Impart Media 10QSB 2005 Q3 Quarterly report (small business)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-QSB

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the period ended September 30, 2005

o TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______.

Commission File Number 0-09358

LIMELIGHT MEDIA GROUP, INC.

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

Nevada	88-0441338
(State or other jurisdiction of (incorporation or organization)	(I.R.S. Employer Identification No.)

	1300 North Northlake Way
	Seattle, WA 98103
(Address of principal executive offices)
	(206) 633-1852
(Issuer's telephone number)
	N/A
(Former Address of principal executive offices)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934) Yes o No x

As of November 21, 2005, 246,628,494 shares of the issuer's common stock, $.001 par value per share, were outstanding.

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

When used in this Report, the words "believes", "anticipates", "expects" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected.

Our business and results of operations are affected by a wide variety of factors that could materially and adversely affect our company and our actual results, including, but not limited to: (1) the availability of additional funds to enable us to successfully pursue our business plan; (2) the uncertainties related to the effectiveness of our technologies and the development of our products and services; (3) our ability to maintain, attract and integrate management personnel; (4) our ability to complete the development of our proposed services in a timely manner; (5) our ability to effectively market and sell our services to current and new customers; (6) our ability to negotiate and maintain suitable strategic licenses and corporate relationships; (7) the intensity of competition; and (8) general economic conditions. As a result of these and other factors, we may experience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely affect our business, financial condition, operating results and stock price.

These forward-looking statements speak only as of the date hereof. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

LIMELIGHT MEDIA GROUP, INC.
BALANCE SHEET
SEPTEMBER 30, 2005
(UNAUDITED)
ASSETS
Current assets
Cash	$	--
Accounts receivable, net		686,238
Inventory		342,880
Prepaid expenses and other current assets		7,802
Total current assets		1,036,920
Fixed assets, net		1,204,522
Deferred loss on sale-leaseback transaction		28,000
Other assets		14,382
Total assets	$	2,283,824
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Bank overdrafts	$	19,449
Accounts payable		905,017
Accrued liabilities		19,802
Customer deposits		189,445
Accrued compensation		244,500
Due to related parties		602,429
Lines of credit		229,370
Convertible loan payable		10,000
Notes payable - current portion		373,775
Notes payable - related parties		1,083,965
Capital lease obligation - current portion		7,674
Other liability for Ipoint Transaction		262,500
Other liabilities		212,613
Total current liabilities		4,160,539
Note payable - long-term portion		485,688
Capital lease obligation - long-term portion		54,326
Total liabilities		4,700,553
Commitments and contingencies		--
Stockholders' deficit
Common stock - $.001 par value, 250,000,000 shares authorized, 248,378,494 shares issued and 246,749,665 shares outstanding		246,750
Additional paid-in capital		315,926
Cash equivalent credit paid in common stock		(125,000	)
Accumulated deficit		(2,854,405	)
Total stockholders' deficit		(2,416,729	)
Total liabilities and stockholders' deficit	$	2,283,824

See Accompanying Notes to Financial Statements

3

LIMELIGHT MEDIA GROUP, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
	For the Three			For the Three			For the Nine			For the Nine
	Months Ended			Months Ended			Months Ended			Months Ended
	September 30, 2005			September 30, 2004			September 30, 2005			September 30, 2004
Revenues
Equipment sales	$	1,268,839		$	1,879,168		$	3,152,876		$	3,428,662
Management fees		117,216			--			117,216			--
Consulting and design services		36,726			41,525			60,017			55,300
Total revenues		1,422,781			1,920,693			3,330,109			3,483,962
Cost of revenues		984,457			1,318,643			2,296,031			2,520,179
Gross profit		438,324			602,050			1,034,078			963,783
General and administrative expenses
Professional and consulting		313,883			31,010			373,139			84,627
Selling and marketing		21,072			37,907			89,214			112,156
Depreciation		103,722			3,952			116,735			9,880
Wages and salaries		306,475			170,126			740,981			527,070
Rent expense		53,899			15,744			161,113			123,483
Other general and administrative expenses		354,903			315,434			431,977			384,246
Total general and administrative expenses		1,153,954			574,173			1,913,159			1,241,462
Income (loss) from operations		(715,630	)		27,877			(879,081	)		(277,679	)
Other income (expense)
Other income		6,511			(24,214	)		30,377			5,608
Interest expense		(112,348	)		(19,012	)		(133,557	)		(42,467	)
Income (loss) before provision for income taxes		(821,467	)		(15,349	)		(982,261	)		(314,538	)
Income tax provisions		--			--			--			--
Net income (loss)	$	(821,467	)	$	(15,349	)	$	(982,261	)	$	(314,538	)
Basic earnings (loss) per common share	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.00	)
Diluted earnings (loss) per common share	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.00	)
Basic and Diluted weighted average common shares outstanding		246,749,665			78,768,542			148,153,197			78,768,542

See Accompanying Notes to Financial Statements

4

LIMELIGHT MEDIA GROUP, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
(UNAUDITED)
								Cash			Receivable
								Equivalent			Related to
	Common stock				Additional			Credit Paid			Issuance						Total
	Number				Paid-in			in Common			of Common			Accumulated			Stockholders'
	of Shares		Amount		capital			Stock			Stock			Deficit			Deficit
Balance, December 31, 2004		78,768,542	$	78,768	$	280,367		$	--		$	--		$	(844,179	)	$	(485,044	)
Issuance of common stock for accrued compensation		20,173,766		20,174		248,172			--			--			--			268,346
Issuance of common stock for Ipoint Transaction		6,057,692		6,058		481,442			--			--			--			487,500
Issuance of common stock for acquisition of Impart, Inc.		138,829,665		138,830		(886,885	)		(125,000	)		(5,000	)		--			(878,055	)
Note payable - related parties assumed for acquisition of
assets from Media SideStreet Support Corporation		--		--		--			--			--			(1,027,965	)		(1,027,965	)
Issuance of common stock for services		2,825,000		2,825		187,225			--			--			--			190,050
Issuance of common stock in satisfaction of due to related parties		95,000		95		5,605			--			--			--			5,700
Proceeds from receivable related to issuance of common stock		--		--		--			--			5,000			--			5,000
Net loss		--		--		--			--						(982,261	)		(982,261	)
Balance, September 30, 2005		246,749,665	$	246,750	$	315,926		$	(125,000	)	$	--		$	(2,854,405	)	$	(2,416,729	)

