**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-QSB**




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




**For
      the quarterly period ended June 30, 2006**






o
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934




For
      the
      transition period from ______________to ______________




Commission
      file number 333-134658







**SPLINTERNET
                HOLDINGS, INC.**(Exact
                Name of Small Business Issuer as Specified in Its
                Charter)






Delaware
            
            22-393-8509(State
                or Other Jurisdiction ofIncorporation
                or Organization)
            
            (IRS
                Employer Identification No.)






535
                Connecticut Avenue, 2ndfloor, Norwalk, CT 06854(Address
                of Principal Executive Offices)




Issuer’s
                Telephone Number, Including Area Code: (203)
                354-9164Former
                Name, Former Address and Former Fiscal Year, if Changed Since Last
                Report.





Check
      whether the Issuer (1) has filed all reports required to be filed by Section
      13
      or 15(d) of the Exchange Act during the past 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  x No o




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




**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. Yes o No o




**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:  As
      of
      September 12, 2006, the Issuer had 53,500,500 outstanding shares of Common
      Stock, $.001 par value.





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





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        to Table of Contents**




**SPLINTERNET
      HOLDINGS, INC.**





**TABLE
      OF CONTENTS**





**Page****PART
                I - FINANCIAL INFORMATION**Item
                1.
            Financial
                Statements.
            3Item
                2.
            Management’s
                Discussion and Analysis or Plan of
                Operation.
            11Item
                3.
            Controls
                and Procedures.
            16**PART
                II - OTHER INFORMATION**Item
                1.
            Legal
                Proceedings.
            17Item
                2.
            Unregistered
                Sales of Equity Securities and Use of
                Proceeds.
            17Item
                3.
            Default
                upon Senior Securities.
            17Item
                4.
            Submission
                of Matters to a Vote of Security
                Holders.
            17Item
                5.
            Other
                Information.
            17Item
                6.
            Exhibits.
            17**SIGNATURES**
            
            18





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            Contents**




**PART
      I - FINANCIAL INFORMATION**




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




Condensed
      consolidated Balance Sheets at June 30, 2006 (Unaudited)
      and December 31, 2005




Condensed
      consolidated Statements of Operations (Unaudited) for the
      three and six months ended June 30, 2006 and 2005




Condensed
      consolidated Statements of Cash Flows (Unaudited) for six
      months ended June 30, 2006 and 2005




Notes
      to the Condensed consolidated Financial Statements
      (Unaudited)


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**SPLINTERNET
      HOLDINGS, INC. AND SUBSIDIARY**




**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


June
                30,
            
            December
                31,2006
            
            2005(unaudited)ASSETSCash
            
            $
            2,759,998
            
            $
            2,199,602Accounts
                receivable, net
            
            
            22,491
            
            
            1,639Prepaid
                expenses
            
            
            1,491
            
            
            3,743Current
                Assets
            
            
            2,783,980
            
            
            2,204,984Property
                and equipment, net
            
            
            15,537
            
            
            1,550Security
                deposits
            
            
            17,544
            
            
            —Total
                assets
            
            $
            2,817,061
            
            $
            2,206,534LIABILITIES
                AND STOCKHOLDERS' EQUITYLiabilitiesAccounts
                payable and accrued expenses
            
            $
            12,766
            
            $
            —Customer
                Prepayments
            
            
            200
            
            
            —Total
                liabilities
            
            $
            12,966
            
            $
            —Stockholders'
                equity:Capital
                stock:Common
                stock, $0.001 par value; 100,000,000 shares authorized;
                53,500,500sharesand 51,675,500 issued and outstanding
            
            
            53,500
            
            
            51,675Additional
                paid-in capital
            
            
            3,113,356
            
            
            2,317,615Accumulated
                deficit
            
            
            (362,761
            )
            
            (162,756
            )Total
                stockholders' equity
            
            
            2,804,095
            
            
            2,206,534Total
                liabilities and stockholders' equity
            
            $
            2,817,061
            
            $
            2,206,534


See
      notes
      to condensed consolidated financial statements.


