**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      DC 20549**







**FORM
      10-QSB**





(Mark
      One)





x
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934For
                the quarterly period ended
            **September
              30, 2006**ORo
            TRANSACTION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934For
                the transition period from
            
            toCommission
                file number:
            **333-135134****ZIPGLOBAL
                HOLDINGS, INC.**(Exact
                Name of Registrant as Specified in Its Charter)**Delaware**
            
            **20-3837010**(State
                of Other Jurisdiction of Incorporation or
              Organization)
            
            (I.R.S.
                Employer Identification Number)**420
                Washington Street, Unit LL-6,**
              **Braintree,
                Massachusetts**
            
            **02184**(Address
                of Principal Executive Offices)
            
            (Zip
                Code)**(781)
                848-0021**(Registrant’s
                Telephone Number, Including Area Code)(Former
                Name, Former Address and Former Fiscal Year, If Changed Since Last
                Report)





Indicate
      by check mark whether the registrant: (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange act of 1934 during
      the
      preceding 12 months (or such shorter period that the registrant was required
      to
      file such reports), and (2) has been subject to such filing requirements for
      the
      past 90 days.


o
      Yes x No





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


o
      Yes x No





**APPLICABLE
      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE
      YEARS:**





Check
      whether the registrant filed all documents and reports required to be filed
      by
      Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
      under a plan confirmed by a court.


o
      Yes o No





**APPLICABLE
      ONLY TO CORPORATE ISSUERS:**





State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date. 18,635,792
      shares of common stock, par value $0.0001 per share, issued and outstanding
      as
      of November 14, 2006 .




Transitional
      Small Business Disclosure Format (check one):  o
      Yes x No







**TABLE
      OF CONTENTS**





**Page****PART
                I - FINANCIAL INFORMATION**
            
            3Item
                1.
            Financial
                Statements
            
            3Item
                2.
            Management’s
                Discussion and Analysis or Plan of Operation
            
            8Item
                3.
            Controls
                and Procedures
            
            13**PART
                II - OTHER INFORMATION**
            
            13Item
                1.
            Legal
                Proceedings
            
            13Item
                2.
            Unregistered
                Sale of Equity Securities and Use of Proceeds
            
            14Item
                3.
            Defaults
                Upon Senior Securities
            
            14Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            
            14Item
                5.
            Other
                Information
            
            14Item
                6.
            Exhibits
            
            14**SIGNATURES**







2


**PART
      I**


**FINANCIAL
      INFORMATION**





**Item
      1. Financial Statements.**





**ZIPGLOBAL
      HOLDINGS, INC. AND SUBSIDIARY**





**CONSOLIDATED
      BALANCE SHEETS**





September
                30,
              2006
            
            March
                31, 2006(Unaudited)
            
            (Restated)**ASSETS**CURRENT
                ASSETSCash
            
            $
            744,718
            
            $
            375,631Accounts
                receivable
            
            
            85,113
            
            
            87,477Inventory
            
            
            34,012
            
            
            32,229Prepaid
                expenses
            
            
            80,676
            
            
            25,909Total
                Current Assets
            
            
            944,519
            
            
            521,246EQUIPMENT,
                net of accumulated depreciation of $11,975 and $8,865,
                respectively
            
            
            16,135
            
            
            15,220Total
                Assets
            
            $
            960,654
            
            $
            536,466**LIABILITIES
                AND STOCKHOLDERS’ EQUITY (DEFICIT)**CURRENT
                LIABILITIESAccounts
                payable
            
            $
            91,566
            
            $
            103,749Accrued
                expenses
            
            
            32,941
            
            
            39,871Due
                to stockholders
            
            
            89,208
            
            
            77,130Deferred
                revenue
            
            
            29,548
            
            
            35,204Customer
                deposits
            
            
            26,870
            
            
            26,870Total
                Current Liabilities
            
            
            270,133
            
            
            282,824STOCKHOLDERS’
                EQUITY (DEFICIT)Preferred
                stock, par value $0.0001 per share, authorized 5,000,000 shares,
                none
                issued and outstandingCommon
                stock par value $0.0001 per share, authorized 100,000,000 shares,
                18,635,792 and 17,560,292 issued and outstanding at September 30,
                2006 and
                March 31, 2006, respectively
            
