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 QUARTERLY PERIOD ENDED JUNE 30, 2006

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

For the transition period from to

COMMISSION FILE NUMBER 000-51364

DOLCE VENTURES INC.
(Exact name of small business issuer as specified in its charter)

UTAH 32-0028823
------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

118 CHATHAM ROAD
SYRACUSE, NY 13203
(Address of principal executive offices)

(315) 476-5769
(Issuer's telephone number)

(Former name, former address and former fiscal year
if changed since last report)

Check whether the registrant (1) has 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 ( )

Indicate by check mark whether the registrant is a shell company (as defined by

RULE 12B-2 OF THE EXCHANGE ACT). YES X NO

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING 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 No X

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: 100,770,140 shares of Common Stock,
$.001 par value, were outstanding as of June 30, 2006

Transitional Small Business Disclosure Forms (check one): Yes ( ) No ( X )

DOLCE VENTURES INC.

INDEX TO FORM 10-QSB
JUNE 30, 2005

PART I FINANCIAL INFORMATION

ITEM 1. Financial Statements

Consolidated Balance Sheets F-1
At December 31, 2005 and June 30, 2006

Consolidated Statements of Income and Retained Earnings F-2

For the six months ended June 30, 2006 and June 30, 2005

Consolidated Statements of Cash Flows
For the six months ended June 30, 2006 and June 30, 2005 F-3

Notes to Consolidated Financial Statements F-4

ITEM 2. Managements Discussion and Analysis of Financial 3
Condition and Results of Operation

ITEM 3. Controls and Procedures 5

PART II OTHER INFORMATION

ITEM 1. Legal Proceedings 8

ITEM 2. Changes in Securities and Use of Proceeds 8

ITEM 3. Defaults Upon Senior Securities 8

ITEM 4. Submission of Matters to a Vote of Security Holders 8

ITEM 5. Other Information 8

ITEM 6. Exhibits and Reports on Form 8-K 8

Signatures

PART I

ITEM 1.

DOLCE VENTURES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)

June 30, December 31,
2006 2005
----------------- -----------------
Assets:

Cash and Cash Equivalents $ 371 $ 3,960
Accounts Receivable 50 2,496
----------------- -----------------

Total Current Assets 421 6,456
----------------- -----------------

Property and Equipment:
Payphone Equipment 12,600 12,600
Less Accumulated Depreciation (11,311) (10,531)
----------------- -----------------

Net Property and Equipment 1,289 2,069
----------------- -----------------

Total Assets $ 1,710 $ 8,525
================= =================

Liabilities:
Accounts Payable $ 11,777 $ 11,750
Related Party Payable 37,555 23,007
----------------- -----------------

Total Liabilities 49,332 34,757
----------------- -----------------

Stockholders' Equity:
Preferred Stock, Par value $0.001, Authorized
100,000,000 shares, Issued 0 at
June 30, 2006 and December 31, 2005
Common Stock, Par value $0.001, Authorized
250,000,000 shares, Issued 100,770,140 at
June 30, 2006 and 100,770,140 at
December 31, 2005 100,770 100,770
Paid-In Capital 13,628 13,628
Retained Deficit (162,020) (140,630)
----------------- -----------------

Total Stockholders' Equity (47,622) (26,232)
----------------- -----------------
Total Liabilities and Stockholders' Equity $ 1,710 $ 8,525
================= =================

The accompanying notes are an integral part of these financial statements.

F-1

DOLCE VENTURES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

For the Three Months Ended For the Six Months Ended
June 30, June 30,
------------------------------------ ------------------------------------
2006 2005 2006 2005
------------------ ---------------- ------------------ ----------------

Revenues $ 113 $ 2,982 878 $ 4,768
Costs of Operations 1,555 1,436 2,704 3,339
------------------ ---------------- ------------------ ----------------

Gross Profits (1,442) 1,546 (1,826) 1,429
------------------ ---------------- ------------------ ----------------

Expenses
General and Administrative 1,289 108 1,442 180
Accounting 9,648 5,821 12,551 5,821
Advertising - - 770 -
Consulting Fee - 20,000 - 20,000
Outside Services 45 7,617 2,898 8,142
------------------ ---------------- ------------------ ----------------

Operating Income (Loss) (12,424) (32,000) (19,487) (32,714)
------------------ ---------------- ------------------ ----------------

Other Income (Expense)
Interest, Net (831) (76) (1,448) (126)
------------------ ---------------- ------------------ ----------------

Net Loss Before Taxes (13,255) (32,076) (20,935) (32,840)
------------------ ---------------- ------------------ ----------------

Income and Franchise Tax (557) - (455) 83
------------------ ---------------- ------------------ ----------------

Net Income (Loss) (13,812) (32,076) (21,390) (32,757)
================== ================ ================== ================

Loss per Share, Basic &
Diluted $ - $ - $ - $ -
================== ================ ================== ================

Weighted Average Shares
Outstanding 100,770,140 94,616,294 100,700,140 87,731,466
================== ================ ================== ================

The accompanying notes are an integral part of these financial statements.