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**SPLINTERNET
      HOLDINGS, INC. AND SUBSIDIARY**




**CONDENSED
      CONSOLIDATED STATEMENTS OF
      OPERATIONS**


**(UNAUDITED)**


Three
                Months Ended
              June
                30,2006
            
            2005RevenuesProduct
                sales
            
            $
            0
            
            $
            67,556Service
                revenue
            
            
            27,918
            
            
            44,13627,918
            
            
            111,692Cost
                of sales
            
            
            —
            
            
            4,600Gross
                profit
            
            
            27,918
            
            
            107,092Selling,
                general and administrative expenses
            
            
            164,558
            
            
            43,303Interest
                income
            
            
            31,864
            
            
            0Net
                income (loss)
            
            $
            (104,776
            )
            $
            63,789Net
                income/(loss) per share:Basic:
            
            $
            (0.0
            )
            $
            0.00Diluted:
            
            $
            (0.0
            )
            $
            0.00Weighted
                average common stock outstanding:Basic
            
            
            53,500,500
            
            
            44,785,500Diluted
            
            
            53,500,500
            
            
            44,785,500


See
      notes
      to condensed consolidated financial statements.


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            Contents**




**SPLINTERNET
      HOLDINGS, INC. AND SUBSIDIARY**




**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**(UNAUDITED)**


Six
                Months Ended
              June
                30,2006
            
            2005RevenuesProduct
                sales
            
            $
            —
            
            $
            102,556Service
                revenue
            
            
            36,624
            
            
            117,78136,624
            
            
            220,337Cost
                of sales
            
            
            —
            
            
            32,100Gross
                profit
            
            
            36,624
            
            
            188,237Selling,
                general and administrative expenses
            
            
            280,884
            
            
            64,550Interest
                income
            
            
            44,255
            
            
            —Net
                income (loss)
            
            
            ($200,005
            )
            $
            123,687Net
                income/(loss) per share:Basic:
            
            $
            (0.0
            )
            $
            0.00Diluted:
            
            $
            (0.0
            )
            $
            0.00Weighted
                average common stock outstanding:Basic
            
            
            52,750,222
            
            
            44,785,500Diluted
            
            
            52,750,222
            
            
            44,785,500


See
      notes
      to condensed consolidated financial statements.


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**SPLINTERNET
      HOLDINGS, INC. AND SUBSIDIARY**




**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH
      FLOWS**


**(UNAUDITED)**


Six
                Months Ended
              June
                30,2006
            
            2005Cash
                flow from operating activities:Net
                income/(loss)
            
            
            ($200,005
            )
            $
            123,687Adjustments
                to reconcile net income to net cash (used in)/provided by operating
                activities:Depreciation
            
            
            644Change
                in assets and liabilities(Increase)
                in accounts receivable
            
            
            (20,852
            )(Increase)/decrease
                in prepaid expense
            
            
            2,252
            
            
            (5,641
            )(Increase)
                in security deposits
            
            
            (17,544
            )Increase/(decrease)
                in accounts payable and accrued liabilities
            
            
            12,766
            
            
            (5,000
            )Increase
                in customer deposits
            
            
            200Net
                cash (used in) provided by operating activities
            
            
            (222,539
            )
            
            113,046Cash
                flows from investing activities:Purchase
                of property and equipment
            
            
            (14,631
            )
            
            (1,550
            )Net
                cash used in investing activities
            
            
            (14,631
            )
            
            (1,550
            )Cash
                flows from financing activities:Net
                proceeds from the sale of common stock
            
            
            797,566Net
                cash provided by financing activities
            
            
            797,566
            
            
            0Net
                increase in cash and cash equivalents
            
            
            560,396
            
            
            111,496Cash
                and cash equivalents, beginning of period
            
            
            2,199,602
            
            
            16,837Cash
                and cash equivalents, end of period
            
            $
            2,759,998
            
            $
            128,333


See
      notes
      to condensed consolidated financial statements.


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SPLINTERNET
      HOLDINGS, INC.AND
      SUBSIDIARY


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS**


**(UNAUDITED)**






**1.
      PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES**





On
      April
      3, 2006, Splinternet Holdings, Inc. a Company incorporated in the State of
      Delaware on March 22, 2006 conducted a share for share exchange of securities
      with Splinternet Communications, Inc. (“Splinternet”) whereby 214,002 shares of
      the common stock, par value $0.001 per share, of Splinternet Communications,
      Inc. were exchanged for 53,500,500 shares of the common stock, par value $0.001
      per share, of Splinternet Holdings, Inc. (the “Share Exchange”), as a result of
      which Splinternet Communications, Inc. became a wholly owned subsidiary of
      Splinternet Holdings, Inc. (“ the Company”). Splinternet Holdings, Inc. does not
      conduct any business or own any assets other than all of the issued and
      outstanding shares of Splinternet Communications, Inc. Accordingly, all amounts
      of common stock and common stock warrants have been retroactively restated
      throughout these consolidated financial statements to give affect for this
      capital change.