            
            1,864
            
            
            1,756Additional
                paid-in capital
            
            
            1,518,084
            
            
            902,525Accumulated
                deficit
            
            
            (824,668
            )
            
            (648,732
            )Accumulated
                other comprehensive loss
            
            
            (4,759
            )
            
            (1,907
            )Total
                Stockholders’ Equity (Deficit)
            
            
            690,521
            
            
            253,642Total
                Liabilities and Stockholders’ Equity (Deficit)
            
            $
            960,654
            
            $
            536,466





See
      accompanying notes to consolidated financial statements


3


**ZIPGLOBAL
      HOLDINGS, INC. AND SUBSIDIARY**





**CONSOLIDATED
      STATEMENTS OF OPERATIONS**





**(UNAUDITED)**





**Three
                Months Ended**
            
            **Six
                Months Ended****September
                30, 2006**
            
            **September
                30, 2005**
            
            **September
                30, 2006**
            
            **September
                30, 2005**NET
                SALES
            
            $
            1,053,047
            
            $
            180,102
            
            $
            2,232,140
            
            $
            458,642COSTS
                AND EXPENSESCost
                of goods sold
            
            
            1,006,827
            
            
            109,752
            
            
            2,143,678
            
            
            333,401General
                and administrative
            
            
            143,595
            
            
            39,740
            
            
            259,836
            
            
            128,132Depreciation
            
            
            1,607
            
            
            1,314
            
            
            3,108
            
            
            2,665Total
                Costs and Expenses
            
            
            1,152,029
            
            
            150,806
            
            
            2,406,622
            
            
            464,198NET
                OPERATING INCOME (LOSS)
            
            
            (98,982
            )
            
            29,296
            
            
            (174,482
            )
            
            (5,556
            )OTHER
                INCOME (EXPENSE)Interest
                income
            
            
            18
            
            
            31
            
            
            496
            
            
            66Interest
                expense
            
            
            
            
            
            (2
            )
            
            
            
            
            (2
            )Loss
                on disposal of fixed assetsTotal
                Other Income (Expense)
            
            
            18
            
            
            29
            
            
            496
            
            
            64NET
                INCOME (LOSS) BEFORE TAXES
            
            
            (98,964
            )
            
            29,325
            
            
            (173,986
            )
            
            (5,492
            )PROVISION
                FOR INCOME TAXES
            
            
            (1,055
            )
            
            1,021
            
            
            1,950
            
            
            1,637NET
                LOSS
            
            
            (100,019
            )
            
            28,304
            
            
            (175,936
            )
            
            (7,129
            )NET
                INCOME (LOSS) PER COMMON SHARE (Basic and diluted)
            
            $
            (0.01
            )
            $
            0.01
            
            $
            (0.01
            )
            $
            (0.01
            )WEIGHTED
                AVERAGE SHARES OUTSTANDING
            
            
            18,635,792
            
            
            16,000,000
            
            
            18,362,461
            
            
            16,000,000





See
      accompanying notes to consolidated financial statements


4


**ZIPGLOBAL
      HOLDINGS, INC. AND SUBSIDIARY**





**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(UNAUDITED)**


**Six
                Months Ended September 30,****2006**
            
            **2005**CASH
                FLOWS FROM OPERATING ACTIVITIESNet
                loss
            
            $
            (175,936
            )
            $
            (7,129
            )Adjustments
                to reconcile net loss to net cash flows from operating
                activities:Depreciation
                and amortization
            
            
            3,108
            
            
            2,665Stock
                based compensation
            
            
            3,237Contribution
                of services
            
            
            78,000
            
            
            36,000Changes
                in operating assets and liabilitiesAccounts
                receivable
            
            
            2,364
            
            
            11,944Inventory
            
            
            (1,783
            )
            
            (25,043
            )Prepaid
                expenses
            
            
            (54,767
            )
            
            (41,381
            )Accounts
                payable
            
            
            (12,183
            )
            
            (33,146
            )Accrued
                expenses
            
            
            (6,930
            )
            