F-2

DOLCE VENTURES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

For the Six Months Ended
June 30,
--------------------------------------
2006 2005
---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:

Net Loss for the Period $ (21,390) $ (32,757)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and Amortization 780 780
Common Stock Issued for Services - 20,000
Changes in Operating Assets and Liabilities
Decrease (Increase) in Accounts Receivable 2,446 (759)
Increase (Decrease) in Accounts Payable 27 10,244
Increase (Decrease) in Accrued Interest 1,448 126
---------------- ----------------
Net Cash Used in Operating Activities (16,689) (2,366)
---------------- ----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Property and Equipment - -
---------------- ----------------
Net cash provided by Investing Activities - -
---------------- ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Notes Payable 13,100 2,000
Capital Contributed - -
---------------- ----------------
Net Cash Provided by Financing Activities 13,100 2,000
---------------- ----------------

Net (Decrease) Increase in Cash (3,589) (366)
Cash at Beginning of Period 3,960 368
---------------- ----------------
Cash at End of Period $ 371 $ 2
================ ================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
- -------------------------------------------------
Cash paid during the year for:
Interest $ - $ -
Franchise and Income Taxes $ 455 $ -

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Stock issued for Services $ - $ 20,000

The accompanying notes are an integral part of these financial statements.

F-3

DOLCE VENTURES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of accounting policies for Dolce Ventures, Inc. and
Subsidiary is presented to assist in understanding the Company's financial
statements. The accounting policies conform to generally accepted accounting
principles and have been consistently applied in the preparation of the
financial statements.

Interim Financial Statements

The unaudited financial statements as of June 30, 2006 and for the
three and nine months then ended, reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
fairly state the financial position and results of operations for the three and
six months. Operating results for interim periods are not necessarily indicative
of the results which can be expected for full years.

Nature of Operations and Going Concern

Several conditions and events cast doubt about the Company's ability to
continue as a "going concern". The Company has incurred net losses of
approximately $162,020 for the period from August 19, 1983 (inception) to June
30, 2006, has a liquidity problem, and requires additional financing in order to
finance its business activities on an ongoing basis. The Company is actively
pursuing alternative financing and has had discussions with various third
parties, although no firm commitments have been obtained. In the interim,
shareholders of the Company have committed to meeting its minimal operating
expenses.

The Company's future capital requirements will depend on numerous
factors including, but not limited to, its willingness to continue progress in
developing its products.

These financial statements do not reflect adjustments that would be
necessary if the Company were unable to continue as a "going concern". While
management believes that the actions already taken or planned, will mitigate the
adverse conditions and events which raise doubt about the validity of the "going
concern" assumption used in preparing these financial statements, there can be
no assurance that these actions will be successful.

If the Company were unable to continue as a "going concern", then
substantial adjustments would be necessary to the carrying values of assets, the
reported amounts of its liabilities, the reported expenses, and the balance
sheet classifications used.

F-4

DOLCE VENTURES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Organization and Basis of Presentation

The Company was originally incorporated under the laws of the State of
Utah on August 19, 1983, under the name of Evica Resources, Inc. On April 5,
1984, the Company changes its name to American Arms, Inc. On April 12, 1988, the
Company changes its name to American Industries, Inc. On May 21, 2002, the
Company changed its name to Dolce Ventures, Inc.

On February 19, 2002, Pegasus Tel, Inc., a Delaware company, was formed
as a wholly owned subsidiary of American Industries.

On March 28, 2002, American Industries, Inc. and Pegasus Tel, Inc.
entered into an agreement with Pegasus Communications, Inc., a New York
corporation, to acquire 100% of the outstanding shares of Pegasus
Communications, Inc. in exchange for 72,721,966 shares of common stock of
American Industries, Inc. Pegasus Tel, Inc. continued as the surviving
corporation and Pegasus Communications, Inc. was merged out of existence.

As a result of the merger, American Industries, Inc. changed its name
to Dolce Ventures, Inc.

Nature of Business

The Company is primarily in the business of providing the use of
outdoor payphones.

Concentration of Credit Risk

The Company has no significant off-balance-sheet concentrations of
credit risk such as foreign exchange contracts, options contracts or other
foreign hedging arrangements.

Principals of Consolidation

The consolidated financial statements include the accounts for Dolce
Ventures, Inc. and its wholly owned subsidiary Pegasus Tel, Inc. The results of
subsidiaries acquired during the year are consolidated from their effective
dates of acquisition. All significant Intercompany accounts and transactions
have been eliminated.

F-5

DOLCE VENTURES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.

Pervasiveness of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles required 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Income (Loss) per Share

Basic income (loss) per share has been computed by dividing the income
(loss) for the year applicable to the common stockholders by the weighted
average number of common shares outstanding during the years. There were no
common equivalent shares outstanding at June, 2005 and 2006.

Reclassifications

Certain reclassifications have been made in the 2005 financial
statements to conform with the 2006 presentation.

Revenue Recognition

Revenue is recognized as services are performed.

Income Taxes

The Company accounts for income taxes under the provisions of SFAS
No.109, "Accounting for Income Taxes." SFAS No.109 requires recognition of
deferred income tax assets and liabilities for the expected future income tax
consequences, based on enacted tax laws, of temporary differences between the
financial reporting and tax bases of assets and liabilities.

F-6

DOLCE VENTURES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Depreciation

Fixed assets are stated at cost. Deprecation expense for the six months
ended June 30, 2006 and 2005 was $780 and $780. Depreciation and amortization
are computed using the straight-line and accelerated methods over the estimated
economic useful lives of the related assets as follows:

Asset Rate
------------------------------------------------ -------------------

Payphone Equipment 5 years

Upon sale or other disposition of property and equipment, the cost and
related accumulated depreciation or amortization are removed from the accounts
and any gain or loss is included in the determination of income or loss.