See Accompanying Notes to Financial Statements

5

LIMELIGHT MEDIA GROUP, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
	For the Nine			For the Nine
	Months Ended			Months Ended
	September 30, 2005			September 30, 2004
Cash flows from operating activities:
Net loss	$	(982,261	)	$	(314,538	)
Adjustments to reconcile net loss to
net cash used by operating activities:
Stock based compensation		190,050
Depreciation		116,735			9,880
Changes in operating assets and liabilities net of acquired assets
and liabilities due to reverse merger:
Accounts receivable		281,733			708
Inventory		11,716			(29,596	)
Prepaid expenses and other current assets		2,600			2,714
Other assets		4,051			--
Accounts payable		(230,024	)		(59,063	)
Accrued liabilities		(34,447	)		(358,063	)
Customer deposits		61,819			21,543
Accrued compensation		244,500			268,346
Other liabilities		88,914			--
Net cash used by operating activities		(244,614	)		(458,069	)
Cash flows from investing activities:
Cash acquired in reverse merger		1,968			--
Purchase of fixed assets		(217,937	)		(3,196	)
Net cash used by investing activities		(215,969	)		(3,196	)
Cash flows from financing activities:
Proceeds from sales-leaseback transaction		62,000			--
Net change in bank overdraft		19,449			(71,808	)
Change in due to related parties		133,174			10,250
Net change in line of credit		103,653			160,598
Proceeds from notes payable		70,000			400,000
Proceeds from notes payable - related parties		56,000			--
Principal payments on notes payable		(25,170	)		(6,076	)
Proceeds from receivable related to issuance of common stock		5,000			--
Net cash provided by financing activities		424,106			492,964
Net change in cash		(36,477	)		31,699
Cash, beginning of period		36,477			--
Cash, end of period	$	--		$	31,699
Supplementary cash flow information:
Cash payments for income taxes	$	--		$	--
Cash payments for interest	$	40,323		$	42,467

See Accompanying Notes to Financial Statements

6

LIMELIGHT MEDIA GROUP, INC.
STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
	For the Nine			For the Nine
	Months Ended			Months Ended
	September 30, 2005			September 30, 2004
Schedule of non-cash operating, investing and financing activities:
Issuance of common stock for accrued compensation	$	268,346		$	--
Issuance of common stock in satisfaction of due to related parties	$	5,700		$	--
Issuance of common stock for acquisition of Impart, Inc.
Limelight Media Group, Inc. net assets
Inventory	$	1,240		$	--
Fixed assets		88,961			--
Other assets		13,700			--
Cash equivalent credit paid in common stock		125,000			--
Accounts payable		(359,770	)		--
Accrued liabilities		(750	)		--
Due to related parties		(464,705	)		--
Notes payable		(25,000	)		--
Convertible loan payable		(10,000	)		--
Other liabilities		(123,699	)		--
Receivable related to issuance of common stock		5,000
Total non-cash consideration related to Limelight	$	(750,023	)	$	--
Non-cash consideration for fixed assets purchased in
the iPoint Transaction
Assumption of note payable	$	250,000		$	--
Assumption of other liability		262,500			--
Issuance of common stock		487,500			--
Total non-cash consideration related to Ipoint	$	1,000,000		$	--
Note payable - related parties assumed for acquisition of assets from Media Sidestreet Support Corporation	$	1,027,965		$	--

See Accompanying Notes to Financial Statements

7

LIMELIGHT MEDIA GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES

Description of business - Limelight Media Group, Inc. (hereinafter referred to as the “Company” or “Limelight”) sells dynamic media solutions consisting of monitors, computers, mounting systems, and associated technological hardware. Sales are made throughout the United States. While customers are in various industries, a significant portion of customers are in banking and retail.

The Company has also developed a digital out-of-home media network. The network is centrally managed and is applicable over the growing digital signage industry in any location where a message needs real time display. The Company focuses on two general markets: point of decisions and captive audience. The Company is currently developing digital networks in multiple vertical markets. By diversifying the markets the Company may realize revenue from multiple sources.

Limelight has developed a system to digitally distribute advertisements, marketing messages and entertainment video content via broadband connection for viewing in public locations, such as financial institutions, government buildings and mass transit locations, and in retail locations, such as grocery stores. The content management system facilitates digital video content to be transmitted in digital files, replacing the soon-to-be antiquated utilization of photographic slides, VCR tape and DVDs. Limelight has two types of clients, the “location partner,” and the advertiser who wishes to reach the patrons that visit the location partners’ venues. A location partner can be a government agency, financial institution, theater owner, retail storeowner or whoever is charged with the marketing and management of a physical facility. Revenue may be derived from advertising sales, sponsorships, subscription agreements, equipment sales, maintenance and installation fees and content development fees. For the nine months ended September 30, 2005 and 2004, the Company’s primary source of revenue was derived from equipment sales.

Limelight provides a turn-key solution for businesses desiring digital signage systems for information display. Limelight contacts high traffic businesses such as banks, mass transit, governmental buildings, movie theaters, malls, restaurants and retail stores to determine if a digitally managed captive audience network is desired. Limelight installs all necessary servers and displays for its customers. Depending on the agreement, Limelight may provide the equipment at no cost to the location partner and share in the revenue or the partner may purchase the equipment and pay a monthly fee to Limelight for sales and administration. The system is connected via a telephone line or broadband internet to Limelight’s video and content management servers. Limelight may provide the programming and marketing of the network space to potential advertisers. Advertising revenues may be used to offset the cost of installation and administration of the network and programming. The location partner may receive a portion of the revenue generated from advertising sales on a negotiated basis depending on their level of involvement in the payment of the system.

