, may fluctuate over short periods of time and are often
      based to a large extent on estimates, comparisons and qualitative evaluations
      of
      private information, the Company's determinations of fair value may differ
      materially from the values that would have been determined if a ready market
      for
      these securities existed. This could make it more difficult for investors to
      accurately value the Company's portfolio investments and could lead to
      under-valuation or over-valuation of its common shares.




**Portfolio
      companies are likely to need additional funding.**




The
      Company expects that many portfolio companies will require additional financing
      to satisfy their working capital requirements.   The amount of
      additional financing needed will depend upon the maturity and objectives of
      the
      particular company.   Each round of venture financing, whether
      from us or other investors, is typically intended to provide a portfolio company
      with enough capital to reach the next major valuation milestone.  If
      the funds provided are not sufficient, a portfolio company may have to raise
      additional capital at a price unfavorable to the existing
      investors.   The availability of capital is generally a function
      of capital market conditions that are beyond the control of any portfolio
      company.   The Company cannot assure you that our management or
      the managements of portfolio companies will be able to predict accurately the
      future capital requirements necessary for success or those additional funds
      will
      be available to portfolio companies from any source. If funding is not
      available, some portfolio companies may be forced to cease
      operations.




**Business
      development companies’ investments are generally illiquid** .




The
      Company expects to make the majority of our investments in micro-cap companies
      and growth stage companies. Substantially all of the securities of such
      portfolio companies will be subject to legal and other restrictions on resale
      or
      will otherwise be less liquid than publicly traded securities. The illiquidity
      of these investments may make it difficult for the Company to sell such
      investments if the need arises. In addition, if the Company is required to
      liquidate all or a portion of its portfolio quickly, it may realize
      significantly less than the value at which it has previously recorded such
      investments. In addition, the Company may face other restrictions on its ability
      to liquidate an investment in a portfolio company to the extent that it has
      material non-public information regarding such portfolio
      company.


24




**Business
      development companies generally require substantial amounts of time to realize
      the benefits from investments** .




The
      Company anticipates that there will be a significant period of time ranging
      from
      one to three years before the Company has obtained funding and completed the
      initial selection of portfolio companies for our first round of equity
      investments.   Venture capital investments typically take from
      four to eight years from the date of initial investment to reach a state of
      maturity at which liquidation can be considered practical.   In
      light of the foregoing, it is unlikely that any significant distributions of
      the
      proceeds from the liquidation of equity investments will be made for several
      years after inception, if at all.




**The
      Company has not made any commitments to any prospective portfolio
      companies** .




Because
      the Company has not made any commitments to any prospective portfolio company,
      investors will not have an opportunity to carefully evaluate any of the
      portfolio companies that the Company may eventually invest in and such
      evaluation will be entirely dependent upon our management for selecting and
      negotiating with these portfolio companies.   The Company cannot
      assure you that we will successfully negotiate a transaction with a portfolio
      company.




**Portfolio
      companies may be more sensitive to economic recessions or
      downturns.**




Many
      of
      the Company's portfolio companies may be susceptible to economic slowdowns
      or
      recessions and may be unable to repay loans or pay dividends during these
      periods. Therefore, the Company's non-performing assets are likely to increase
      and the value of its portfolio is likely to decrease during these periods.
      Adverse economic conditions also may decrease the value of collateral securing
      some of the Company's loans and the value of its equity investments. Economic
      slowdowns or recessions could lead to financial losses in its portfolio and
      a
      decrease in revenues, net income and assets. Unfavorable economic conditions
      also could increase funding costs, limit access to the capital markets or result
      in a decision by lenders not to extend credit to the Company. These events
      could
      prevent the Company from increasing investments and harm its operating
      results.




A
      portfolio company's failure to satisfy financial or operating covenants could
      lead to defaults and, potentially, termination of its loans and foreclosure
      on
      its secured assets, which could trigger cross-defaults under other agreements
      and jeopardize the portfolio company's ability to meet its obligations under
      the
      debt or equity securities that the Company holds. The Company may need to incur
      additional expenses to seek recovery upon default or to negotiate new terms
      with
      a defaulting portfolio company. In addition, if one of the Company's portfolio
      companies were to go bankrupt, even though the Company may have structured
      its
      interest as senior debt, depending on the facts and circumstances, including
      the
      extent to which the Company actually provided significant managerial assistance
      to that portfolio company, a bankruptcy court might re-characterize the
      Company's debt holding and subordinate all or a portion of our claim to that
      of
      other creditors.


25




**Our
      investment decisions may present industry, sector and issuer
      risk.**




The
      Company may, from time to time, invest a substantial portion of its assets
      in
      the securities of issuers in any single industry or sector of the economy or
      in
      only a few issuers. The Company cannot predict the industries or sectors in
      which its investment strategy may cause it to concentrate and cannot predict
      the
      level of its diversification among issuers, although over time the Company
      anticipates investing in a minimum of 15 to 20 issuers to ensure it satisfies
      diversification requirements for qualification as a regulated investment company
      for U.S. federal income tax purposes. Concentration of the Company's assets
      in
      an industry or sector may present more risks than if it were broadly diversified
      over numerous industries and sectors of the economy. A downturn in an industry
      or sector in which the Company is concentrated would have a larger impact on
      us
      than on a company that does not concentrate in industry or sector. As a result
      of investing a greater portion of the Company's assets in the securities of
      a
      smaller number of issuers, the Company would be classified as a non-diversified
      company under the 1940 Act. The Company may be more vulnerable to events
      affecting a single issuer or industry and therefore subject to greater
      volatility than a company whose investments are more broadly diversified.
      Accordingly, an investment in the Company may present greater risk than an
      investment in a diversified company. Furthermore, we have not made and do not
      intend to make any determination as to the allocation of assets among different
      classes of securities. Consequently, at any point in time the Company may be
      highly concentrated in a single type of asset and events which affect a
      particular asset class disproportionately could have an equally disproportionate
      effect on the Company.




**There
      may be changes in laws or regulations governing portfolio
      companies.**




The
      Company's portfolio companies will be subject to regulation by laws at the
      local, state and federal level and, to the extent that we are successful in
      expanding our portfolio companies’ operations globally, the laws of foreign
      countries as well.  These laws and regulations, as well as their
      interpretation, may be changed from time to time. Any change in these laws
      or
      regulations, or any failure to comply with them by the Company's portfolio
      companies, could have a material adverse affect on the Company's
      business.





**ITEM
      4.        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 May 31, 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.


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**PART
      II.       OTHER
      INFORMATION**




**ITEM 5.**
            
            **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 filed   pursuant to Section 302
                of the Sarbanes-Oxley Act of 200232
            Certification
                of Chief Executive Officer furnished pursuant to 18 U.S.C. Section
                1350,
                as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002(b)
            
            REPORTS
                ON FORM 8-K.  None




**SIGNATURES**





In
      accordance with the requirements of the Securities Exchange Act of 1934, the
      registrant caused this Report on Form 10-Q to be signed on its behalf by the
      undersigned, thereunto duly authorized.





DATE:  September
      19, 2008




**Imperiali Inc**By:
            /s/Daniel
                ImperatoInterim
                Non-Executive Chairman Emeritus




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