**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington
      D.C. 20549**


x
            
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                OF 1934****For
                the quarterly period ended September 30, 2006****or**o
            
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                OF 1934**




**Form 10-Q**




**Commission
      File Number 000-52011**




**Conihasset
      Capital Partners, Inc.**


*(Exact
      name of the registrant as specified in its charter)*


**Delaware**
            
            **20-4414490***(State
                or other jurisdiction of*
              *incorporation
                or organization)*
            
            *(I.R.S.
                Employer*
              *Identification
                No.)***21
                Custom House Street**
              **9th Floor**
              **Boston,
                Massachusetts**
              *(Address
                of principal executive offices)*
            
            **02108**
              *(Zip
                Code)*




**Registrant’s
      telephone number, including area code:**


**(617) 320-8347**




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 for such shorter period that the
      registrant was required to file such reports), and (2) has been subject to
      such filing requirements for the past
      90 days. Yes o No x




Indicate by check mark whether the registrant is a large accelerated filer,
      an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
      (Check one):


Large
      accelerated filer o Accelerated
      filer o Non-accelerated filer x




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




There were 275,540 shares of the registrant’s common stock, $0.001 par
      value, outstanding as of November 10, 2006.











**Conihasset
      Capital Partners, Inc.**


**(A
      Delaware Corporation)**


**Index**




**Part I.
                    Financial Information**Item 1.
                Financial
                    StatementsStatement of Assets and Liabilities• As
                    of September 30, 2006
                
                
                3Statements of Operations• For
                    the three months ended September 30, 2006 and the period from
                    Inception(March
                    1, 2006) to September 30, 2006
                
                
                4Schedule of Investments• September
                    30, 2006
                
                
                5Statements of Changes in Net Assets• For
                    the three months ended September 30, 2006 and the period from
                    Inception(March
                    1, 2006) to September 30, 2006
                
                
                6Statements of Cash Flows• For
                    the three months ended September 30, 2006 and the period from
                    Inception(March
                    1, 2006) to September 30, 2006
                
                
                7Notes to Financial Statements
                
                
                8Item 2.
                Management’s Discussion and Analysis of Financial Condition and Resultsof
                    Operations
                
                
                17Item 3.
                Quantitative and Qualitative Disclosures about Market Risk
                
                
                21Item 4.
                Controls and Procedures
                
                
                22**Part II.
                    Other Information**Item 1.
                Legal Proceedings
                
                
                22Item 1A.
                Risk Factors
                
                
                22Item 2.
                Unregistered Sales of Equity Securities and Use of
                    Proceeds
                
                
                32Item 3.
                Defaults Upon Senior Securities
                
                
                32Item 4.
                Submissions of Matters to a Vote of Security Holders
                
                
                32Item 5.
                Other Information
                
                
                32Item 6.
                Exhibits
                
                
                32SIGNATURES
                
                33







2





**Item
      1.**  **Financial
      Statements.**




CONIHASSET
      CAPITAL PARTNERS, INC.


(a
      development stage company)





Statement
      of Assets and Liabilities


September
      30 ,
      2006


(unaudited)


**Assets**Investments
                  - controlled
              
              $
              250,100Cash
                  and cash equivalents
              
              
              2,981Interest
                  receivable from controlled investments
              
              
              3,017Prepaid
                  expense
              
              
              63,972Total
                  Assets
              
              $
              320,070**Liabilities
                  and deficiency in net assets**Accrued
                  organizational costs
              
              $
              40,000Accrued
                  offering costs
              
              
              222,014Accounts
                  payable and accrued expenses
              
              
              113,174Accrued
                  officer payroll and related payroll taxes
              
              
              46,063Due
                  to a stockholder
              
              
              2,500Total
                  Liabilities
              
              
              423,751**Deficiency
                  in net assets**Preferred
                  stock, par value $0.001:1,000,000
                  shares authorized;no
                  shares issued and outstanding
              
              
              -Common
                  stock, par value $0.001 per share:10,000,000
                  shares authorized, 66,520 sharesissued
                  and outstanding
              
              
              67Additional
                  paid-in capital
              
              
              43,191Deficit
                  accumulated during development stage
              
              
              (146,939
              )Total
                  deficiency in net assets
              
              
              (103,681
              )Total
                  liabilities and deficiency in net assets
              
              $
              320,070Deficiency
                  in net asset value per share
              
              $
              (1.56
              )




See
      accompanying notes to financial statements.







3





CONIHASSET
      CAPITAL PARTNERS, INC.


(a
      development stage company)





Statements
      of Operations


(unaudited)





For
                the three
              months
                ended
              September
                30, 2006
            
            For
                the period from inception
              (March
                1, 2006) to September 30, 2006Investment
                incomeInterest
                from controlled investments
            
            $
            1,857
            
            $
            3,017Structuring
                fees
            
            
            9,000
            
            
            9,000Total
                Operating Income
            
            
            10,857
            
            
            12,017Costs
                and expensesOrganization
                expenses
            
            
            -
            
            
            40,000Officer
                salaries and related payroll taxes
            
            
            46,063
            
            
            46,063Rent
            
            
            200
            
            
            200Professional
                fees
            
            
            55,361
            
            
            55,361Director
                fees
            
            
            8,125
            
            
            8,125General
                and administrative
            
            
            9,207
            
            
            9,207Total
                Operating Expenses
            
            
            118,956
            
            
            158,956Net
                investment loss
            
            
            (108,099
            )
            
            (146,939
            )Realized
                and unrealized gain (loss) on investments
            
            
            -
            
            
            -**Decrease
                in net assets from operations**
            
            $
            (108,099
            )
            $
            (146,939
            )Decrease
                in net assets from operations attributable tocommon
                stockholders, per share
            
            $
            (2.42
            )
            $
            (4.55
            )Weighted
                average shares of common stock outstanding, basic and
                diluted
            
            
            44,754
            
            
            32,288




See
      accompanying notes to financial
      statements.





4





CONIHASSET
      CAPITAL PARTNERS, INC.


(a
      development stage company)





Schedule
      of Investments





As
      of
      September 30, 2006


(unaudited)








Company
            
            Industry
            
            Investments
            
            Cost
            
            Fair
                Value**Controlled
                Investments**Conihasset
                Management, Inc.
            
            
            Investment
            
            100%
                equity interest
            
            $
            5,000
            
            $
            5,000Conihasset
                Management, Inc.
            
            
            Investment
            
            Notes
                receivable, 4.83%,due
                3/30/09
            
            
            95,100
            
            
            95,100MRO
                Integrated Solutions, LLC
            
            
            Investment
            
            Convertible 
                subordinated promissory note,5%,
                due 8/28/11
            
            
            150,000
            
            
            150,000$
            250,100
            
            $
            250,100







See
      accompanying notes to financial
      statements.





5





CONIHASSET
      CAPITAL PARTNERS, INC.


(a
      development stage company)





Statements
      of Changes in Net Assets


(unaudited)








For
                  the three months ended September 30, 2006
              
              For
                  the period from inception
                (March
                  1, 2006) to
                September
                  30, 2006OPERATIONSDecrease
                  in net assets from operations
              
              $
              (108,099
              )
              $
              (146,939
              )STOCKHOLDERS’
                  ACTIVITY:Issuance
                  of common stock for cash
              
              
              182,500
              
              
              332,600Offering
                  costs incurred
              
              
              (77,171
              )
              
              (289,342
              )Increase
                  in net assets from stockholders’ activity
              
              
              105,329
              
              
              43,258NET
                  DECREASE IN NET ASSETS
              
              
              (2,770
              )
              
              (103,681
              )NET
                  ASSETS(DEFICIENCY):Beginning
                  of period
              
              
              (100,911
              )
              
              -End
                  of period
              
              $
              (103,681
              )
              $
              (103,681
              )





See
      accompanying notes to financial
      statements.





6





CONIHASSET
      CAPITAL PARTNERS, INC.


(a
      development stage company)





Statements
      of Cash Flows


(unaudited)


For
                the three months ended
              September
                30, 2006
            
            For
                the period from inception
              (March
                1, 2006) to September 30, 2006**Cash
                flow from operating activities:**Decrease
                in net assets resulting from operations
            
            $
            (108,099
            )
            $
            (146,939
            )Adjustments
                to reconcile decrease in net assets resulting from
                operationsto
                net cash used by operating activities -Purchase
                of controlled investments
            
            
            (150,000
            )
            
            (250,100
            )(Increase)
                in interest receivable from controlled investments
            
            
            (1,857
            )
            
            (3,017
            )(Increase)
                in prepaid expense
            
            
            (63,972
            )
            
            (63,972
            )Increase
                in accounts payable and accrued expenses
            
            
            113,174
            
            
            113,174Increase
                in accrued payroll and payroll taxes
            
            
            46,063
            
            
            46,063Net
                cash used by operating activities
            
            
            (164,691
            )
            
            (304,791
            )**Cash
                flow from financing activities:**Proceeds
                from the issuance of common stock
            
            
            182,500
            
            
            332,600Proceeds
                from stockholders’ loan
            
            
            0
            
            
            2,500Accrued
                organizational costs
            
            
            0
            
            
            40,000Offering
                costs
            
            
            (22,667
            )
            
            (67,328
            )Net
                cash provided by financing activities
            
            
            159,833
            
            
            307,772Net
                (decrease) increase in cash and cash equivalents
            
            
            (4,858
            )
            
            2,981Cash
                and cash equivalents at beginning of period
            
            
            7,839
            
            
            -Cash
                and cash equivalents at end of period
            
            $
            2,981
            
            $
            2,981


SUPPLEMENTAL
                CASH FLOW INFORMATIONCash
                paid for interest
            
            $
            -
            
            $
            -Cash
                paid for income taxes
            
            $
            -
            
            $
            -NON-CASH
                INVESTING AND FINANCING ACTIVITIESDuring
                the three month period ended September 30, 2006 and the period from
                inception (March 1, 2006) through September 30, 2006, the Company
                accrued
                organizational and offering costs totaling $54,504 and $262,014,
                respectively.




See
      accompanying notes to financial
      statements.





7





CONIHASSET
      CAPITAL PARTNERS, INC.





Notes
      to
      Financial Statements


(unaudited)








1.
      ORGANIZATION AND BUSINESS





Conihasset
      Capital Partners, Inc., a development stage company (“CCP” or the “Company”),
      was organized as a Delaware corporation on March 1, 2006. CCP is a newly
      organized closed-end management investment company that has filed an election
      to
      be treated as a business development company (“BDC”) under the Investment
      Company Act of 1940 (the “1940 Act”). BDCs were created by Congress under the
      Small Business Investment Act of 1980. The intent behind the legislation was
      to
      make the U.S. capital markets more easily accessible to small businesses. In
      addition, the legislation was enacted to provide institutional and retail
      investors with an easily accessible avenue to small business loans and
      investments which at the time was regarded as a very difficult asset class
      to
      access by such investors. BDCs differ from more widely known private equity
      partnerships in that they offer liquid investments (i.e., their securities
      can
      be bought and sold by retail investors in the public securities markets) that
      are required to publicly disclose on a quarterly basis the value of each of
      their loans and investments.