The content is presented on single or multiple screens installed by the Company at the location. The displays are located in ideal locations to attract the attention of patrons who are entering and leaving the location.

History - Multinet International Corporation, Inc. was incorporated on May 17, 1996 in the State of Nevada. On September 26, 2001, the Company consummated an agreement to acquire all of the outstanding capital stock of Limelight Media Group, Inc., a Nevada corporation, in exchange for 18,000,000 shares of Multinet’s common stock (“Limelight Transaction”). Prior to the Limelight Transaction, Multinet was a non-operating public company with no operations or assets and with 2,431,000 shares of common stock issued and outstanding; and Limelight Media Group, Inc. was a privately-held company with assets being used for the development of its video-streaming technology.

Prior to the Limelight Transaction, Multinet International Corporation, Inc. operated a convenience store through Nikky D Corporation, a wholly-owned subsidiary. In September 2001, the Company divested itself of Nikky D Corporation. Multinet International Corporation, Inc. has accounted for this divestiture as a spin-off in accordance with Accounting Principles Board Statement No. 29. As a result of this divestiture, the Multinet became a non-operational public company.

8

LIMELIGHT MEDIA GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

On June 30, 2005, the Company formed a wholly owned subsidiary, Limelight Merger II Corp., a Washington corporation.

On June 30, 2005, through its wholly-owned subsidiary, Limelight Merger II Corp., Limelight Media Group, Inc. consummated an agreement to acquire all of the outstanding capital stock of Impart, Inc. (“Impart”), a Washington corporation (“Impart Transaction”). Also, on June 30, 2005, concurrently with the Impart Transaction, Impart entered into an Agreement with Ipoint Networks, LLC, a Washington limited liability company (“Ipoint”), whereby Impart purchased the assets of Ipoint (“Ipoint Transaction”). The total consideration for these transactions was 162,500,000 shares (“Merger Consideration”) of Limelight’s common stock and a promissory note in the principal amount of $250,000.

As Limelight Media Group, Inc. did not have a sufficient number of duly authorized shares on the date of the acquisition, the parties agreed to holdback 57,500,000 shares (“Holdback Shares”) of the 162,500,000 shares to be issued to the former owners of Impart and Ipoint not later than ten days following the later of (i) the effective date of a merger by Limelight with and into a Delaware corporation to be formed by the Limelight or (ii) Limelight’s receipt of audited financial statements of Impart. Prior to the Impart Transaction, Limelight was a public company with nominal operations that had $105,868 in assets (including cash totaling $1,968); liabilities totaling $890,924, a cash equivalent credit valued at $125,000 previously purchased through the issuance of common stock, a receivable related to the issuance of common stock totaling $12,500 and 141,628,494 shares of common stock issued and 138,829,665 shares outstanding. Impart was a privately-held company that sells dynamic media solutions consisting of monitors, computers, mounting systems, and associated technological hardware. The following table reflects the stock issued in relation to the Impart Transaction and Ipoint Transaction:

	Impart			Ipoint
	Transaction (1)			Transaction (2)			Total
Total consideration		153,125,000			9,375,000			162,500,000
Holdback shares		(54,182,692	)		(3,317,308	)		(57,500,000	)
Total Common Stock issuance		98,942,308			6,057,692			105,000,000

(1) The Impart Transaction is considered to be a capital transaction in substance, rather than a business combination. Inasmuch, the Impart Transaction is equivalent to the issuance of stock by a private company (Impart) for the net monetary assets of a public shell company (Limelight), accompanied by a recapitalization. Thus, the 98,942,308 shares (net of Holdback Shares) of common stock issued to the shareholders of Impart are retroactively applied. The accounting for the Impart Transaction is identical to that resulting from a reverse acquisition, except that neither goodwill nor other intangible assets will be recorded. Accordingly, these financial statements are the historical financial statements of Impart. Impart was incorporated on June 19, 1984 in the State of Washington.

(2) The Ipoint Transaction resulted in the acquisition of certain fixed assets in exchange for 6,057,692 shares (net of Holdback Shares) and a promissory note totaling $250,000. The note is unsecured, bearing interest at 8% per annum and is payable on the earlier of June 30, 2006 or the closing of a PIPE financing transaction by the Company.

On June 30, 2005, Impart entered into an Agreement with Media Sidestreet Support Corporation (“Media Sidestreet”) whereby Impart purchased the assets of Media Sidestreet in exchange for the issuance of notes in the aggregate principal amount of $1,027,965 to the owners of Media Sidestreet (“Media Sidestreet Asset Acquisition”). The notes are unsecured, with interest ranging from 6% to 10% (two notes include variable interest rates), and are payable on the earlier of June 30, 2006 or the closing of a PIPE financing transaction by the Company. Prior to the Impart Transaction, the majority owners of Impart were also owners in Media Sidestreet, thus a related party transaction.

9

LIMELIGHT MEDIA GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

Amended Articles of Incorporation - In October 2003, a Certificate of Amendment to the Articles of Incorporation changed the name of the Company to Limelight Media Group, Inc. During February 2004, a Certificate of Amendment to the Articles of Incorporation increased the authorized shares of common stock from 25,000,000 to 100,000,000. During January 2005, a Certificate of Amendment to the Articles of Incorporation increased the authorized shares of common stock from 100,000,000 to 250,000,000.

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. The Company has incurred a net loss of approximately $982,000 and $315,000 for the nine months ended September 30, 2005 and 2004, respectively. The Company's current liabilities exceed its current assets by approximately $3,124,000 as of September 30, 2005. The Company’s net cash used from operating activities approximated $244,614 during the nine months ended September 30, 2005.

These conditions give rise to substantial doubt about the Company's ability to continue as a going concern. The Company's management plan to obtain additional financing through a combination of equity and debt financing.

