**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-QSB**








[xx]
            QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934
                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31,
                2006





Commission
      file Number: **0-28053**





**INVESTMENT
      ASSOCIATES, INC.**


(Exact
      name of small business issuer as specified in its charter)





**Nevada**


(State
      or
      other jurisdiction of incorporation or organization)





**98-0204280**


(I.R.S.
      Employer Identification Number)





**Suite
      810**


**1708
      Dolphin Avenue**


**Kelowna,
      British Columbia, V1Y 9S4**


(Address
      of principal executive offices)





**(250)
      868-8177**


(Issuer's
      telephone number)








Check
      whether the issuer (1) 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. [ X ] Yes [ ] No





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


(check
      one): Yes [ X ] No [ ]





State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of the latest practicable date:  1,000,000
      common shares as at February 1, 2007





Transitional
      Small Business Disclosure Format (check one): Yes [ ] No [ X ]











**INVESTMENT
      ASSOCIATES, INC.**








INDEX


PART
                  1.
              FINANCIAL
                  INFORMATIONItem
                  1.
              
              Financial
                  StatementsBalance
                  Sheets as of December 31, 2006 (unaudited)
              3Statements
                  of Operations for the three monthsended
                  December 31, 2006 and 2005 (unaudited)
              4Statements
                of Cash Flows for the three monthsended December 31, 2006
                and
                2005 (unaudited)
              5Condensed
                  Notes to Interim Financial Statements
              6Item
                  2
              
              Plan
                  of Operation
              10Item
                  3
              
              Controls
                  and Procedures
              14PART
                  II.
              OTHER
                  INFORMATIONItem
                  1
              
              Legal
                  Proceedings
              14Item
                  2
              
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              14Item
                  3
              
              Defaults
                  Upon Senior Securities
              15Item
                  4
              
              Submission
                  of Matters to a Vote of Security Holders
              15Item
                  5
              
              Other
                  Information
              15Item
                  6
              
              Exhibits
                  and Reports on Form 8K
              15SIGNATURES
              
              
              15





*-
          2
          -*
 
  **INVESTMENT
                    ASSOCIATES, INC.****(A
                    Development Stage Enterprise)****BALANCE
                    SHEETS**December
                    31,2006
                
                September
                    30,(unaudited)
                
                2006**ASSETS**CURRENT
                    ASSETSCash
                
                $
                1,905
                
                $
                457**TOTAL
                    ASSETS**
                
                $
                1,905
                
                $
                457**LIABILITIES
                    AND STOCKHOLDERS' DEFICIT**CURRENT
                    LIABILITIESAccounts
                    payable and accrued liabilities
                
                $
                1,692
                
                $
                1,079Indebtedness
                    to related parties
                
                
                29,720
                
                
                24,720Loans
                    payable
                
                
                10,000
                
                
                10,000TOTAL
                    CURRENT LIABILITIES
                
                
                41,412
                
                
                35,799COMMITMENTS
                    AND CONTINGENCIES
                
                
                -
                
                
                -STOCKHOLDERS'
                    DEFICITCommon
                    stock, 25,000,000 shares authorized; $0.001par
                    value; 1,000,000 shares issued and outstanding
                
                
                1,000
                
                
                1,000Additional
                    paid-in capital
                
                
                29,283
                
                
                29,283Accumulated
                    deficit during development stage
                
                
                (69,790
                )
                
                (65,625
                )TOTAL
                    STOCKHOLDERS' DEFICIT
                
                
                (39,507
                )
                
                (35,342
                )**TOTAL
                    LIABILITIES AND STOCKHOLDERS' DEFICIT**
                
                $
                1,905
                
                $
                457
 
 The
          accompanying condensed notes are an integral part of these interim financial
          statements.
  *-
              3
              -*
  
 **INVESTMENT
                    ASSOCIATES, INC.****(A
                    Development Stage Enterprise)****STATEMENTS
                    OF OPERATIONS**FromJuly
                    18,Three
                    Months
                
                Three
                    Months
                
                1997Ended
                
                Ended
                
                (Inception)
                    toDecember
                    31,
                
                December
                    31,
                
                December
                    31,2006
                
                2005
                
                2006(unaudited)
                