CCP
      was
      organized to create a varied portfolio that will include both mezzanine
      investments in and senior secured loans to small U.S. companies, among other
      types of investments, in a broad variety of industries. CCP intends to
      concentrate on making investments in companies having annual revenues of less
      than $100 million. In most cases, these companies will be privately held or
      will
      have thinly traded public equity securities. The Company will generally seek
      to
      target companies that generate positive cash flows in industries which its
      investment professionals have direct expertise, though it may invest in other
      industries if it is presented with attractive opportunities.





The
      Company intends to invest approximately $500 thousand to $3.0 million of
      capital, on average, in the securities of U.S. small companies. Pursuant to
      the
      terms of its offering for sale to the public of up to $5,000,000 of common
      stock, $0.001 par value, at $5.00 per share (the “Offering”), the Company
      intends to immediately begin implementing its investment strategy.  Until
      such time as all of the net proceeds from the Offering are invested pursuant
      to
      the Company's investment strategy, the Company intends to invest any uninvested
      funds in temporary investments, such as cash, cash equivalents, U.S. government
      securities and other high quality debt investments that mature in one year
      or
      less from the date of its investment. As the Company begins to implement its
      investment strategy, a significant portion of its portfolio will consist of
      mezzanine investments and other asset classes. Additionally, the Company may
      acquire investments in the secondary market and, in analyzing such investments,
      will employ the same analytical process as it uses for the investments it
      acquires directly from issuers.





2.
      SIGNIFICANT ACCOUNTING POLICIES




***Interim
      Financial Information***





The
      accompanying statement of assets and liabilities and schedule of investments
      as
      of September 30, 2006, the statements of operations and cash flows, and the
      statements of changes in net assets for the period from inception (March 1, 2006) through September 30, 2006 are unaudited. The
      unaudited interim financial statements have been prepared in accordance with
      U.S. generally accepted accounting principles for the interim financial
      information and, therefore, do not include all the information and footnotes
      required by U.S. generally accepted accounting principles for complete financial
      statements. In the opinion of the Company's management, the unaudited interim
      financial statements include all adjustments consisting of normal recurring
      adjustments and accruals necessary for the fair presentation of the Company's
      financial position, results of operations and its cash flows for the three
      months ended September 30, 2006 and for the period from inception (March 1,
      2006) through September 30, 2006.








8





***Revenue
      Recognition***





Interest
      Income Recognition





Interest
      on commercial loans is recognized when earned and is computed by methods that
      generally result in level rates of return on principal amounts outstanding.





Structuring
      Fees





The
      Company generally charges a structuring fee when originating an investment.
      The
      fee can range anywhere from 4%-6% of the loan amount. The fee is recognized
      as
      earned income when the investment transaction closes.





Other
      Fees





In
      certain investment transactions, we may perform consulting or advisory services,
      for which we will charge a fee. Income is recognized as services are
      performed.





***Investments***





In
      accordance with specific rules for BDCs, subsidiaries hold investments on behalf
      of the Company or provide substantial services to the Company. Portfolio
      investments are held for purposes of deriving investment income and future
      capital gains. The financial results of portfolio investments are not
      consolidated in the Company’s financial statements. At September 30, 2006, the
      Company had two portfolio investments, MRO Integrated Solutions, LLC (“MROIS”)
      and Conihasset Management, Inc. (“CMI”), which is 100% owned by
      CCP.





The
      Company holds a convertible subordinated promissory note from MROIS as an
      investment, bearing interest at 5% per annum and is due August 28, 2011. The
      Company intends to collateralize substantially all of the assets of MROIS in
      order to securitize this note. The note is convertible in whole into membership
      units representing 5% of the total outstanding membership units of MROIS. The
      Company, at its option, can convert the note at anytime on or before the
      maturity date.





The
      Company holds notes receivable totaling $95,100 from CMI as an investment,
      bearing interest at 4.83% per annum and is due March 30, 2009, and also holds
      an
      equity investment in CMI valued at $5,000.








9





Summarized
      financial information of CMI is as follows:








Balance
      Sheet


September
      30, 2006


(unaudited)





Investment,
                at cost
            
            $
            100,100Total
                assets
            
            $
            100,100Notes
                payable to parent company
            
            $
            95,100Interest
                payable to parent company
            
            
            2,309Total
                liabilities
            
            
            97,409Common
                stock
            
            
            5,000Retained
                earnings
            
            
            (2,309
            )Total
                stockholder’s equity
            
            
            2,691Total
                liabilities and stockholder's equity
            
            $
            100,100





Statement
      of Operations


For
      the
      period from inception (March 1, 2006) through September 30, 2006


(unaudited)


Interest
                Expense
            
            $
            2,309Net
                Loss from Operations
            
            $
            (2,309
            )





***Use
      of Estimates in Preparation of Financial Statements***





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 the reported amount of assets and
      liabilities at the date of the financial statements and the reported amounts
      of
      income and expenses during the reported period. The Company evaluates all of
      its
      estimates on an on-going basis. Actual results could differ from these
      estimates.





***Cash
      and Cash Equivalents***





Cash
      and
      cash equivalents consist of cash and investments with original maturities to
      the
      Company of three months or less. Cash is invested at high quality financial
      institutions.





***Fair
      Value of Financial Instruments***





The
      fair
      value of financial instruments is the amount for which the instrument could
      be
      exchanged in a current transaction between willing parties. As of September
      30,
      2006, the carrying values of cash and cash equivalents and accrued expenses
      approximated their respective fair values because of the short duration of
      these
      instruments.











10





***Valuation
      of Investments***





Unrestricted
      securities that are publicly traded are valued at the closing price on the
      valuation date. Debt and equity securities of companies that are not publicly
      traded, or for which the Company has various degrees of trading restrictions
      are
      carried at fair value, as determined in good faith by the Company’s Board of
      Directors. In determining fair value, the Company prepares an analysis
      consisting of traditional valuation methodologies to estimate the enterprise
      value of the portfolio company issuing the securities. The methodologies consist
      of valuation estimates based on: valuations of comparable public companies,
      recent sales of comparable companies, discounting the forecasted cash flows
      of
      the portfolio company, the liquidation or collateral value of the portfolio
      company’s assets, third party valuations of the portfolio company, third party
      sale offers, potential strategic buyer analysis and the value of recent
      investments in the equity securities of the portfolio company. The Company
      will
      weight some or all of the above valuation methods in order to conclude on its
      estimate of value. Where embedded derivatives exist relating to convertible
      debt, equity or other securities, a fair value model will be utilized which
      will
      include multiple probability-weighted scenarios under various assumptions
      reflecting the economics of the convertible debt, such as the risk-free interest
      rate, expected issuer stock price and volatility, likelihood of conversion
      and
      or redemption, and likelihood default status and timely registration. In valuing
      convertible debt, equity or other securities, the Company values its equity
      investment based on its pro rata share of the residual equity value available
      after deducting all outstanding debt from the estimated enterprise value. The
      Company values non-convertible debt securities at cost plus amortized original
      issue discount (“OID”) to the extent that the estimated enterprise value of the
      portfolio company exceeds the outstanding debt of the portfolio company. If
      the
      estimated enterprise value is less than the outstanding debt of the company,
      the
      Company will reduce the value of its debt investment beginning with the junior
      most debt such that the enterprise value less the value of the outstanding
      debt
      is zero. If there is sufficient enterprise value to cover the face amount of
      a
      debt security that has been discounted due to detachable equity warrants
      received with that security, that detachable equity warrant will be valued
      such
      that the sum of the discounted debt security and the detachable equity warrant
      equal the face value of the debt security. For CMBS (collateralized
      mortgage-backed securities) and CDO (collateralized
      debt obligations) securities, the Company prepares a fair value analysis which is based on a
      discounted cash flow model that utilizes prepayment and loss assumptions based
      on historical experience and projected performance, economic factors, the
      characteristics of the underlying cash flow, and comparable yields for similar
      securities, when available.





Due
      to
      the uncertainty inherent in the valuation process, estimates of fair value
      may
      differ significantly from the values that would have been used had a ready
      market for the securities existed, and the differences could be material.
      Additionally, changes in the market environment and other events that may occur
      over the life of the investments may cause the gains or losses ultimately
      realized on these investments to be different from the valuations currently
      assigned. As of September 30, 2006, the percentage of the Company’s investments
      that were not publicly traded or for which the Company has various degrees
      of
      trading restrictions, and thus in which the fair value was determined in good
      faith by the Company’s Board of Directors, was 100%.





***Decrease
      in Net Assets from Operations Attributable to Common Stockholders, Per
      Share***





Basic
      loss per common share is computed by dividing net loss allocable to common
      stockholders by the weighted average number of common shares outstanding for
      the
      period. Diluted net loss per share reflects the dilution from the potential
      conversion or exercise into common stock of securities such as warrants. In
      all
      financial statements presented, diluted net loss per common share is the same
      as
      basic net loss per common share. The Company did not issue any potentially
      dilutive instruments in the three months ended September 30, 2006 and in the
      period of inception (March 1, 2006) though September 30, 2006.





***Stock
      Based Compensation***





Effective
      on the Company’s date of inception (March 1, 2006), the Company adopted the fair
      value recognition provisions of SFAS No. 123R. On June 1, 2006 the Company
      adopted a stock based compensation plan. The Company has not issued stock based
      compensation.





11


In
      March
      2005, the SEC issued SAB 107 providing supplemental implementation guidance
      for
      SFAS 123R. The Company will apply the provisions of SAB 107 in its adoption
      of
      SFAS 123R. As a result of adopting the fair value method for stock compensation,
      all future stock options will be expensed over the award vesting period. For
      stock-based awards granted on or after January 1, 2006, the Company will record
      stock-based compensation expense on a straight-line basis over the requisite
      service period. SFAS
      123R
      requires the use of a valuation model and the Company has elected to utilize
      the
      Black-Scholes option pricing model to estimate the fair value of
      options.





The
      Company did not have any stock-based compensation for the three months ended
      September 30, 2006 or for the period from inception (March 1, 2006) through
      September 30, 2006.





***Concentration
      of Credit Risk***





The
      Company believes it is not exposed to any significant credit risk with cash
      and
      cash equivalents. The Company maintains its cash with a high credit quality
      financial institution. Each account is secured by the Federal Deposit Insurance
      Corporation up to $100,000.





***Federal
      Income Taxes***




For
      U.S.
      federal income tax purposes, the Company is taxed as an ordinary corporation
      under Subchapter C of the Internal Revenue Code (the “Code”).