Splinternet
      Communications, Inc. was incorporated in the State of Connecticut in January
      2000. Splinternet is a developer of VOIP (Voice over Internet Protocol)
      technology and services which enable the customer to make phone calls utilizing
      the internet as an alternative to the traditional Public Switched Telephone
      Network.





On
      November 3, 2005, the Company undertook a stock split for which every share
      of
      common stock was converted into approximately 9 shares of common stock
      outstanding in accordance with the approval of the Company's stockholders.
      The
      stock split affects all the Company's common stock outstanding immediately
      prior
      to the effective date of the stock split. Any fractional share resulting from
      the stock split was rounded up to a full share. The stock split increased the
      number of shares of the Company's common stock outstanding including shares
      issuable in connection with the exercise of warrants. Accordingly, all amounts
      of common stock have been retroactively restated throughout these financial
      statements to give effect to the 9.343 to 1 stock split.





**2.
      BASIS OF PREPARATION**





Pursuant
      to the rules and regulations of the Securities and Exchange Commission for
      Form
      10-QSB, the financial statements, footnote disclosures and other information
      normally included in financial statements prepared in accordance with generally
      accepted accounting principles have been condensed. The financial statements
      contained in this report are unaudited but, in the opinion of the Company,
      reflect all adjustments, consisting of only normal recurring adjustments
      necessary to fairly present the financial position as of June 30, 2006 and
      the
      results of operations and cash flows for the interim periods of the fiscal
      year
      ending December 31, 2006 presented herein. The results of operations for any
      interim period are not necessarily indicative of results for the full year.
      The
      balance sheet at December 31, 2005 has been derived from the audited financial
      statements at that date but does not include all of the information and
      footnotes required by accounting principles generally accepted in the United
      States of America for complete financial statements. The
      unaudited financial statements include all the accounts of the
      Company.





For
      purposes of the statement of cash flows, the Company considers all highly liquid
      debt instruments purchased with an original maturity of three months or less
      to
      be cash equivalents.




The
      Company maintains cash in bank deposit accounts which, at times, exceed
      federally insured limits. The Company has not experienced any losses on these
      accounts.





Property
      and equipment are stated at cost. Depreciation is provided using the
      straight-line method over the estimated useful life.


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The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires the use of estimates by management. Actual
      results could differ from these estimates.




The
      Company follows the guidance of the Securities and Exchange Commission’s (“SEC”)
      Staff Accounting Bulletin 104 for revenue recognition.  In general, the
      Company records revenue when persuasive evidence of an arrangement exists,
      services have been rendered or product delivery has occurred, the sales price
      to
      the customer is fixed or determinable, and collectability is reasonably
      assured.




The
      Company recognizes income when products have been shipped or services have
      been
      performed. In cases where a customer prepays a subscription for services to
      be
      performed in a period which extends from one accounting period into a subsequent
      period, the Company only recognizes the portion of income due for services
      performed in the current reporting period. In cases where there is an acceptance
      period during which a subscriber may cancel their agreement without penalty,
      the
      Company defers the revenue recognition until the end of that acceptance
      period.




The
      Company also purchases hardware (for resale) from suppliers who offer a warranty
      of one year. The Company generally warrants these same hardware products for
      one
      year after sale and provides for estimated future warranty costs at the time
      revenue is recognized. Consequently, our warranty liability is limited to the
      cost of the logistics involved in accepting returns and shipping replacements.
      No warranty cost has been recorded for the six month period ended June 20,
      2006
      and 2005, respectively.





Income
      taxes are accounted for under the asset and liability method of Statement of
      Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS
      109”). Under SFAS 109, deferred tax assets and liabilities are recognized for
      the future tax consequences attributable to differences between the financial
      statement carrying amounts of existing assets and liabilities and their
      respective tax bases. Deferred tax assets and liabilities are measured using
      enacted tax rates expected to apply to taxable income in the years in which
      those temporary differences are expected to be recovered or settled. Under
      SFAS
      109, the effect on deferred tax assets and liabilities of a change in tax rates
      is recognized in income in the period that includes the enactment
      date.




Basic
      loss per share is computed by dividing net loss by the weighted average number
      of shares of common stock outstanding during the period. Diluted loss per share
      is computed by dividing net loss by the weighted average number of shares of
      common stock, potential common stock and potentially dilutive securities
      outstanding during each period. As of June 30, 2006, the Company had outstanding
      warrants to purchase an aggregate of 3,214,500 shares of common stock, which
      could potentially dilute future earnings per share. Diluted loss per common
      share has not been presented for the three month period ended June 30, 2006
      and
      six month period ended June 30, 2006 since the impact of the warrants would
      be
      antidilutive. At June 30, 2005, the Company did not have any potential common
      stock.





