##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-QSB
 þ
    
    Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934
 for the quarterly period ended October 31, 2006.
 o
    
    Transition report under Section 13 or 15(d) of the Exchange Act
 for the transition period from  to .
 Commission file number 000-28761
 JAG MEDIA HOLDINGS, INC.
  Nevada
(State or other jurisdiction of 
incorporation or organization)
    
    88-0380546
(I.R.S. Employer
Identification No.)
 
 
 
  þ o
  o þ




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PART I
FINANCIAL INFORMATION

|        |                                                                                              |  |      |       | 
|------- | -------------------------------------------------------------------------------------------- |  | ---- | ----- | 
|PART I  | FINANCIAL INFORMATION                                                                        |  | PAGE
|        |                                                                                              |  |      |       | 
|ITEM 1: | FINANCIAL STATEMENTS                                                                         |  |      |       | 
|        |                                                                                              |  |      |       | 
|        | Condensed Consolidated Balance Sheet at                                                      |  |      | 2     | 
|        | October 31, 2006 (Unaudited)                                                                 |  |      |       | 
|        |                                                                                              |  |      |       | 
|        | Condensed Consolidated Statement of Operations                                               |  |      | 3     | 
|        | Three Months Ended October 31, 2006 and 2005 (unaudited)                                     |  |      |       | 
|        |                                                                                              |  |      |       | 
|        | Condensed Consolidated Statement of Changes in Stockholders Deficiency                      |  |      | 4     | 
|        |                                                                                              |  |      |       | 
|        | Three Months Ended October 31, 2006 (unaudited)                                              |  |      |       | 
|        |                                                                                              |  |      |       | 
|        | Condensed Consolidated Statements of Cash Flows Three Months Ended October 31, 2006 and 2005 |  |      | 5     | 
|        |                                                                                              |  |      |       | 
|        | Notes to Condensed Consolidated Financial Statements                                         |  |      | 6/11  | 
|        |                                                                                              |  |      |       | 
|ITEM 2: | MANAGEMENTS DISCUSSION AND ANALYSIS                                                         |  |      | 12/17 | 
|        |                                                                                              |  |      |       | 
|ITEM 3: | CONTROLS AND PROCEDURES                                                                      |  |      | 17    | 
|        |                                                                                              |  |      |       | 
|PART II | OTHER INFORMATION                                                                            |  |      |       | 
|        |                                                                                              |  |      |       | 
|        |                                                                                              |  |      |       | 
|ITEM 1: | LEGAL PROCEEDINGS                                                                            |  |      | 18    | 
|        |                                                                                              |  |      |       | 
|ITEM 2: | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                                  |  |      | 18    | 
|        |                                                                                              |  |      |       | 
|        |                                                                                              |  |      |       | 
|ITEM 3: | DEFAULTS UPON SENIOR SECURITIES                                                              |  |      | 18    | 
|        |                                                                                              |  |      |       | 
|ITEM 4: | SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS                                            |  |      | 18    | 
|        |                                                                                              |  |      |       | 
|ITEM 5: | OTHER INFORMATION                                                                            |  |      | 18    | 
|        |                                                                                              |  |      |       | 
|ITEM 6: | EXHIBITS                                                                                     |  |      | 18    | 





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AssetsCurrent assets:Cash and cash equivalents
    
    $
    35,501Accounts receivable, net of allowance for doubtful accounts of $7,500
    
    
    20,960Other current assets
    
    
    138,748Total current assets
    
    
    195,209Equipment, net of accumulated depreciation of $127,798
    
    
    83,214Total
    
    $
    278,423Liabilities and Stockholders DeficiencyCurrent liabilities:Accounts payable and accrued expenses
    
    $
    236,987Deferred revenues
    
    
    19,444Derivative liability
    
    
    2,466,660Total current liabilities
    
    
    2,723,091Convertible debentures payable, net of unamortized debt discount of $1,678,813
    
    
    2,196,187Total liabilities
    
    
    4,919,278Mandatorily redeemable Class B common stock; par value $.00001 per share:400,000 shares designated as Series 2; 381,014 shares issued and
outstanding
    