Expenditures for maintenance and repairs are charged to expense as
incurred. Major overhauls and betterments are capitalized and depreciated over
their estimated economic useful lives.

Recent Accounting Standards

In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
CONSOLIDATION OF VARIABLE INTEREST ENTITIES, which addresses the consolidation
of business enterprises (variable interest entities), to which the usual
condition of consolidation, a controlling financial interest, does not apply.
FIN 46 requires an entity to assess its business relationships to determine if
they are variable interest entities. As defined in FIN 46, variable interests
are contractual, ownership or other interests in an entity that change with
changes in the entity's net asset value. Variable interests in an entity may
arise from financial instruments, service contracts, guarantees, leases or other
arrangements with the variable interest entity. An entity that will absorb a
majority of the variable interest entity's expected losses or expected residual
returns, as defined in FIN 46, is considered the primary beneficiary of the
variable interest entity. The primary beneficiary must include the variable
interest entity's assets, liabilities and results of operations in its
consolidated financial statements. FIN 46 is immediately effective for all
variable interest entities created after January 31, 2003. For variable interest
entities created prior to this date, the provisions of FIN 46 were originally
required to be applied no later than our first quarter of Fiscal 2004. On
October 8, 2003, the FASB issued FASB Staff Position (FSP) FIN 46-6, EFFECTIVE
DATE OF FASB INTERPRETATION NO. 46, CONSOLIDATION OF VARIABLE INTEREST ENTITIES.
The FSP provides a limited deferral (until the end of our second quarter of
2004) of the effective date of FIN 46 for certain

F-7

DOLCE VENTURES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Standards (Continued)

interests of a public entity in a variable interest entity or a potential
variable interest entity. We will continue to evaluate FIN 46, but due to the
complex nature of the analysis required by FIN 46, we have not determined the
impact on our consolidated results of operations or financial position.

In April 2003, the Financial Accounting Standards Board (FASB) issued
SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging
Activities. The statement amends and clarifies accounting and reporting for
derivative instruments, including certain derivative instruments embedded in
other contracts, and hedging activities. This statement is designed to improve
financial reporting such that contracts with comparable characteristics are
accounted for similarly. The statement, which is generally effective for
contracts entered into or modified after June 30, 2003, is not anticipated to
have a significant effect on our financial position or results of operations.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial instruments with Characteristics of Both Liabilities and Equity. This
statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. This statement is effective for financial instruments entered into or
modified after May 31, 2003, and is otherwise effective at the beginning of the
first interim period beginning after June 15, 2003. The statement was considered
in regard to our Preferred Stock and convertible notes, and is not anticipated
to have a significant effect on our financial position or results of operations.

In December 2003, the FASB issued FASB Interpretation No. 46 (Revised),
Consolidation of Variable Interest Entities. This interpretation clarifies rules
relating to consolidation where entities are controlled by means other than a
majority voting interest and instances in which equity investors do not bear the
residual economic risks. We currently have no ownership in variable interest
entities, therefore adoption of this standard currently has no financial
reporting implications.

In November 2004, the FASB issued SFAS No. 151, INVENTORY COSTS - AN
AMENDMENT OF ARB NO. 43, CHAPTER 4. This Statement amends the guidance in ARB
No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal
amounts of idle facility expense, freight, handling costs, and wasted material
(spoilage). Paragraph 5 of ARB 43, Chapter 4 previously stated that"...under
some circumstances, items such as idle facility expense, excessive spoilage,
double freight, and rehandling costs maybe so abnormal as to require treatment
as current period charges..." This Statement requires that those items be
recognized as current-

F-8

DOLCE VENTURES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Standards (Continued)

period charges regardless of whether they meet the criterion of "so abnormal."
In addition, this Statement requires that allocation of fixed production
overheads to the costs of conversion be based on the normal capacity of the
production facilities. This statement is effective for inventory costs incurred
during fiscal years beginning after June 15, 2005. Management does not believe
the adoption of this Statement will have any immediate material impact on the
Company.

On December 16, 2004, the FASB issued SFAS No. 123 ( R ), SHARE-BASED
PAYMENT, which is an amendment to SFAS No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION. This new standard eliminates the ability to account for
share-based compensation transactions using Accounting Principles Board ("APB")
Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and generally requires
such transactions to be accounted for using a fair-value based method and the
resulting cost recognized in our financial statements.

This new standard is effective for awards that are granted, modified or
settled in cash in interim and annual periods beginning after June 15, 2005. In
addition, this new standard will apply to unvested options granted prior to the
effective date. We will adopt this new standard effective for the fourth fiscal
quarter of 2005, and have not yet determined what impact this standard will have
on our financial position or results of operations.