The ability of the Company to continue as a going concern is dependent on additional sources of capital and the success of the Company's plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Inventory - Inventory is stated at the lower of cost or market. Cost is principally determined by using the average cost method. Inventory consists of raw materials as well as finished goods held for sale. The Company's management monitors the inventory for excess and obsolete items and makes necessary valuation adjustments when required.

Fixed assets - Fixed assets are stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are generally 3 to 10 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).

The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.

Fixed assets acquired through the Ipoint Asset Acquisition and the Media Sidestreet Asset Acquisition were recorded at a pro-rata reduction of their estimated fair value to the extent of the consideration given at the time of acquisition less accumulated depreciation from the time of acquisition.

10

LIMELIGHT MEDIA GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

Fair value of financial instruments - The carrying amounts and estimated fair values of the Company’s financial instruments approximate their fair value due to the short-term nature.

Earnings (loss) per share - Basic earnings (loss) per share exclude any dilutive effects of options, warrants and convertible securities. Basic earnings (loss) per share are computed using the weighted-average number of outstanding common shares during the applicable period. Diluted earnings per share is computed using the weighted average number of common and common stock equivalent shares outstanding during the period. Common stock equivalent shares are excluded from the computation if their effect is antidilutive.

Income taxes - The Company accounts for its income taxes in accordance with Statement of Financial Accounting Standards No. 109, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carryforwards. 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. 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.

As of September 30, 2005, the Company has available net operating loss carryforwards that will expire in various periods through 2025. Such losses may not be fully deductible due to the significant amounts of non-cash service costs and the change in ownership rules under Section 382 of the Internal Revenue Code. The Company has established a valuation allowance for the full tax benefit of the operating loss carryovers due to the uncertainty regarding realization.

Comprehensive loss - The Company has no components of other comprehensive loss. Accordingly, net loss equals comprehensive loss for all periods.

Segment information - The Company discloses segment information in accordance with SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information,” which uses the Management approach to determine reportable segments. The Company operates under one segment as of September 30, 2005.

Advertising costs - The Company recognizes advertising expenses in accordance with Statement of Position 93-7 “Reporting on Advertising Costs.” Accordingly, the Company expenses the costs of producing advertisements at the time production occurs, and expenses the costs of communicating advertisements in the period in which the advertising space or airtime is used. Advertising costs are charged to expense as incurred. Advertising expenses were $28,249 for the nine months ended September 30, 2005.

Research and development costs - Research and development costs are charged to expense when incurred. Costs incurred to internally develop software, including costs incurred during all phases of development, are charged to expense as incurred.

Stock-based compensation - The Company applies Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees, and Related Interpretations”, in accounting for stock options issued to employees. Under APB No. 25, employee compensation cost is recognized when estimated fair value of the underlying stock on date of the grant exceeds exercise price of the stock option. For stock options and warrants issued to non-employees, the Company applies SFAS No. 123, “Accounting for Stock-Based Compensation”. SFAS No 123 requires the recognition of compensation cost using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued to non-employees. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement.

11

LIMELIGHT MEDIA GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

The Company granted warrants to purchase an aggregate of 3,000,000 shares of the Company’s common stock to two directors of Limelight for services rendered prior to the Impart Transaction. As these financial statements are the historical financial statements of Impart, Inc., no valuation has been included. The Company granted no other warrants or options to employees for compensation for the nine months ended September 30, 2005 and 2004.

Expenses of offering - The Company accounts for specific incremental costs directly to a proposed or actual offering of securities as a direct charge against the gross proceeds of the offering.

Revenue recognition - Revenue from product sales are generally recognized when the Company’s products are shipped and/or the revenue is fully earned and ownership has passed to the customer. Revenue from design and installation contracts are recognized using the completed-contract method.

New accounting pronouncements - In December 2004, the FASB issued SFAS 153, Exchanges of Nonmonetary Assets, an amendment of APB No. 29, Accounting for Nonmonetary Transactions. SFAS 153 requires exchanges of productive assets to be accounted for at fair value, rather than at carryover basis, unless (1) neither the asset received nor the asset surrendered has a fair value that is determinable within reasonable limits or (2) the transactions lack commercial substance. SFAS 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Company does not expect the adoption of this standard to have a material effect on its financial position, results of operations or cash flows.

In December 2004, the FASB issued Statement 123 (revised 2004) which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. This Statement supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. This Statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments. This Statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. This Statement requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award--the requisite service period (usually the vesting period). The Company files as a small business issuer and must meet the requirements of this Statement for accounting periods after December 15, 2005. The Company is evaluating SFAS 123R and believes it may have a material effect on the Company’s financial statements.

2. ASSET ACQUISITIONS

Ipoint Transaction - As discussed in Note 1, the Company purchased certain fixed assets in exchange for 6,057,692 shares (net of Holdback Shares of 3,317,308) and a promissory note totaling $250,000. The note is unsecured, bearing interest at 8% per annum and is payable on the earlier of June 30, 2006 or the closing of a PIPE financing transaction by the Company. The Company estimated the fair value of the assets at approximately $2,456,000, including approximately $52,500 in computer equipment, $3,500 in office furniture and fixtures, and $2,400,000 in software to be used to manage and distribute the Company’s advertising network. The Company valued the assets at $1,000,000 which is based on the fair value of the promissory note of $250,000 and the fair value of the total shares of 9,375,000 valued at $750,000. Due to the Holdback Shares, the Company allocated the $750,000 value of the shares between the actual stock issued, or $487,500 and an other liability for Ipoint Transaction of $262,500. As the purchase price was lower than the estimated fair value, the Company allocated the $1,000,000 purchase price on a pro rata basis over the assets.