            19,838Deferred
                Revenue
            
            
            (5,656
            )
            
            (31,567
            )Customer
                deposits
            
            
            
            
            
            (6,451
            )Net
                cash used in operating activities
            
            
            (170,546
            )
            
            (74,270
            )CASH
                FLOWS FROM INVESTING ACTIVITIESPurchases
                of property and equipment
            
            
            (4,023
            )
            
            (823
            )Net
                cash used in investing activities
            
            
            (4,023
            )
            
            (823
            )CASH
                FLOWS FROM FINANCING ACTIVITIESLoans
                from stockholders
            
            
            12,078
            
            
            87,688Proceeds
                from issuance of common stock
            
            
            534,430Net
                cash provided by financing activities
            
            
            546,508
            
            
            87,688EFFECT
                OF RATE CHANGE ON CASH
            
            
            (2,852
            )
            
            (1,443
            )NET
                INCREASE IN CASH
            
            
            369,087
            
            
            11,152CASH,
                BEGINNING OF PERIOD
            
            
            375,631
            
            
            18,133CASH,
                END OF PERIOD
            
            $
            744,718
            
            $
            29,285





See
      accompanying notes to consolidated financial statements


5


**ZIPGLOBAL
      HOLDINGS, INC. AND SUBSIDIARY**





**CONSOLIDATED
      STATEMENTS OF CASH FLOWS (CONTINUED)**





**(UNAUDITED)**





**Six
                Months Ended September 30,****2006**
            
            **2005**SUPPLEMENTAL
                CASH FLOW DISCLOSURESCash
                paid for taxesContribution
                of services by officers and directors
            
            $
            78,000
            
            $
            36,000Stock
                based compensation
            
            $
            3,237





See
      accompanying notes to consolidated financial statements


6


**ZIPGLOBAL
      HOLDINGS, INC. AND SUBSIDIARY**




**NOTES
      TO UNAUDITED CONDENSED FINANCIAL STATEMENTS**




NOTE
      A -
      BASIS OF PRESENTATION




The
      accompanying condensed consolidated financial statements have been prepared
      in
      accordance with generally accepted accounting principles for interim financial
      information. Accordingly, they do not include all of the information and
      footnotes required by generally accepted accounting principles for complete
      financial statements. In the opinion of management, all adjustments (consisting
      of normal recurring accruals) considered necessary in order to make the
      financial statements not misleading have been included. Results for the three
      and six months ended September 30, 2006 are not necessarily indicative of the
      results that may be expected for the year ending March 31, 2007. For
      further information, refer to the financial statements and footnotes thereto
      included in the ZipGlobal Holdings Inc. and Subsidiary annual report on Form
      SB
      -2 for the year ended March 31, 2006.




NOTE
      B -
      GOING CONCERN




As
      indicated in the accompanying financial statements, the Company incurred net
      operating losses of $824,668 since inception. Management’s plans include the
      raising of capital through short term financing to fund future operations and
      the generating of revenue through its business. Failure to raise capital and
      generate sales revenues could result in the Company having to curtail or cease
      operations. Additionally, even if the Company does raise sufficient capital
      to
      support its operating expenses and generate revenues, there can be no assurances
      that the revenue will be sufficient to enable it to develop business to a level
      where it will generate profits and cash flows from operations. These matters
      raise substantial doubt about the Company’s ability to continue as a going
      concern. However, the accompanying financial statements have been prepared
      on a
      going concern basis, which contemplates the realization of assets and
      satisfaction of liabilities in the normal course of business. These financial
      statements do not include any adjustments relating to the recovery of the
      recorded assets or the classification of the liabilities that might be necessary
      should the Company be unable to continue as a going concern.




NOTE
      C -
      ISSUANCE OF COMMON STOCK




During
      the six months ended September 30, 2006, the Company, under a private placement
      agreement, issued 1,075,500 shares of its common stock at $0.50 per share
      aggregating $534,430.