In December 2004, the FASB issued SFAS No. 152, ACCOUNTING FOR REAL
ESTATE TIME-SHARING TRANSACTIONS, which amends FASB statement No. 66, Accounting
for Sales of Real Estate, to reference the financial accounting and reporting
guidance for real estate time-sharing transactions that is provided in AICPA
Statement of Position (SOP) 04-2, Accounting for Real Estate Time-Sharing
Transactions. This statement also amends FASB Statement No. 67, Accounting for
Costs and Initial Rental Operations of Real Estate Projects, to state that the
guidance for (a) incidental operations and (b) costs incurred to sell real
estate projects does not apply to real estate time-sharing transactions. The
accounting for those operations and costs is subject to the guidance in SOP04-2.
This Statement is effective for financial statements for fiscal years beginning
after June 15, 2005. Management believes the adoption of this Statement will
have no impact on the financial statements of the Company.

In December 2004, the FASB issued SFAS No. 153, EXCHANGE OF NONMONETARY
ASSETS. This Statement addresses the measurement of exchanges of nonmonetary
assets. The guidance in APB Opinion NO. 29, Accounting for Nonmonetary
Transactions, is based on the principle that exchanges of nonmonetary assets
should be measured based on the fair value of the assets exchanged. The guidance
in that Opinion, however, included certain exceptions to that principle.

F-9

DOLCE VENTURES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Standards (Continued)

This Statement amends Opinion 29 to eliminate the exception for nonmonetary
exchanges of similar productive assets and replaces it with a general exception
for exchanges of nonmonetary assets that do not have commercial substance. A
nonmonetary exchange has commercial substance if the future cash flows of the
entity are expected to change significantly as a result of the exchange. This
Statement is effective for financial statements for fiscal years beginning after
June 15, 2005. Earlier applications is permitted for nonmonetary assets
exchanges incurred during fiscal years beginning after the date of this
statement is issued. Management believes the adoption of this Statement will
have not impact on the financial statements of the Company.

NOTE 2 - INCOME TAXES

The Company has a net operating loss for income taxes. Due to the
regulatory limitations in utilizing the loss, it is uncertain whether the
Company will be able to realize a benefit from these losses. Therefore, a
deferred tax asset has not been recorded. There are no significant tax
differences requiring deferral.

NOTE 3 - COMMITMENTS

As of June 30, 2006, all activities of the Company have been conducted
by corporate officers from either their homes or business offices. Currently,
there are no outstanding debts owed by the company for the use of these
facilities and there are no commitments for future use of the facilities.

NOTE 4 - RELATED PARTY PAYABLES

On November 29, 2004, Mary Passalaqua loaned the Company $298 with an
imputed interest rate of 10 percent per annum. The note is payable in a lump sum
November 29, 2006. The balance due on this note is $349 as of June 30, 2006 and
$332 as of December 31, 2005.

On February 15, 2005, Mary Passalaqua loaned the Company $2000 with an
imputed interest rate of 10 percent per annum. The note is payable in a lump sum
February 15, 2006. The balance due on this note is $2292 as of June 30, 2006 and
$2181 as of December 31, 2005.

On July 27, 2005, Mary Passalaqua loaned the Company $10,000 with an
imputed interest rate of 10 percent per annum. The note is payable in a lump sum
July 27, 2006. The balance on this note is $10,965 as of June 30, 2006 and
$10,435 as of December 31, 2005.

F-10

DOLCE VENTURES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 4 - RELATED PARTY PAYABLES (Continued)

On December 8, 2005, Mary Passalaqua loaned the Company $10,000 with an
imputed interest rate of 10 percent per annum. The note is payable in a lump sum
December 8, 2006. The balance due on this note is $10,574 as of June 30, 2006
and $10,063 as of December 31, 2005.

On February 15, 2006, Mary Passalaqua loaned the Company $3,000 with an
imputed interest rate of 10 percent per annum. The note is payable in a lump sum
February 15, 2008. The balance due on this note is $ 3112 as of June 30, 2006
and $0 as of December 31, 2005.

On March 22, 2006, Mary Passalaqua loaned the Company $3,000 with an
imputed interest rate of 10 percent per annum. The note is payable in a lump sum
March 22, 2007. The balance due on this note is $3,082 as of June 30, 2006 and
$0 as of December 31, 2005.

On May 19, 2006, Mary Passalaqua loaned the Company $7,100 with an
imputed interest rate of 10 percent per annum. The note is payable in a lump sum
April 22, 2008. The balance due on this note is $7,182 as of June 30, 2006 and
$0 as of December 31, 2005.

NOTE 5 - COMMON STOCK TRANSACTIONS

On April 28, 2005, the Company issued 20,000,000 shares of common stock
in exchange for services rendered. The cost of $20,000 for services has been
charged to consulting expense.

F-11

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION

FORWARD LOOKING STATEMENTS

The following is a discussion and analysis of the results of operations of our
company and should be read in conjunction with our financial statements and
related notes contained in the Form 10-QSB. This Form 10-QSB contains forward
looking statements that involve risks and uncertainties. You can identify these
statements by the use of forward-looking words such as "may", "will", "expect",
"anticipate", "estimate", "believe", "continue", or other similar words. You
should read statements that contain these words carefully because they discuss
our future expectations, contain projections of our future results of operation
or financial condition or state other "forward-looking" information. We believe
that it is important to communicate our future expectations to our investors.
However, there may be events in the future that we are unable to accurately
predict or control. Those events as well as any cautionary language in this
Quarterly statement provide examples of risks, uncertainties and events that may
cause our actual results to differ materially from the expectations we describe
in our forward-looking statements. You should be aware that the occurrence of
the events described in this Form 10-QSB could have a material adverse effect on
our business, operating results and financial condition. Actual results differ
materially from current expectations. Among the factors that could effect our
actual results and could cause results to differ from those contained in the
forward-looking statements contained herein is our ability to expand our
customer base, which will be dependent on business, financial and other factors
beyond our control, including , among others, seasonal aspects such as the
winter months that tend to reduce the frequency of outdoor payphone use on the
east coast, ability to increase our size and marketing area by purchasing
payphones and locations from independent telephone companies, and whether the
public uses our payphones, together with all the risks inherent in the
establishment of a new enterprise and marketing of new products.

