Digital Youth Network 10QSB/A 2006 Q3 Quarterly report (small business) (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB/A

(Mark One)

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

For the quarterly period ended May 31, 2006

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period

Commission file number 0-32715

DIGITAL YOUTH NETWORK CORP.
(formerly Ocean Ventures Inc.)
(Exact name of small business issuer as specified in its charter)

Alberta, Canada
(State or other jurisdiction of incorporation or organization)

98-0343194
(I.R.S. Employer Identification No.)

#303 - 1847 West Broadway
Vancouver, BC, Canada V6J 1Y6
(Address of principal executive offices)

(604) 682-6203

(Issuer’s telephone number)

not applicable
(Former name, former address and former fiscal year, if changed since last report)

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. Yes x No o

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

Yes x

No o

D/MEP/879795.2

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes o No o

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

15,977,407 common shares outstanding as at July 18, 2006

Transitional Small Business Disclosure Format (Check one):

Yes o

No [X ]

PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements.

Our unaudited financial statements for the three month period ended May 31, 2006 form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.

It is the opinion of management that the consolidated interim financial statements for the quarter ended May 31, 2006, include all adjustments necessary in order to ensure that the consolidated interim financial statements are not misleading.

DIGITAL YOUTH NETWORK CORP.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2006

(Stated in US Dollars)

(Unaudited)

DIGITAL YOUTH NETWORK CORP.

INTERIM CONSOLIDATED BALANCE SHEETS

May 31, 2006 and August 31, 2005

(Stated in US Dollars)

(Unaudited)

		May 31,		August 31,
		2006		2005
ASSETS

Current
Cash	$	9,761	$	212
Accounts receivable		17,510		81,044
Goods and services taxes receivable		13,093		-
Prepaid expenses and deposits		9,218		6,018

		49,582		87,274
Property and equipment – Note 3		27,839		24,080

	$	77,421	$	111,354

LIABILITIES

Current
Bank indebtedness	$	1,076	$	6,787
Accounts payable and accrued liabilities – Note 7		923,772		871,174
Unearned revenue		48,319		-
Convertible debentures – Notes 4 and 7		95,709		88,567

		1,068,876		966,528

STOCKHOLDERS’ DEFICIENCY

Capital stock – Notes 5 and 10
Authorized:
Unlimited Common shares without par value
Unlimited Preferred shares without par value
Issued:
16,073,699 (August 31,2005: 12,419,987) common shares		2,133,779		1,780,897
Additional capital		119,029		119,029
Accumulated foreign currency translation adjustment		(181,752)		(124,645)
Accumulated deficit		(3,062,511)		(2,630,455)

		(991,455)		(855,174)

	$	77,421	$	111,354

SEE ACCOMPANYING NOTES

DIGITAL YOUTH NETWORK CORP.

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

for the three and nine month periods ended May 31, 2006 and 2005

(Stated in US Dollars)

(Unaudited)

	Three months ended				Nine months ended
		May 31,		May 31,		May 31,		May 31,
		2006		2005		2006		2005

Revenue	$	36,173	$	30,765	$	81,047	$	43,649

Direct costs
Cellular phones and accessories		-		141		-		3,510
Text messaging		24,388		6,474		47,153		19,325

		24,388		6,615		47,153		22,835

General and administrative expenses
Accounting and audit		7,647		10,680		20,406		34,629
Advertising and promotion		8,826		11,496		34,733		78,365
Amortization		2,550		3,088		7,199		9,271
Bad debt expense		8,552		-		16,657		-
Bank charges and interest		1,818		562		8,259		6,527
Consulting fees		20,523		75,212		65,719		104,335
Foreign exchange		298		639		(758)		(2,940)
Conversion option expense		-		42,100		-		60,629
Interest on convertible debentures – Note 7		1,465		3,944		4,173		7,463
Insurance, licenses and dues		1,589		606		4,043		7,661
Legal fees		8,205		13,292		29,141		48,432
Management fees – Note 7		45,806		37,679		130,664		133,295
Office and rent		12,169		18,654		51,383		56,909
Transfer agent		886		539		7,405		7,926
Travel and automobile		9,680		7,248		24,456		19,053
Wages and benefits		17,145		29,402		62,470		69,439

		147,159		255,141		465,950		640,994

Net loss for the period		(135,374)		(230,991)		(432,056)		(620,180)
Comprehensive loss
Foreign currency translation adjustment		(32,062)		11,022		(57,107)		(30,697)

Comprehensive loss for the period	$	(167,436)	$	(219,969)	$	(489,163)	$	(650,877)

Basic and diluted loss per share	$	(0.01)	$	(0.02)	$	(0.03)	$	(0.06)

Weighted average number of common shares outstanding		15,492,566		11,714,029		14,072,697		9,909,112

SEE ACCOMPANYING NOTES

DIGITAL YOUTH NETWORK CORP.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

for the nine month periods ended May 31, 2006 and 2005

(Stated in US Dollars)

(Unaudited)

		2006		2005

Operating Activities
Net loss for the period	$	(432,056)	$	(620,180)
Items not affecting cash:
Amortization		7,199		9,271
Convertible debenture beneficial conversion option interest expense		-		60,629
Provision for bad debts		16,657		-
Changes in non-cash working capital balances related to operations:
Amounts receivable		50,386		(21,277)
Goods and services taxes receivable		(12,476)		-
Inventory		-		3,494
Prepaid expenses and deposits		(2,588)		(1,395)
Accounts payable and accrued liabilities		87,012		318,080
Unearned revenue		46,808		-

		(239,058)		(251,378)

Investing Activities
Property and equipment acquired		(2,825)		-

Financing Activities
Bank indebtedness		(5,711)		6,272
Common share issuances (net of share issue costs)		251,500		220,475
Convertible debentures		-		36,204

		245,789		262,951

Effect of foreign currency translation on cash		5,643		(11,363)

Increase in cash during the period		9,549		210

Cash, beginning of period		212		1,004

Cash, end of period	$	9,761	$	1,214

Non-cash Transactions – Note 8

SEE ACCOMPANYING NOTES

DIGITAL YOUTH NETWORK CORP.

INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)

for the period August 31, 2004 to May 31, 2006

(Stated in US Dollars)

(Unaudited)

				Accumulated
				Foreign
				Currency		Stockholders’
	Common Shares		Additional	Translation	Accumulated	Equity
	Number	Amount	Capital	Adjustment	Deficit	(Deficiency)

Balance, August 31, 2004	8,472,254	$1,194,569	$ 58,400	$ (48,164)	$ (1,873,468)	$ (668,663)
Issued for cash:
Private placements – at $0.12 per share	209,323	25,119	-	-	-	25,119
– at $0.13 per share	401,688	52,219	-	-	-	52,219
– at $0.15 per share	700,001	105,000	-	-	-	105,000
– at $0.16 per share	50,000	8,000	-	-	-	8,000
– at $0.17 per share	167,712	28,511	-	-	-	28,511
– at $0.20 per share	128,000	25,600	-	-	-	25,600
– at $0.22 per share	68,182	15,000	-	-	-	15,000
Less: finders’ fee – for cash	-	(2,641)	-	-	-	(2,641)
Shares issued for debt settlement – at $0.13 to $0.22 per share	2,222,827	329,520	-	-	-	329,520
Convertible debenture beneficial conversion feature	-	-	60,629	-	-	60,629
Net loss for the year	-	-	-	-	(756,987)	(756,987)
Foreign currency translation adjustment	-	-	-	(76,481)	-	(76,481)

Balance, August 31, 2005	12,419,987	1,780,897	119,029	(124,645)	(2,630,455)	(855,174)
Issued for cash:
Private placements – at $0.06 per share	66,666	4,000				4,000
– at $0.08 per share	1,562,500	125,000	-	-	-	125,000
– at $0.10 per share	1,125,000	112,500	-	-	-	112,500
– at $0.13 per share	76,923	10,000	-	-	-	10,000
Shares issued for debt settlement – at $0.10 to $0.16 per share	822,623	101,382	-	-	-	101,382
Net loss for the nine-month period	-	-	-	-	(432,056)	(432,056)
Foreign currency translation adjustment	-	-	-	(57,107)	-	(57,107)

Balance, May 31, 2006	16,073,699	2,133,779	$ 119,029	$ (181,752)	$ (3,062,511)	$ (991,455)

SEE ACCOMPANYING NOTES

DIGITAL YOUTH NETWORK CORP.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2006

(Stated in US Dollars)

(Unaudited)

Note 1

Nature and Continuance of Operations

The Company was incorporated on November 22, 1996, under the Business Corporations Act of the Province of Alberta. In January 2000, the Company changed its name to Ocean Ventures Inc and in May, 2004, the Company changed it name to Digital Youth Network Corp. At May 31, 2006, substantially all of the Company’s assets and operations are located and conducted in Canada.

The Company’s shares are quoted for trading on the Over-The-Counter Bulletin Board in the United States of America (the “OTCBB”). The Company ceased its prior business on November 30, 1999 and began investigating new business ventures on September 1, 1999. This process ended on October 7, 2003, when the Company completed the acquisition of Digital Youth Network Inc. (“DYNI”), a private company that was incorporated in British Columbia, Canada on October 4, 2001 and continued under the Canada Business Corporations Act on November 12, 2002. The Company’s operations focus on the integration of wireless and internet technologies and print media to provide text messaging and advertising services to customers. On May 10, 2006, DYNI changed its name to DY Mobile Inc.

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At May 31, 2006, the Company had not yet achieved profitable operations, has accumulated losses of $3,062,511 since its inception, has a working capital deficiency of $1,019,294 and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available.

Note 2

Summary of Significant Accounting Policies

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment. Actual results could differ from those estimates.

Digital Youth Network Corp.

Notes to the Interim Consolidated Financial Statements

May 31, 2006

Stated in US Dollars

(Unaudited) – Page 2

Note 2

Summary of Significant Accounting Policies – (cont’d)

The financial statements have, in management’s opinion, been properly prepared within the framework of the significant accounting policies summarized as follows:

Interim Reporting

The accompanying unaudited consolidated interim financial statements have been prepared by the Company in accordance with the rules and regulations of Regulation S-B as promulgated by the Securities and Exchange Commission. In the opinion of management, the accompanying unaudited consolidated interim financial statements contain all adjustments necessary (consisting of normal recurring accruals) to present fairly the financial information contained therein. The accompanying unaudited interim consolidated financial statements may not include all disclosures required by generally accepted accounting principles in the United States of America. The results of operations for the nine-month period ended May 31, 2006 are not necessarily indicative of the results to be expected for the year ending August 31, 2006.

These unaudited financial statements should be read in conjunction with the audited financial statements of the Company as at August 31, 2005.

New Accounting Standards

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

Note 3

Property and Equipment

	May 31, 2006
		Accumulated
	Cost	Amortization	Net

Computer and office equipment	$ 68,721	$ 42,671	$ 26,050
Leasehold improvements	1,946	157	1,789

	$ 70,667	$ 42,828	$ 27,839

	August 31, 2005
		Accumulated
	Cost	Amortization	Net

Computer and office equipment	$ 56,836	$ 32,756	$ 24,080

Digital Youth Network Corp.

Notes to the Interim Consolidated Financial Statements

May 31, 2006

Stated in US Dollars

(Unaudited) – Page 3

Note 4

Convertible Debentures

	May 31,	August 31,
	2006	2005

Principal amount of CDN$60,500 (August 31, 2005: CDN$60,500) bears interest at 6% per annum and is past due. The principal and accrued interest is convertible in whole or in part at the option of the holder, into common shares of the Company at a price of $0.19 per share. These debentures are secured by a general security agreement.	$ 54,885	$ 50,790

Principal amount of CDN$45,000 (August 31, 2005: CDN$45,000) bears interest at 6% per annum and is past due. The principal and accrued interest is convertible, in whole or in part, at the option of the holder into common shares of the Digital Youth Network Inc. at a price of $0.13 per share. These debentures are secured by a general security agreement over the assets of the Company.	40,824	37,777

	$ 95,709	$ 88,567

Note 5

Capital Stock – Notes 4, 8 and 10

Commitments:

Share Purchase Warrants

At May 31, 2006, a total of 2,252,603 share purchase warrants were outstanding.

The following warrants entitle the holder to purchase one common share for each warrant held:

	Exercise
Number	Price	Expiry Date

50,000	$0.40	April 15, 2007 (*)
664,668	$0.40	April 30, 2007 (*)
33,333	$0.40	June 30, 2007 (*)
209,323	$0.40	August 31, 2007 (*)
1,151,923	$0.25	December 31, 2007 (*)
143,356	$0.30	June 22, 2009

2,252,603

Digital Youth Network Corp.

Notes to the Interim Consolidated Financial Statements

May 31, 2006

Stated in US Dollars

(Unaudited) – Page 4

Note 5

Capital Stock – Notes 4, 8 and 10 – (cont’d)

Commitments: – (cont’d)

Share Purchase Warrants – (cont’d)

*	The Company has the right to call these warrants at any time after the bid price and the ask price (at the close) for the Company’s share is equal to or greater than $0.60 per share for a period of seven consecutive days on the OTCBB public exchange.