12

LIMELIGHT MEDIA GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

Media Sidestreet Asset Acquisition - As discussed in Note 1, Impart purchased the assets of Media Sidestreet in exchange for the issuance of notes in the aggregate principal amount of $1,027,965 to the owners of Media Sidestreet (“Media Sidestreet Asset Acquisition”). The notes are unsecured, with interest ranging from 6% to 10% (two notes include variable interest rates), and are payable on the earlier of June 30, 2006 or the closing of a PIPE financing transaction by the Company. Prior to the Impart Transaction, the majority owners of Impart were also the majority owners in Media Sidestreet. The Company estimated the fair value of the assets at approximately $2,020,500, including approximately $249,500 in computer equipment, $21,000 in furniture and fixtures, and $1,750,000 in software to be used to manage and distribute the Company’s advertising network. Due to the common ownership between the entities, the Company recorded the value of the fixed assets at their historical costs as previously recorded on Media Sidestreet. At the time of the acquisition all assets on Media Sidestreet had been fully depreciated. Accordingly, the Company did not record the assets and the related notes payable has been reflected as an increase to accumulated deficit.

3. ACCOUNTS RECEIVABLE

As of September 30, 2005 accounts receivable consists of trade receivables related to equipment sales and total $686,238, which is net of allowance for doubtful accounts of $35,988.

4. INVENTORY

Inventory totaling $342,880 consists of finished goods as of September 30, 2005.

5. FIXED ASSETS

Fixed assets consist of the following as of September 30, 2005:

Computer and other equipment	$	628,231
Furniture and fixtures		71,206
Software		977,199
Leasehold equipment		5,613
		1,682,249
Less: accumulated depreciation		477,727
Fixed assets, net	$	1,204,522

6. DUE TO RELATED PARTIES

Due to related parties totaling $602,429 as of September 30, 2005 consist of the following:

Loan payable to the Company’s CEO, secured by the Company’s assets bearing interest at 9% per annum, payable in monthly installments of interest only, due on demand	$	397,282
Unreimbursed expenses to the CEO, unsecured, bearing no interest and due on demand		117,925
Unreimbursed expenses to various stockholders, unsecured, bearing no interest and due on demand		11,177
Accrued interest on related party loans		76,045
	$	602,429

13

LIMELIGHT MEDIA GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

7. LINES OF CREDIT

As of September 30, 2005, lines of credit consist of the following:

A bank line of credit for borrowing up to $200,000, secured by the Company’s assets, bearing interest at 11% per annum payable in monthly installments of interest only, matures December 2006	$	198,796
A Wells Fargo business line for borrowing up to$55,000, unsecured, bearing interest rate of 12.5%, payable in monthly installments of interest only		30,574
	$	229,370

8. CONVERTIBLE LOANS PAYABLE

In August 2003, the Company borrowed $10,000, unsecured and bearing interest at 12% from an individual that matured during August 2004. As of September 30, 2005, the balance of $10,000 is in default and recorded as a current liability. The individual is entitled to convert all or a portion of the principal balance into shares of the Company’s common stock at a conversion price of $0.20 per share. Further, the individual has the option of receiving payment of accrued interest in cash or 50,000 shares of the Company’s common stock.

9. NOTES PAYABLE

As discussed in Note 17, pending in the State Court of Cherokee County, Georgia filed September 9, 2002, D&D Management, Inc. is alleging it entered into a loan agreement with the Company during February 2002 for $54,000 which has not been repaid. The Company is defending on the basis that it issued D&D Management, Inc. 89,000 shares of the Company’s common stock in consideration of repayment and for settlement. D&D Management, Inc. is responding that the shares were issued for consulting services. The Company denies services were rendered and is pursuing settlement negotiations. The Company has recognized a liability of $25,000, based on management’s estimate of negotiated terms.

As discussed in Note 1 and 2, On June 30, 2005, concurrently with the Impart Transaction, Impart entered into an Agreement with Ipoint whereby Impart purchased the assets of Ipoint in exchange for the issuance of a promissory note of $250,000 and 9,375,000 shares of the Company’s common stock valued at $750,000. The note is unsecured, bearing interest at 8% per annum and is payable on the earlier of June 30, 2006 or the closing of a PIPE financing transaction by the Company.

During June 2005, the Company entered into a promissory note with an entity totaling $20,000. The note is unsecured, bearing interest at 8.5% per annum and payable in June 2006.

During June 2005, the Company entered into a promissory note with an individual totaling $50,000. The note is unsecured, bearing interest at 8% per annum and payable in June 2006.

During November 2004, the Company entered into a promissory note with a lending institution. The note is secured by the Company’s assets and bears interest at 8.5% per annum. The note requires 24 monthly principal and interest payments of $6,000 beginning December 2004, with a final payment of $484,249 to be made in December 2006. As of September 30, 2005, the current portion on the note from October 1, 2005 through September 30, 2006 totals $28,775 and the long-term portion totals $485,688.

14

LIMELIGHT MEDIA GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

10. NOTES PAYABLE - RELATED PARTIES

As discussed in Note 1, on June 30, 2005, concurrently with the Impart Transaction, Impart entered into an Agreement with Media Sidestreet whereby Impart purchased the assets of Media Sidestreet in exchange for the issuance of a promissory note in the aggregate principal amount of $1,027,965 to the owners of Media Sidestreet. The notes are unsecured, with interest ranging from 6% to 10% (two notes include variable interest rates), and are payable on the earlier of June 30, 2006 or the closing of a PIPE financing transaction by the Company. Prior to the Impart Transaction, the majority owners of Impart were also owners in Media Sidestreet, thus a related party transaction.

During April 2005, Limelight issued promissory notes to two Impart stockholders (prior to the Impart Transaction) whereby the Impart stockholders loaned Limelight $36,000 and $20,000 to pay for equipment purchased by Limelight from Impart. The notes are unsecured, bearing interest at 20% and 8.5% per annum, respectively, and are payable on maturity during April 2006. The two stockholders became officers of the Company concurrently with the Impart Transaction. As of September 30, 2005, the remaining balance of the two notes remain at $56,000.