                (unaudited)
                
                (unaudited)REVENUES
                
                $
                -
                
                $
                -
                
                $
                -EXPENSESSelling,
                    general and administrative expenses
                
                
                4,165
                
                
                1,584
                
                
                73,568Loss
                    on write-down of note receivable
                
                
                -
                
                
                -
                
                
                18,679Gain
                    on forgiveness of note payable
                
                
                -
                
                
                -
                
                
                (22,500
                )Interest
                    expense
                
                
                -
                
                
                -
                
                
                43TOTAL
                    EXPENSES
                
                
                4,165
                
                
                1,584
                
                
                69,790LOSS
                    FROM OPERATIONS
                
                
                (4,165
                )
                
                (1,584
                )
                
                (69,790
                )LOSS
                    BEFORE TAXES
                
                
                (4,165
                )
                
                (1,584
                )
                
                (69,790
                )INCOME
                    TAXES
                
                
                -
                
                
                -
                
                
                -NET
                    LOSS
                
                $
                (4,165
                )
                $
                (1,584
                )
                $
                (69,790
                )NET
                    LOSS PER COMMON SHARE,BASIC
                    AND DILUTED
                
                $
                nil
                
                $
                nilWEIGHTED
                    AVERAGE NUMBEROF
                    COMMON SHARES OUTSTANDING,BASIC
                    AND DILUTED
                
                
                1,000,000
                
                
                1,000,000
 
 The
          accompanying condensed notes are an integral part of these interim financial
          statements.
 
  *-
              4
              -*
  
 **INVESTMENT
                    ASSOCIATES, INC.****(A
                    Development Stage Enterprise)****STATEMENTS
                    OF CASH FLOWS**FromJuly
                    18,Three
                    Months
                
                Three
                    Months
                
                1997Ended
                
                Ended
                
                (Inception)
                    toDecember
                    31,
                
                December
                    31,
                
                December
                    31,2006
                
                2005
                
                2006(unaudited)
                
                (unaudited)
                
                (unaudited)**CASH
                    FLOWS FROM OPERATING ACTIVITIES:**Net
                    loss
                
                $
                (4,165
                )
                $
                (1,584
                )
                $
                (69,790
                )Adjustments
                    to reconcile net loss to net cash used in operating
                    activities:Loss
                    on write-down of note receivable
                
                
                -
                
                
                -
                
                
                18,679Gain
                    on forgiveness note payable
                
                
                -
                
                
                -
                
                
                (22,500
                )Increase
                    (decrease) in accounts payable and accrued liabilities
                
                
                613
                
                
                (960
                )
                
                1,692Net
                    cash used by operating activities
                
                
                (3,552
                )
                
                (2,544
                )
                
                (71,919
                )**CASH
                    FLOWS PROVIDED BY INVESTING ACTIVITIES:**Issuance
                    of note receivable
                
                
                -
                
                
                -
                
                
                (18,679
                )Net
                    cash used by investing activities
                
                
                -
                
                
                -
                
                
                (18,679
                )**CASH
                    FLOWS PROVIDED BY FINANCING ACTIVITIES:**Issuance
                    of common stock
                
                
                -
                
                
                -
                
                
                1,000Proceeds
                    from issuance of loan payable
                
                
                -
                
                
                -
                
                
                10,000Proceeds
                    from related party advances
                
                
                5,000
                
                
                7,000
                
                
                29,720Proceeds
                    from issuance of note payable
                
                
                -
                
                
                -
                
                
                22,500Capital
                    contributed by an affiliate
                
                
                -
                
                
                -
                
                
                29,283Net
                    cash provided by financing activities
                
                
                5,000
                
                
                7,000
                
                
                92,503**NET
                    INCREASE (DECREASE) IN CASH**
                
                
                1,448
                
                
                4,456
                
                
                1,905**CASH,
                    BEGINNING OF PERIOD**
                
                
                457
                
                
                2,258
                
                
                -**CASH,
                    END OF PERIOD**
                
                $
                1,905
                
                $
                6,714
                
                $
                1,905**SUPPLEMENTAL
                    CASH FLOW INFORMATION:**Interest
                    paid
                