    
    440,000 shares designated as Series 3; 21,500 shares issued and
outstanding
    
    
    4Commitments and contingenciesStockholders deficiency:Preferred stock; par value $.00001 per share;
50,000,000 shares authorized, none issuedCommon stock; par value $.00001 per share;
500,000,000 shares authorized; 44,579,589 shares
issued and outstanding
    
    
    446Additional paid-in capital
    
    
    44,383,563Accumulated deficit
    
    
    (49,024,868
    )Total stockholders deficiency
    
    
    (4,640,859
    )Total
    
    $
    278,423
  2




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2006
    
    
    2005Revenues
    
    $
    43,331
    
    
    $
    40,023Operating expenses:Cost of revenues
    
    
    24,650
    
    
    
    25,873Selling expenses
    
    
    24,262
    
    
    
    9,869General and administrative expenses
    
    
    239,689
    
    
    
    526,167Totals
    
    
    288,601
    
    
    
    561,909Loss from operations
    
    
    (245,270
    )
    
    
    (521,886
    )Other income (expense):Gain on change in value of derivative liability
    
    
    359,090
    
    
    
    Interest income
    
    
    77
    
    
    
    1,702Interest expense
    
    
    (468,249
    )
    
    
    (74,370
    )Net loss
    
    $
    (354,352
    )
    
    $
    (594,554
    )Basic net loss per share
    
    $
    (0.01
    )
    
    $
    (0.01
    )Basic weighted average common shares outstanding
    
    
    43,972,608
    
    
    
    44,747,799
  3




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Common Stock
    
    
    AdditionalNumber of
    
    
    
    
    
    
    Paid-in
    
    
    Unearned
    
    
    AccumulatedShares
    
    
    Amount
    
    
    Capital
    
    
    Compensation
    
    
    Deficit
    
    
    TotalBalance, August 1, 2006
    
    
    42,896,506
    
    
    $
    429
    
    
    $
    44,209,217
    
    
    $
    (34,870
    )
    
    $
    (48,670,516
    )
    
    $
    (4,495,740
    )Amortization of unearned compensation
    
    
    
    
    
    
    
    
    
    
    9,233
    
    
    
    
    
    
    
    
    
    
    
    9,233Reclassification
of deferred compensation upon
adoption of SFAS 123R
    
    
    
    
    
    
    
    
    
    
    (34,870
    )
    
    
    34,870
    
    
    
    
    
    
    
    Shares issued on conversion of convertible debentures
    
    
    1,683,083
    
    
    
    17
    
    
    
    199,983
    
    
    
    
    
    
    
    
    
    
    
    200,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (354,352
    )
    
    
    (354,352
    )Balance, October 31, 2006
    
    
    44,579,589
    
    
    $
    446
    
    
    $
    44,383,563
    
    
    $
    
    
    
    $
    (49,024,868
    )
    
    $
    (4,640,859
    )
  4




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2006
    
    
    2005Operating activities:Net loss
    
    $
    (354,352
    )
    
    $
    (594,554
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation
    
    
    9,018
    
    
    
    5,247Amortization of unearned compensation
    
    
    9,233
    
    
    
    11,433Gain on change in value of derivative liability
    
    
    (359,090
    )
    
    
    Amortization of debt discount
    
    
    369,098
    
    
    
    13,877Amortization of other assets
    
    
    
    
    
    
    6,937Changes in operating assets and liabilities:Accounts receivable
    
    
    (5,380
    )
    
    
    (6,009
    )Other current assets
    
    
    (67,096
    )
    
    
    13,589Accounts payable and accrued expenses
    
    
    2,001
    
    
    
    229,781Deferred revenues
    
    
    (3,004
    )
    
    
    3,796Net cash used in operating activities
    
    
    (399,572
    )
    
    
    (315,903
    )Investing activities:Equipment purchases
    
    
    (15,545
    )
    
    
    (12,171
    )Net decrease in cash and cash equivalents
    
    
    (415,117
    )
    
    
    (328,074
    )Cash and cash equivalents, beginning of period
    
    
    450,618
    
    
    
    660,865Cash and cash equivalents, end of period
    
    $
    35,501
    
    
    $
    332,791Supplemental disclosure of noncash financing activities:Noncash effect of convertible debentures converted to common stock
    