However,
      the Company intends to operate, as soon as practicable after it qualifies to
      be
      so taxed, as a regulated investment company, or RIC, under the Code and, as
      such, would not be subject to federal income tax on the portion of its taxable
      income and gains distributed to stockholders. To qualify as a RIC, the Company
      is required to distribute at least 90% of its investment company taxable income,
      as defined by the Code, to its stockholders. At this time the Company cannot
      determine when it will be able to qualify as a RIC. Because federal income
      tax
      regulations differ from accounting principles generally accepted in the United
      States, distributions in accordance with tax regulations may differ from net
      investment income and realized gains recognized for financial reporting
      purposes. Differences may be permanent or temporary. Permanent differences
      are
      reclassified among capital accounts in the financial statement to reflect their
      tax character. Temporary differences arise when certain items of income,
      expense, gain or loss are recognized at some time in the future. Differences
      in
      classification may also result from the treatment of short-term gains as
      ordinary income for tax purposes.





The
      Company utilizes the asset and liability method of accounting for deferred
      income taxes. Under this method, deferred tax assets and liabilities are
      established based on the differences between financial statement and income
      tax
      bases of assets and liabilities using enacted tax rates in effect for the year
      in which the differences are expected to reverse. The Company provides a
      valuation allowance against deferred tax assets if, based on the weight of
      available evidence, it is more likely than not that some or all of the deferred
      tax assets will not be realized. The Company has generated a decrease in net
      assets resulting from operations of $108,099 for the three months ended
      September 30, 2006 and of $146,939 for the period of inception (March 1, 2006)
      through September 30, 2006 of its taxable year which would ordinarily create
      a
      Federal and state net operating loss to be carried forward to utilize against
      future taxable income. If the Company elects to qualify as an RIC, it will
      lose
      the benefit of the net operating loss deduction. Therefore, no deferred tax
      asset or valuation allowance will be recorded for the net operating
      loss.








12





***Organization
      and offering costs***





Offering
      costs incurred in connection with the Company’s ongoing Offering are charged
      against additional paid-in capital. Organization expenses are nonrecurring
      and
      include costs of organizing the Company and are charged to expense as
      incurred.





3.
      LIQUIDITY AND CAPITAL RESOURCES




The
      Company currently has minimal revenue from investments and in all likelihood
      will be required to make future expenditures in connection with its marketing
      efforts along with general administrative expenses.




A
      45.1%
      stockholder, which is an entity controlled by the Company’s President/Chief
      Executive Officer and Chief Operating Officer/Executive Vice President, has
      committed to fund any shortfalls in the Company’s cash flow on a day to day
      basis during the period that the Company is in the development stage and is
      in
      the process of undertaking an Offering to raise additional capital through
      the
      exempt sale of its equity securities. Management believes that the commitment
      to
      fund any shortfalls in the Company’s cash flow for the period detailed above
      provide the opportunity for the Company to continue as a going
      concern.




If
      the
      additional financing or arrangements cannot be obtained, the Company would
      be
      materially and adversely affected and there would be substantial doubt about
      the
      Company's ability to continue as a going concern. The financial statements
      do
      not include any adjustments relating to the recoverability and realization
      of
      assets and classifications of liabilities necessary if the Company becomes
      unable to continue as a going concern.





4.
      INVESTMENT CLASSIFICATION





As
      required by the 1940 Act, the Company classifies its investments by level of
      control. “Control Investments” are investments in those companies that the
      Company is deemed to “Control.” Generally, under the 1940 Act, the Company is
      deemed to control a company in which it has invested if it owns more than 25%
      of
      the voting securities of such company or has 50% or more representation on
      its
      board of directors. “Affiliate Investments” are investments in those companies
      that are “Affiliated Companies” of the Company, as defined in the 1940 Act,
      other than Control Investments. “Non-Control/Non-Affiliate Investments” are
      those that are neither Control Investments nor Affiliate Investments. The
      Company is deemed to be an affiliate of a company in which it has invested
      if it
      owns 5% or more of the voting securities of such company.





5.
      RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS





In
      February 2006, the FASB issued SFAS Statement No. 155, “Accounting for Certain
      Hybrid Financial Instruments”, which amends SFAS No. 133 and SFAS No. 140,
“Accounting for Transfers and Servicing of Financial Assets and Extinguishment
      of Liabilities”. SFAS 155 amends SFAS 133 to narrow the scope exception for
      interest-only and principal-only strips on debt instruments to include only
      such
      strips representing rights to receive a specified portion of the contractual
      interest or principle cash flows. SFAS 155 also amends SFAS 140 to allow
      qualifying special-purpose entities to hold a passive derivative financial
      instrument pertaining to beneficial interests that itself is a derivative
      instrument. The adoption of the provisions of SFAS 155 is not expected to have
      a
      material impact on the Company’s financial position or results of
      operations.





In
      June
      2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in
      Income Taxes” (FIN 48), which supplements SFAS No. 109,
“Accounting for Income Taxes,” by defining the confidence level that a tax
      position must meet in order to be recognized in the financial statements. The
      Interpretation requires that the tax effects of a position be recognized only
      if
      it is “more-likely-than-not” to be sustained based solely on its technical
      merits as of the reporting date. The more-likely-than-not threshold represents
      a
      positive assertion by management that a company is entitled to the economic
      benefits of a tax position. If a tax position is not considered
      more-likely-than-not to be sustained based solely on its technical merits,
      no
      benefits of the position are to be recognized. Moreover, the
      more-likely-than-not threshold must continue to be met in each reporting period
      to support continued recognition of a benefit. At adoption, companies must
      adjust their financial statements to reflect only those tax positions that
      are
      more-likely-than-not to be sustained as of the adoption date. Any necessary
      adjustment would be recorded directly to retained earnings in the period of
      adoption and reported as a change in accounting principle. This Interpretation
      is effective as of the beginning of the first fiscal year beginning after
      December 15, 2006. Management is assessing the impact on the Company’s
      financial condition and results of operations.





13


In
      September 2006, the FASB issued SFAS No. 157, *Fair
      Value Measurements* (SFAS
      157). This Statement defines fair value, establishes a framework for measuring
      fair value, and expands disclosures about fair value measurements. SFAS 157
      applies under other accounting pronouncements that require or permit fair value
      measurement. SFAS 157 does not require any new fair value measurements and
      we do
      not expect the application of this standard to change our current practices.
      The
      provisions of SFAS 157 are effective for financial statements issued for fiscal
      years beginning after November 15, 2007 and interim periods within those fiscal
      years. The Company is currently evaluating the potential impact of SFAS
      157.





6.
      RELATED PARTY TRANSACTIONS





On
      June
      2, 2006, the Company received an open account, non-interest bearing advance
      from
      a stockholder totaling $2,500.





The
      Company issued 30,020 shares of common stock (45.1% of its outstanding common
      stock as of September 30, 2006) at $5 per share to Conihasset Partners, LLC,
      an
      entity controlled by the Company’s President/Chief Executive Officer and Chief
      Operating Officer/Executive Vice President. The Company issued an additional
      1,500 shares and 5,000 shares of common stock at $5 per share (2.3% and 7.5%
      respectively of its outstanding common stock as of September 30, 2006) to the
      Chief Operating Officer and Chief Financial Officer, respectively (See Note
      2
      for other related party transactions). The Company has accrued unpaid
      compensation and the related employment taxes to these same
      officers.








14





7.
      FINANCIAL HIGHTLIGHTS




For
                the three
              months
                ended
              September
                30, 2006
            
            For
                the period from inception
              (March
                1, 2006) through
              September
                30, 2006(unaudited)
            
            (unaudited)Selected
                per share dataNet
                asset value, beginning of period
            
            $
            (3.36
            )
            $
            -Issuance
                of common stock
            
            
            5.00
            
            
            5.00Dilutive
                effect of share issuances
            
            
            0.38Offering
                costs
            
            
            (1.16
            )
            
            (4.35
            )Decrease
                in net assets resulting from operations
            
            
            (2.42
            )
            
            (2.21
            )Deficiency
                in net asset value, end of period
            
            $
            (1.56
            )
            $
            (1.56
            )Ratios
                and supplemental dataDeficiency
                in net assets, end of period
            
            $
            (103,681
            )
            $
            (103,681
            )Average
                net assets, annualized
            
            $
            (95,391
            )
            $
            (51,093
            )Total
                operating expenses/average net assets, annualized
            
            
            n/a
                (1
            )
            
            n/a
                (1
            )Net
                investment loss/average net assets
            
            
            n/a
                (1
            )
            
            n/a
                (1
            )





(1)
      The
      Company had negative average net assets for the period from inception (March
      1,
      2006) through September 30, 2006.






15





8.
      SUBSEQUENT EVENTS





On
      October 2, 2006, the Company received a payment in the amount of $75,000 from
      CMI, to be applied against a note receivable.




On
      October 3, 2006, the Company purchased a Convertible Promissory Note (the
“Note”) in the amount of $75,000 from MROIS. Upon purchase of this Note the
      Company realized a structuring fee of 6% of the gross proceeds of the Note.
      The
      Note carries interest at a rate of 5% per annum and is due August 28, 2011.
      The
      Company intends to collateralize substantially all of the assets of MROIS in
      order to securitize the Note. The Note is convertible in whole into membership
      units representing 2.5% of the total outstanding membership units of MROIS.
      The
      Company, at its option, can convert the Note at any time on or before the
      maturity date.




On
      October 23, 2006, the Company sold 9,000 shares of its common stock at $5 per
      share to two investors, as part of and in accordance with the terms of its
      Offering.




On
        November 3, 2006, the
        Company sold 200,000 shares of its common stock at $5 per share
        to
        The Hummingbird Value Fund, L.P. and to The Hummingbird Microcap Value Fund,
        L.P. which
        represents an approximate 73% interest in CCP. The *s* hares
        were acquired for investment purposes.


On
      November 10, 2006, the Company sold 20 shares of its common stock at $5.00
      per
      share to a relative of the Company’s President/Chief Executive
      Officer.




On
      November 10, 2006, the Company’s Board of Director’s voted to approve the
      modification of the Company’s current per share offering price from $5.00 per
      share to $4.54 per share. The Company intends to offer its existing shareholders
      the right to rescind their purchase of shares of common stock of the Company
      acquired as part of the Company’s Offering or the right to receive additional
      shares of the Company’s common stock based on the new offering price. If
      existing shareholders elect to receive additional shares, the Company will
      issue
      a total of 101,321 additional shares under the Company’s Regulation E Offering.
      The Company is required to and will seek SEC approval for these actions. If
      such
      approval is received, the Company will proceed with offering its current
      shareholders the right to rescind their purchase of shares of common stock
      of
      the Company acquired as part of the Company's Offering or the right to receive
      additional shares of the Company's common stock based on the new offering
      price.




The
      Company continues its Offering of up to $5,000,000 of its common stock, par
      value $0.001 per share, for sale to the public.