NOTE
      D-
      ISSUANCE OF STOCK OPTIONS





On
      June
      19, 2006, the Company granted (i) three consultants non-qualified stock options
      (NSOs) exercisable for an aggregate of 205,000 shares of the Company’s Common
      Stock and (ii) ten employees incentive stock options (ISOs) exercisable for
      aggregate of 227,500 shares of the Company’s Common Stock. The options granted
      to such individuals are exercisable at $0.50 per share and vest in one-third
      increments commencing on the first anniversary date of the date of grant. The
      NSOs granted to the three consultants expire on December 19, 2009, and the
      ISOs
      granted to the ten employees expire on June 19, 2010. These stock options will
      be accounted for under the fair value method prescribed by SFAS 123(R). The
      estimated fair value of these options is $82,000, $41,000 relating to the
      consultant stock options and $41,000 relating to the employee stock options.
      The
      fair value of the options was determined using the Black-Scholes option pricing
      model based on the weighted average assumptions of:


7





**ZIPGLOBAL
      HOLDINGS, INC. AND SUBSIDIARY**




**NOTES
      TO UNAUDITED CONDENSED FINANCIAL STATEMENTS**






NOTE
      D-
      ISSUANCE OF COMMON STOCK (Continued)




ISOs
            
            NSOsRisk-free
                rate
            
            
            4.85
            %
            
            4.85
            %Volatility
            
            
            47
            %
            
            47
            %Expected
                life
            
            
            3
                years
            
            
            3.55
                yearsDividend
                yield
            
            
            0
            %
            
            0
            %





The
      expected life of the NSOs is the perform period of the consulting agreements.
      The weighted average grant date fair value of these options was $0.18 for the
      ISOs and $0.20 for the NSOs. The entire $82,000 fair value of these options
      is
      non-vested at June 30, 2006. The employee stock options will be recognized
      over
      a weighted average period of 3 years. The consultant stock options will be
      recognized over the performance period of 3.55 years. For the six months ended
      September 30, 2006, the Company recognized $3,237 in expense relating to the
      consultant stock options. The employee stock options will be recognized each
      vesting period.




NOTE
      E -
      CONTRIBUTION OF SERVICES




The
      Company does not pay salaries or fees to its directors and officers. The Company
      has recorded the fair value of services provided by directors and officers,
      as
      determined by management, as an expense and capital contribution when incurred.
      None of these accrued amounts have been paid to or are owed to any officers
      and
      directors of the Company. The Company recognized $78,000 and $36,000 in
      contributed services during the six months ended September 30,
      2006.





**Item
      2. Management’s Discussion and Analysis or Plan of
      Operation**





**Forward-Looking
      Statements**





*This
      Report contains statements that we believe are, or may be considered to be,
      “forward-looking statements” within the meaning of the Private Securities
      Litigation Reform Act of 1995. All statements other than statements of
      historical fact included in this Report regarding the prospects of our industry
      or our prospects, plans, financial position or business strategy, may constitute
      forward-looking statements. In addition, forward-looking statements generally
      can be identified by the use of forward-looking words such as “may,” “will,”
“expect,” “intend,” “estimate,” “foresee,” “project,” “anticipate,” “believe,”
“plans,” “forecasts,” “continue” or “could” or the negatives of these terms or
      variations of them or similar terms. Furthermore, such forward-looking
      statements may be included in various filings that we make with the SEC or
      press
      releases or oral statements made by or with the approval of one of our
      authorized executive officers. Although we believe that the expectations
      reflected in these forward-looking statements are reasonable, we cannot assure
      you that these expectations will prove to be correct. These forward-looking
      statements are subject to certain known and unknown risks and uncertainties,
      as
      well as assumptions that could cause actual results to differ materially from
      those reflected in these forward-looking statements. Readers are cautioned
      not
      to place undue reliance on any forward-looking statements contained herein,
      which reflect management’s opinions only as of the date hereof. Except as
      required by law, we undertake no obligation to revise or publicly release the
      results of any revision to any forward-looking statements. You are advised,
      however, to consult any additional disclosures we make in our reports to the
      SEC. All subsequent written and oral forward-looking statements attributable
      to
      us or persons acting on our behalf are expressly qualified in their entirety
      by
      the cautionary statements contained in this Report.*