BASIS OF PRESENTATION

The unaudited consolidated financial statements of Dolce Ventures Inc. ("Dolce",
the "Company", "our", or "we"), include the accounts of Dolce Ventures Inc. and
its wholly owned subsidiary: Pegasus Tel Inc. All significant inter-company
amounts have been eliminated. The unaudited consolidated financial statements of
Dolce present herein, should be read in conjunction with the audited
consolidated financial statements of Dolce as of and for the year ended December
31, 2005. In the opinion of management, the unaudited consolidated financial
statements presented herein reflect all adjustments (consisting only of normal
recurring adjustments) necessary for fair presentation. Interim results are not
necessary indicative of results to be expected for the entire year.

We prepare our consolidated financial statements in accordance with generally
accepted accounting principles, which require that management make estimates and
assumptions that affect reported amounts. Actual results could differ from these
estimates.

Certain of the statements contained below are forward-looking statements (rather
than historical facts) that are subject to risks and uncertainties that could
cause actual results to differ materially from those described in the
forward-looking statements.

DESCRIPTION OF BUSINESS

Dolce was incorporated under the laws of the State of Utah on August 19, 1983 as
Evica Resources, Inc. On April 5, 1984 the Articles of Incorporation were
amended and the name of the Company was changed to American Arms, Inc. American
Arms Inc. commenced the manufacture and sale of weapons and laser sights. On
December 31, 1984, the Company's Certificate of Incorporation was suspended for
failure to file an annual report. The Company's Certificate of Incorporation was
reinstated on December 19, 1985 by the Utah Department of Commerce, Division of
Corporations. On October 1, 1984, the Company's Certificate of Incorporation was
suspended a second time for failure to file its annual report. The Company's
Certificate of Incorporation was reinstated on November 21, 1986 again by the
State of Utah, Department of Commerce, Division of Corporations. On April 12,
1988, the Company amended its Articles of Incorporation and the name was changed
to American Industries, Inc. as the company was no longer engaged in the
manufacturing and sale of weapons and laser sights. American Industries Inc. was
in the business of providing room safes for hotel rooms.

On February 19, 2002, the Company formed a subsidiary corporation, named Pegasus
Tel, Inc., under the laws of the State of Delaware, to enter into the
telecommunications business. On March 28, 2002, Pegasus Tel, Inc. and the
Company entered into a merger agreement with Pegasus Communications, Inc., a New
York corporation. On May 21, 2002, the Certificate of merger was duly filed with
Pegasus Tel, Inc. as the surviving entity. On January 14, 2002 we purchased
payphone assets, 29 payphones, and associated equipment from the Margaretville
Telephone Company for $11,600.00. On May 21, 2002, the Articles of Incorporation
of the Company were amended, and the name was changed to Dolce Ventures, Inc.

We own, operate and manage privately owned public payphones in the County of
Delaware, State of New York. We may pay site owners a commission based on a flat
monthly rate or on a percentage of sales. Some of the businesses include but are
not limited to retail stores, convenience stores, bars, restaurants, gas
stations, colleges and hospitals. In the alternative, the agreement with the
business owner is to provide the telecommunications services without the payment
of any commissions.

SEASONALITY

The Company's revenues from payphone operation are affected by seasonal
variations, geographic distribution of payphones and type of location. Because

the Company operates in the northeastern part of the country with many of the
payphones located outdoor, weather patterns affect our revenue streams. Revenues
drop off significantly during winter and conversely show an increase in the
spring and summer. Revenues are generally lowest in the first quarter and
highest in the third quarter.

Our installed payphone base generates revenue from three principle sources:
coin-calls and non-coin calls, sales and service of payphones.

1. COMMISSION INCOME.

Commission income includes commissions from operator service telecommunications
companies and commissions for toll free calls from all payphones. The
commissions for operator services are paid 45 days in arrears. Dial Around
compensation is billed quarterly and received three and one half months behind
the billed quarter.

2. COIN CALLS.

Coin calls represent calls paid for by customers who deposit coins into the
payphones. Coin call revenue is recorded as the actual amount of coins collected
from the payphones.

3. PAYPHONE SALES, REPAIRS AND PRE-PAID PHONE CARD SALES.

We derive income from the sale and repair of a payphone. We can negotiate the
sale, of a payphone to a site owner when it becomes cost prohibitive to maintain
or if a customer offers to buy the phone at a price that is favorable to our
company. The new owner or lessee becomes responsible for the maintenance and
operational costs of the payphone. We sell pre-paid phone cards at some of our
payphone locations. Sales and repairs of payphones are not subject to the same
collection delays as the other types of operating income.

COSTS RELATED TO OUR OPERATION.