11. CASH EQUIVALENT CREDIT PAID IN COMMON STOCK

Effective December 10, 2004, the Limelight completed the sale of 5,000,000 shares of its common stock, which had a fair market value at that time of approximately $125,000, to American Marketing Complex, Inc. (“AMC”). Payment for this purchase by AMC was in the form of cash equivalent credits (“Credits”) with a face value of $1,500,000, which the Company can use or sell to others for the purchase of merchandise and services. The face value is not necessarily indicative of the ultimate fair value or settlement value of the credits. The credits were valued at the fair market value of the shares issued by the Company at $125,000 and classified as cash equivalent credits paid in common stock, which is a separate component of stockholders' deficiency in the accompanying balance sheet as of September 30, 2005. The cash equivalent credits paid in common stock will be offset as the trade credits are used.

12. OTHER LIABILITIES

As of June 30, 2005, the individual paid the Company $30,699 of the total $150,000 required under the Purchase Agreement. The Company rescinded all agreements with the individual as the individual did not pay the entire $150,000 as required by the Purchase Agreement and attempted to return the $30,699. The individual refused to accept the funds and filed a suit against the Company. The Company has recorded the $30,699 as an other liability.

During August 2005, the Company agreed to settle this liability for 1,000,000 shares of common stock. As of September 30, 2005 the Company had not issued this stock.

Clickplay, Inc. - During February 2002, Clickplay, Inc. filed suit on February 19, 2002 alleging claims against the Limelight for non-payment related to a consulting services agreement. A default judgment was entered in favor of Clickplay, Inc. against the Company. The Company’s management has determined that the liability will be paid and accordingly recorded $123,219 (including accrued interest of $30,219). The Company is attempting to negotiate payment terms with Clickplay, Inc.

Lease Agreement - During July 2005 the Company entered into a lease agreement for the lease of certain equipment to be installed and used for advertising in certain store locations owned by a retail entity. The Company received $60,000 and is required to pay 48 monthly principal and interest payments totaling $2,199. Subsequent to that agreement negotiations with the retail entity fell through whereby the Company did not have the locations to install the equipment. Accordingly, the Company did not purchase the equipment with the funds but continues to make the payments as required by the lease. The principal balance as of September 30, 2005 totaled $58,695 and was recorded as an other liability. The Company is currently attempting to negotiate substitution of collateral for the liability.

15

LIMELIGHT MEDIA GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

13. EMPLOYMENT AGREEMENTS

Pursuant to the Impart Transaction, the Company entered into the following Employment Agreements on September 30, 2005:

David V. Lott (Former President and Chief Financial Officer of Limelight) - David V. Lott was appointed as Chief Executive Officer for the term of three years from June 30, 2005, subject to termination provisions. Mr. Lott will receive an annual base salary totaling $120,000 plus benefits.

Laird Laabs (President of Impart) - Laird Laabs was appointed as President for the term of three years from June 30, 2005, subject to termination provisions. Mr. Laabs will receive an annual base salary totaling $120,000 plus benefits.

Joseph Martinez - Joseph Martinez was appointed as Chairman and Chief Financial Officer for the term of three years from June 30, 2005, subject to termination provisions. Mr. Martinez will receive an annual base salary totaling $120,000 plus benefits.

Steven Corey - Steven Corey was appointed as Chief Strategy Officer for the term of three years from June 30, 2005, subject to termination provisions. Mr. Corey will receive an annual base salary totaling $120,000 plus benefits.

Thomas Muniz - Thomas Muniz was appointed as Chief Operating Officer and Chief Technology Officer for the term of three years from June 30, 2005, subject to termination provisions. Mr. Muniz will receive an annual base salary totaling $120,000 plus benefits.

14. LOCK-UP AGREEMENTS

Pursuant to the Impart Transaction, former Shareholders of Impart and David Lott of Limelight entered into a Lock-Up Agreement restricting the transfer, sale, assignment of their Limelight shares of common stock from June 30, 2005 through June 30, 2006 unless certain provisions are met.

16

LIMELIGHT MEDIA GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

15. COMMITMENTS AND CONTINGENCIES

Legal - As discussed in Note 9, pending in the State Court of Cherokee County, Georgia filed September 9, 2002, D&D Management, Inc. is alleging it entered into a loan agreement with the Company during February 2002 for $54,000 which has not been repaid. The Company is defending on the basis that it issued D&D Management, Inc. 89,000 shares of the Company’s common stock in consideration of repayment and for settlement. D&D Management, Inc. is responding that the shares were issued for consulting services. The Company denies services were rendered and is pursuing settlement negotiations. The Company has recognized a liability of $25,000, based on management’s estimate of negotiated terms.

During January 2005 Dierbergs Markets, Inc. (“Dierbergs”) filed a complaint against Interactive Graphic Solutions, LLC and Limelight Media Group, Inc. According to the complaint, Dierbergs entered into a license agreement with Interactive Graphic Solutions, LLC ("IGS") pursuant to which IGS granted Dierbergs a license to use IGS's system of motion media equipment for the purpose of showing certain advertising in retail stores. Further, the complaint asserts that IGS failed to pay approximately $72,000 to Hanenkamp Electric Company for its services relating to the installation of IGS's media system and that such amount was paid by to Hanenkamp by Dierbergs. In August 2004, Limelight acquired substantially all of the assets of IGS, including the license agreement with the Dierbergs. Dierbergs was seeking damages from the defendants in amount equal to $72,000 plus attorneys' fees, costs, expenses and pre-judgment and post-judgment interest. In February 2005, the Company filed a motion to dismiss on the basis that the Company was neither a party to the license agreement nor, as Dierbergs asserted in the complaint, a permitted assignee. Dierbergs dismissed the motion against Limelight during August 2005.

Leased facilities - The Company operates from leased facilities under two noncancellable operating leases. The first lease (related to Limelight) calls for a base monthly rent of $3,237 increasing to $3,642 during June 2005 through May 2006. The second lease (related to Impart) calls for a base monthly rent of $15,000 through November 30, 2018. The facility is owned by certain stockholders.