In
      July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB
      Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an
      interpretation of FASB Statement No. 109 (“FIN 48”), which provides
      criteria for the recognition, measurement, presentation and disclosure of
      uncertain tax positions. A tax benefit from an uncertain position may be
      recognized only if it is “more likely than not” that the position is sustainable
      based on its technical merits. The provisions of FIN 48 are effective for fiscal
      years beginning after December 15, 2006. The Company does not expect FIN 48
      will have a material effect on the Company’s consolidated financial condition or
      results of operations.





Management
      does not believe that any other recently issued, but not yet effective,
      accounting standards if currently adopted would have a material effect on the
      accompanying financial statements.





**3.
      COMMITMENT**





The
      Company is obligated under a noncancelable operating lease for office space
      which commenced on March 15, 2006 and expires March 15, 2009 at an annual rent
      of $46,000.


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**4.
      MAJOR CUSTOMER**





During
      the six months ended June 30, 2006, two customers accounted for 74% of sales.
      Multi Tech International accounted for 54% and Shady Grove for 20%,
      respectively.





**5.
      TAXES**





The
      Company has net operating loss carryforwards of approximately
      $363,000 available to offset taxable income through the year
      2025.




The
      Company recorded a deferred income tax asset for the tax effect of net operating
      loss carryforwards and temporary differences, aggregating approximately
      $144,000. In recognition of the uncertainty regarding the ultimate amount of
      income tax benefits to be derived, the Company has recorded a valuation
      allowance of $144,000 at June 30, 2006.





**6.
      STOCKHOLDERS’ EQUITY**





During
      the period from inception in 2000 to December 31, 2004, the Company issued
      44,785,500 shares of common stock and received proceeds of $196,400.




During
      the year ended December 31, 2005, the Company issued 2,715,000 shares of common
      stock and received proceeds of $100,000. In connection with these issuances
      the
      investors received warrants to purchase 3,214,500 shares of common stock at
      an
      exercise price of $.048 per share. The warrants expire in September 2007. During
      November and December of 2005 the Company commenced selling common stock through
      a private placement. As of December 31, 2005, the Company had received
      subscriptions and funds for 4,175,000 shares at a price of $.50 per share,
      or
      gross proceeds of $2,087,500, less fees of approximately $14,600. During the
      six
      month period ended June 30, 2006 the Company sold the remainder of the offering
      (1,825,000 common shares) for an additional gross proceeds of $912,500 and
      received net proceeds of $798,000 after expenses of which approximately $87,000
      was incurred during the three months ended June 30, 2006. The Company has
      assessed whether the warrants should be classified as either a liability or
      equity in accordance with EITF 00-19 “Accounting for Derivative Financial
      Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” and
      concluded that the warrants should be classified as equity.


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





The
      following discussion should be read in conjunction with the Financial Statements
      included in this report and is qualified in its entirety by the
      foregoing.





**Forward-Looking
      Statements**





This
      report contains “forward-looking statements”, which involve known and unknown
      risks, uncertainties and other factors which could cause actual financial or
      operating results, performances or achievements expressed or implied by such
      forward-looking statements not to occur or be realized. These forward-looking
      statements generally are based on our best estimates of future results,
      performances or achievements, based upon current conditions and assumptions.
      Forward-looking statements may be identified by the use of forward-looking
      terminology such as “may,” “can,” “could,” “project,” “expect,” “believe,”
“plan,” “predict,” “estimate,” “anticipate,” “intend,” “continue,” “potential,”
“would,” “should,” “aim,” “opportunity” or similar terms, variations of those
      terms or the negative of those terms or other variations of those terms or
      comparable words or expressions. These risks and uncertainties include, but
      are
      not limited to:




•
            general
                economic conditions in both foreign and domestic
                markets,


•
              cyclical
                  factors affecting our industry,
 
 •
              lack
                  of growth in our industry,
 
 •
              our
                  ability to comply with government
                  regulations,
 
 •
              a
                  failure to manage our business effectively and profitably,
                  and
 
 •
              our
                  ability to sell both new and existing products and services at
                  profitable
                  yet competitive prices.