8




**Business
      Overview**




ZipGlobal
      Holdings, Inc. is a Delaware corporation working through its wholly-owned
      subsidiary Beasley Holdings Limited, a British Virgin Island company located
      in
      Hong Kong and acquired by us in a share exchange consummated in November 2005.
      Through Beasley, we provide Internet telephony services to over 5,000 registered
      subscribers as of September 30, 2006 by utilizing Voice over Internet Protocol,
      or VoIP, technology. While we sell our services to all parts of the world,
      over
      40% of our current customers are located outside of the United States and Canada
      and our growth strategy has been focused on the domestic and international
      Asian
      markets. We also sell telecommunication time to other resellers of
      telecommunication time. In May 2004 and January 2005, we opened sales offices
      in
      Hong Kong and mainland China, respectively, to support direct sales and to
      better serve our customers in Asia.





We
      have
      incurred net operating losses of $824,668 since our inception, and our auditors
      have expressed doubt about our ability to continue as a going concern. In order
      to grow our customer base and revenue, we seeking to grow our business by
      increasing our sales force in Asia. We are pursuing to grow our business in
      the
      near term to capitalize on the current expansion of Internet broadband usage
      and
      to establish ourselves in VoIP market in Asia. We intend to continue to pursue
      growth because we believe it will position us as a viable competitor in the
      long
      term. This strategy, however, will result in further net losses.





***Results
      of Operations***





*Three
      Months Ended September 30, 2006 Compared to Three Months Ended September 30,
      2005*





*Revenues* .
      We
      recognize revenue through our retail sales consisting of the sale of gateway
      kits, subscription services plans and fees and our prepaid ZipGlobal To-Go
      Recharge Cards and through our resale of blocks of telecommunications time
      to
      other telecommunication providers. Our overall revenues were $1,053,047 for
      the
      three month period ended September 30, 2006, compared to $180,102 for the three
      month period ended September 30, 2005. This increase was primarily driven by
      our
      resell business, commenced in February 2005, whereby we repurchase blocks of
      VoIP of telephony minutes from telecommunication providers and resell them
      to
      other telecommunications providers on a usage basis.





*Costs
      of Sales.* The cost
      of sales consists of costs associated with purchasing gateway systems and
      equipment and shipping and handling of gateway systems to our dealers and our
      costs associated with our purchases of blocks of time in connection with our
      resell business. Our costs of sales for the quarter ended September 30, 2006
      were $1,006,827, compared to $109,752 for the three months ended September
      30,
      2005. This increase was due to our purchases of blocks of VoIP telephony time
      in
      connection with our resell business which we commenced in February 2005. Cost
      of
      sales primarily consists of fees paid to other telecommunication providers
      for
      blocks of telecommunications time for our resale and retail businesses.





*General
      and Administrative Expenses* .
      Our
      general and administrative expenses consist of related overhead costs for sales,
      marketing, customer support, finance, human resources and management. Our
      general and administrative expenses increased to $143,595 for the quarter ended
      September 30, 2006 from $39,740 for the quarter ended September 30, 2005. The
      most significant components of general and administrative expenses are salaries,
      contributed services and rent.





*Six
      Months Ended September 30, 2006 Compared to Six Months Ended September 30,
      2005*





*Revenues* .
      We
      recognize revenue through our retail sales consisting of the sale of gateway
      kits, subscription services plans and fees and our prepaid ZipGlobal To-Go
      Recharge Cards and through our resale of blocks of telecommunications time
      to
      other telecommunication providers. Our overall revenues were $2,232,140 for
      the
      six month period ended September 30, 2006, compared to $458,642 for the six
      month period ended September 30, 2005. This increase was primarily driven by
      our
      resell business, commenced in February 2005, whereby we repurchase blocks of
      VoIP of telephony minutes from telecommunication providers and resell them
      to
      other telecommunications providers on a usage basis.


9





*Costs
      of Sales.* The cost
      of sales consists of costs associated with purchasing gateway systems and
      equipment and shipping and handling of gateway systems to our dealers and our
      costs associated with our purchases of blocks of time in connection with our
      resell business. Our costs of sales for the six months ended September 30,
      2006
      were $2,143,678, compared to $333,401 for the six months ended September 30,
      2005. This increase was due to our purchases of blocks of VoIP telephony time
      in
      connection with our resell business which we commenced in February 2005. Cost
      of
      sales primarily consists of fees paid to other telecommunication providers
      for
      blocks of telecommunications time for our resale and retail businesses.