Stock-based Compensation Plan

The Company has granted directors and a former director common share purchase options. These options were granted with an exercise price equal to the market price of the Company’s stock on the date of the grant.

	May 31, 2006		February 28, 2005
		Weighted		Weighted
		Average		Average
		Exercise		Exercise
	Shares	Price	Shares	Price

Outstanding and exercisable at beginning and end of period	200,000	$0.25	250,000	$0.25

Each option entitles the holder the right to acquire one additional common share of the Company at $0.25 until October 7, 2008.

Note 6

Commitments – Note 5

The Company has entered into a lease agreement for its office premises. The term of the lease is three years and expires on December 31, 2008. The approximate annual lease payments due are as follows:

May 31, 2007	$	25,420
May 31, 2008		25,420
May 31, 2009		14,828

	$	65,668

Digital Youth Network Corp.

Notes to the Interim Consolidated Financial Statements

May 31, 2006

Stated in US Dollars

(Unaudited) – Page 5

Note 7

Related Party Transactions

The Company was charged the following expenses by directors of the Company and a company with a common director:


	Three months ended		Nine months ended
	May 31,		May 31,
	2006	2005	2006	2005

Interest on convertible debentures	$ 600	$ 552	$ 1,768	$ 6,382
Management fees	45,806	37,679	130,664	133,295

	$ 46,406	$ 38,231	$ 132,432	$ 139,677

At May 31, 2006, accounts payable and accrued liabilities include $263,535 (August 31, 2005: $246,595) due to directors of the Company and a company with a common director.

At May 31, 2006, a director holds Convertible Debentures (Note 4) of $41,278 (August 31, 2005: $38,197).

Note 8

Non-cash Transactions

Investing and financing activities that do not have a direct impact on current cash flows are excluded from the statements of cash flows. The following transactions were excluded from the statement of cash flows for the nine months ended May 31, 2006.

the Company settled debts of $101,381 by issuance of 822,623 shares at prices ranging from $0.10 to $0.16 per share.

The following transactions were excluded from the statement of cash flows for the nine months ended May 31, 2005.

In September 2004, a note payable was exchanged for a convertible debenture disclosed in Note 4.

ii)

In January 2005, the Company settled debts totaling $163,528 by issuance of 1,009,220 shares at prices ranging from $0.13 to $0.22 per share.

Digital Youth Network Corp.

Notes to the Interim Consolidated Financial Statements

May 31, 2006

Stated in US Dollars

(Unaudited) – Page 6

Note 9

Prior Period Adjustment

The Company has restated the comparative figures included in these interim consolidated financial statements due to an oversight of information available at the time of the preparation of the May 31, 2005 interim consolidated financial statements and the August 31, 2005 consolidated financial statements. During the three months ended May 31, 2005, the Company was charged $15,000 for consulting fees provided by an unrelated company. These fees were not accounted for as at August 31, 2005 and the related liability was not set up. The result of this oversight was to understate the accumulated deficit and accounts payable as at August 31, 2005 by $15,000 and understate consulting fees for the three and nine months ended May 31, 2005 by $15,000.

Note 10

Subsequent Events

Subsequent to May 31, 2006, the Company received cash totaling $132,578 in respect to subscriptions to issue 1,521,484 shares at $0.08 - $0.12 per share.

Note 11

Comparative Figures

Certain of the prior periods’ comparative figures have been reclassified to conform with the presentation used in the current period.

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

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or to our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks enumerated in the section of this quarterly report on Form 10-QSB entitled “Risk Factors”, beginning at page 18, below, that may cause our actual results or the actual results in our industry, of our levels of activity, performance or achievement to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

As used in this quarterly report, the terms “we”, “us”, “our” and “Digital Youth” mean our company, Digital Youth Network Corp., and our majority-owned subsidiary DY Mobile Inc., unless otherwise indicated. All dollar amounts refer to US dollars unless otherwise indicated. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.

General

Our company was incorporated under the laws of the Province of Alberta on November 22, 1996 under the name “CallDirect Capital Corp.”. We changed our name to “Ocean Ventures Inc.” on January 31, 2000, and at the same time completed a consolidation of our then issued and outstanding common shares on a five for one basis, effective January 27, 2001. On July 20, 2004 we changed our name to “Digital Youth Network Corp.”. We are also registered as an extra-provincial company in the Province of British Columbia, and are a reporting issuer under the securities laws of both the province of Alberta and the province of British Columbia.

On October 7, 2003, we acquired approximately 99.99626%, of the issued and outstanding common shares of Digital Youth Network Inc., a federally incorporated Canadian corporation with its principal place of business located at Suite 302, 1040 Hamilton Street, Vancouver, British Columbia, Canada V6B 2R9. Digital Youth Network Inc. was dissolved by Industry Canada on December 14, 2005 for failure to file annual reports and was reinstated effective May 10, 2006. Upon reinstatement, we changed our subsidiary’s name from Digital Youth Network Inc. to DY Mobile Inc.

Our Business

We are engaged in the business of developing and executing marketing and advertising campaigns that integrate traditional media with SMS (short message service) text messaging and the promotion and sale of licensed mobile content. Our technology allows wireless subscribers to interact with television, radio and print media to participate in contests and wireless promotions and to request additional information about products or promotions. We generate revenue both from advertisers and consumers.

We work with Universal Music to promote new artists and their album releases to our subscriber community, and we continue to explore ways to provide our subscribers with access to legally downloadable music through our website while simultaneously providing Universal Music with a new channel for distribution of its products. In return, Universal Music provides us with merchandise for distribution to our members both as incentives for their participation in our market research and as incentives to young people signing up for new memberships in our

Digital Youth community. Universal Music, a division of Universal Studios Canada Ltd., produces, manufactures, markets, sells and distributes recorded music and represents artists from Canada and around the world. Music industry participants have lost substantial revenues over the past few years as a result of file sharing and what they have alleged is illegally downloaded music. Industry statistics suggest that these losses to the music industry are equal to approximately 20% of sales and that a substantial percentage of the people engaged in this activity are between the ages of 15 and 24. Music industry participants believe that this illegal activity may decrease if more opportunities to purchase music online are made available, and they welcomed the launch of the Puretracks® on-line music store through which consumers can legally download music.

The Puretracks® music store allows customers to legally download music in a Windows Media Player format 24 hours a day, seven days a week. However, members of generation DY will be less likely to use the Puretracks® site because it requires payment by credit card and most 13 to 18 year olds do not have credit cards. Our digital youth network can provide a viable alternative for members of generation DY who wish to download music legally by providing the option of payment by deduction from their members’ airtime accounts. Our company continues to explore how best to integrate legally downloadable music with our other current products.