You
      should carefully consider these risks, uncertainties and other information,
      disclosures and discussions which contain cautionary statements identifying
      important factors that could cause actual results to differ materially from
      those provided in the forward-looking statements. Splinternet Holdings, Inc.
      undertakes no obligation to update or revise any forward-looking statements,
      whether as a result of new information, future events or otherwise.





**Overview**




Splinternet
      Holdings, Inc. (“we”, “us”, “our”, the “Company” or “Splinternet”) was
      incorporated in the State of Delaware on March 22, 2006. On April 3, 2006,
      Splinternet Holdings, Inc. conducted a share for share exchange of securities
      with Splinternet Communications, Inc. whereby 214,002 shares of the common
      stock, par value $0.001 per share, of Splinternet Communications, Inc. were
      exchanged for 53,500,500 shares of the common stock, par value $0.001 per share,
      of Splinternet Holdings, Inc. (the “Share Exchange”), as a result of which
      Splinternet Communications, Inc. became a wholly owned subsidiary of Splinternet
      Holdings, Inc. Splinternet Holdings, Inc. does not conduct any business or
      own
      any assets other than all of the issued and outstanding shares of Splinternet
      Communications, Inc. Accordingly, all amounts of common stock and common stock
      warrants have been retroactively restated throughout the consolidated financial
      statements to give affect for this capital change.





Splinternet
      Communications, Inc. was incorporated in the State of Connecticut in January
      12,
      2000. Splinternet is a developer of VOIP (Voice over Internet Protocol)
      technology and services which enable the customer to make phone calls utilizing
      the internet as an alternative to the traditional Public Switched Telephone
      Network.





On
      November 3, 2005, and prior to the share for share exchange of securities with
      Splinternet Holdings, Inc., Splinternet Communications, Inc. undertook a stock
      split for which every share of common stock was converted into 9.343 shares
      of
      common stock outstanding in accordance with the approval of the Company’s
      stockholders. The stock split affected all the Splinternet Communications,
      Inc.’s common stock outstanding immediately prior  -11-
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            Contents**


to
      the
      effective date of the stock split. Any fractional share resulting from the
      stock
      split was rounded up to a full share. The stock split increased the number
      of
      shares of the Splinternet Communications, Inc.’s common stock outstanding
      including shares issuable in connection with the exercise of warrants.
      Accordingly, all amounts of common stock have been retroactively restated
      throughout the financial statements to give effect to the 9.343 to 1 stock
      split.





Since
      our
      inception, the Company has generated revenues by inviting prospects to sample
      prototype products and services and to give us in return feedback on the
      function and operation of those products and services. We would sometimes charge
      for those services, if appropriate in circumstances where the customer wanted
      to
      use more than we were willing to provide without charge. We are now at a point
      of significant change in our business development. We are ready to transition
      from casually selling our developing products and services to convenient
      customers into actively selling to targeted prospects.





Because
      of the efforts we have put into our infrastructure, we believe we can utilize
      the resulting system in a variety of ways, creating a variety of communication
      products and services and introduce those products and services into existing
      distribution channels operated by others. This would be expected to benefit
      the
      Company immediately. We will be able to increase sales by approaching companies
      with an existing distribution network of their own focused on a customer base
      which is ready for enhanced telecommunications services. We will also be able
      to
      create our own distribution for services.





We
      are
      presently developing new products and services and are also considering the
      acquisition of other companies operating in the VOIP market space under
      circumstances where there is a strategic, technology, and marketing fit or
      enhancement.





**Results
      of Operations**




REVENUES





Sales
      for
      the quarter ended June 30, 2006 were $27,918 which is a reduction from $111,692
      in the quarter ended June 30, 2005. Sales for the six months ended June 30,
      2006
      were $36,624 which declined from $220,337 in the comparable period in 2005.
      A
      substantial portion of sales in the first six months of 2005 were sales to
      Contelca, a Costa Rican company which subsequently ceased operations in May
      of
      2005. As a result, there have been no further sales to Contelca since then
      which
      was the primary cause for the decrease in sales in the first six months of
      2006.
      The Company anticipates the return of a reorganized successor company to
      Contelca sometime in 2006. It remains to be seen whether this will occur or,
      if
      it does, whether sales from this customer will be at a greater or lesser rate
      than the original Contelca-related business. Regardless, we have other existing
      customers both for our hosting and other services, from which we expect to
      generate revenues to offset some of the lost revenues of Contelca. We do not
      anticipate expanding our hosting business with these or new customers. Hosting
      is not part of our core strategy for the future. While we are optimistic that
      our future revenues will exceed prior year revenues (regardless of the specific
      customers involved), we cannot be assured that this will be the
      case.