The principle costs related to the ongoing operation of the Company's payphones
include telephone charges, commissions, service, maintenance and network costs.
Telephone charges consist of payments made by the Company to LEC or competitive
local exchange carriers and long distance carrier for access to and use of their
telecommunications networks. Commission expense represents payments to owners or
operators of the premises at which a payphone is located. Service, maintenance
and network cost represent the cost of servicing and maintaining the payphones
on an ongoing basis.

SIX MONTHS ENDED JUNE 30, 2006 COMPARED TO SIX MONTHS ENDED JUNE 30, 2005

REVENUES

Our total revenue decreased by $3,890 or approximately 82%, from $4,768 in the
six months ended June 30, 2005 to $878 in the six months ended June, 2006. This
decrease was primarily attributable to removal of unprofitable phone locations
and lower call volumes on our payphones resulting from the growth in wireless
communications.

Our coin call revenues decreased by $2,867 or approximately 96%, from $3,002 in
the six months ended June 30, 2005 to $135 in the six months ended June 30,
2006. The decrease in coin call revenue was primarily attributable to the
reduced number of payphones we operated coupled with the increased competition
from wireless communication services. Our non-coin call revenue, which is
comprised primarily of dial-around revenue and operator service revenue
decreased $1,022 or approximately 58% from $1,766 in the six months ended June
30, 2005 to $744 in the six months ended June 30, 2006. Our service & repair
revenues decreased when compared to the same period in 2005.

COSTS OF SALES

Our overall cost of sales decreased for the six months ending June 30, 2006 by
$635 or approximately 19% when compared to the six months ending June 30, 2005.
Our telecommunication costs decreased by $635 due to reducing our network of
payphones by 81%. Once a low revenue payphone is identified, we offer the site
owner an opportunity to purchase the equipment. If the site owner does not
purchase the payphone, we remove it from the site. Depreciation expense remained
the same when compared to the same period in 2005. We own telephone equipment
which provides a service for a number of years. The term of service is commonly
referred to as the "useful life" of the asset. Because an asset such as
telephone equipment or motor vehicle is expected to provide service for many
years, it is recorded as an asset, rather than an expense, in the year acquired.
A portion of the cost of the long-lived asset is reported as an expense each
year over its useful life and the amount of the expense in each year is
determined in a rational and systematic manner

OPERATION AND ADMINISTRATIVE EXPENSES

Operating expenses decreased by $16,482 or approximately 48% over the same
period in 2005. Professional fees increased by $6,730 over 2005. These are fees
we pay to accountants and attorneys throughout the year for performing various
tasks. Expenses for outside services decreased by $5,244 over 2005. These are
fees the Company pays to an outside company to collect and maintain our network
of payphones. Our office expenses increased and travel & entertainment expenses
increased, together account for an increase of $1,262 when compared to the same
period ending June 30, 2005. Expenses for advertising increased by $770 over
2005.

GOING CONCERN QUALIFICATION

In their Independent Auditor's Report for the fiscal year ending December 31,
2005, Robison, Hill & Co. states that we have incurred annual losses since
inception raising substantial doubt about our ability to continue as a going
concern.

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOW

Our primary sources of liquidity have been cash from operations and borrowing
from various sources. As of June 30, 2006 we have notes payable to Mary
Passalaqua in the amount of $37,555.

COMMON STOCK

We are authorized to issue 250,000,000 shares of Common Stock, with a par value
of $0.001. There are 100,770,140 shares of Common Stock issued and outstanding
as of the date of this form 10-QSB. All shares of common stock have one vote per
share on all matters including election of directors, without provision for
cumulative voting. The common stock is not redeemable and has no conversion or
preemptive rights. The common stock currently outstanding is validly issued,
fully paid and non- assessable. In the event of liquidation of the company, the
holders of common stock will share equally in any balance of the company's
assets available for distribution to them after satisfaction of creditors and
preferred shareholders, if any. The holders of common stock of the company are
entitled to equal dividends and distributions per share with respect to the
common stock when, as and if, declared by the board of directors from funds
legally available.

PREFERRED STOCK

In addition to the 250,000,000 shares of Common Stock, the Company is authorized
to issue 100,000,000 shares of preferred stock, with a par value of $0.001.
Shares of the Preferred Stock of the corporation may be issued from time to time
in one or more classes or series, each of which class or series shall have such
distinctive designation or title as shall be fixed by the Board of Directors
prior to the issuance any shares thereof. At this time no shares of Preferred
Stock have been issued by the Company.

Except as set forth below, no transactions have occurred since the beginning of
the Company's last fiscal year or are proposed with respect to which a director,
executive officer, security holder owning of record or beneficially more than 5
% of any class of the Company's securities or any member of the immediate
families of the foregoing persons had or will have a direct or indirect material
interest:

We issued 8,000,000 common shares each to Mr. Carl Worboys and Mr. John
Passalaqua at a deemed price of $0.001 per share on April 28, 2005. These shares
were issued to Mr. Worboys and Mr. Passalaqua in consideration for their
services in organizing our company, acting as officers and building our business
plan.

On April 28, 2005, we issued 2,000,000 common shares at a deemed price of $0.001
per share to Mr. David Stever in consideration for his services as director and
building our business plan.

ITEM 3. CONTROLS AND PROCEDURES

The Company's Chief Executive Officer and Chief Financial Officer are
responsible for establishing and maintaining disclosure controls and procedures
for the Company.