We have an agreement with Universal Music whereby we distribute “TrueTones” derived from music written by artists represented by Universal Music. TrueTones are recordings of music that play as the ring tone on a cellular telephone. In addition to our agreement with Universal Music for Truetones, we have entered into an agreement with the Canadian Wireless Telecommunication Association whereby consumers will be allowed to text message a particular code to our short code to purchase TrueTones directly from the newspaper or other advertisement where the consumer found the code. Consumers are charged $3.50 per TrueTone, for which the carrier bills them monthly. The carriers remit to our company an amount sufficient to pay commissions to our company and Universal Music, and a royalty for the artist. We keep our commission and remit to Universal Music an amount sufficient to pay their commission and the artists’ royalties, and Universal Music pays the artists’ royalties.

We have an agreement with Digital Advertising Network Inc., an unrelated Canadian company, integrating our SMS messaging capability with Digital Advertising Network Inc.’s large video screens in shopping malls across Canada pursuant to a written agreement. The agreement allows us the exclusive right, on behalf of companies who have enlisted our services, to broadcast promotions that enable patrons to interact with advertisers using SMS messaging in order to receive prizes, coupons and special offers. Our agreement with Digital Advertising Network Inc. provides that we will share revenues derived from these interactive campaigns.

We continue to work with Pacific Newspaper Group Inc. in the creation and publication of a full page “Mobile On Demand” page in the Province newspaper, which is a newspaper of general circulation in the greater Vancouver metropolitan area. The agreement allows us the right to display promotions, on behalf of companies who have enlisted our services, that enable readers to interact with the advertisers using SMS messaging in order to receive prizes, coupons and special offers. We have expanded this project to include four additional major Canadian newspapers – the Ottawa Citizen, the Montreal Gazette, the Edmonton Journal and the Calgary Herald. We are responsible for all design and content of the Mobile On Demand page, which is published weekly in these newspapers. We continue to look for additional media partners with whom we can expand our Mobile on Demand print operation.

We are still in our infancy as a viable commercial entity, and consequently our focus has been on the identification of market needs, the development of products and services to meet these needs, and the branding of our company and our services. We anticipate that the expected growth in revenues will assist us in attracting additional financing to allow us to add the needed resources in order to further support the growth of our operations. Despite our expectations, there are no assurances that an increase in our revenues can be achieved, or that we will be able to attract additional financing on acceptable terms, if at all. Should we be unable to achieve the anticipated revenue growth or to attract additional financing on acceptable terms, our ongoing business and future success may be adversely affected.

The following discussion of our financial condition, changes in financial condition and results of operations for the three months ended May 31, 2006 and May 31, 2005 should be read in conjunction with our most recent audited annual financial statements, which form part of our annual report on Form 10-KSB filed on January 13, 2006, the unaudited interim financial statements forming part of this quarterly report, and, in each case, the notes thereto.

Our consolidated audited financial statements and the pre-acquisition financial statements of our subsidiary (the predecessor) are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

Results of Operations

Three month periods ended May 31, 2006 and May 31, 2005

We have reported a net loss for the three months ended May 31, 2006 of $135,374 ($167,436) after adjustment for foreign currency translation) or $0.01 per share based on a weighted average number of common shares outstanding of 15,492,566, compared to a net loss of $230,991 ($219,969) after adjustment for foreign currency translation) or $0.02 per share for the three months ended May 31, 2005, based on a weighted average number of common shares outstanding of 11,714,029.

During the three months ended May 31, 2006, we had revenue of $36,173, compared to revenue of $30,765 for the three months ended May 31, 2005.

We generate our revenues through the sale of market research and advertising and, to a lesser extent, from subscriber referrals to our strategic partner Microcell, Inc. (which we discontinued at December 31, 2004 upon the expiration of our agreement with Microcell, Inc.). Our advertising services include wireless text messaging, electronic mail, direct mail and internet advertising. The revenues that we derive from the sale of these services vary depending on the nature and scope of the advertising campaign.

Our general and administrative expenses for the three months ended May 31, 2006 were $147,159 compared to $255,141 for the three months ended May 31, 2005. Overall, this decrease is comprised of decreases in advertising and promotion fees, consulting fees, legal fees, insurance, licenses and dues and wages and benefits. These items are broken down in the following paragraphs.

Wages and benefits decreased slightly, from $29,402 for the three months ended May 31, 2005 to $17,145 for the three months ended May 31, 2006. Consulting fees decreased from $75,212 in the three months ended May 31, 2005 to $20,523 during the three months ended May 31, 2006, while management fees for the three months ended May 31, 2006 increased slightly to $45,806, from $37,679 for the three months ended May 31, 2005.

Advertising and promotion fees decreased slightly from $11,496 for the three months ended May 31, 2005 to $8,826 for the three months ended May 31, 2006. This decrease is due primarily to the fact that our business model has changed to focus on the sale of advertising via text messaging and print media as opposed to our previous business model, which required promotion to the digital youth community.

Liquidity and Capital Resources

As at May 31, 2006

As at May 31, 2006, we had a cash position of $9,761 and a net working capital deficiency of $1,019,294.

We do not have sufficient cash resources to fund our normal operating expenses, which total approximately CDN $65,000 per month, for the balance of the fiscal year.

Plan of Operation - Cash Requirements

Over the twelve month period ending May 31, 2007, we anticipate that we will require additional operating capital of approximately $500,000 to fund our working capital requirements. We plan to raise approximately $250,000 of this operating capital from operations and we plan to raise the balance of approximately $250,000 through private placements of our equity securities and/or debt financing. We plan to use this money to pursue and grow our relationships with Digital Advertising Network Inc., Universal Music and other industry partners and sponsors, and to implement our plan to sell downloadable music.

Product Research and Development

We do not anticipate that we will expend any significant funds on research and development over the twelve months ending June 30, 2007.

Purchase of Significant Equipment

We do not anticipate that we will need to purchase any significant equipment during the next 12 months.

Employees

Prior to the date of our acquisition of our subsidiary company, DY Mobile Inc., on October 7, 2003, we had no employees. As at July 19, 2006, we still had no employees but our subsidiary company DY Mobile Inc. employed four people on a full time basis (three employees and one consultant) and a varying number of consultants and casual labour on an as-needed basis. These employees and consultant perform all of the necessary management and accounting functions for our company, in addition to customer service, website design and development, advertising and sales. We currently spend an aggregate of approximately CDN $65,000 per month on consulting fees, wages, benefits, withholdings for all of our employees, rent and general overhead. We do not anticipate an increase in the number of our employees or consultants, other than fluctuations in the normal course of scheduled promotional events for our subscribers, over the next 12 months.