COST
      OF
      SALES





The
      use
      of VOIP services requires a combination of hardware and software to convert
      the
      electronic signals which would otherwise comprise a traditional telephone call
      into a packetized data stream and route those packets over a data network,
      such
      as the Internet. In general, hardware sales are made with lower gross margins
      than software or services.





For
      the
      first six months of 2006, however, the services sold were limited to hosting
      (essentially renting space to others for locating their equipment) and switching
      (moving communications traffic over our system for others), and these services
      had no direct incremental cost to us so that the margin on those sales was
      100%
      of sales. Therefore, we had no cost of sales for the three and six months ended
      June 30, 2006 compared to cost of sales of $4,600 and $32,100 for the three
      and
      six months ended June 30, 2005. For the three and six months ended June 30,
      2006, we had gross profit of $27,918 and $36,624 compared to gross profit of
      $107,092 and $188,237 for the three and six months ended June 30, 2005. This
      decrease in gross profit is a reflection of the reduction of
      revenue


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described
      above.





SELLING,
      GENERAL AND ADMINISTRATIVE EXPENSES





In
      the
      second quarter of 2005, selling, general and administrative costs were $43,303,
      which increased to $164,558 in the comparable period in 2006. In the first
      six
      months of 2005, selling, general and administrative costs were $64,550, which
      increased to $280,884 in the comparable period in 2006. This change is primarily
      a reflection of the change in our strategy from a reliance on wholesale business
      and our investment in new products and service offerings which we believe will
      allow us to compete effectively in the future. The increases were the result
      of
      salaries and consulting expenses related to product development related to
      our
      change in strategy.





INTEREST
      INCOME





Interest
      earned in the three and six months ended June 30, 2006 were $31,864 and $44,255,
      compared to none in the prior year. This was due to our placing our recently
      raised funds in an interest bearing account.





NET
      INCOME (LOSS)





We
      recognized a net loss of $104,776, during the three months ended June 30, 2006
      compared to net income of $63,789 during the same period in the prior year
      for
      an overall decrease in net income of $168,565. For the six months ended June
      30,
      2006, we recognized a new loss of $200,005 compared to net income of $123,687
      during the same period in the prior year for an overall decrease in net income
      of $323,692. The decrease in the net income was primarily the result of lower
      revenues achieved in the first six months of 2006 compared to the prior year
      period and an increase in selling, general and administrative expenses incurred
      in the first six months of 2006 compared to the same period of the prior year.





**Liquidity
      and Capital Resources**




As
      of
      June 30, 2006, we had approximately $2,750,000 in liquid assets and no
      significant liabilities. Hence, we expect to be adequately funded for the next
      twelve months. Further, with the registration of shares of our Common Stock
      which was effected by our filing of a Registration Statement on Form SB-2 which
      was declared effective by the Securities and Exchange Commission on August
      8,
      2006, we feel we will have increased access to both private and public capital
      markets should our capital needs increase within the next twelve months or
      thereafter. We believe we will have such access, as we have, subsequent to
      the
      effectiveness of the Registration Statement, already applied, with the
      assistance of a market maker, to the OTC Bulletin Board for the quotation of
      our
      Common Stock in the near future. Such application is currently in the review
      process with the NASD.





Net
      cash
      used by operating activities for the six months ended June 30, 2006 was $222,539
      which was primarily the result of the net loss of $200,005 together with an
      increase in accounts receivable of $20,852, an increase in security deposits
      of
      $17,544, offset by an increase in accounts payable and accrued liabilities
      of
      $12,766. This compared to net cash provided by operating activities of $113,046
      for the six months ended June 30, 2005 which was primarily the result of net
      income of $123,687 offset by an increase in prepaid expense of $5,641 and a
      decrease in accounts payable and accrued liabilities of $5,000. Net cash used
      in
      investing activities for the six months ended June 30, 2006 was $14,631 compared
      to $1,550 for the six months ended June 30, 2005 which change was primarily
      due
      to an increase in the purchase of property and equipment. For the six months
      ended June 30, 2006, net cash provided by financing activities was $797,566
      compared to $0 for the six months ended June 30, 2005 which change was due
      to
      completion of the equity financing during the first quarter of 2006 which had
      commenced in the fourth quarter of 2005. We expect no trends will impact our
      short-term liquidity, since we have adequate resources to cover our operating
      costs for at least 12 months.





Capital
      Commitments





The
      Company currently has no material commitments for capital
      expenditures.