*General
      and Administrative Expenses* .
      Our
      general and administrative expenses consist of related overhead costs for sales,
      marketing, customer support, finance, human resources and management. Our
      general and administrative expenses increased to $259,836 for the six months
      ended September 30, 2006 from $128,132 for the six months ended September 30,
      2005. The most significant components of general and administrative expenses
      are
      salaries, contributed services and rent.





***Liquidity
      and Capital Resources***





We
      have
      incurred significant operating losses since our inception. As a result, we
      have
      generated negative cash flows from operations and had an accumulated deficit
      of
      $824,668 at September 30, 2006, causing our independent auditors to issue a
      “going concern” opinion. Our primary sources of funds have been loans from
      officers and from the sale of common stock in a series of private placement
      offerings.





*Cash
      Balance.* At
      September 30, 2006, we had a cash balance of $744,718, compared to $375,631
      as
      of March 31, 2006. This increase was primarily due to our private financing
      activities consisting of sales of our common stock to accredited investors
      under
      Regulation D of the Securities Act. We anticipate continuing to rely on private
      and public equity sales of our common stock in order to continue to fund our
      business operations. Issuances of additional shares will result in dilution
      to
      our existing stockholders. There is no assurance that we will achieve any of
      additional sales of our equity securities or arrange for debt or other financing
      for to fund our planned business activities.





*Accounts
      Receivable.* At
      September 30, 2006, we had accounts receivable of $85,113, compared to $87,477
      as of March 31, 2006. This decrease was due to a decrease in resale transactions
      in VoIP telephony minutes with other telecommunication providers.





*Accounts
      Payable.* At
      September 30, 2006, we had accounts payable of $91,566, compared to $103,749
      as
      of March 31, 2006. This decrease was due to a decrease in resale transactions
      of
      VoIP telephony minutes to other telecommunication providers.





*Accrued
      Expenses.* At
      September 30, 2006, we had accrued expenses of $32,941, compared to $39,871
      as
      of March 31, 2006. This decrease was due to decreased commission expense
      resulting from a decreased number of new retail customers.





*Deferred
      Revenues.* At
      September 30, 2006, we had deferred revenues of $29,548, compared to $35,204
      as
      of March 31, 2006. This decrease was due to a decrease in the number of new
      retail customers and the amortization of deferred activation fees over the
      average customer relationship period .





Historically,
      our principal uses of cash have been to fund operating losses, which were driven
      by start-up costs associated with opening offices in Asia and the costs of
      developing our technology. We anticipate incurring net losses in the future
      as
      we seek to grow our customer base in Asia through the opening of additional
      sales offices.




To
      implement our growth strategy, we may need to seek additional funding by
      accessing the equity or debt capital markets. In addition, although we do not
      currently anticipate any acquisitions, we may need to seek additional funding
      if
      an attractive acquisition opportunity is presented to us. However, our
      significant losses to date may prevent us from obtaining additional funds on
      favorable terms or at all. Because of our historical net losses and our limited
      tangible assets, we do not fit traditional credit lending criteria, which,
      in
      particular, could make it difficult for us to obtain loans or to access the
      debt
      capital markets.




10




***Critical
      Accounting Policies & Estimates***




The
      follow describes critical accounting policies and estimates:




Use
      of
      Estimates





It
      is
      important to note that when preparing the financial statements in conformity
      with U.S. generally accepted accounting principles, management is required
      to
      make certain estimates and assumptions that affect the amounts reported and
      disclosed in the financial statements and related notes. Actual results could
      differ if those estimates and assumptions approve to be incorrect.





On
      an
      ongoing basis, we evaluate our estimates, including those related to estimated
      customer life, used to determine the appropriate amortization period for
      deferred revenue and deferred costs associated with customer activation fees,
      the useful lives of property and equipment as well as in U.S. dollar exchange
      rates with foreign currencies, among others, as well as our estimates of the
      value of common stock for the purpose of determining stock-based compensation.
      We base our estimates on historical experience and on various other assumptions
      that we believe to be reasonable, the results of which form the basis for making
      judgments about the carrying values of assets and liabilities.