    $
    200,000Fair value
of fullyvested stock options issued to non-employee
    
    $
    36,000
  5




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6




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7




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Deferred revenues, net
    
    $
    7,000Unearned compensation
    
    
    72,000Net operating loss carryforwards
    
    
    12,356,00012,435,000Less valuation allowance
    
    
    (12,435,000
    )Total
    
    $
    
         8




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9




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th
    WeightedWeighted
    
    AverageAverage
    
    Remaining
    
    AggregateExercise
    
    Contractual
    
    IntrinsicShares
    
    Price
    
    Term
    
    ValueOptions outstanding at beginning of
period
    
    
    1,420,000
    
    
    $
    0.12Granted
    
    
    200,000
    
    
    
    0.05Exercised
    
    
    Canceled
    
    
    Options outstanding at end of period
    
    
    1,620,000
    
    
    $
    0.11
    
    
    
    6.40
    
    
    $
    246,000Options exercisable at end of period
    
    
    1,565,000
    
    
    $
    0.08
    
    
    
    6.34
    
    
    $
    246,000
  10




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Three Months EndedOctober 31, 2006Risk-free interest rate
    
    
    6.00
    %Dividend yield
    
    
    0
    %Expected life
    
    5 yearsExpected volatility factor
    
    
    340.64
    %
  Note 6  Litigation:
  Note 7  Cryptometrics merger:
        Note 8  Subsequent conversions of debentures
  11




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Item 2. Managements Discussion and Analysis.
 Critical Accounting Policies and Estimates
    Related Party Transactions:
  Off-Balance Sheet arrangements:
  Results of operations:
  12




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Three Months Ended October 31,2006
    
    
    2005
    
    
    $ ChangeRevenues
    
    $
    43,331
    
    
    $
    40,023
    
    
    $
    3,308Operating expenses:Cost of revenues
    
    
    24,650
    
    
    
    25,873
    
    
    
    (1,223
    )Selling expenses
    
    
    24,262
    
    
    
    9,869
    
    
    
    14,393General and administrative expenses
    
    
    239,689
    
    
    
    526,167
    
    
    
    (286,478
    )Totals
    
    
    288,601
    
    
    
    561,909
    
    
    
    (273,308
    )Loss from operations
    
    
    (245,270
    )
    
    
    (521,886
    )
    
    
    276,616Other income (expense):Gain on change in value of derivative
liability
    
    
    359,090
    
    
    
    
    
    
    
    359,090Interest income
    
    
    77
    
    
    
    1,702
    
    
    
    (1,625
    )Interest expense
    
    
    (468,249
    )
    
    
    (74,370
    )
    
    
    (393,879
    )Net loss
    
    $
    (354,352
    )
    
    $
    (594,554
    )
    
    $
    240,202
 Revenues:
  Cost of revenues:
   Selling expenses:
  General and administrative expenses:
  13




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Gain on change in value of derivative liability
  Interest expense
     Liquidity and Capital Resources:
       14




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15




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Seasonality:
  Recent Accounting Pronouncements:
  Recent Events:
  16




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Item 3. Controls and Procedures.
     17




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PART II
OTHER INFORMATION
 Item 1. Legal Proceedings.
  Item 2. Sales of Unregistered Securities and Use of Proceeds.
   Item 3. Defaults Upon Senior Securities.
  Item 4. Submission of Matters to a Vote of Security Holders.
  Item 5. Other Information.
  Item 6. Exhibits.
 31.1
    
    Section 302 Certification of Chief Executive Officer.31.2
    
    Section 302 Certification of Chief Financial Officer.32.1
    
    Section 906 Certification of Chief Executive Officer and Chief Financial
Officer.
 18




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SIGNATURES
  JAG MEDIA HOLDINGS, INC.Date: March 7, 2007
    By:
    /s/ Thomas J. MazzarisiName:
    Thomas J. MazzarisiTitle:
    Chairman of the Board and
Chief Executive Officer Date: March 7, 2007
    By:
    /s/ Stephen J. SchoepferName:
    Stephen J. SchoepferTitle:
    President, Chief Financial
Officer, Chief Operating Officer
and Secretary




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EXHIBIT INDEX
 31.1
    
    Section 302 Certification of Chief Executive Officer.31.2
    
    Section 302 Certification of Chief Financial Officer.32.1
    
    Section 906 Certification of Chief Executive Officer and Chief Financial
Officer.