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Trends





The
      industry in which we operate is in a state of dynamic and rapid change. VOIP
      services are gaining acceptance in the marketplace and we intend to take
      advantage of that trend by attempting to sell into a more willing marketplace,
      despite the increased competition.





We
      have
      noted that several VoIP service retailers in the United States are currently
      offering services to end users for no charge, as a promotional program to
      attract users to their systems. We acknowledge that this may attract users,
      but
      do not believe there is any assurance users acquired in this manner can be
      converted into sources of revenue, even if they are part of a subscriber base
      to
      which advertising can be delivered on behalf of third parties. The role of
      United States retail services in that environment is unknown.





We
      are
      developing products suited for retail deployment internationally in countries
      where there is still a significant premium charged for traditional
      telecommunications relative to the cost of providing VoIP services.





Changes
      in Income Elements





There
      are
      no expected changes in the sources of income for the Company, with the exception
      that the liquid assets held by us are earning interest income currently, whereas
      there was no significant interest income in past years. We believe operating
      income will come from newly acquired customers for our services. It is useful
      to
      note that as the scope of our products and services broadens, the mix of our
      income sources will change. We currently are deriving operating revenue only
      from wholesale services, but as our retail products become available, they
      are
      expected to provide a significant source of revenues.





Material
      Changes in our Financial Statements





Between
      November 15, 2005 and March 15, 2006, Splinternet Communications, Inc. sold
      24,000 shares of common stock (which were converted into 6,000,000 shares of
      Splinternet Holdings, Inc. Common Stock pursuant to the Share Exchange) for
      an
      aggregate of $3,000,000. As a result, $2,087,500 in increased equity appears
      on
      our December 31, 2005 balance sheet, with the balance appearing on our June
      30,
      2006 balance sheet. Prior to this infusion of capital, total invested funds
      in
      the Company were $196,400.





Seasonal
      Fluctuations





There
      have been no fluctuations in our business to date which can be attributed to
      seasonality.





Employment
      Agreements





Currently,
      we have no written employment agreements with any of our employees or
      officers.





Additional
      Employee Benefits: The Company offers medical insurance coverage to its
      employees.





**Critical
      Accounting Policies**





The
      following is a discussion of the accounting policies that the Company believes
      are critical to its operations :




Use
      of
      Estimates





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States requires management to make estimates
      and assumptions that affect the reported amounts of assets and liabilities,
      disclosure of contingent assets and liabilities at the date of the financial
      statements and the reported amounts of revenues and expenses during the
      reporting period. Actual results could differ from those
      estimates.


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Income
      Taxes





The
      Company accounts for its income taxes using SFAS No. 109, “ *Accounting
      for Income Taxes* ”,
      which
      requires the recognition of deferred tax liabilities and assets for expected
      future tax consequences of events that have been included in the financial
      statements or tax returns. Under this method, deferred tax liabilities and
      assets are determined based on the difference between the financial statement
      and tax bases of assets and liabilities using enacted tax rates in effect for
      the year in which the differences are expected to reverse.





We
      follow
      the guidance of the Securities and Exchange Commission’s (“SEC”) Staff
      Accounting Bulletin 104 for revenue recognition.  In general, we record
      revenue when persuasive evidence of an arrangement exists, services have been
      rendered or product delivery has occurred, the sales price to the customer
      is
      fixed or determinable, and collectability is reasonably assured.




We
      recognize income when products have been shipped or services have been
      performed. In cases where a customer prepays a subscription for services to
      be
      performed in a period which extends from one accounting period into a subsequent
      period, we only recognize the portion of income due for services performed
      in
      the current reporting period. In cases where there is an acceptance period
      during which a subscriber may cancel their agreement without penalty, we defer
      the revenue recognition until the end of that acceptance period.




We
      also
      purchase hardware (for resale) from suppliers who offer a warranty of one year.
      We generally warrant these same hardware products for one year after sale and
      provides for estimated future warranty costs at the time revenue is recognized.
      Consequently, our warranty liability is limited to the cost of the logistics
      involved in accepting returns and shipping replacements. Management does not
      believe that any recently issued, but not yet effective, accounting standards
      if
      currently adopted would have a material effect on the accompanying financial
      statements.





**Off-Balance
      Sheet Arrangements**





We
      do not
      have any off balance sheet arrangements that are reasonably likely to have
      a
      current or future effect on our financial condition, revenues, results of
      operations, liquidity or capital expenditures.