Offices

We currently share office space with our subsidiary. Our principal place of business is located at Suite 303, 1847 West Broadway, Vancouver, British Columbia, Canada V6J 1Y6, where we rent approximately 1,023 square feet of office space, together with parking, for a monthly rent of Cdn $2,591.

New Accounting Pronouncements

Our management does not believe that any recently issued but not yet effective accounting standards, if currently adopted, could have a material effect on our company or our operations.

Application of Critical Accounting Policies

Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financials.

Going Concern

Our financial statements have been prepared on the going concern basis which assumes that adequate sources of financing will be obtained as required and that our assets will be realized and liabilities settled in the ordinary course of business. Accordingly, our financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.

In order to continue as a going concern, our company requires additional financing to fund its operations. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are unable to continue as a going concern, we would likely be unable to realize the carrying value of our assets.

RISK FACTORS

An investment in our common stock involves a number of very significant risks. You should carefully consider the following risks and uncertainties in addition to other information in this quarterly report in evaluating our company and its business before purchasing shares of our common stock. Our business, operating results and financial condition could be seriously harmed due to any of the following risks. The trading price of the shares of our common stock could decline due to any of these risks, and you could lose all or part of your investment.

We have not generated any significant revenues since May 1999. If we are unable to obtain additional capital to finance the operation of our business, our business may fail.

We have an accumulated deficit of $3,062,511 as at May 31, 2006. We had revenue for the three month period ended May 31, 2006 of $36,173 and expenses for the same period of $147,159. At May 31, 2006, we had cash in the bank of $9,761. Our monthly operating expenses are approximately CDN $65,000. Our expenses exceed our revenue. We do not currently have the money necessary to continue our operations. Because we cannot fund our operations from our revenues, we anticipate that we will require additional financing in order to continue to operate and grow our business until we begin to generate revenues in an amount sufficient to pay for our operations. We have historically raised the money we needed for our operations through the sale of our equity securities and we intend to secure any additional financing necessary through private placements of our common shares, but there can be no assurance that any such financing will be available upon terms and conditions acceptable to us, if at all. If we cannot obtain additional financing in a sufficient amount when needed and on terms and conditions acceptable to us, our business could fail.

We require additional financing in order to continue in business as a going concern, the availability of which is uncertain.

In their report on our annual financial statements for the year ended August 31, 2005, our independent auditors included additional comments in their auditors’ report indicating concerns about our ability to continue as a going concern. Our consolidated financial statements contain additional note disclosures describing the circumstances that led to this disclosure by our independent auditors. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We have a limited operating history which makes it difficult to evaluate whether we will operate profitably.

We have a limited operating history on which to base an evaluation of our business and prospects. Our prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies in the early stages of establishing a new business opportunity. We cannot be sure that we can successfully address these risks and uncertainties and our failure to do so could have a materially adverse affect on our financial condition.

The loss of some of our present directors and officers could harm our business.

Some of our present officers and directors, who are also officers of our subsidiary, DY Mobile Inc., are key to our continuing operations and we rely upon their continued service and performance, and their knowledge and ability, to maintain our current level of business and to expand our business. Any of these officers or directors could leave our company with little or no prior notice. We cannot be assured that we can persuade these people to continue their employment with our company, or that we can do so on terms that are satisfactory to our company. If we fail to retain these key persons, our business could be harmed.

We rely on third parties for some essential business operations, and disruptions or failures in the services provided by these parties may adversely affect our ability to deliver goods and services to our participating students.

We depend on all of the cellular telephone service providers in Canada for service to the cellular telephones used by our customers, and we depend on Impact Mobile for the ability to communicate across the various networks. This is an essential aspect of our business. We have no control over any of these telecommunications carriers or over

Impact Mobile. We may not be able to maintain satisfactory relationships with any one or more of them on acceptable commercial terms. Further, we cannot be certain that the quality of products and services that they provide will remain at the levels needed to enable us to conduct our subsidiary’s business effectively.

Rapid changes to the technology used in our business may make our technology obsolete or require us to make large capital expenditures.

The wireless telecommunications industry is experiencing significant technological change, as evidenced by evolving industry standards, ongoing improvements in the capacity and quality of digital technology, shorter development cycles for new products and enhancements and changes in end-user requirements and preferences. These continuing technological advances make it difficult to predict the extent of future competition with cellular and other services. As a result, there can be no assurance that existing, proposed or as yet undeveloped technologies will not become dominant in the future and render the use of cellular telephones less profitable or even obsolete.

The actual or perceived health risks of wireless communications devices could have a material adverse effect on our business.

Reports have suggested that certain radio frequency emissions from wireless communications transmission equipment and handsets may be linked to certain medical conditions, such as cancer. Scientific investigations are ongoing to review whether radio emissions from wireless handsets and radio transmitters used in connection with wireless technologies pose health concerns, including interference with hearing aids, pacemakers and other medical equipment and devices. There can be no assurance that the findings from such studies will not have a material adverse effect on our business or will not lead to changes in government regulation. The actual or perceived health risks of wireless communications devices could adversely affect wireless communications service providers through reduced subscriber growth, reduced network usage per subscriber, the threat of product liability lawsuits or reduced availability of financing to the wireless communications industry.

Telecommunications service providers are subject to governmental regulation and licensing requirements, which may increase their operating costs and affect their ownership structure.

The use of radio spectrum is regulated by Industry Canada pursuant to the Radiocommunication Act (Canada). Radio and spectrum licenses are issued for a term and may be renewed at Industry Canada’s discretion. They may be suspended or revoked for cause, including failure to comply with the conditions of license, although revocation is rare, and licenses are usually renewed upon expiration. Industry Canada regulation can materially affect the costs and the operations of the cellular telephone service providers through whom we route all of our text messages.

Canadian carriers are also subject to the Telecommunications Act (Canada), and therefore subject to regulation by the Canadian Radio-television and Telecommunications Commission (“CRTC”). CRTC regulation can materially affect the services and activities of these carriers.

If any telecommunications carrier fails to continue to comply with the applicable provisions of these Canadian statutes, it could lose its license to provide the services that it currently provides to our company. Although the possibility is remote, if this were to occur to some material number of these carriers, it could have a material adverse affect on our ability to operate our business.

We are not currently subject to any direct federal, state or local regulation in the United States, other than regulations applicable to businesses generally.

To the best of our knowledge, we are not currently subject to any direct federal, state or local regulation in the United States, other than regulations applicable to businesses generally. Upon our acquisition of DY Mobile Inc., we became engaged in the business of providing advertising products in Canada through various media including telecommunications, though we do not directly provide any telecommunications service. The telecommunications industry is highly regulated in Canada and we do not have any direct experience operating in this industry. Our lack of expertise and knowledge concerning this regulatory framework could have an adverse impact on the future development of our business.