16





**Item
      2. Management’s Discussion and Analysis of Financial Condition and Results of
      Operations.**





All
      statements contained herein, other than historical facts, may constitute
“forward-looking statements.” These statements may relate to, among other
      things, future events or the Company’s future performance or financial
      condition. In some cases, you can identify forward-looking statements by
      terminology such as “may,” “might,” “believe,” “will,” “provided,” “anticipate,”
“future,” “could,” “growth,” “plan,” “intend,” “expect,” “should,” “would,”
“if,” “seek,” “possible,” “potential,” “likely” or the negative of such terms or
      comparable terminology. These forward-looking statements involve known and
      unknown risks, uncertainties and other factors that may cause the Company’s
      actual results, levels of activity, performance or achievements to be materially
      different from any future results, levels of activity, performance or
      achievements expressed or implied by such forward-looking statements. Such
      factors include, among others: (1) the future operating results as the
      Company has a limited operating history; (2) the impact of the investments
      that the Company makes and the ability of these investments to achieve their
      objectives; (3) the Company’s contractual relationships with third parties;
      (4) the adequacy of the Company’s cash resources and working capital;
      (5) the Company’s ability to obtain future financing, if at all; and
      (6) those factors listed under the caption “Risk Factors” in Item 1A of
      this Form 10-Q. The Company cautions readers not to place undue reliance on
      any
      such forward-looking statements, which speak only as of the date made. The
      Company undertakes no obligation to publicly update or revise any
      forward-looking statements, whether as a result of new information, future
      events or otherwise, after the date of this Form 10-Q.





*The
      following analysis of the Company’s financial condition and results of
      operations should be read in conjunction with the financial statements and
      the
      notes thereto contained elsewhere in this report.*





**General**




Conihasset
      Capital Partners, Inc. (the “Company”) is a newly organized, internally managed,
      closed-end management investment company that has elected to be regulated as
      a
      business development company (“BDC”) under the Investment Company Act of 1940,
      as amended (the “1940 Act”). The Company was incorporated on March 1, 2006 under
      the laws of the State of Delaware. The Company currently has two portfolio
      companies, Conihasset Management, Inc. (“CMI”) which is 100% owned by CCP, and
      MRO Integrated Solutions, LLC (“MROIS”). As a BDC, the Company will be required
      to comply with certain regulatory requirements. For example, to the extent
      provided by the 1940 Act, the Company is limited in its ability to invest in
      a
      private company in which certain of its affiliates already has an investment.
      Also, while the Company is permitted to finance investments using debt, its
      ability to use debt will be limited in certain significant respects, most
      notably that it maintain a 200% asset coverage position. The Company has not
      decided whether, and to what extent, it will finance investments using debt.





The
      Company has recently commenced operations. The Company is subject to all of
      the
      business risks and uncertainties associated with any new business, including
      the
      risk that it will not achieve its investment objective and that the value of
      its
      investments could decline substantially. On August 4, 2006 the Company filed
      a
      notification on Form 1-E of its intent to commence a best efforts offering
      of
      its common stock under Regulation E of the Securities Act of 1933 (the “1933
      Act”) (the “Offering”) to the public of up to $5,000,000 of common stock,
      $0.001 par value, at $5.00 per share. On August 17, 2006, the Offering became
      effective upon the expiration of the statutorily mandated waiting period of
      10
      business days. As of September 30, 2006, the Company had sold 36,500 shares
      to
      seven investors. Mr. Andrew Cahill, the Chief Operating Officer of the Company,
      and Mr. Keith Lowey, the Chief Financial Officer of the Company, purchased
      1,500
      and 5,000 of these shares, respectively.




The
      Company’s primary business goals are to increase its taxable income, net
      operating income and net asset value by investing in senior debt, subordinated
      debt and equity of publicly and privately held U.S. small companies with
      attractive current yields and potential for equity appreciation and realized
      gains for the benefit of investors.





17


The
      Company intends to create a varied portfolio that will include mezzanine and
      senior secured loans, among other investments, by investing approximately $500
      thousand to $3.0 million of capital, on average, in the securities of U.S.
      small
      companies. Structurally, the loan portion of a mezzanine investment usually
      ranks subordinate in priority of payment to senior debt, such as senior bank
      debt, and is often unsecured. However, mezzanine loans rank senior to common
      and
      preferred equity in a borrower’s capital structure. Typically, mezzanine
      investments have elements of both debt and equity instruments, offering fixed
      returns in the form of interest payments associated with senior debt, while
      providing lenders an opportunity to participate in the capital appreciation
      of a
      borrower, if any, through an equity interest. This equity interest typically
      takes the form of warrants. Due to a higher risk profile and often less
      restrictive covenants as compared to senior loans, mezzanine loans generally
      earn a higher return than senior secured loans. The warrants associated with
      mezzanine investments are typically detachable, which allows lenders to receive
      repayment of their principal on an agreed amortization schedule while retaining
      their equity interest in the borrower. Mezzanine investments also may include
      a
“put” feature, which permits the holder to sell its equity interest back to the
      borrower at a price determined through an agreed formula.




Pursuant
      to the terms of its Offering, the Company intends to immediately begin
      implementing its investment strategy.  Until such time as all of the net
      proceeds from the Offering are invested pursuant to the Company's investment
      strategy, the Company intends to invest any uninvested funds in temporary
      investments, such as cash, cash equivalents, U.S. government securities and
      other high quality debt investments that mature in one year or less from the
      date of its investment. As the Company begins to implement its investment
      strategy, a significant portion of its portfolio will consist of mezzanine
      investments and other asset classes. While the Company’s primary focus will be
      to generate current income through debt and equity investments in U.S. small
      companies, the Company intends to also invest in other types of investments
      for
      the purpose of diversifying its overall portfolio, improving its liquidity
      or
      enhancing returns to stockholders. The Company intends to use this portion
      of
      its portfolio to implement investment strategies that may include investing
      in
      relatively higher yielding asset-backed securities, securities backed by pools
      of non-investment grade senior secured loans, investment grade bonds, or other
      collateral (collateralized debt obligations or “CDOs”). The Company may also
      invest, consistent with the requirements of the 1940 Act for BDCs, in other
      types of securities including high-yield bonds, distressed debt, real estate
      related assets, private equity or securities of public companies that are not
      thinly traded. Additionally, the Company may acquire investments in the
      secondary market and, in analyzing such investments, it will employ the same
      analytical process as it uses for the investments it acquires directly from
      issuers.






The
      Company was organized to create a varied portfolio that will include both
      mezzanine investments in and senior secured loans to small U.S. companies,
      among
      other types of investments, in a broad variety of industries. The Company
      intends to concentrate on making investments in companies having annual revenues
      of less than $100 million. In most cases, these companies will be privately
      held
      or will have thinly traded public equity securities. The Company will generally
      seek to target companies that generate positive cash flows in which its
      investment professionals have direct expertise, though it may invest in other
      industries if it is presented with attractive opportunities.




In
      an
      effort to increase returns and the number of loans made, the Company may in
      the
      future seek to securitize a portion of its loans. To securitize loans, the
      Company could contribute a pool of loans to a wholly-owned subsidiary and sell
      investment-grade fixed income securities issued by such subsidiary to investors
      willing to accept a lower interest rate to invest in investment-grade loan
      pools. The Company’s retained interest in the subsidiary would consequently be
      subject to first loss on the loans in the pool. The Company may use the proceeds
      of such sales to pay down bank debt, to fund additional investments or for
      other
      corporate purposes.




**Current
      Investments**




**MRO
      Integrated Solutions, LLC**





MROIS,
      a
      Shrewsbury, Massachusetts limited liability corporation, purchases spare,
      consumable maintenance and repair parts and resells them to various distributors
      who in turn sell them to hospitals, pharmaceutical companies, HMO’s etc. MROIS
      currently has several national accounts including a three year non-exclusive
      reseller agreement with VWR International (“VWR”). VWR employs 6,000 people and
      is a leader in the global research laboratory industry with worldwide sales
      of
      US $3.0 billion, of which approximately two thirds are from North America and
      the remainder from Europe. VWR offers a diversified spectrum of products and
      services of more than 750,000 parts from more than 5,000 manufacturers, to
      over
      250,000 customers throughout North America and Europe. VWR's primary customers
      work in the pharmaceutical, life science, chemical, technology, food processing
      and consumer product industries. Other important customers include universities
      and research institutes, governmental agencies, environmental testing
      organizations, and primary and secondary schools.





18


On
      August
      28, 2006 and on October 3, 2006, the Company purchased two convertible
      subordinated notes from MROIS in the amounts of $150,000 and $75,000,
      respectively, as part of the Company’s commitment to purchase up to $1,500,000
      of convertible subordinated notes from MROIS. The notes pay an interest rate
      of
      5% per annum and, upon the purchase of each of the notes, the Company was paid
      a
      structuring fee of 6% of the gross amount of each note. The Company intends
      to
      collateralize substantially all of the assets of MROIS in order to securitize
      these notes. In addition, the aggregate of the $1,500,000 of notes are
      convertible into up to 50% of the equity interests of MROIS at the election
      of
      the Company.





Representatives
      of the Company are entitled to and currently hold 50% of the Board seats of
      MROIS.





**Conihasset
      Management Inc.**




As
      of
      September 30, 2006, the Company holds two notes receivable totaling $95,100,
      each bearing interest at 4.83% per annum and due March 30, 2009, from its wholly
      owned portfolio company, CMI, as an investment. **** CMI
      used
      the proceeds of the notes to purchase its interest in one portfolio company,
      MRO
      Investment LLC (“MRO Investment”). MRO Investment is a newly formed limited
      liability company that was formed for the sole purpose of jointly forming,
      with
      Turbine Controls, Inc. (“TCI”), MRO Industries, LLC (“MRO Industries” or the
“JV”). The JV was created to service the fragmented and rapidly growing field of
      commercial and military manufacture and re-manufacture of turbine-based ground
      support equipment (“GSE”) currently in use by all branches of the U.S. military
      and foreign governments, as well as commercial aviation manufacturers. TCI,
      of
      Bloomfield, CT currently supplies re-manufactured and original equipment
      manufacturer (“OEM”) whole turbines and assemblies as well as parts to virtually
      every major defense contractor, the U.S. Department of Defense (“DoD”),
      commercial aviation manufacturers and suppliers as well as foreign governments
      seeking to acquire fixed base and portable turbine based power generation units.
      TCI currently holds all of the quality assurance certifications, including
      ISO-9001, and is DoD and FAA approved and is also certified as an approved
      aerospace parts and component supplier. In addition, TCI qualifies as a small
      business for government contracting purposes. MRO Industries is 60% owned by
      MRO
      Investment and 40% owned by TCI and/or their designees.





**RESULTS
      OF OPERATIONS**





*For
      the three months ended September 30, 2006*





**Investment
      Income**





The
      Company has recently commenced investment operations and, as of September 30,
      2006, has two portfolio investments. For the three month period ended September
      30, 2006 its total revenue from investment activities was $10,857, which
      consisted of interest from controlled investments of $1,857 and a structuring
      fee of $9,000 which was paid to the Company upon the purchase of the $150,000
      note from MROIS.





**Operating
      Expenses**





Operating
      expenses for the three months ended September 30, 2006 were $118,956. These
      consisted of salaries and payroll taxes of $46,063, professional fees of
      $55,361, director’s fees of $8,125, rent of $200, and general and administrative
      expenses of $9,207.








19





**Net
      Decrease in Net Assets from Operations**





The
      net
      decrease in net assets from operations was $108,099. For the three months ended
      September 30, 2006 the Company incurred $77,171 in legal, accounting, and other
      expenses relating to its Offering which were charged against net
      assets.