Inventory




Inventory
      consists of the cost of customer equipment and is stated at the lower of cost
      or
      market, with cost determined using the first in first out (FIFO) method. We
      provide an inventory allowance for customer equipment that has been returned
      by
      customers but may not be able to be re-issued to new customers or returned
      to
      the manufacturer for credit.




Income
      Taxes





We
      recognize deferred tax assets and liabilities based on the differences between
      the financial statement and income tax bases of assets and liabilities by using
      estimated tax rates in effect for the year in which the differences are expected
      to reverse. The measurement of a deferred tax asset is adjusted by a valuation
      allowance, if necessary, to recognize tax benefits only to the extent that,
      based on available evidence, it is more likely than not that they will be
      realized. We have recorded a valuation allowance on the assumption that we
      will
      not generate taxable income.




Stock-Based
      Compensation





We
      account for stock based compensation using the fair value method. In determining
      fair value for the 432,500 in options issued on June 19, 2006, the Company
      is
      utilizing the Black-Scholes model with the following assumptions:


Risk-free
                  rate
              
              
              4.85
              %Volatility
              
              
              47
              %Expected
                  Life
              
              
              3
                  years - 3.55 yearsDividend
                  Yield
              
              
              0
              %


11





The
      risk
      free rate is the expected U.S. Treasury rate over the expected life. The
      volatility reflects the estimated price movement of the Company’s stock. As the
      Company is not public, the Company utilized the price movements of similar
      publicly traded companies in estimating volatility. The expected life is the
      period for which the risk-free rate, volatility and dividend yield are to be
      applied. The dividend yield is based upon the estimated dividend yield over
      the
      expected life.





The
      above
      assumptions were made by the Company based upon management’s best estimates.
      Changes in these assumptions would impact the amount of stock-based compensation
      recognized by the Company. These assumptions would likely be different for
      future issuances of stock-based compensation. The following table summarizes
      the
      estimated increase (decrease) in the Company’s stock-based compensation based
      changes in estimates.





**Assumption**
            
            **Change**
            
            **Change
                in Stock-Based Compensation**Risk-free
                rate
            
            
            100
                basis point increase
            
            $
            2,000100
                basis point decrease
            
            $
            (2,000
            )Volatility
            
            
            1000
                basis point increase
            
            $
            12,0001000
                basis point decrease
            
            $
            (13,000
            )Expected
                Life
            
            
            Held
                until expiration
            
            $
            8,0001
                  year decrease
            
            $
            (15,000
            )





Revenue
      Recognition





The
      Company earns revenue through the retail sales of VoIP gateway boxes and
      telephony minutes and through the resale of block VoIP telephony minutes to
      other telecommunications providers.





For
      retail sales, the Company earns revenues from the sale of VoIP gateway boxes
      and
      monthly, usage and activation fees in connection with a customer’s use of the
      Company’s telephony service. Pursuant to the Company’s agreements with its
      dealer representatives, the Company’s sales representatives are required to
      purchase an agreed upon number of VoIP gateway boxes for $75 per box as a
      security deposit. The Company recognizes revenue on the sale of a VoIP gateway
      boxes when a customer purchases the gateway box from a dealer representatives
      when subscribing the Company’s service. The Company furnishes additional gateway
      boxes to a dealer representative on a consignment basis and recognizes revenue
      only when it is sold to a customer. Monthly fees are automatically billed to
      customers each month and are recognized when earned. Usage fees are prepaid
      by
      customers and recognized as revenue based upon customer usage of the minutes.
      Activation fees are charged to customers for the purchase of gateway kits from
      one of our sales representatives and are necessary to utilize VoIP telephony
      minutes. These activation fees, along with the related costs up to but not
      exceeding the activation fees, are deferred and amortized over the estimated
      average customer relationship period. The average customer relationship period
      has been determined to be 13 months based upon the Company’s review of its
      customer retention since inception.