                $
                -
                
                $
                -
                
                $
                43Income
                    taxes paid
                
                $
                -
                
                $
                -
                
                $
                -**NON-CASH
                    TRANSACTIONS:**1,000,000
                    shares of common stock issued for services
                
                $
                -
                
                $
                -
                
                $
                1,000
 
 The
          accompanying condensed notes are an integral part of these interim financial
          statements.
  *-
              5
              -*
  
 **INVESTMENTS
          ASSOCIATES, INC.**
 **(A
          Development Stage Enterprise)**
 **CONDENSED
          NOTES TO THE INTERIM FINANCIAL STATEMENTS**
 **December
          31, 2006**
 
 
 
 **NOTE
          1 - DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION**
 
 Investment
          Associates, Inc. (the “Company”) was incorporated, under the laws of Nevada on
          July 18, 1997 to engage in any lawful corporate undertaking, including,
          but not
          limited to, selected mergers and acquisitions. The Company’s business plan is to
          evaluate, structure and complete a merger with, or acquisition of, a privately
          owned corporation.
 
 The
          Company has been in a development stage since its inception on July 18,
          1997 and
          has not realized any revenues from its planned operations. The Company’s year
          end is September ** 30.
 
 The
          foregoing unaudited interim financial statements have been prepared in
          accordance with generally accepted accounting principles for interim financial
          information and with the instructions to Regulation S-B as promulgated
          by the
          Securities and Exchange Commission. Accordingly, these financial statements
          do
          not include all of the disclosures required by generally accepted accounting
          principles in the United States of America for complete financial statements.
          These unaudited interim financial statements should be read in conjunction
          with
          the audited financial statements for the period ended September 30, 2006.
          In the
          opinion of management, the unaudited interim financial statements furnished
          herein include all adjustments, all of which are of a normal recurring
          nature,
          necessary for a fair statement of the results for the interim period presented.
          Operating results for the three-month period ending December 31, 2006 are
          not
          necessarily indicative of the results that may be expected for the year
          ending
          September 30, 2007.
 
 The
          Company is a “blank check” company. It was organized to evaluate, structure and
          complete a merger with, or acquisition of, a privately owned
          corporation.
 
 
 **NOTE
          2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 Going
          Concern
 The
          accompanying financial statements have been prepared on a going concern
          basis,
          which contemplates the realization of assets and the satisfaction of liabilities
          in the normal course of business. As shown in the accompanying financial
          statements, the Company has no revenues, minimal cash, and recurring losses
          since inception. These factors, among others, may indicate that the Company
          will
          be unable to continue as a going concern for a reasonable period of
          time.
 
  *-
              6
              -*
  
 **INVESTMENTS
            ASSOCIATES, INC.**
 **(A
            Development Stage Enterprise)**
 **CONDENSED
            NOTES TO THE INTERIM FINANCIAL STATEMENTS**
 **December
            31, 2006**
 
 The
          financial statements do not include any adjustments relating to the
          recoverability and classification of liabilities that might be necessary
          should
          the Company be unable to continue as a going concern. Management’s plans are to
          engage in evaluating, structuring, and completing a merger with, or acquisition
          of, a privately owned corporation. These plans, if successful, will mitigate
          the
          factors which raise substantial doubt about the Company’s ability to continue as
          a going concern. The Company’s continuation as a going concern is dependent upon
          continuing capital contributions from an affiliate to meet its obligations
          on a
          timely basis, consummating a business combination with an operating company,
          and
          ultimately attaining profitability. There is no assurance that the affiliate
          will continue to provide capital to the Company or that the Company can
          identify
          a target company and consummate a business combination. The financial statements
          do not include any adjustments that might result from the outcome of this
          uncertainty.
 
 
 Use
          of
          Estimates
 The
          process of preparing financial statements in conformity with accounting
          principles generally accepted in the United States of America requires
          the use
          of estimates and assumptions regarding certain types of assets, liabilities,
          revenues, and expenses. Such estimates primarily relate to unsettled
          transactions and events as of the date of the financial statements. Accordingly,
          upon settlement, actual results may differ from estimated amounts.
 