Future minimum rental payments for the leased facilities as of September 30, 2005, are as follows:

October 1, 2005 through December 31, 2005	$	55,926
2005		198,210
2006		180,000
2007		180,000
2008		180,000
2009		180,000
Thereafter		1,620,000
	$	2,594,136

16. SUBSEQUENT EVENTS

17

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

General

The following discussion and analysis of the financial condition and results of operations should be read in conjunction with our financial statements and notes appearing elsewhere in this Report. As a result of our acquisition of all of the outstanding capital stock of Impart, Inc., a Washington corporation (“Impart”), on June 30, 2005, as we previously reported on our Current Report on Form 8-K filed with the Securities and Exchange Commission (the “Commission”) on July 7, 2005, upon which Impart was considered to be the acquirer for financial reporting purposes, our historical financial statements for any period prior to June 30, 2005 are those of Impart.

Recent Developments

As previously reported on our Current Report on Form 8-K filed with the Commission on October 28, 2005, we purchased the from Marlin Capital Partners II, LLC (doing business as InTransit Media) (“MCP”) an exclusive option to purchase the assets of MCP used in its digital advertising services business.

As previously reported on our Current Report on Form 8-K filed with the Commission on November 4, 2005, we issued to certain stockholders promissory notes in the aggregate total amount of $4.6 million on November 4, 2005, in lieu of the issuance of additional shares of our common stock required to be issued under the Agreement and Plan of Merger, dated as of June 30, 2005 by and among Impart, our company and Limelight Merger II Corp., a Washington corporation. All payments of principal and interest under such promissory notes are due on or before November 4, 2007.

Results of Operations - Three months ended September 30, 2005 compared to the three months ended September 30, 2004.

Revenue.For the three months ended September 30, 2005, we had revenues of $1,422,781 as compared to $1,920,693 for the three months ended September 30, 2004, representing a decrease of $497,912, or 25.9%. Our revenues are derived primarily from a combination of (i) the recurring fees we receive for managing our customers’ digital signage networks that we sell and/or operate, (ii) the sale price of hardware components and software products used in our proprietary digital signage network and (iii) the fees we received in connection with the delivery of consulting, maintenance and other digital signage services to our customers.  The decrease in our revenues for the three months ended September 30, 2005 as compared to the comparable period in 2004 was primarily due to a shift in our long-term business strategy and, to a lesser extent, our inability to service and invoice a significant customer located in Louisiana, Texas and other southern locations due to the effects of hurricanes Katrina and Rita during the quarter. Historically, one component of our Impart business has been the sale and distribution of brackets and fixtures to support the deployment of plasma screens and LCD screens. Recently, however, we have reduced our emphasis on being a distributor of these products and have shifted our primary focus to a more full service digital media offering. Our revenue models now include, in addition to integration and equipment sales, subscription and management services, revenues from third party advertising and marketing and content management with development services. We believe this vertical and horizontal integration will equate to a one-stop operation where clients do not need to secure services from another vendor. We believe that these offerings will position our company as a full service digital media solution.

Cost of Revenue. For the three months ended September 30, 2005, the cost of sales was $984,457 as compared to $1,318,643 for the three months ended September 30, 2004, representing a decrease of $334,186, or 25.3%.  The decrease was primarily the result of the decrease in the revenues outlined above. With such a decrease in revenue, the cost of revenue similarly decreased. We have also experienced a reduction in the cost of plasma screens, LCD screens and other network digital components that we sell to our customers under our “turn-key” (or “full integration”) model. In this model, we purchase standard, off-the-shelf hardware components that we integrate and custom configure before deployment to our customers and we earn a profit on the difference between the sale price and our cost, in addition to the fees we receive for integrating, installing and operating the customer’s digital signage network.

18

General and Administrative Expenses. For the three months ended September 30, 2005, we incurred general and administrative expenses of $1,153,954 as compared to $574,173 for three months ended September 30, 2004, an increase of $579,781, or 101%. This increase was primarily attributable to an increase of $282,873, or 912.2%, in the amount of professional and consulting fees we paid for services, to $313,883 for the three months ended September 30, 2005 from $31,010 for the three months ended September 30, 2004. Such dramatically increased professional and consulting fees resulted primarily from legal and accounting expenses incurred in connection with our acquisition of Impart and related filings with the Commission pursuant to the Securities and Exchange Act of 1934. In addition, we incurred depreciation expense of $103,722 for the three months ended September 30, 2005 as compared to $3,952 for the three months ended September 30, 2004, an increase of $99,770, or 2,924.5%. Such increase in depreciation expense was attributed to additional hardware components and other equipment we have purchased for use in our digital signage network. We also incurred a substantial increase in wages and salaries paid, resulting in an overall increase of $136,349, or 80.1%, to $306,475 for the three months ended September 30, 2005 from $170,126 for the three months ended September 30, 2004. Wage and salary expenses increased primarily due to additional graphics and programming personnel supporting the certain product lines who are now employed by our company as a result of the acquisition of iPoint Technologies, Inc. (“iPoint”).

Interest Expense. Interest expense was $112,348 for the three months ended September 30, 2005, as compared to $19,012 for the three months ended September 30, 2004, resulting in an increase of $93,336, or 490.9%. This increase was primarily due to interest accrued on promissory notes issued in connection with the acquisitions of iPoint and Media Side Street Corporation (“Media Side Street”).

Net Income (Loss). For the reasons described above, we had a net loss of $821,467 for the three months ended September 30, 2005 as compared to a net loss of $15,349 for the three months ended September 30, 2004.

Results of Operations - Nine months ended September 30, 2005 compared to nine months ended September 30, 2004.

Revenue. For the nine months ended September 30, 2005, we had revenues of $3,330,109 as compared to $3,483,962 for the nine months ended September 30, 2004, representing a decrease of $153,853 or 4.4%. This decrease was primarily due to the reasons set forth above. 

Cost of Revenue. For the nine months ended September 30, 2005, the cost of sales was $2,296,031 as compared to $2,520,179 for the nine months ended September 30, 2004, representing a decrease of $224,148, or 8.9%. This decrease was primarily due to the reasons set forth above.