The
      Company records the resale of block VoIP telephony minutes on a gross basis
      as
      the Company has latitude in establishing the resale price, has discretion in
      its
      selection of resale suppliers and has credit risk on the transactions.
      Accordingly, revenue is recognized when persuasive evidence of an arrangement
      exists, delivery has occurred, the fee is determinable and collectibility is
      probable.





Substantially
      all of our telephony services revenue is derived from monthly subscription
      fees
      that customers are charged under our service plans. We also derive telephony
      services revenue from per minute fees for international calls and for any
      calling minutes in excess of a customer's monthly plan limits. Monthly
      subscription fees are automatically charged to customers' credit or debit cards
      in advance and are recognized over the following month when services are
      provided. Revenue generated from international calls and from customers
      exceeding allocated call minutes under limited minute plans are recognized
      as
      services are provided, that is, as minutes are used, and are billed to a
      customer's credit card in arrears. As a result of our multiple billing cycles
      each month, we estimate the amount of revenue earned from international calls
      and from customers exceeding allocated call minutes under limited minute plans
      but not billed from the end of each billing cycle to the end of each reporting
      period. These estimates are based primarily upon historical minutes and have
      been consistent with our actual results


12





Contributed
      Services





The
      Company does not pay salaries or fees to its directors and officers. The
      Company’s policy is to record the fair value of services provided by directors
      and officers, as determined by management, as an expense and capital
      contribution when incurred.




***Off-Balance
      Sheet Arrangements***




We
      have
      no off-balance sheet arrangements that have or are reasonably likely to have
      a
      current or future effect on our financial condition, changes in financial
      condition, revenues or expenses, results of operations, liquidity, capital
      expenditures or capital resources.




**Item
      3. Controls and Procedures.**





(a) *Evaluation
      of Disclosure Controls and Procedures.* Based on
      their evaluation as of the end of the period covered by this Quarterly Report
      on
      Form 10-QSB, our principal executive officer and principal financial officer
      have concluded that our disclosure controls and procedures (as defined in Rules
      13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange
      Act”)) were effective to ensure that information required to be disclosed by us
      in reports that we file or submit under the Exchange Act is recorded, processed,
      summarized and reported within the time periods specified in SEC rules and
      forms.





(b) *Changes
      in Internal Controls Over Financial Reporting.* There
      were no changes in our internal controls over financial reporting during the
      fiscal quarter covered by this Form 10-QSB that have materially affected, or
      are
      reasonably likely to materially affect, our internal control over financial
      reporting.




**PART
      II**


**OTHER
      INFORMATION**


**Item
      1. Legal Proceedings.**




We
      are
      not currently a party to any legal proceedings.




We
      are
      required by Section 131 of the Delaware General Corporation Law to maintain
      a
      resident agent in the State of Delaware. Our resident agent for this purpose
      is
      Harvard Business Services, Inc. located at 25 Greystone Manor, Lewes, Delaware
      19958. All legal process and any demand or notice authorized by law to be served
      upon us may be served upon our resident agent in the State of Delaware in the
      manner provided in Section 132 of the Delaware General Corporation
      Law.




13





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





None.





**Item
      3. Defaults Upon Senior Securities.**





None.





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





None.





**Item
      5. Other Information.**





None.





**Item
      6. Exhibits.**





**EXHIBIT
      INDEX**




**Exhibit No.**
            
            **Exhibit**31.1
            
            Certification
                by Michael C. Lee, the Principal Executive Officer and Principal
                Accounting Officer of ZipGlobal Holdings, Inc., pursuant to Rule
                13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as
                amended32.1
            
            Certification
                of Michael C. Lee, the Principal Executive Officer and Principal
                Accounting Officer of ZipGlobal Holdings, Inc., pursuant to 18 U.S.C.
                Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
                Act
                of 2002




14


**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.





Date:
                November 14, 2006
            
            **ZIPGLOBAL
                HOLDINGS, INC.**By:
            */s/
                Michael C. Lee***MICHAEL
                C. LEE**
              President
                and Chief Executive Officer
              (Principal
                Executive Officer and Principal
              Accounting
                Officer)






15