 
 **NOTE
          3 - LOAN PAYABLE**
 
 During
          the year ended September 30, 2002, an unrelated third party made an unsecured,
          non-interest bearing loan to the Company for working capital. The loan
          remains
          unpaid at December 31, 2006, is non-interest bearing, not collaterized,
          and is
          due on demand.
 
 
 **NOTE
          4 - RELATED PARTY TRANSACTIONS**
 
 The
          Company maintains a mailing address at the offices of RD Capital, Inc.
          (“RD
          Capital”), an affiliate under common control. At this time, the Company has no
          need for an office.
 
 RD
          Capital has assumed responsibility for funding the Company’s limited operations.
          The Company accounts for such proceeds as contributed capital or as indebtedness
          to a related party. During the year ended September 30, 2004, RD Capital
          made
          contributions to the Company totaling $6,092. No capital contributions
          were made
          during the year ended September 30, 2005. Through December 31, 2006, RD
          Capital
          has contributed a total of $29,283 on behalf of the stockholders, which
          is
          included in the accompanying financial statements as “additional paid-in
          capital”. RD Capital does not expect to be repaid for its capital contributions
          to the Company.
 
  *-
              7
              -*
  **INVESTMENTS
            ASSOCIATES, INC.**
 **(A
            Development Stage Enterprise)**
 **CONDENSED
            NOTES TO THE INTERIM FINANCIAL STATEMENTS**
 **December
            31, 2006**
 
 During
          the year ended September 30, 2001, Strathmore Minerals Corp, an affiliate
          corporation under common control, loaned $2,720 to the Company. During
          the years
          ended September 30, 2006 and 2005, RD Capital loaned $13,000 and $9,000
          to the
          Company, respectively. During the three months ended December 31, 2006,
          RD
          Capital loaned $5,000 to the Company. This indebtedness is non-interest
          bearing,
          not collateralized and due on demand. At December 31, 2006, the Company
          owed
          $29,720 to related parties.
 
 
 **NOTE
          5 - COMMON STOCK**
 
 During
          the year ended September 30, 1997, the Company issued 1,000,000 shares
          of common
          stock in exchange for services. There have been no issuances of the Company’s
          common stock after September 30, 1997.
 *-
            8
            -*
 
  **PLAN
            OF OPERATIONS**
 
 The
            following discussion of the plan of operations of the Company should
            be read in
            conjunction with the financial statements and the related notes thereto
            included
            elsewhere in this quarterly report for the three months ended December
            31, 2006.
            This quarterly report contains certain forward-looking statements and
            the
            Company's future operation results could differ materially from those
            discussed
            herein.
 
 We
            intend
            to seek to acquire assets or shares of an entity actively engaged in
            a business
            that generates revenues, in exchange for its securities. We have not
            identified
            a particular acquisition target and have not entered into any negotiations
            regarding an acquisition. None of our officers, directors, promoters
            or
            affiliates have engaged in any preliminary contact or discussions with
            any
            representative of any other company regarding the possibility of an acquisition
            or merger with us as of the date of this quarterly report.
 
 Depending
            upon the nature of the relevant business opportunity and the applicable
            state
            statutes governing how the transaction is structured, the Company's Board
            of
            Directors expects that it will provide our shareholders with complete
            disclosure
            documentation concerning a potential business opportunity and the structure
            of
            the proposed business combination prior to consummation. Disclosure is
            expected
            to be in the form of a proxy or information statement, in addition to
            the
            post-effective amendment.
 
 While
            any
            disclosure must include audited financial statements of the target entity,
            we
            cannot assure you that such audited financial statements will be available.
            As
            part of the negotiation process, the Board of Directors does intend to
            obtain
            certain assurances of value, including statements of assets and liabilities,
            material contracts, accounts receivable statements, or other indicia
            of the
            target entity's condition prior to consummating a transaction, with further
            assurances that an audited statement would be provided prior to execution
            of a
            merger or acquisition agreement. Closing documents will include representations
            that the value of the assets transferred will not materially differ from
            the
            representations included in the closing documents, or the transaction
            will be
            voidable.
 