We voluntary delisted from the TSX Venture Exchange (formerly the Canadian Venture Exchange) and trading in our common shares on the National Association of Securities Dealers Inc.’s OTC Bulletin Board is limited and sporadic, making it difficult for our shareholders to sell their shares or liquidate their investments.

On June 21, 2002, we voluntarily delisted our common shares from the TSX Venture Exchange (formerly the Canadian Venture Exchange). Although our common shares were approved for trading on the National Association of Securities Dealers Inc.’s OTC Bulletin Board on January 29, 2002, under the symbol “OVNIF” and on August 24, 2004 under the new symbol “DYOUF”, trading has been very limited and sporadic, making it difficult for our shareholders to sell any of their common shares and liquidate their investment.

Trading prices of our common shares may fluctuate in response to a number of factors, many of which will be beyond our control. The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with no current business operation. There can be no assurance that trading prices and price earnings ratios previously experienced by our common shares will be matched or maintained. These broad market and industry factors may adversely affect the market price of our common shares, regardless of our operating performance.

In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation has often been instituted. Such litigation, if instituted, could result in substantial costs for us and a diversion of management’s attention and resources.

Trading of our stock may be restricted by the SEC’s “Penny Stock” regulations which may limit a stockholder’s ability to buy and sell our stock.

The U.S. Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

Our By-laws contain provisions indemnifying our officers and directors against all costs, charges and expenses incurred by them.

Our By-laws contain provisions with respect to the indemnification of our officers and directors against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, actually and reasonably incurred by him, including an amount paid to settle an action or satisfy a judgment in a civil, criminal or administrative action or proceeding to which he is made a party by reason of his being or having been one of our directors or officers.

Investors’ interests in our company will be diluted and investors may suffer dilution in their net book value per share if we issue additional shares or raise funds through the sale of equity securities.

Our constating documents authorize the issuance of an unlimited number of common shares and an unlimited number of preferred shares. In the event that we are required to issue any additional shares or enter into private placements to raise financing through the sale of equity securities, investors’ interests in our company will be diluted and investors may suffer dilution in their net book value per share depending on the price at which such securities are sold. If we issue any such additional shares, such issuances also will cause a reduction in the proportionate ownership and voting power of all other shareholders. Further, any such issuance may result in a change in our control.

Our by-laws do not contain anti-takeover provisions which could result in a change of our management and directors if there is a take-over of our company.

We do not currently have a shareholder rights plan or any anti-takeover provisions in our by-laws. Without any anti-takeover provisions, there is no deterrent for a take-over of our company, which may result in a change in our management and directors.

As a result of all of our assets being located outside the United States and a majority of our directors and officers residing outside of the United States, investors may find it difficult to enforce, within the United States, any judgments obtained against our company or our directors and officers.

All of our assets are located outside the United States and we do not currently maintain a permanent place of business within the United States. In addition, a majority of our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons’ assets are located outside the United States. As a result, it may be difficult for investors to enforce within the United States any judgments obtained against our company or our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.

Item 3. Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this quarterly report, being May 31, 2006, we have carried out an evaluation of the effectiveness of the design and operation of our company’s disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our company’s management, including our company’s principal executive officer, principal financial officer and principal operating officer. Based upon that evaluation, our management and our board of directors have concluded that our company’s disclosure controls and procedures, especially with regard to our internal controls over financial reporting, are adequate.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our company's reports filed or submitted 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. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our president and chief executive officer as appropriate, to allow timely decisions regarding required disclosure.

As our company is relatively small, our audit committee does not have a member that qualifies as an “audit committee financial expert” as defined in Item 401(e) of Regulation S-B, or “independent” as that term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended. We believe that the members of our board of directors are collectively capable of analyzing and evaluating our financial statements and understanding our internal controls and procedures, including those pertaining to financial reporting. In addition, we believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in light of the current size of our company.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

We know of no material, active or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

We have received correspondence putting our company on notice of a claim by Bay Management Ltd. that it believes that it is entitled to receive a finders’ fee from our subsidiary company, Digital Youth Network Inc., as compensation for finders’ services allegedly rendered to Digital Youth Network Inc. prior to the date of our acquisition of its shares on October 7, 2003. We do not believe that this claim has any merit and if it is pursued we intend to contest it.

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

On July 15, 2006 we agreed to issue 1,250,000 units at a price per unit of $0.08, for a total purchase price of $100,000, to one investor. Each unit is comprised of one common share and one share purchase warrant. Each share purchase warrant will entitle the holder to purchase one additional common share for a purchase price of $0.25 until December 31, 2007, at which time the share purchase warrants will expire. We have the right to force the holder of the warrant to exercise it if at any time the average of the bid price and the ask price (at the close) for our shares on the OTC Bulletin Board is equal to or greater than $0.60 for a period of seven (7) consecutive days. The investor is not a U.S. person, this transaction occurred outside of the United States and we relied on the exemption from the registration requirements of the Securities Act of 1933 provided by Regulation S promulgated thereunder.

On July 4, 2006 we agreed to issue to one investor 188,150 units at a price per unit of $ 0.12 for a total purchase price of $22,578. Each unit is comprised of one common share and one share purchase warrant. Each share purchase warrant will entitle the holder to purchase one additional common share for a purchase price of $0.25 until December 31, 2007, at which time the share purchase warrants will expire. We have the right to force the holder of the warrant to exercise it if at any time the average of the bid price and the ask price (at the close) for our shares on the OTC Bulletin Board is equal to or greater than $0.60 for a period of seven (7) consecutive days. The investor is not a U.S. person, this transaction occurred outside of the United States and we relied on the exemption from the registration requirements of the Securities Act of 1933 provided by Regulation S promulgated thereunder.

On June 26, 2006 we agreed to issue 1,250,000 shares of our common stock to one accredited investor at a price per share of $0.08 per share for a total purchase price of $100,000.00. These shares were issued to a member of our board of directors who is an accredited investor and we relied on the exemption from the registration requirements of the Securities Act of 1933 provided by Section 4(2) thereof and/or Rule 506 of Regulation D promulgated thereunder.

On June 26, 2006 we agreed to issue 83,334 shares of our common stock to one accredited investor at a price per share of $0.12 per share for a total purchase price of $100,000. These shares were issued to an accredited investor and we relied on the exemption from the registration requirements of the Securities Act of 1933 provided by Section 4(2) thereof and/or Rule 506 of Regulation D promulgated thereunder.

On May 29, 2006 we issued 312,500 shares of our common stock at a price per share of $0.08 for a total purchase price of $25,000. These shares were issued to one accredited investor and we relied on the exemption from the registration requirements of the Securities Act of 1933 provided by Section 4(2) thereof and/or Rule 506 of Regulation D promulgated thereunder.