*For
      the period of Inception (March 1, 2006) to September 30, 2006*





**Investment
      Income**





The
      Company has recently commenced investment operations and as of September 30,
      2006 has two portfolio investments. For the period of Inception (March 1, 2006)
      to September 30, 2006 its investment income was $12,017, which consisted of
      interest income from notes in the amount of $3,017 and a structuring fee of
      $9,000 which was paid to the Company upon the purchase of the $150,000 note
      from
      MROIS on August 28, 2006.





**Operating
      Expenses**





Operating
      expenses for the period of Inception (March 1, 2006) to September 30, 2006
      were
      $158,956 and were incurred primarily in connection with the formation of the
      Company. These expenses consisted of organization expenses of $40,000, salaries
      and payroll taxes of $46,063, professional fees of $55,361, director’s fees of
      $8,125, rent of $200, and general and administrative expenses of
      $9,207.





**Net
      Decrease in Net Assets from Operations**





The
      net
      decrease in net assets from operations was $146,939. For the period since
      inception the Company incurred $289,342 in legal, accounting, and other expenses
      relating to its Offering which were charged against net assets.





**LIQUIDITY
      AND CAPITAL RESOURCES**





The
      Company commenced operations on March 31, 2006 and has two investments.
      Investment income for the period from Inception (March 1, 2006) to September
      30,
      2006 was $12,017 which
      consisted of interest income accrued but not paid from notes in the amount
      of
      $3,017 and a structuring fee of $9,000 which was paid to the Company upon the
      purchase of the $150,000 note from MROIS on August 28, 2006.





The
      Company’s primary focus during this period was in the preparation of its
      Offering documentation with the Securities and Exchange Commission. On August
      4,
      2006, the Company filed a notification on Form 1-E of its intent to commence
      a
      best efforts offering of its common stock for sale to the public of up to
      $5,000,000 of common stock, $0.001 par value, at $5.00 per share under
      Regulation E of the Securities Act of 1933 (the “Offering”). On August 17, 2006,
      the Offering became effective upon the expiration of the statutorily mandated
      waiting period of 10 business days. During
      this period, the Company’s cash flow decreased by the amount of the offering
      costs paid and incurred in the preparation of these filings.




The
      Company currently has minimal revenue from operations and in all likelihood
      will
      be required to make future expenditures in connection with its marketing efforts
      along with general administrative expenses. A
      45.1%
      stockholder, which is an entity control by the Company’s President/Chief
      Executive Officer and Chief Operating Officer/Executive Vice
      President has
      committed to fund any shortfalls in the Company’s cash flow on a day to day
      basis during the period that the Company is in the development stage and is
      in
      the process of undertaking an Offering to raise additional capital through
      the
      exempt sale of its equity securities. Management believes that the commitment
      to
      fund any shortfalls in the Company’s cash flow for the period detailed above
      provide the opportunity for the Company to continue as a going
      concern.




On
      August
      25, 2006, the Company sold 35,000 shares of its common stock at $5.00 per share
      to six investors as part of and in accordance with the terms of its Offering.
      Additionally, on September 14, 2006, the Company sold 1,500 shares of its common
      stock at $5.00 per share as part of and in accordance with the terms of its
      Offering to the Company’s Executive Vice President, Chief Operating Officer and
      Director. The Company received the full benefit of these sales as no commission
      was paid to any broker-dealer or finder as is allowed under the terms of the
      Offering.





20


If
      additional financing or arrangements cannot be obtained, the Company would
      be
      materially and adversely affected and there would be substantial doubt about
      the
      Company's ability to continue as a going concern. The financial statements
      do
      not include any adjustments relating to the recoverability and realization
      of
      assets and classifications of liabilities necessary if the Company becomes
      unable to continue as a going concern.




**RECENT
      DEVELOPMENTS**






On
      October 3, 2006, the Company purchased a Convertible Promissory Note (the
“Note”) in the amount of $75,000 from MROIS. Upon purchase of this Note the
      Company realized a structuring fee of 6% of the gross proceeds of the Note.
      The
      Note carries interest at a rate of 5% per annum, payable quarterly. On August
      28, 2006, the Company purchased a $150,000 note from MROIS bringing the
      aggregate amount of notes purchased by the Company from MROIS to $225,000.
      The
      Company intends to continue to purchase additional notes in accordance with
      the
      Company’s plan to invest up to $1,500,000 in Convertible Promissory Notes of
      MROIS.




On
      October 23, 2006, the Company sold 9,000 shares of its common stock at $5.00
      per
      share to two investors, as part of and in accordance with the terms of its
      Offering. The Company received the full benefit of this sale as no commission
      was paid to any broker-dealer or finder as is allowed under the terms of the
      Offering.




On
      November 3, 2006, the Company sold 200,000 shares of its common stock at $5.00
      per share to two investors, as part of and in accordance with the terms of
      its
      Offering. The Company received the full benefit of this sale as no commission
      was paid to any broker-dealer or finder as is allowed under the terms of the
      Offering.




On
      November 10, 2006, the Company sold 20 shares of its common stock at $5.00
      per
      share to a relative of the Company’s President/Chief Executive Officer, as part
      of and in accordance with the terms of its Offering. The Company received the
      full benefit of this sale as no commission was paid to any broker-dealer or
      finder as is allowed under the terms of the Offering.




On
      November 10, 2006, the Company’s Board of Director’s voted to approve the
      modification of the Company’s current per share offering price from $5.00 per
      share to $4.54 per share. The Company intends to offer its existing shareholders
      the right to rescind their purchase of shares of common stock of the Company
      acquired as part of the Company’s Offering or the right to receive additional
      shares of the Company’s common stock based on the new offering price. If
      existing shareholders elect to received additional shares, the Company will
      issue a total of 101,321 additional shares under the Company’s Regulation E
      Offering. The Company is required to and will seek SEC approval for these
      actions. If such approval is received, the Company will proceed with offering
      its current shareholders the right to rescind their purchase of shares of common
      stock of the Company acquired as part of the Company's Offering or the right
      to
      receive additional shares of the Company's common stock based on the new
      offering price.





**Item
      3. Quantitative and Qualitative Disclosures about Market
      Risk.**




The
      Company intends to invest in small companies, and its investments in these
      companies are considered speculative in nature. The Company’s investments will
      often include securities that are subject to legal or contractual restrictions
      on resale that adversely affect the liquidity and marketability of such
      securities. As a result, the Company is subject to risk of loss which may
      prevent its shareholders from achieving price appreciation, dividend
      distributions and return of capital. The key risks the Company faces are market
      risk and equity risk.




The
      Company considers the principal type of market risk to be fluctuations in
      interest rates. The Company considers the management of risk essential to
      conducting its businesses. Accordingly, the Company’s risk management systems
      and procedures are designed to identify and analyze risks, to set appropriate
      policies and limits and to continually monitor these risks and limits by means
      of reliable administrative and information systems and other policies and
      programs.




21


Equity
      price risk arises from exposure to securities that represent an ownership
      interest in the Company’s portfolio companies. The value of the Company’s equity
      securities and other investments are based on quoted market prices or the Board
      of Directors’ good faith determination of their fair value (which is based, in
      part, on quoted market prices). Market prices of common equity securities,
      in
      general, are subject to fluctuations, which could cause the amount to be
      realized upon sale or exercise of the instruments to differ significantly from
      the current reported value. The fluctuations may result from perceived changes
      in the underlying economic characteristics of its portfolio companies, the
      relative price of alternative investments, general market conditions and supply
      and demand imbalances for a particular security.




**Item 4.
      Controls and Procedures.**





(a)
            As
                of the end of the period covered by this quarterly report on
                Form 10-Q, the chief executive officer (the “CEO”) and the chief
                financial officer (the “CFO”) conducted an evaluation of the Company’s
                disclosure controls and procedures (as defined in Rules 13a-15 and
                15d-15 of the Securities Exchange Act of 1934, as amended). Based
                upon
                this evaluation, the Company’s CEO and CFO concluded that its disclosure
                controls and procedures are effective in timely alerting them of
                any
                material information relating to the Company that is required to
                be
                disclosed by the Company in the reports it files or submits under
                the
                Securities Exchange Act of
                1934.





(b)
            There
                have been no changes in the Company’s internal control over financial
                reporting that occurred during the quarter ended September 30, 2006,
                that
                have materially affected, or are reasonably likely to materially
                affect,
                its internal control over financial
                reporting.




**Part II.
      Other Information**





**Item
      1. Legal Proceedings.**





The
      Company is not currently subject to any material legal proceeding, nor, to
      its
      knowledge, is any material legal proceeding threatened against the Company.





**Item
      1A. Risk Factors.**




Investing
      in the Company’s common stock involves a number of significant risks. The
      Company cannot assure you that it will achieve its investment objective. You
      should consider carefully the risks described below and all other information
      contained in this filing.




***The
      Company has a limited operating history.***




The
      Company was incorporated on March 1, 2006 and has only recently commenced
      operations. As a result, the Company has limited financial information on which
      you can evaluate an investment in the Company. The Company is subject to all
      of
      the business risks and uncertainties associated with any new business, including
      the risks that it will not achieve its investment objective and that the value
      of your investment could decline substantially.




***The
      Company is dependent upon its key investment personnel for its future
      success.***




The
      Company depends on the diligence, skill and network of business contacts of
      the
      investment professionals it employs for the sourcing, evaluation, negotiation,
      structuring and monitoring of its investments. The Company’s future success will
      also depend, to a significant extent, on the continued service and coordination
      of its senior management team, particularly, Richard
      D. Bailey, its President and Chief Executive Officer and Andrew J. Cahill,
      Chief
      Operating Officer and Executive Vice President, currently the only two employees
      of the Company. If either of these individuals, or
      any
      other member of its senior management team leaves the Company, it could have
      a
      material adverse effect on its ability to achieve its investment
      objective.




***There
      is no assurance that the Company will sell all of the shares in the
      Offering.***





The
      Offering is a “best efforts” offering with no required minimum amount to be
      raised and there is no escrow. This means that even if very few of the shares
      offered under the Offering are sold, the Company will not refund any payments
      made by investors for the shares of common stock. The Company cannot assure
      you
      that all of the shares of common stock offered for sale by the Company will
      be
      sold.




22


***The
      Company’s management team has no experience managing a
      BDC.***




The
      1940
      Act imposes numerous constraints on the operations of BDCs. For example, BDCs
      are required to invest at least 70% of their total assets primarily in
      securities of “eligible portfolio companies” (as defined under the 1940 Act),
      cash, cash equivalents, U.S. government securities and other high quality
      debt investments that mature in one year or less. The Company’s management
      team’s lack of experience in managing a portfolio of assets under such
      constraints may hinder its ability to take advantage of attractive investment
      opportunities and, as a result, achieve its investment objective. Furthermore,
      any failure to comply with the requirements imposed on BDCs by the 1940 Act
      could cause the SEC to bring an enforcement action against the Company. If
      the
      Company does not remain a BDC, it might be regulated as a closed-end investment
      company under the 1940 Act, which would further decrease its operating
      flexibility.