 Due
            to
            our intent to remain a shell corporation until a merger or acquisition
            candidate
            is identified, it is anticipated that its cash requirements shall be
            minimal,
            and that all necessary capital, to the extent required, will be provided
            by the
            directors or officers. We do not anticipate that we will have to raise
            capital
            in the next twelve months. We also do not expect to acquire any plant
            or
            significant equipment.
 
 We
            have
            not and do not intend to enter into, any arrangement, agreement or understanding
            with non-management shareholders allowing non-management shareholders
            to
            directly or indirectly participate in or influence our management of
            the
            Company. As a result, management is in a position to elect a majority
            of the
            directors and to control our affairs.
 
 We
            have
            no full time employees. Our President and Secretary have agreed to allocate
            a
            portion of their time to our activities, without compensation. These
            officers
            anticipate that our business plan can be implemented by their devoting
            approximately five (5) hours each per month to our business affairs and,
            consequently, conflicts of interest may arise with respect to their limited
            time
            commitment. We do not expect any significant changes in the number of
            employees.
            See "Management."
 
 Our
            officers and directors may become involved with other companies who have
            a
            business purpose similar to ours. As a result, potential conflicts of
            interest
            may arise in the future. If a conflict does arise and an officer or director
            is
            presented with business opportunities under circumstances where there
            may be a
            doubt as to whether the opportunity should belong to the Company or another
            "blank check" company they are affiliated with, they will disclose the
            opportunity to all the companies. If a situation arises where more than
            one
            company desires to merge with or acquire that target company and the
            principals
            of the proposed target company have no preference as to which company
            will merge
            with or acquire the target company, the company that first filed a registration
            statement with the Securities and Exchange Commission will be entitled
            to
            proceed with the proposed transaction. See "Risk Factors - Affiliation
            With
            Other "Blank Check" Companies."
 
  *-
                9
                -*
  General
            Business Plan
 
 Our
            purpose is to seek, investigate and, if investigation warrants, acquire
            an
            interest in business opportunities presented to it by persons or firms
            that
            desire to seek the perceived advantages of an Exchange Act registered
            corporation. We will not restrict our search to any specific business,
            industry,
            or geographical location and we may participate in a business venture
            of
            virtually any kind or nature. This discussion of the proposed business
            is
            purposefully general and is not meant to restrict our discretion to search
            for
            and enter into potential business opportunities. Management anticipates
            that it
            may be able to participate in only one potential business venture because
            we
            have nominal assets and limited financial resources. This lack of
            diversification should be considered a substantial risk to our shareholders
            because it will not permit us to offset potential losses from one venture
            against gains from another.
 
 We
            may
            seek a business opportunity with entities that have recently commenced
            operations, or that wish to utilize the public marketplace in order to
            raise
            additional capital in order to expand into new products or markets, to
            develop a
            new product or service, or for other corporate purposes. We may acquire
            assets
            and establish wholly owned subsidiaries in various businesses or acquire
            existing businesses as subsidiaries.
 
 We
            anticipate that the selection of a business opportunity will be complex
            and
            extremely risky. Due to general economic conditions, rapid technological
            advances being made in some industries and shortages of available capital,
            management believes that there are numerous firms seeking the perceived
            benefits
            of a publicly registered corporation. The perceived benefits may include
            facilitating or improving the terms for additional equity financing that
            may be
            sought, providing liquidity for incentive stock options or similar benefits
            to
            key employees, providing liquidity (subject to restrictions of applicable
            statutes) for all shareholders and other factors. Potentially, available
            business opportunities may occur in many different industries and at
            various
            stages of development, all of which will make the task of comparative
            investigation and analysis of these business opportunities extremely
            difficult
            and complex.
 