General and Administrative Expenses. For the nine months ended September 30, 2005, we incurred general and administrative expenses of $1,913,159 as compared to $1,241,462 for nine months ended September 30, 2004, an increase of $671,697, or 54.1%. This increase was primarily attributable to (i) an increase of $288,512, or 340.9%, in the amount of professional and consulting fees we paid for services rendered, to $373,139 for the nine months ended September 30, 2005 from $84,627 for the nine months ended September 30, 2004; (ii) an increase of $106,855, or 1,081.5%, in depreciation expense, to $116,735 for the nine months ended September 30, 2005 from $9,880 for the nine months ended September 30, 2004; and (iii) an increase of $213,911, or 40.6%, in the amount of wages and salaries we paid, to $740,981 for the nine months ended September 30, 2005 from $527,070 for the nine months ended September 30, 2004. These increases were primarily due to the reasons set forth above.

19

Interest Expense. Interest expense was $133,557 for the nine months ended September 30, 2005, as compared to $42,467 for the nine months ended September 30, 2004, resulting in an increase of $91,090, or 214.5%. This increase was primarily due to the reasons set forth above.

Net Income (Loss). For the reasons described above, we incurred a net loss of $982,261 for the nine months ended September 30, 2005 as compared to a net loss of $314,538 for the nine months ended September 30, 2004.

Liquidity and Capital Resources

At September 30, 2005, we had a cash balance of $0. Since 2002, our principal sources of liquidity have been the revenue from operations, the issuance of debt and equity securities, primarily to related parties, and borrowings from lending institutions. Our current cash levels, together with the cash flows we generate from operating activities, are not sufficient to enable us to continue our operations at current levels. We believe that anticipated cash flows from recent and near-term scheduled deployments of our digital signage network will allow us to “break-even” during the first quarter of 2006. As a result, we intend to seek additional capital through the sale of shares of our common stock to institutional investors or other ‘accredited investors’ in private placements in order to obtain sufficient working capital to sustain operations until such time as we are cash flow positive and to allow us to pay off our existing credit facility. In the event that our operations do not generate sufficient cash flow, or we cannot obtain additional funds if and when needed, we may be forced to curtail or cease our activities, which would likely result in the loss to investors of all or a substantial portion of their investment.

We are currently in preliminary discussions with an institutional investor to obtain debt or equity financing in the amount of $3 million to $5 million. We anticipate that the closing of such financing will be contingent upon, among other conditions, the recapitalization of our company through a reverse stock split, a decrease in our number of authorized but unissued shares of common stock and the creation of a class of “blank check” preferred stock. In September 2005, our board of directors and the holders of more than 50% of our outstanding shares of common stock approved a proposal to (i) change our corporate name to “Impart Media Group, Inc.”; (ii) effect a reverse stock split, pursuant to which every twenty (20) shares of our outstanding common stock would be exchanged for one new share of common stock; (iii) decrease the number of authorized shares of our common stock; and (iv) authorize 25,000,000 shares of “blank check” preferred stock.

We intend to effect such a recapitalization in December 2005. There can be no assurance that we will be able to consummate the proposed financing transaction, or that any such transaction will be consummated on terms favorable to us.

20

Even if we successfully obtain such financing, we will still require additional capital to execute our growth strategy of expanding our digital signage network and acquiring other digital signage companies that we believe are financially accretive with our company, of which there can be no assurance.

At September 30, 2005, we had liquid assets of $1,036,920, consisting of accounts receivable derived from operations in the amount of $694,040 and inventory in the amount of $342,880. Long-term assets of $1,204,522 consisted primarily of computer servers, software and video display equipment used in operations.

Our working capital deficit was $3,123,619 as of September 30, 2005 for the reasons described above.

During the nine months ended September 30, 2005, we used net cash of $244,614 in operating activities.

During the nine months ended September 30, 2005, we used net cash of $215,969 in investing activities, primarily for the purchase of digital signage hardware inventory and for the purchase of proprietary software from iPoint and Media Side Street.

Financing activities, consisting primarily of borrowings under a line of credit and loans by certain of our officers and directors, provided net cash of $424,106 during the nine months ended September 30, 2005.

ITEM 3. CONTROLS AND PROCEDURES.

DISCLOSURE CONTROLS AND PROCEDURES. Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this Report. Based on such evaluation, our chief executive officer and chief financial officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submits under the Exchange Act.

INTERNAL CONTROL OVER FINANCIAL REPORTING. There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

During the fiscal quarter ended September 30, 2005, we entered into negotiations with Clickplay, Inc. to reach an agreement regarding satisfaction of amounts payable as a result of a default judgment entered against us in February, 2002. The amount of such default judgment was $123,219 (including accrued interest of $30,219).

21

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

In the quarter ended September 30, 2005, we issued an aggregate of 2,800,000 shares of our common stock to two consulting firms for services rendered, which services were valued at $188,000 in the aggregate. Such shares were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended, on the basis that such issuance did not involve a public offering, no underwriter fees or commissions were paid in connection with such issuance and such persons were ‘accredited investors’ as defined in Regulation D under the Securities Act of 1933, as amended.

In the quarter ended September 30, 2005, we issued an aggregate of 25,000 shares of our common stock to two investors in a private placement for an aggregate purchase price of $2,050, or $.082 per share. Such shares were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended, on the basis that such issuance did not involve a public offering and such persons were ‘accredited investors’ as defined in Regulation D under the Securities Act of 1933, as amended.

ITEM 6. EXHIBITS.

The exhibits required by this item are listed on the Exhibit Index attached hereto.

22

SIGNATURES

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

Dated: November 23, 2005		LIMELIGHT MEDIA GROUP, INC.
	By:	/s/David V. Lott
		David V. Lott
		Chief Executive Officer
		(principal executive officer)
	By:	/s/Joseph Martinez
		Joseph Martinez
		Chief Financial Officer
		(principal financial officer)

23

EXHIBIT INDEX

31.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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

32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.