***The
      Company’s business model depends to a significant extent upon strong referral
      relationships with private equity sponsors, and its inability to maintain or
      develop these relationships, or the failure of these relationships to generate
      investment opportunities, could adversely affect its
      business.***






The
      Company expects that members of its management team will maintain their
      relationships with private equity sponsors, and it will rely to a significant
      extent upon these relationships to provide the Company with potential investment
      opportunities. If the Company’s management team fails to maintain its existing
      relationships or develop new relationships with other sponsors or sources of
      investment opportunities, it will not be able to grow its investment portfolio.
      In addition, individuals with whom members of the Company’s management team have relationships
      are not obligated to provide the Company with investment opportunities, and,
      therefore, there is no assurance that such relationships will generate
      investment opportunities for the Company.




***The
      Company operates in a highly competitive market for investment
      opportunities.***




The
      Company competes for investments with other BDCs and other investment funds
      (including private equity funds and mezzanine funds), as well as traditional
      financial services companies such as commercial banks and other sources of
      funding. Many of the Company’s competitors are substantially larger and have
      considerably greater financial, technical and marketing resources than it does.
      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 of
      the
      Company’s competitors may have higher risk tolerances or different risk
      assessments. These characteristics could allow the Company’s competitors to
      consider a wider variety of investments, establish more relationships, and
      offer
      better pricing and more flexible structuring than the Company is able to
      consider, establish, or offer. The Company may lose investment opportunities
      if
      it does not match its competitors’ pricing, terms and structure. If the Company
      is forced to match its competitors’ pricing, terms and structure, it may not be
      able to achieve acceptable returns on its investments or it may bear substantial
      risk of capital loss. Furthermore, many of the Company’s competitors have
      greater experience operating under, or are not subject to, the regulatory
      restrictions that the 1940 Act imposes on it as a BDC.




The
      Company cannot assure you that the competitive pressures it faces will not
      have
      a material adverse effect on its 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
      it cannot assure you that it will continue to be able to identify and make
      investments that are consistent with its investment objective.




***Regulations
      governing the Company’s operation as a BDC will affect its ability to, and the
      way in which it, raises additional capital.***




The
      Company’s business will require capital. It may acquire additional capital from
      the following sources:




*Senior
      Securities and Other Indebtedness.* The
      Company may issue debt securities or preferred stock and/or borrow money from
      banks or other financial institutions, which it refers to collectively as senior
      securities, up to the maximum amount permitted by the 1940 Act. If the Company
      issues senior securities, including debt or preferred stock, it will be exposed
      to additional risks, including the following:




23


·
            Under
                the provisions of the 1940 Act, the Company will be permitted, as
                a BDC,
                to issue senior securities only in amounts such that its asset coverage,
                as defined in the 1940 Act, equals at least 200% after each issuance
                of
                senior securities. If the value of the Company’s assets declines, it may
                be unable to satisfy this test. If that happens, the Company may
                be
                required to sell a portion of its investments and, depending on the
                nature
                of its leverage, repay a portion of its debt at a time when such
                sales
                and/or repayments may be
                disadvantageous.




·
            Any
                amounts that the Company uses to service its debt or make payments
                on
                preferred stock will not be available for dividends to its common
                stockholders.




·
            It
                is likely that any senior securities or other indebtedness the Company
                issues will be governed by an indenture or other instrument containing
                covenants restricting its operating flexibility. Additionally, some
                of
                these securities or other indebtedness may be rated by rating agencies,
                and in obtaining a rating for such securities and other indebtedness,
                the
                Company may be required to abide by operating and investment guidelines
                that further restrict operating and financial
                flexibility.




·
            The
                Company and, indirectly, its stockholders will bear the cost of issuing
                and servicing such securities and other
                indebtedness.




·
            Preferred
                stock or any convertible or exchangeable securities that the Company
                issues in the future may have rights, preferences and privileges
                more
                favorable than those of its common stock, including separate voting
                rights
                and could delay or prevent a transaction or a change in control to
                the
                detriment of the holders of its common
                stock.




*Additional
      Common Stock.* The
      Company is not generally able to issue and sell its common stock at a price
      below net asset value per share. The Company may, however, sell its common
      stock, warrants, options or rights to acquire its common stock, at a price
      below
      the current net asset value of the common stock if its board of directors
      determines that such sale is in its best interests and that of its stockholders,
      and its stockholders approve such sale. In any such case, the price at which
      its
      securities are to be issued and sold may not be less than a price, which, in
      the
      determination of its board of directors, closely approximates the market value
      of such securities (less any distributing commission or discount). The Company
      may also make rights offerings to its stockholders at prices per share less
      than
      the net asset value per share, subject to applicable requirements of the 1940
      Act. If the Company raises additional funds by issuing more common stock or
      senior securities convertible into, or exchangeable for, its common stock,
      the
      percentage ownership of its stockholders at that time would decrease and they
      may experience dilution. Moreover, the Company can offer no assurance that
      it
      will be able to issue and sell additional equity securities in the future,
      on
      favorable terms or at all.




*Securitization
      of Loans.* In
      addition to issuing securities to raise capital, the Company may securitize
      its
      loans to generate cash for funding new investments. To securitize loans, the
      Company will typically create a wholly-owned subsidiary and contribute a pool
      of
      loans to the subsidiary. This would generally include the sale of interests
      in
      the subsidiary on a non-recourse basis to purchasers who are willing to accept
      a
      lower interest rate to invest in investment grade loan pools. The Company will
      also retain a portion of the equity in the securitized pool of loans. An
      inability to successfully securitize its loan portfolio could limit its ability
      to grow its business, fully execute its business strategy and adversely affect
      its earnings, if any. Moreover, the securitization of the Company’s loan
      portfolio might increase its exposure to risk for losses, as the residual loans
      in which it does not sell interests will tend to be those that are riskier
      and
      more apt to generate losses.




***The
      Company will remain subject to corporate-level income tax if the Company is
      unable to qualify as a RIC under Subchapter M of the
      Code.***




Although
      the Company intends to qualify as a RIC under Subchapter M of the Code, it
      is
      currently subject
      to tax as an ordinary corporation under Subchapter C of the Code, and no
      assurance can be given that it will be able to qualify and maintain any RIC
      status if elected. To
      obtain
      and maintain RIC tax treatment under the Code, the Company must meet the
      following annual distribution, income source and asset diversification
      requirements.




24


·
            The
                annual distribution requirement for a RIC will be satisfied if the
                Company
                distributes to its stockholders on an annual basis at least 90% of
                its net
                ordinary income and realized net short-term capital gains in excess
                of
                realized net long-term capital losses, if any. Because the Company
                may use
                debt financing, the Company is subject to certain asset coverage
                ratio
                requirements under the 1940 Act and financial covenants under loan
                and
                credit agreements that could, under certain circumstances, restrict
                the
                Company from making distributions necessary to satisfy the distribution
                requirement. If the Company is unable to obtain cash from other sources,
                it could fail to qualify for RIC tax treatment and thus become subject
                to
                corporate-level income tax.




·
            The
                income source requirement will be satisfied if the Company obtains
                at
                least 90% of its income for each year from dividends, interest, gains
                from
                the sale of stock or securities or similar
                sources.




·
            The
                asset diversification requirement will be satisfied if the Company
                meets
                certain asset diversification requirements at the end of each quarter
                of
                its taxable year. Failure to meet those requirements may result in
                its
                having to dispose of certain investments quickly in order to prevent
                the
                loss of RIC status. Because most of its investments will be in private
                companies, and therefore will be relatively illiquid, any such
                dispositions could be made at disadvantageous prices and could result
                in
                substantial losses.




If
      the
      Company fails to qualify for RIC tax treatment for any reason and remain 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.




***The
      Company may have difficulty paying its required distributions if it recognizes
      income before or without receiving cash representing such
      income.***




For
      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 it receives warrants in connection with the origination of a loan
      or
      possibly in other circumstances, or contractual payment-in-kind interest, which
      represents contractual interest added to the loan balance and due at the end
      of
      the loan term. Such original issue discount or increases in loan balances as
      a
      result of contractual payment-in-kind arrangements 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 it 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 meeting the annual distribution
      requirement necessary to obtain and maintain RIC tax treatment under the Code.
      Accordingly, the Company may have to sell some of its investments at times
      and/or at prices it would not consider advantageous, raise additional debt
      or
      equity capital or reduce new investment originations for this purpose. If the
      Company is not able to obtain cash from other sources, it may fail to qualify
      for RIC tax treatment and thus remain (or become) subject to corporate-level
      income tax.




***Because
      the Company intends to distribute substantially all of its income to its
      stockholders upon its election to be treated as a RIC, it will continue to
      need
      additional capital to finance its growth. If additional funds are unavailable
      or
      not available on favorable terms, its ability to grow will be
      impaired.***




In
      order
      to satisfy the requirements applicable to a RIC and to avoid payment of excise
      taxes, the Company intends to distribute to its stockholders substantially
      all
      of its net ordinary income and net capital gain income. As a BDC, the Company
      generally is required to meet a coverage ratio of total assets to total senior
      securities, which includes all of its borrowings and any preferred stock it
      may
      issue in the future, of at least 200%. This requirement limits the amount that
      the Company may borrow. Because the Company will continue to need capital to
      grow its investment portfolio, this limitation may prevent the Company from
      incurring debt and require the Company to raise additional equity at a time
      when
      it may be disadvantageous to do so. While the Company expects to be able to
      borrow and to issue additional debt and equity securities, it cannot assure
      you
      that debt and equity financing will be available to the Company on favorable
      terms, or at all. In addition, as a BDC, the Company generally is not permitted
      to issue equity securities priced below net asset value without stockholder
      approval. If additional funds are not available to the Company, it could be
      forced to curtail or cease new investment activities, and its net asset value
      could decline.




25


***The
      Company may borrow money, which will magnify the potential for gain or loss
      on
      amounts invested and may increase the risk of investing in the
      Company.***




Borrowings,
      also known as leverage, magnify the potential for gain or loss on amounts
      invested and, therefore, increase the risks associated with investing in the
      Company. The Company may borrow from and issue senior debt securities to banks
      and other lenders. Holders of these senior securities will have fixed dollar
      claims on its assets that are superior to the claims of its common stockholders.
      If the value of the Company’s assets increases, then leveraging would cause the
      net asset value attributable to its common stock to increase more sharply than
      it would have had it not leveraged. Conversely, if the value of the Company’s
      assets decreases, leveraging would cause net asset value to decline more sharply
      than it otherwise would have had it not leveraged. Similarly, any increase
      in
      the Company’s income in excess of interest payable on the borrowed funds would
      cause its net income to increase more than it would without the leverage, while
      any decrease in its income would cause net income to decline more sharply than
      it would have had it not borrowed. Such a decline could negatively affect the
      Company’s ability to make common stock dividend payments. Leverage is generally
      considered a speculative investment technique.