 We
            have,
            and will continue to have, no capital to provide the owners of business
            opportunities with any significant cash or other assets. However, management
            believes we will be able to offer owners of acquisition candidates the
            opportunity to acquire a controlling ownership interest in a publicly
            registered
            company without incurring the cost and time required to conduct an initial
            public offering. The owners of the business opportunities will, however,
            incur
            significant legal and accounting costs in connection with acquisition
            of a
            business opportunity, including the costs of preparing Form 8-K's, 10-KSB's,
            or
            10-QSB's, agreements and related reports and documents. The '34 Act specifically
            requires that any merger or acquisition candidate comply with all applicable
            reporting requirements, which include providing audited financial statements
            to
            be included within the numerous filings relevant to complying with the
            `34 Act.
            Nevertheless, the officers and directors of the Company have not conducted
            market research and are not aware of statistical data that would support
            the
            perceived benefits of a merger or acquisition transaction for the owners
            of a
            business opportunity.
 
 The
            analysis of new business opportunities will be undertaken by our officers
            and
            directors, none of whom is a professional business analyst. Management
            intends
            to concentrate on identifying preliminary prospective business opportunities
            that may be brought to our attention through present associations of
            our
            officers and directors, or by our shareholders. In analyzing prospective
            business opportunities, management will consider:
 
 -
                  the
                      available technical, financial and managerial
                      resources;
 -
                  working
                      capital and other financial
                      requirements;
 -
                  history
                      of operations, if any;
 -
                  prospects
                      for the future;
 -
                  nature
                      of present and expected
                      competition;
 -
                  the
                      quality and experience of management services that may be available
                      and
                      the depth of that management;
 -
                  the
                      potential for further research, development, or
                      exploration;
 -
                  specific
                      risk factors not now foreseeable but could be anticipated to
                      impact our
                      proposed activities;
 -
                  the
                      potential for growth or expansion;
 -
                  the
                      potential for profit;
 -
                  the
                      perceived public recognition of acceptance of products, services,
                      or
                      trades;
  *-
                10
                -*
  
 -
                  name
                      identification; and
 -
                  other
                      relevant factors.
 
 Our
            officers and directors expect to meet personally with management and
            key
            personnel of the business opportunity as part of their "due diligence"
            investigation. To the extent possible, the Company intends to utilize
            written
            reports and personal investigations to evaluate the above factors. We
            will not
            acquire or merge with any company that cannot provide audited financial
            statements within a reasonable period of time after closing of the proposed
            transaction.
 
 Our
            management, while probably not especially experienced in matters relating
            to the
            prospective new business of the Company, shall rely upon their own efforts
            and,
            to a much lesser extent, the efforts of our shareholders, in accomplishing
            our
            business purposes. We do not anticipate that any outside consultants
            or
            advisors, except for our legal counsel and accountants, will be utilized
            by us
            to accomplish our business purposes. However, if we do retain an outside
            consultant or advisor, any cash fee will be paid by the prospective
            merger/acquisition candidate, as we have no cash assets. We have no contracts
            or
            agreements with any outside consultants and none are contemplated.
 
 We
            will
            not restrict our search for any specific kind of firms, and may acquire
            a
            venture that is in its preliminary or development stage or is already
            operating.
            We cannot predict at this time the status of any business in which we
            may become
            engaged, because the business may need to seek additional capital, may
            desire to
            have its shares publicly traded, or may seek other perceived advantages
            that we
            may offer. Furthermore, we do not intend to seek capital to finance the
            operation of any acquired business opportunity until we have successfully
            consummated a merger or acquisition.
 
 We
            anticipate that we will incur nominal expenses in the implementation
            of its
            business plan. Because we has no capital to pay these anticipated expenses,
            present management will pay these charges with their personal funds,
            as interest
            free loans, for a minimum of twelve months from the date of this quarterly
            report. If additional funding is necessary, management and or shareholders
            will
            continue to provide capital or arrange for additional outside funding.
            However,
            the only opportunity that management has to have these loans repaid will
            be from
            a prospective merger or acquisition candidate. Management has no agreements
            with
            us that would impede or prevent consummation of a proposed transaction.
            We
            cannot assure, however, that management will continue to provide capital
            indefinitely if a merger candidate cannot be found. If a merger candidate
            cannot
            be found in a reasonable period of time, management may be required reconsider
            its business strategy, which could result in our dissolution.
 