On May 27, 2006, we issued to one investor 75,000 units at a price per unit of $0.10 for a total purchase price of $7,500. Each unit is comprised of one common share and one share purchase warrant. Each share purchase warrant will entitle the holder to purchase one additional common share for a purchase price of $0.25 until December 31, 2007, at which time the share purchase warrants will expire. We have the right to force the holder of the warrant to

exercise it if at any time the average of the bid price and the ask price (at the close) for our shares on the OTC Bulletin Board is equal to or greater than $0.60 for a period of seven (7) consecutive days. The investor is not a U.S. person, this transaction occurred outside of the United States and we relied on the exemption from the registration requirements of the Securities Act of 1933 provided by Regulation S promulgated thereunder.

On May 3, 2006 we issued 312,500 shares of our common stock at a price per share of $0.08 for a total purchase price of $25,000. These shares were issued to one accredited investor and we relied on the exemption from the registration requirements of the Securities Act of 1933 provided by Section 4(2) thereof and/or Rule 506 of Regulation D promulgated thereunder.

On April 27, 2006 we issued 76,923 units at a price per unit of $0.13 for a total purchase price of $10,000.00. Each unit is comprised of one common share and one share purchase warrant. Each share purchase warrant will entitle the holder to purchase one additional common share for a purchase price of $0.25 until December 31, 2007, at which time the share purchase warrants will expire. We have the right to force the holder of the warrant to exercise it if at any time the average of the bid price and the ask price (at the close) for our shares on the OTC Bulletin Board is equal to or greater than $0.60 for a period of seven (7) consecutive days. The investor is not a U.S. person, this transaction occurred outside of the United States and we relied on the exemption from the registration requirements of the Securities Act of 1933 provided by Regulation S promulgated thereunder.

On April 20, 2006 we issued 62,500 shares of our common stock at a price per share of $0.08 for a total purchase price of $5,000. These shares were issued to one accredited investor and we relied on the exemption from the registration requirements of the Securities Act of 1933 provided by Section 4(2) thereof and/or Rule 506 of Regulation D promulgated thereunder.

On April 5, 2006 we issued 66,666 shares of our common stock at a price per share of $0.06 for a total purchase price of $4,000. These shares were issued to one accredited investor and we relied on the exemption from the registration requirements of the Securities Act of 1933 provided by Section 4(2) thereof and/or Rule 506 of Regulation D promulgated thereunder.

On April 4, 2006 we issued 125,000 shares of common stock at a price per share of $0.08 for a total purchase price of $10,000.00. These shares were issued to one accredited investor and we relied on the exemption from the registration requirements of the Securities Act of 1933 provided by Section 4(2) thereof and/or Rule 506 of Regulation D promulgated thereunder.

On March 29, 2006, we issued 312,500 shares of our common stock at a price per share of $0.08 for a total purchase price of $25,000. These shares were issued to one accredited investor and we relied on the exemption from the registration requirements of the Securities Act of 1933 provided by Section 4(2) thereof and/or Rule 506 of Regulation D promulgated thereunder.

Item 3. Defaults Upon Senior Securities.

None.

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

None

Item 5. Other Information.

On June 23, 2006 Jason Jaspar and David Desmond Paden were appointed to our board of directors to fill vacancies left by the resignation of former directors Roland Sartorius and Jerry McKenzie. Mr. Paden was also appointed as our Chief Operating Officer.

On June 29, 2006, Mr. Raymond Mol resigned from all of his offices with our company, though he remains a member of our board of directors. Mr. Daniel Reitzik resigned from his office as our Chief Financial Officer, though he, too, remains a member of our board of directors. Upon accepting these resignations, our board of directors appointed David Desmond Paden as our President, Daniel Reitzik as our Chief Operating Officer and Jason Jaspar as our Chief Financial Officer.

Item 6. Exhibits

Exhibit Number and Exhibit Title

Exhibit Number and Exhibit Title

(3)	Articles of Incorporation and Bylaws
3.1	Articles of Incorporation, effective November 22, 1996⁽¹⁾
3.2	Certificate of Incorporation, effective November 22, 1996⁽¹⁾
3.3	By-Laws, effective November 30, 1996⁽¹⁾
3.4	Articles of Amendment, dated February 22, 1997⁽¹⁾
3.5	Certificate of Amendment of Articles of Incorporation, effective February 27, 1997⁽¹⁾
3.6	Certificate of Amendment and Registration of Restated Articles, effective January 31, 2000⁽¹⁾
3.7	Certificate of Change of Name (British Columbia), dated January 16, 2001⁽¹⁾
3.8	Certificate of Amendment, effective July 20, 2004⁽⁶⁾
(10)	Material Contracts
10.1	Convertible Debenture with Sourcexport, Inc., dated December 5, 2000⁽¹⁾
10.2	Convertible Debenture Subscription Agreement with Sourcexport, Inc., dated December 1, 2000⁽¹⁾
10.3	Escrow Agreement with Sourcexport, Inc. and Clark, Wilson, dated December 1, 2000⁽¹⁾

10.4 Share Purchase Agreement dated as of July 21, 2003, with all of the shareholders of Digital Youth Network, Inc.⁽²⁾

10.5	Convertible Debenture dated April 28, 2003, with Digital Youth Network, Inc.⁽²⁾

10.6 Amendment to Share Purchase Agreement dated October 1, 2003, with all of the shareholders of Digital Youth Network Inc⁽³⁾

10.7	Employment Agreement dated October 1, 2003 between Digital Youth Network Inc. and Daniel Reitzik⁽³⁾
10.8	Employment Agreement dated October 1, 2003 between Digital Youth Network Inc. and Robert Skoko⁽³⁾
10.9	Employment Agreement dated October 7, 2003 between Digital Youth Network Inc. and Jason Jaspar⁽³⁾

10.10	Form of Subscription Agreement entered into with the following subscribers⁽⁵⁾
		Andrew Macdonald
		Salus Systems Ltd.
		Eddi Sponza
		Monty Reitzik
		Scipio Consulting Ltd.
		684634 B.C. Ltd.
		684628 B.C. Ltd.
		684631 B.C. Ltd.
		Ghouse Productions (2004) Inc.
		Vern Powers
		Darryl Flash
		Wendy Fuller
10.11	Form of Subscription Agreement entered into with the following subscribers⁽⁶⁾
		Synergy Sales & Service Inc.
		Medium M Industries Ltd.
		Robert Allaire
		Steve Skoko Inc.
		Robert Balbirnie
10.12	Debt Settlement Agreement and Subscription Agreement dated June 22, 2004 with 310047 B.C. Ltd.⁽⁶⁾
10.13	Assignment of Debt dated June 22, 2004 with Clark, Wilson⁽⁶⁾
10.14	Finder’s Fee Agreement dated August 1, 2003 with Austin Rand⁽⁶⁾
10.15	Connectivity Agreement dated June 17, 2004 with Impact Mobile Inc.⁽⁶⁾
10.16	Letter of Agreement dated August 30, 2004 with Microcell Solutions Inc.⁽⁶⁾