***Changes
      in interest rates may affect the Company’s cost of capital and net investment
      income.***




Because
      the Company may borrow to fund its investments, a portion of its income is
      dependent upon the difference between the interest rate at which it borrows
      funds and the interest rate at which it invests these funds. A portion of its
      investments will have fixed interest rates, while a portion of its borrowings
      will likely have floating interest rates. As a result, a significant change
      in
      market interest rates could have a material adverse effect on its net investment
      income. In periods of rising interest rates, the Company’s cost of funds could
      increase, which would reduce its net investment income. The Company may hedge
      against interest rate fluctuations by using standard hedging instruments such
      as
      futures, options and forward contracts, subject to applicable legal
      requirements, including without limitation, all necessary registrations (or
      exemptions from registration) with the Commodity Futures Trading Commission.
      These activities may limit its ability to participate in the benefits of lower
      interest rates with respect to the hedged portfolio. Adverse developments
      resulting from changes in interest rates or hedging transactions could have
      a
      material adverse effect on its business, financial condition and results of
      operations. Also, the Company has limited experience in entering into hedging
      transactions, and it will initially have to rely on outside parties with respect
      to the use of such financial instruments or develop such expertise
      internally.




***A
      significant portion of the Company’s investment portfolio will be recorded at
      fair value as determined in good faith by its board of directors and, as a
      result, there will be uncertainty as to the value of its portfolio
      investments.***




Under
      the
      1940 Act, the Company is required to carry its portfolio investments at market
      value or, if there is no readily available market value, at fair value as
      determined by its board of directors. The Company is not permitted to maintain
      a
      general reserve for anticipated losses. Instead, the Company is required by
      the
      1940 Act to specifically value each individual investment and record an
      unrealized loss for any asset it believes has decreased in value. Typically
      there will not be a public market for the securities of the privately-held
      companies in which the Company will generally invest. As a result, the Company
      will value its investments in privately-held companies on a quarterly basis
      based on a determination of their fair value made in good faith and in
      accordance with the written guidelines established by its board of directors.
      The types of factors that may be considered in determining the fair value of
      its
      investments include the nature and realizable value of any collateral, the
      portfolio company’s earnings and its ability to make payments on its
      indebtedness, the markets in which the portfolio company does business,
      comparison to publicly traded companies, discounted
      cash flow and other relevant factors. Because such valuations, and particularly
      valuations of private securities and private companies, are inherently
      uncertain, may fluctuate over short periods of time, and may be based on
      estimates, its determinations of fair value may differ materially from the
      values that would have been used if a ready market for these securities existed.
      The Company’s net asset value could be adversely affected if its determinations
      regarding the fair value of its investments were materially higher than the
      values that it ultimately realize upon the disposal of such
      securities.




26


***The
      lack of liquidity in the Company’s investments may adversely affect its
      business.***




The
      Company will generally make investments in private companies. Substantially
      all
      of these securities are subject to legal and other restrictions on resale or
      are
      otherwise less liquid than publicly traded securities. The illiquidity of its
      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 had previously recorded its investments. The Company may
      also
      face other restrictions on its ability to liquidate an investment in a portfolio
      company to the extent that the Company has material non-public information
      regarding such portfolio company.




***The
      Company’s quarterly and annual results could fluctuate
      significantly.***





The
      Company’s quarterly and annual operating results could fluctuate significantly
      due to a number of factors. These factors include the small number and range
      of
      values of the transactions that are completed each quarter, fluctuations in
      the
      values of the Company’s investments, the timing of the recognition of unrealized
      gains and losses, the degree to which the Company encounters competition in
      its
      markets, the volatility of the stock market and its impact on its unrealized
      gains and losses, as well as other general economic conditions. As a result
      of
      these factors, quarterly and annual results are not necessarily indicative
      of
      its performance in future quarters and years.




***The
      Company’s financial condition and results of operations will depend on its
      ability to manage growth effectively.***




The
      Company’s ability to achieve its investment objective will depend on its ability
      to grow, which will depend, in turn, on its management team’s ability to
      identify, evaluate and monitor, and its ability to finance and invest in,
      companies that meet its investment criteria.




Accomplishing
      this result on a cost-effective basis will be largely a function of the
      Company’s management team’s handling of the investment process and its ability
      to provide competent, attentive and efficient services, as well as its access
      to
      financing on acceptable terms. In addition to monitoring the performance of
      its
      existing investments, members of its management team and its investment
      professionals may also be called upon to provide managerial assistance to its
      portfolio companies. These demands on their time may distract them or slow
      the
      rate of investment. In order to grow, the Company will need to hire, train,
      supervise and manage new employees. However, the Company cannot assure you
      that
      any such employees will contribute to the success of its business. Any failure
      to manage its future growth effectively could have a material adverse effect
      on
      its business, financial condition, and results of operations.




***The
      Company’s ability to enter into transactions with its affiliates will be
      restricted.***




The
      Company is prohibited under the 1940 Act from knowingly participating in certain
      transactions with its affiliates without the prior approval of its independent
      directors. Any person that owns, directly or indirectly, 5% or more of its
      outstanding voting securities will be its affiliate for purposes of the 1940
      Act
      and the Company will generally be prohibited from buying or selling any security
      from or to such affiliate, absent the prior approval of its independent
      directors. The 1940 Act also prohibits “joint” transactions with an affiliate,
      which could include investments in the same portfolio company (whether at the
      same or different times), without prior approval of the Company’s independent
      directors. If a person acquires more than 25% of the Company’s voting
      securities, it will be prohibited from buying or selling any security from
      or to
      such person, or entering into joint transactions with such person, absent the
      prior approval of the SEC.




***Changes
      in laws or regulations governing the Company’s operations may adversely affect
      its business.***




The
      Company and its portfolio companies are subject to local, state and federal
      laws
      and regulations. 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 affect on its business.




***The
      Company’s board of directors may change its operating policies and strategies
      without prior notice or stockholder approval, the effects of which may be
      adverse.***




The
      Company’s board of directors has the authority to modify or waive its current
      operating policies and strategies without prior notice and without stockholder
      approval. The Company cannot predict the effect any changes to its current
      operating policies and strategies would have on its business, operating results
      and value of its stock. However, the effects might be adverse, which could
      negatively impact its ability to pay you dividends and cause you to lose all
      or
      part of your investment.




27


***The
      Company’s investments in portfolio companies may be risky, and it could lose all
      or part of its investment.***




Investing
      in small companies involves a number of significant risks. Among other things,
      these companies:




·
            may
                have limited financial resources and may be unable to meet their
                obligations under their debt instruments that the Company holds,
                which may
                be accompanied by a deterioration in the value of any collateral
                and a
                reduction in the likelihood of the Company realizing any guarantees
                that
                it may have obtained in connection with its
                investment;




·
            may
                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;




·
            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 its portfolio company and, in turn, on the
                Company;




·
            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. In addition, its executive officers
                and directors may, in the ordinary course of business, be named as
                defendants in litigation arising from its investments in the portfolio
                companies; and




·
            generally
                have less publicly available information about their businesses,
                operations and financial condition. The Company is required to rely
                on the
                ability of its management team and investment professionals to obtain
                adequate information to evaluate the potential returns from investing
                in
                these companies. If the Company is unable to uncover all material
                information about these companies, it may not make a fully informed
                investment decision, and may lose all or part of its
                investment.




***The
      Company’s portfolio companies may incur debt that ranks equally with, or senior
      to, its investments in such companies.***




The
      Company will invest primarily in senior secured loans and subordinated debt
      issued by small companies. The Company’s portfolio companies may have, or may be
      permitted to incur, other debt that ranks equally with, or senior to, the debt
      in which it invests. By their terms, such debt instruments may entitle the
      holders to receive payment of interest or principal on or before the dates
      on
      which the Company is entitled to receive payments with respect to the debt
      instruments in which it invests. Also, in the event of insolvency, liquidation,
      dissolution, reorganization or bankruptcy of a portfolio company, holders of
      debt instruments ranking senior to the Company’s investment in that portfolio
      company would typically be entitled to receive payment in full before it
      receives any distribution. After repaying such senior creditors, such portfolio
      company may not have any remaining assets to use for repaying its obligation
      to
      the Company. In the case of debt ranking equally with debt instruments in which
      the Company invests, it would have to share on an equal basis any distributions
      with other creditors holding such debt in the event of an insolvency,
      liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio
      company.




***There
      may be circumstances where the Company’s debt investments could be subordinated
      to claims of other creditors or the Company could be subject to lender liability
      claims.***




Even
      though the Company may have structured certain of its investments as senior
      loans, if one of its portfolio companies were to go bankrupt, depending on
      the
      facts and circumstances, including the extent to which it actually provided
      managerial assistance to that portfolio company, a bankruptcy court might
      recharacterize its debt investment and subordinate all or a portion of its
      claim
      to that of other creditors. The Company may also be subject to lender liability
      claims for actions taken by the Company with respect to a borrower’s business or
      instances where it exercises control over the borrower. It is possible that
      the
      Company could become subject to a lender’s liability claim, including as a
      result of actions taken in rendering significant managerial
      assistance.




28


***The
      Company may not control any of its portfolio
      companies.***




The
      Company may not control any of its portfolio companies, even though it may
      have
      board representation or board observation rights and its debt agreements may
      contain certain restrictive covenants. As a result, the Company is subject
      to
      the risk that a portfolio company in which it invests may make business
      decisions with which it disagrees and the management of such company, as
      representatives of the holders of their common equity, may take risks or
      otherwise act in ways that do not serve its interests as debt investors.




***Economic
      recessions or downturns could impair the Company’s portfolio companies and harm
      its operating results.***




Many
      of
      the Company’s portfolio companies may be susceptible to economic slowdowns or
      recessions and may be unable to repay its debt investments 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 its debt investments
      and the value of its equity investments. Economic slowdowns or
      recessions could lead to financial losses in the Company’s portfolio and a
      decrease in revenues, net income and assets. Unfavorable economic conditions
      also could increase the Company’s funding costs, limit its 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.




***Defaults
      by the Company’s portfolio companies will harm its operating
      results.***




A
      portfolio company’s failure to satisfy financial or operating covenants imposed
      by the Company or other lenders 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 investments that the
      Company holds. The Company may incur expenses to the extent necessary to seek
      recovery upon default or to negotiate new terms with a defaulting portfolio
      company.




***Prepayments
      of the Company’s debt investments by its portfolio companies could adversely
      impact its results of operations and reduce its return on
      equity.***




The
      Company is subject to the risk that the investments it makes in its portfolio
      companies may be repaid prior to maturity. When this occurs, the Company will
      generally reinvest these proceeds in temporary investments, pending their future
      investment in new portfolio companies. These temporary investments will
      typically have substantially lower yields than the debt being prepaid and the
      Company could experience significant delays in reinvesting these amounts. Any
      future investment in a new portfolio company may also be at lower yields than
      the debt that was repaid. As a result, the Company’s results of operations could
      be materially adversely affected if one or more of its portfolio companies
      elects to prepay amounts owed to the Company. Additionally, prepayments could
      negatively impact its return on equity, which could result in a decline in
      the
      market price of its common stock.