 Acquisition
            of Opportunities
 
 In
            implementing a structure for a particular business acquisition, we may
            become a
            party to a merger, consolidation, reorganization, joint venture, or licensing
            agreement with another corporation or entity. It may also acquire stock
            or
            assets of an existing business. On the consummation of a transaction,
            it is
            probable that our present management and shareholders will no longer
            be in
            control. In addition, our directors may, as part of the terms of the
            acquisition
            transaction, resign and be replaced by new directors without a vote of
            our
            shareholders. Furthermore, management may negotiate or consent to the
            purchase
            of all or a portion of our stock. Any terms of sale of the shares presently
            held
            by officers and/or directors will be also afforded to all other shareholders
            on
            similar terms and conditions. Any and all sales will only be made in
            compliance
            with the securities laws of the United States and any applicable
            state.
 
 While
            the
            actual terms of a transaction that management may not be a party to cannot
            be
            predicted, it may be expected that the parties to the business transaction
            will
            find it desirable to avoid the creation of a taxable event and thereby
            structure
            the acquisition in a so-called "tax-free" reorganization under Sections
            368(a)(1) or 351 of the Internal Revenue Code (the "Code"). In order
            to obtain
            tax-free treatment under the Code, it may be necessary for the owners
            of the
            acquired business to own 80% or more of the voting stock of the surviving
            entity. In that event, the shareholders of the Company would retain 20%
            or less
            of the issued and outstanding shares of the surviving entity, which would
            result
            in significant dilution in the equity of the shareholders.
 
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                11
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  As
            part
            of the "due diligence" investigation, our officers and directors will
            meet
            personally with management and key personnel, may visit and inspect material
            facilities, obtain independent analysis of verification of certain information
            provided, check references of management and key personnel, and take
            other
            reasonable investigative measures to the extent of our limited financial
            resources and management expertise. How we will participate in an opportunity
            will depend on the nature of the opportunity, the respective needs and
            desires
            of the parties, the management of the target company and our relative
            negotiation strength.
 
 With
            respect to any merger or acquisition, negotiations with target company
            management are expected to focus on the percentage of our Company that
            the
            target company shareholders would acquire in exchange for all of their
            shareholdings in the target company. Depending upon, among other things,
            the
            target company's assets and liabilities, our shareholders will probably
            hold a
            substantially lesser percentage ownership interest following any merger
            or
            acquisition. The percentage ownership may be subject to significant reduction
            in
            the event we acquire a company with substantial assets. Any merger or
            acquisition effected by us can be expected to have a significant dilutive
            effect
            on the percentage of shares held by our then shareholders.
 
 We
            will
            participate in a business opportunity only after the negotiation and
            execution
            of appropriate written agreements. Although we cannot predict the terms
            of the
            agreements, generally the agreements will require some specific representations
            and warranties by all of the parties, will specify certain events of
            default,
            will detail the terms of closing and the conditions that must be satisfied
            by
            each of the parties prior to and after the closing, will outline the
            manner of
            bearing costs, including costs associated with our attorneys and accountants,
            will set forth remedies on default and will include miscellaneous other
            terms.
 
 As
            stated
            previously, we will not acquire or merge with any entity that cannot
            provide
            independent audited financial statements concurrent with the closing
            of the
            proposed transaction. We are subject to the reporting requirements of
            the '34
            Act. Included in these requirements is our affirmative duty to file independent
            audited financial statements as part of its Form 8-K to be filed with
            the
            Securities and Exchange Commission upon consummation of a merger or acquisition,
            as well as our audited financial statements included in our annual report
            on
            Form 10-K (or 10-KSB, as applicable) and quarterly reports on Form 10-Q
            (or
            10-QSB, as applicable). If the audited financial statements are not available
            at
            closing, or if the audited financial statements provided do not conform
            to the
            representations made by the candidate to be acquired in the closing documents,
            the closing documents will provide that the proposed transaction will
            be
            voidable at the discretion of our present management. If the transaction
            is
            voided, the agreement will also contain a provision providing for the
            acquisition entity to reimburse us for all costs associated with the
            proposed
            transaction.
 