(a) Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's President, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures
pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Based upon the evaluation, the Company's President
concluded that, as of the end of the period, the Company's disclosure controls
and procedures were effective in timely alerting him to material information
relating to the Company required to be included in the reports that the Company
files and submits pursuant to the Exchange Act.

(b) Changes in Internal Controls

Based on his evaluation as of June 30, 2006, there were no significant changes
in the Company's internal controls over financial reporting or in any other
areas that could significantly affect the Company's internal controls subsequent
to the date of his most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

RISKS ASSOCIATED WITH OUR BUSINESS

In addition to the other information in this report, the following risks should
be considered carefully in evaluating our business and prospects:

UNLESS WE CAN REVERSE OUR HISTORY OF LOSSES, WE MAY HAVE TO DISCONTINUE
OPERATIONS.

If we are unable to achieve or sustain profitability, or if operating losses
increase in the future, we may not be able to remain a viable company and may
have to discontinue operations. Our expenses have historically exceeded our
revenues and we have had losses in all fiscal years of operation, including
those in fiscal years 2004 through 2005, and the losses are projected to
continue in 2006. Our net losses were $8,856 and $47,547 for fiscal years ended
2004, 2005 respectively. We have been concentrating on the development of our
products, services and business plan. Our management believes that we can be
profitable and that our business plan will be successful; however, there is no
assurance that we will be successful in implementing our business plan or that
we will be profitable now or in the future.

WE WILL NEED ADDITIONAL CAPITAL FINANCING IN THE FUTURE.

We may be required to seek additional financing in the future to respond to
increased expenses or shortfalls in anticipated revenues, accelerate product
development and deployment, respond to competitive pressures, develop new or
enhanced products, or take advantage of unanticipated acquisition opportunities.
We cannot be certain we will be able to find such additional financing on
reasonable terms, or at all. If we are unable to obtain additional financing
when needed, we could be required to modify our business plan in accordance with
the extent of available financing.

IF WE ENGAGE IN ACQUISITIONS, WE MAY EXPERIENCE SIGNIFICANT COSTS AND DIFFICULTY
ASSIMILATING THE OPERATIONS OR PERSONNEL OF THE ACQUIRED COMPANIES, WHICH COULD
THREATEN OUR FUTURE GROWTH.

If we make any acquisitions, we could have difficulty assimilating the
operations, technologies and products acquired or integrating or retaining
personnel of acquired companies. In addition, acquisitions may involve entering
markets in which we have no or limited direct prior experience. The occurrence
of any one or more of these factors could disrupt our ongoing business, distract
our management and employees and increase our expenses. In addition, pursuing
acquisition opportunities could divert our management's attention from our
ongoing business operations and result in decreased operating performance.
Moreover, our profitability may suffer because of acquisition-related costs or
amortization of acquired goodwill and other intangible assets. Furthermore, we
may have to incur debt or issue equity securities in future acquisitions. The
issuance of equity securities would dilute our existing stockholders.

IF WE CANNOT ATTRACT, RETAIN, MOTIVATE AND INTEGRATE ADDITIONAL SKILLED
PERSONNEL, OUR ABILITY TO COMPETE WILL BE IMPAIRED.

Many of our current and potential competitors have more employees than we do.
Our success depends in large part on our ability to attract, retain and motivate
highly qualified management and technical personnel. We face intense competition
for qualified personnel. The industry in which we compete has a high level of
employee mobility and aggressive recruiting of skilled personnel. If we are
unable to continue to employ our key personnel or to attract and retain
qualified personnel in the future, our ability to successfully execute our
business plan will be jeopardized and our growth will be inhibited.

WE MAY BE UNABLE TO ADEQUATELY PROTECT OUR PROPRIETARY RIGHTS OR MAY BE SUED BY
THIRD PARTIES FOR INFRINGEMENT OF THEIR PROPRIETARY RIGHTS.

The telecommunications industry is characterized by the existence of a large
number of patents and frequent litigation based on allegations of tradesecret,
copyright or patent infringement. We may inadvertently infringe a patent of
which we are unaware. In addition, because patent applications can take many
years to issue, there may be a patent application now pending of which we are
unaware that will cause us to be infringing when it is issued in the future. If
we make any acquisitions, we could have similar problems in those industries.
Although we are not currently involved in any intellectual property litigation,
we may be a party to litigation in the future to protect our intellectual
property or as a result of our alleged infringement of another's intellectual
property, forcing us to do one or more of the following:

o Cease selling, incorporating or using products or services that incorporate
the challenged intellectual property; o Obtain from the holder of the infringed
intellectual property right a license to sell or use the relevant technology,
which license may not be available on reasonable terms; or o Redesign those
products or services that incorporate such technology.

A successful claim of infringement against us, and our failure to license the
same or similar technology, could adversely affect our business, asset value or
stock value. Infringement claims, with or without merit, would be expensive to
litigate or settle, and would divert management resources.

Our employees may be bound by confidentiality and other nondisclosure agreements
regarding the trade secrets of their former employers. As a result, our
employees or we could be subject to allegations of trade secret violations and
other similar violations if claims are made that they breached these agreements.

BECAUSE OUR OFFICERS AND DIRECTORS ARE INDEMNIFIED AGAINST CERTAIN LOSSES, WE
MAY BE EXPOSED TO COSTS ASSOCIATED WITH LITIGATION.