***The
      Company may not realize gains from its equity
      investments.***




Certain
      investments that the Company will make in the future may include warrants or
      other equity securities. In addition, the Company may from time to time make
      non-control, equity co-investments in companies in conjunction with private
      equity sponsors. The Company’s goal is ultimately to realize gains upon its
      disposition of such equity interests. However, the equity interests the Company
      receives may not appreciate in value and, in fact, may decline in value.
      Accordingly, the Company may not be able to realize gains from its equity
      interests, and any gains that it does realize on the disposition of any equity
      interests may not be sufficient to offset any other losses it experiences.
      The
      Company also may be unable to realize any value if a portfolio company does
      not
      have a liquidity event, such as a sale of the business, recapitalization, or
      a
      public offering, which would allow the Company to sell the underlying equity
      interests.







29




***There
      is a risk that you may not receive dividends or that the Company’s dividends may
      not grow over time.***




The
      Company intends to make distributions on a quarterly basis to its stockholders.
      The Company cannot assure you that it will achieve investment results that
      will
      allow the Company to make a specified level of cash distributions or
      year-to-year increases in cash distributions. In addition, due to the asset
      coverage test applicable to the Company as a BDC, it may be limited in its
      ability to make distributions.




***Investing
      in the Company’s shares may involve an above average degree of
      risk.***




The
      investments the Company makes in accordance with its investment objective may
      result in a higher amount of risk than alternative investment options and
      volatility or loss of principal. The Company’s investments in portfolio
      companies may be highly speculative and aggressive, and therefore, an investment
      in its shares may not be suitable for someone with lower risk tolerance.




***The
      Company’s largest stockholder is controlled by its management.***




As
      of
      September 30, 2006, Conihasset Partners LLC (“Conihasset Partners”), an entity
      controlled by Messrs. Bailey and Cahill, owned 45.1% of the Company’s common
      stock. Messrs. Bailey and Cahill are also part of the management and are thus
      responsible for the investment and operational decisions of the Company. As
      a
      result, such individuals will be able to exert influence over the Company’s
      management and policies. Such persons, either through Conihasset Partners or
      in
      their own name, may acquire beneficial ownership of additional shares of the
      Company’s equity securities in the future. This concentration of ownership may
      also have the effect of delaying, preventing or deterring a change of control
      of
      the Company, could deprive its stockholders of an opportunity to receive a
      premium for their common stock as part of a sale of the Company and might
      ultimately affect the market price of its common stock.




***The
      market price of the Company’s common stock may fluctuate
      significantly.***




The
      market price and liquidity of the market for shares of the Company’s common
      stock may be significantly affected by numerous factors, some of which are
      beyond its control and may not be directly related to its operating performance.
      These factors include:




·
            significant
                volatility in the market price and trading volume of securities of
                BDCs or
                other companies in the Company’s sector, which are not necessarily related
                to the operating performance of these
                companies;




·
            changes
                in regulatory policies or tax guidelines, particularly with respect
                to
                RICs or BDCs;




·
            loss
                of RIC status, if obtained;




·
            changes
                in earnings or variations in operating
                results;




·
            changes
                in the value of the Company’s portfolio of
                investments;




·
            any
                shortfall in revenue or net income or any increase in losses from
                levels
                expected by investors or securities
                analysts;




·
            departure
                of the Company’s key personnel;




·
            operating
                performance of companies comparable to the
                Company;




·
            general
                economic trends and other external
                factors; and




·
            loss
                of a major funding source.




30


***The
      Company’s investments in foreign securities may involve significant risks in
      addition to the risks inherent in U.S. investments.***




The
      Company’s investment strategy contemplates that a portion of its investments may
      be in securities of foreign companies. Investing in foreign companies may expose
      the Company to additional risks not typically associated with investing in
      U.S.
      companies. These risks include changes in exchange control regulations,
      political and social instability, expropriation, imposition of foreign taxes,
      less liquid markets and less available information than is generally the case
      in
      the United States, higher transaction costs, less government supervision of
      exchanges, brokers and issuers, less developed bankruptcy laws, difficulty
      in
      enforcing contractual obligations, lack of uniform accounting and auditing
      standards and greater price volatility.




Although
      most of the Company’s investments will be denominated in U.S. dollars, the
      Company’s investments that are denominated in a foreign currency are subject to
      the risk that the value of a particular currency may change in relation to
      one
      or more other currencies. Among the factors that may affect currency values
      are
      trade balances, the level of short-term interest rates, differences in relative
      values of similar assets in different currencies, long-term opportunities for
      investment and capital appreciation, and political developments. The Company
      may
      employ hedging techniques to minimize these risks, but it can offer no assurance
      that it will, in fact, hedge currency risk or, that if it does, such strategies
      will be effective.




If
      the
      Company engages in hedging transactions, it may expose itself to risks
      associated with such transactions. The Company may utilize instruments such
      as
      forward contracts, currency options and interest rate swaps, caps, collars
      and
      floors to seek to hedge against fluctuations in the relative values of its
      portfolio positions from changes in currency exchange rates and market interest
      rates. Hedging against a decline in the values of the Company’s portfolio
      positions does not eliminate the possibility of fluctuations in the values
      of
      such positions or prevent losses if the values of such positions decline.
      However, such hedging can establish other positions designed to gain from those
      same developments, thereby offsetting the decline in the value of such portfolio
      positions. Such hedging transaction may also limit the opportunity for gain
      if
      the values of the underlying portfolio positions should increase. Moreover,
      it
      may not be possible to hedge against an exchange rate or interest rate
      fluctuation that is so generally anticipated that the Company is not able to
      enter into a hedging transaction at an acceptable price.




While
      the
      Company may enter into transactions to seek to reduce currency exchange rate
      and
      interest rate risks, unanticipated changes in currency exchange rates or
      interest rates may result in poorer overall investment performance than if
      the
      Company had not engaged in any such hedging transactions. In addition, the
      degree of correlation between price movements of the instruments used in a
      hedging strategy and price movements in the portfolio positions being hedged
      may
      vary. Moreover, for a variety of reasons, the Company may not seek to establish
      a perfect correlation between such hedging instruments and the portfolio
      holdings being hedged. Any such imperfect correlation may prevent the Company
      from achieving the intended hedge and expose the Company to risk of loss. In
      addition, it may not be possible to hedge fully or perfectly against currency
      fluctuations affecting the value of securities denominated in non-U.S.
      currencies because the value of those securities is likely to fluctuate as
      a
      result of factors not related to currency fluctuations.




***Terrorist
      attacks and other acts of violence or war may affect any market for the
      Company’s common stock, impact the businesses in which the Company invests and
      harm its operations and its profitability.***




Terrorist
      attacks may harm the Company’s results of operations and your investment. The
      Company cannot assure you that there will not be further terrorist attacks
      against the United States or United States businesses. Such attacks or armed
      conflicts in the United States or elsewhere may impact the businesses in which
      the Company invests directly or indirectly, by undermining economic conditions
      in the United States. Losses resulting from terrorist attacks are generally
      uninsurable.




***Certain
      provisions of the Company’s certificate of incorporation and bylaws as well as
      the Delaware General Corporation Law could deter takeover attempts and have
      an
      adverse impact on the price of the Company’s common
      stock.***




The
      Company’s certificate of incorporation and bylaws as well as the Delaware
      General Corporation Law contain provisions that may have the effect of
      discouraging a third party from making an acquisition proposal for the Company.
      These anti-takeover provisions may inhibit a change in control in circumstances
      that could give the holders of its common stock the opportunity to realize
      a
      premium over the market price for its common stock.




31




**Item 2.
      Unregistered Sales of Equity Securities and Use of
      Proceeds.**




During
      the period from inception (March 1, 2006) to September 30, 2006, the Company
      issued 30,020 shares of common stock (45.1% of its outstanding shares of common
      stock) at $5 per share to Conihasset Partners, LLC, an entity controlled by
      the
      Company’s President and Chief Executive Officer and Chief Operating Officer and
      Executive Vice President. Additionally, as of September 30, 2006, the Company
      sold 36,500 shares to seven investors as part of and in accordance with the
      terms of its Offering. Mr. Andrew Cahill, Chief Operating Officer of the
      Company, and Mr. Keith Lowey, Chief Financial Officer of the Company, purchased
      1,500 and 5,000 of these shares, respectively.




On
      October 3, 2006, the Company used proceeds from the $75,000 payment by CMI
      to
      acquire a $75,000 convertible subordinated note from MROIS.




On
      October 23, 2006, the Company sold 9,000 shares of its common stock at $5 per
      share to two investors, as part of and in accordance with terms of the Offering.
      The Company received the full benefit of this sale as no commission was paid
      to
      any broker-dealer or finder as is allowed under the terms of the Offering.




On
      November 3, 2006, the Company sold 200,000 shares of its common stock at $5
      per
      share to two investors, as part of and in accordance with the terms of its
      Offering. The Company received the full benefit of this sale as no commission
      was paid to any broker-dealer or finder as is allowed under the terms of the
      Offering.




On
      November 10, 2006, the Company sold 20 shares of its common stock at $5.00
      per
      share to a relative of the Company’s President/Chief Executive Officer, as part
      of and in accordance with the terms of its Offering. The Company received the
      full benefit of this sale as no commission was paid to any broker-dealer or
      finder as is allowed under the terms of the Offering.







**Item
      3. Defaults upon Senior Securities.**





Not applicable.





**Item
      4. Submission of Matters to a Vote of Security Holders.**





On
      June
      8, 2006, the Board unanimously approved and on July 26, 2006, Conihasset
      Partners, LLC, the Company’s sole shareholder at the time, approved the stock
      option plan for the Company. No other matters were submitted to a vote of
      security holders during the quarter ended September 30, 2006.





**Item
      5. Other Information.**





Not applicable





**Item 6.
      Exhibits.**




(a)*Exhibits*




3.1
            Certificate
                of Incorporation of the Company filed with the Delaware Secretary
                of State
                on March 1, 2006*3.2
            By-laws
                of the Company*10
            Stock
                Agreement between Conihasset Capital Partners, Inc. and Conihasset
                Partners, LLC*31.1
            Certification
                of the Chief Executive Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 200231.2
            Certification
                of the Chief Financial Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 200232.1
            Certification
                of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-
                Act of 200232.2
            Certification
                of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-
                Act of 2002


*  Incorporated
      herein by reference to the Registration Statement on Form 10 filed on May 19,
      2006.





32







**SIGNATURES**




Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      caused this report to be signed by the undersigned, thereunto duly
      authorized.







Conihasset
                Capital Partners, Inc.Date:
                November 14, 2006
            /s/
                Richard D. BaileyRichard
                D. Bailey










President
                and Chief Executive Officer.Conihasset
                Capital Partners, Inc.Date:
                November 14, 2006
            /s/
                Keith D. LoweyKeith
                D. Lowey










Assistant
                Secretary and Chief Financial
                Officer.









33