 Competition
 
 We
            will
            remain an insignificant participant among the firms that engage in the
            acquisition of business opportunities. There are many established venture
            capital and financial concerns that have significantly greater financial
            and
            personnel resources and technical expertise than we do. In view of our
            combined
            extremely limited financial resources and limited management availability,
            we
            will continue to be at a significant competitive disadvantage compared
            to our
            competitors.
 
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                12
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  **Item
            3 - Controls and Procedures**
 
 **(a)**  **Evaluation
            of disclosure controls and procedures.**
 
 As
            required by Rule 13a-15 under the Securities Exchange Act of 1934, as
            amended
            (the "Exchange Act"), the Company carried out an evaluation under the
            supervision and with the participation of the Company's management, including
            the President and Chief Executive Officer and the Chief Financial Officer,
            of
            the effectiveness of the Company's disclosure controls and procedures
            as of
            December 31, 2006. In designing and evaluating the Company's disclosure
            controls
            and procedures, the Company and its management recognize that there are
            inherent
            limitations to the effectiveness of any system of disclosure controls
            and
            procedures, including the possibility of human error and the circumvention
            or
            overriding of the controls and procedures. Accordingly, even effective
            disclosure controls and procedures can only provide reasonable assurance
            of
            achieving their desired control objectives. Additionally, in evaluating
            and
            implementing possible controls and procedures, the Company's management
            was
            required to apply its reasonable judgment. Furthermore, in the course
            of this
            evaluation, management considered certain internal control areas, in
            which we
            have made and are continuing to make changes to improve and enhance controls.
            Based upon the required evaluation, the Chief Executive Officer and the
            Chief
            Financial Officer concluded that as of December 31, 2006, the Company's
            disclosure controls and procedures were effective (at the "reasonable
            assurance"
            level mentioned above) to ensure that information required to be disclosed
            by
            the Company in the reports it files or submits under the Exchange Act
            is
            recorded, processed, summarized and reported within the time periods
            specified
            in the Securities and Exchange Commission's rules and forms.
 
 From
            time-to-time, the Company and its management have conducted and will
            continue to
            conduct further reviews and, from time to time put in place additional
            documentation, of the Company's disclosure controls and procedures, as
            well as
            its internal control over financial reporting. The Company may from time
            to time
            make changes aimed at enhancing their effectiveness, as well as changes
            aimed at
            ensuring that the Company's systems evolve with, and meet the needs of,
            the
            Company's business. These changes may include changes necessary or desirable
            to
            address recommendations of the Company's management, its counsel and/or
            its
            independent auditors, including any recommendations of its independent
            auditors
            arising out of their audits and reviews of the Company's financial statements.
            These changes may include changes to the Company's own systems, as well
            as to
            the systems of businesses that the Company has acquired or that the Company
            may
            acquire in the future and will, if made, be intended to enhance the
            effectiveness of the Company's controls and procedures. The Company is
            also
            continually striving to improve its management and operational efficiency
            and
            the Company expects that its efforts in that regard will from time to
            time
            directly or indirectly affect the Company's disclosure controls and procedures,
            as well as the Company's internal control over financial reporting.
 
 **(b)**  **Changes
            in internal controls.**
 
 There
            were no significant changes in the Company's internal controls or other
            factors
            that could significantly affect the Company's internal controls subsequent
            to
            the date of their evaluation.
 
 
 **PART
            II**
 **OTHER
            INFORMATION**
 
 Item
            1.   LEGAL
            PROCEEDINGS
 
 None
 
 
 Item
            2   UNREGISTERED
            SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
 None
 
  *-
                13
                -*
  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
            AND REPORTS ON FORM 8-K
 
 (a)  Exhibits
 
 31.1  Section
            302 Certification of Chief Executive Officer
 31.2  Section
            302 Certification of Chief Financial Officer
 32 Section
            906 Certification
 
 
 (b)  Reports
            on Form 8-K
 
 None
 
 **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.
   **INVESTMENT
                      ASSOCIATES, INC.**Dated:
                    February 1, 2007
                  By:
                  /s/ Robert
                    HemmerlingRobert
                      Hemmerling,
                    C.F.O.,
                      Secretary, Treasurer and Director
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                14
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