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**Item
              3.**
            **Controls
                and Procedures**





The
      Company maintains disclosure controls and procedures that are designed to ensure
      (1) that information required to be disclosed by the Company in the reports
      it
      files or submits under the Securities Exchange Act of 1934, as amended (the
      “Exchange Act”), is recorded, processed, summarized, and reported within the
      time periods specified in the Securities and Exchange Commission’s (“SEC”) rules
      and forms, and (2) that this information is accumulated and communicated to
      management, including the Company’s Chief Executive Officer and Chief Financial
      Officer, as appropriate, to allow timely decisions regarding required
      disclosure. In designing and evaluating the disclosure controls and procedures,
      management recognizes that any controls and procedures, no matter how well
      designed and operated, can provide only reasonable assurance of achieving the
      desired control objectives, and management necessarily was required to apply
      its
      judgment in evaluating the cost benefit relationship of possible controls and
      procedures.





Prior
      to
      the filing date of this report, under the supervision and review of the
      Company’s Chief Executive Officer and Chief Financial Officer, the Company
      conducted an evaluation of the effectiveness of the design and operation of
      its
      disclosure controls and procedures as of the end of the period covered by this
      report. Based on that evaluation, the Company’s Chief Executive Officer and
      Chief Financial Officer have concluded that the Company’s disclosure controls
      and procedures are effective in alerting them in a timely manner to material
      information regarding the Company that is required to be included in its
      periodic reports to the SEC.





In
      addition, there have been no significant changes in the Company’s internal
      controls or in other factors that could significantly affect those controls
      that
      occurred during the fiscal quarter covered by this report that have materially
      affected, or are reasonably likely to materially affect, the Company’s internal
      control over financial reporting. The Company can provide no assurance, however,
      that its system of disclosure controls and procedures will always achieve its
      stated goals under all future conditions, no matter how remote.


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**PART
      II - OTHER INFORMATION**





**Item
              1.**
            **Legal
                Proceedings**





We
      are
      not a party to any pending legal proceeding, nor is our property the subject
      of
      a pending legal proceeding, that is not in the ordinary course of business
      or
      otherwise material to the financial condition of our business. None of our
      directors, officers or affiliates is involved in a proceeding adverse to our
      business or has a material interest adverse to our business.




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





(a)  From
      November 15, 2005 through March 15, 2006, Splinternet Communications, Inc.
      conducted a private placement of up to 24,000 shares of Common Stock at $125.00
      per share, selling 24,000 shares of Common Stock for aggregate gross proceeds
      of
      $3,000,000 (the “Private Placement”) which shares were converted into 6,000,000
      shares of Splinternet Holdings, Inc. Common Stock pursuant to the share for
      share exchange effected on April 3, 2006 with Splinternet Holdings, Inc. No
      broker-dealer was utilized in connection with this offering. The shares of
      Common Stock sold in the Private Placement were not registered under the
      Securities Act of 1933, as amended (the "Securities Act"), pursuant to the
      exemption from registration provided in Sections 4(2) and 3(b) of and Regulation
      D under the Securities Act. All purchasers were accredited investors, as defined
      in Regulation D under the Securities Act.





(b)  The
      Company’s first registration statement filed under the Securities Act (File No.
      333-134658) was declared effective on August 8, 2006. The Company will not
      receive any proceeds from the sale of the Common Stock registered thereunder,
      all of which registered shares are being sold for the account of selling
      security holders.




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





Not
      applicable.





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





Not
      applicable.




**Item
              5.**
            **Other
                Information**





Not
      applicable.




**Item
              6.**
            **Exhibits**





31.1
                Certification
                    of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                    Act of 2002(Rules
                    13a-14 and 15d-14 of the Exchange
                    Act)


31.2
                Certification
                    of Principal Financial Officer pursuant to Section 302 of the
                    Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of the Exchange
                    Act)


32.1
                Certification
                    of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
                    Act of 2002 (18 U.S.C.
                    1350)


32.2
                Certification
                    of Principal Financial Officer pursuant to Section 906 of the
                    Sarbanes-Oxley Act of 2002 (18 U.S.C.
                    1350)


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**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.




**SPLINTERNET
      HOLDINGS, INC.**


(Registrant)




Dated:  September
      20, 2006


By: 
      /s/ James C. Ackerly


James
      C.
      Ackerly, Chief Executive Officer


and
      President (Principal Executive Officer)




Dated:  September 20, 2006


By: 
      /s/ John T. Grippo


John
      T.
      Grippo, Chief Financial Officer


(Principal
      Financial Officer)


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