10.17 Debt Settlement Agreement and Subscription Agreement dated July 20, 2004 with Wireless With You Corp.⁽⁷⁾

10.18	Form of Subscription Agreement entered into with the following subscribers.⁽⁷⁾
		Troy Peart
		Wendy Fuller
		Vice D’Arpino
		Antonio Zanetti
		Aldo Trinetti

10.19 Debt Settlement Agreement and Subscription Agreement dated as of January 6, 2005 with Redwood Enterprises Ltd. ⁽⁸⁾

10.20	Subscription Agreement dated June 27, 2004 entered into with Robert Beiser.⁽⁸⁾
10.21	Agreement dated December 2, 2004 with Digital Advertising Network Inc.⁽⁸⁾
10.22	Form of Debt Settlement and Subscription Agreement entered into with the following investors:⁽⁹⁾
		Wendy Fuller
		Edward Skoko

Jason Coull

Dennis Sinclair

Jason Jaspar

Dan Reitzik

Mel Baillie

Raymond Mol

Anthony Marcera

Forge Marketing Ltd.

Jeffrey Haas

10.23

Subscription Agreement dated March 18, 2005 with Mark Spevakow.⁽⁹⁾

10.24

Subscription Agreement dated March 18, 2005 with Robert Spevakow.⁽⁹⁾

10.25

Proposed Revenue Sharing Agreement dated June 1, 2005 with Digital Advertising Network Inc.⁽¹⁰⁾

10.26

Agreement dated October 19, 2005 with Canadian Wireless Telecommunications Association.⁽¹⁰⁾

10.27

Agreement with The Edmonton Journal Newspaper.⁽¹⁰⁾

10.28

Agreement with The Montreal Gazzette Newspaper.⁽¹⁰⁾

10.29

Agreement dated with The Ottawa Citizen Newspaper.⁽¹⁰⁾

10.30

Agreement dated with The Calgary Herald Newspaper.⁽¹⁰⁾

10.31

Subscription Agreement dated November 16, 2005 with Marc Renaud.⁽¹⁰⁾

10.32

Subscription Agreement dated June 2, 2005 with Mark Nussbaum.⁽¹⁰⁾

10.33

Form of Subscription Agreement with the following investors⁽¹¹⁾

Shelly Spevakow

Jayson Spevakow

684631 B.C. Ltd.

Douglas Murakami

David Paden

10.34

Form of Debt Settlement and Subscription Agreement with the following creditors⁽¹¹⁾

Wendy Fuller

Digitel Systems Inc.

Mer-Lyn Investments Ltd.

338126 Canada Inc.

S&T Stereo Printers Ltd.

10.35

Form of Subscription Agreement with Thomas Bogle, Patrick Paden and Jerome Gisby⁽¹¹⁾

10.36

Form of Subscription Agreement with the following subscribers: ⁽¹²⁾

Jerome Ginsburg

David Paden

Patrick Paden

Myron Reinhart

10.37

Subscription Agreement with Paul Desjardins⁽¹²⁾

10.38*

Subscription Agreement with Cary Skidmore

10.39

Subscription Agreement with DY Pathway Films

10.40

Subscription Agreement, with JR Trust

10.41

Subscription Agreement, with David Desmond Paden

10.42

Subscription Agreement, with Elizabeth Wallace

(14)

Code of Ethics

14.1

Code of Business Conduct and Ethics⁽⁴⁾

(21)

Subsidiaries of our Company

21.1

Digital Youth Network, Inc.

(31)

Section 302 Certifications

31.1*

Certification by David Desmond Paden pursuant to Section 302 under the Sarbanes-Oxley Act of 2002

31.2*

Certification by Jason Jaspar pursuant to Section 302 under the Sarbanes-Oxley Act of 2002

(32)

Section 906 Certifications

32.1* Certification by David Desmond Paden and Jason Jaspar pursuant to Section 906 under the Sarbanes-Oxley Act of 2002

⁽¹⁾ Incorporated by reference from our Form 10-SB Registration Statement (as amended), originally filed with the Securities and Exchange Commission on May 11, 2000.

⁽²⁾ Incorporated by reference from our Form 10-QSB filed with the Securities and Exchange Commission on August 14, 2003.

⁽³⁾ Incorporated by reference from our Form 8-K filed with the Securities and Exchange Commission on October 22, 2003.

⁽⁴⁾Incorporated by reference from our Form 10-KSB filed with the Securities and Exchange Commission on January 12, 2004.

⁽⁵⁾Incorporate by reference from our Form 10-QSB filed with the Securities and Exchange Commission on February 20, 2004.

⁽⁶⁾Incorporated by reference from our Form 10-QSB filed with the Securities and Exchange Commission on August 20, 2004.

⁽⁷⁾ Incorporated by reference from our Form 10-KSB filed with the Securities and Exchange Commission on January 13, 2005.

⁽⁸⁾Incorporate by reference from our Form 10-QSB filed with the Securities and Exchange Commission on February 18, 2005.

⁽⁹⁾Incorporate by reference from our Form 10-QSB filed with the Securities and Exchange Commission on April 22, 2005.

⁽¹⁰⁾ Incorporated by reference from our Form 10-KSB filed with the Securities and Exchange Commission on January 13, 2006.

⁽¹¹⁾ Incorporated by reference from our Form 10-QSB filed with the Securities and Exchange Commission on February 22, 2006.

⁽¹²⁾ Incorporated by reference from our Form 10-QSB filed with the Securities and Exchange Commission on May 19, 2006.

* Filed herewith

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.

DIGITAL YOUTH NETWORK CORP.

By: /s/ David Desmond Paden

David Desmond Paden, President, Chief Executive Officer and Director

July 20, 2006

By: /s/ Daniel Reitzik

Daniel Reitzik, Director and Chief Operating Officer

July 20, 2006

By: /s/ William McGinty

William McGinty, Director

July 20, 2006

By: Jason Jaspar

Jason Jaspar, Chief Financial Officer and Director

July 20, 2006

By: /s/ Raymond Mol

Raymond Mol, Director

July 20, 2006

Digital Youth Network (DYOUF) Inactive 10QSB/A2006 Q3 Quarterly report (small business) (amended)