If our directors or officers become exposed to liabilities invoking the
indemnification provisions, we could be exposed to additional unreimbursable
costs, including legal fees. Our articles of incorporation and bylaws provide
that our directors and officers will not be liable to us or to any shareholder
and will be indemnified and held harmless for any consequences of any act or
omission by the directors and officers unless the act or omission constitutes
gross negligence or willful misconduct. Extended or protracted litigation could
have a material adverse effect on our cash flow.

WE WILL DEPEND ON OUTSIDE MANUFACTURING SOURCES AND SUPPLIERS.

We may contract with third party manufacturers to produce our products and we
will depend on third party suppliers to obtain the raw materials necessary for
the production of our products. We do not know what type of contracts we will
have with such third party manufacturers and suppliers. In the event we
outsource the manufacturing of our products, we will have limited control over
the actual production process. Moreover, difficulties encountered by any one of
our third party manufacturers, which result in product defects, delayed or
reduced product shipments, cost overruns or our inability to fill orders on a
timely basis, could have an adverse impact on our business. Even a short-term
disruption in our relationship with third party manufacturers or suppliers could
have a material adverse effect on our operations. We do not intend to maintain
an inventory of sufficient size to protect ourselves for any significant period
of time against supply interruptions, particularly if we are required to obtain
alternative sources of supply.

OUR STOCK PRICE MAY BE VOLATILE.

The market price of our common stock will likely fluctuate significantly in
response to the following factors, some of which are beyond our control:

o Variations in our quarterly operating results;
o Changes in financial estimates of our revenues and operating results by
securities analysts; o Changes in market valuations of telecommunications
equipment companies; o Announcements by us of significant contracts,
acquisitions, strategic partnerships, joint ventures or capital commitments;

o Additions or departures of key personnel;

o Future sales of our common stock;

o Stock market price and volume fluctuations attributable to inconsistent
trading volume levels of our stock;

o Commencement of or involvement in litigation.

In addition, the equity markets have experienced volatility that has
particularly affected the market prices of equity securities issued by
technology companies and that often has been unrelated or disproportionate to
the operating results of those companies. These broad market fluctuations may
adversely affect the market price of our common stock.

WE DO NOT ANTICIPATE PAYING ANY DIVIDENDS ON OUR COMMON STOCK.

We have not paid any dividends on our Common Stock since inception and do not
anticipate paying any dividends on our Common Stock in the foreseeable future.
Instead, we intend to retain any future earnings for use in the operation and
expansion of our business.

IF WE ARE SUBJECT TO SEC REGULATIONS RELATING TO LOW-PRICED STOCKS, THE MARKET
FOR OUR COMMON STOCK COULD BE ADVERSELY AFFECTED.

The Securities and Exchange Commission has adopted regulations concerning
low-priced (or "penny") stocks. The regulations generally define "penny stock"
to be any equity security that has a market price less than $5.00 per share,
subject to certain exceptions. If our shares are offered at a market price less
than $5.00 per share, and do not qualify for any exemption from the penny stock
regulations, our shares may become subject to these additional regulations
relating to low-priced stocks.

The penny stock regulations require that broker-dealers, who recommend penny
stocks to persons other than institutional accredited investors make a special
suitability determination for the purchaser, receive the purchaser's written
agreement to the transaction prior to the sale and provide the purchaser with
risk disclosure documents that identify risks associated with investing in penny
stocks. Furthermore, the broker-dealer must obtain a signed and dated
acknowledgment from the purchaser demonstrating that the purchaser has actually
received the required risk disclosure document before effecting a transaction in
penny stock. These requirements have historically resulted in reducing the level
of trading activity in securities that become subject to the penny stock rules.

The additional burdens imposed upon broker-dealers by these penny stock
requirements may discourage broker-dealers from effecting transactions in the
common stock, which could severely limit the market liquidity of our common
stock and our shareholders' ability to sell our common stock in the secondary
market.

PART II OTHER INFORMATION.

ITEM 1. LEGAL PROCEEDINGS
Not applicable.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Not applicable

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

EXHIBIT

NO. DESCRIPTION

3 Articles of Incorporation
3.1 Amended Articles of Incorporation, dated March 14, 1984
3.2 Amended Articles of Incorporation, dated March 31, 1988
3.3 Amended Articles of Incorporation, dated February 7, 2002
3.4 Amended Articles of Incorporation, dated March 26, 2002
3.5 Agreement of Merger, dated March 28, 2002
4 By-Laws
5 Specimen Share Certificate for Common Shares
31.1 Sarbanes-Oxley Act of 2002 Section 302 Certification for Carl E.
Worboys
31.1 Sarbanes-Oxley Act of 2002 Section 302 Certification for John F.
Passalaqua
32.1 Sarbanes-Oxley Act of 2002 Section 906 Certification for Carl E.
Worboys
32.2 Sarbanes-Oxley Act of 2002 Section 906 Certification for John F.
Passalaqua

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

DOLCE VENTURES INC.

(Registrant)

Dated: August 16, 2006 /s/ CARL E. WORBOYS
-------------------
Carl E. Worboys
President
(Principal Executive
Officer)

Dated: August 16, 2006 /s/ JOHN F. PASSALAQUA
----------------------
John F. Passalaqua
Secretary/Treasurer
(Principal Financial
Officer)