UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, ~~2006~~2007 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 0000-~~1460~~01460

MOSCOW CABLECOM CORP.

(Exact name of Registrant as specified in its charter)

Delaware	06-0659863
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
590 Madison Avenue, New York, New York	10022
153 East 53rd Street, New York, New York	10022
(Address of principal executive offices)	(Zip Code)
(212) 826-8942
(Registrant’s telephone number, including area code)

Indicate by check mark 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 o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer,. ~~see~~See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large Accelerated filer o

Accelerated filer o Non-accelerated filer x

Indicate by check mark whether the registrant is a shell company (as defined in Rule ~~12b2~~12b-2 of the Exchange Act). Yes o No x

The number of shares of the Registrant’s $.01 par value common stock outstanding at May 2615, ~~2006~~2007 was 1113,~~349~~983,~~130~~615 and the number of shares of the Registrant’s $.01 par value Series B Convertible Preferred Stock outstanding was 4,500,000.

MOSCOW CABLECOM CORP.
FORM 10-Q

TABLE OF CONTENTS

	Page No.
Part I. Financial Information
Item 1: Financial Statements.
Consolidated Condensed Balance Sheets as of March 31, 2006 (unaudited) and December 31, 2005.	3
Condensed Consolidated Balance Sheets as of March 31, 2007 and December 31, 2006 (unaudited).	3
Consolidated Condensed Statements of Operations for the Three Months Ended March 31, 2006 and March 31, 2005 (unaudited).	4
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2007 and March 31, 2006 (unaudited).	4
Consolidated Condensed Statement of Stockholders’ Equity and Comprehensive Loss for the Three Months Ended March 31, 2006 (unaudited).	5
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2007 and March 31, 2006 (unaudited).	5
Consolidated Condensed Statements of Cash Flows for the Three Months Ended March 31, 2006 and March 31, 2005 (unaudited).	6
Notes to Condensed Consolidated Financial Statements (unaudited).	6
Notes to Consolidated Condensed Financial Statements (unaudited).	7
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations.	14
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations.	15
Item 3: Quantitative and Qualitative Disclosures About Market Risk.	18
Item 3: Quantitative and Qualitative Disclosures About Market Risk.	20
Item 4: Controls and Procedures.	19
Item 4: Controls and Procedures.	21
Part II. Other Information.
Item 1: Legal Proceedings.	2220
Item 1A: Risk Factors.	2321
Item 6: Exhibits.	2321
Signatures.	2422

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Part I. Financial Information
Item 1. Financial Statements.

MOSCOW CABLECOM CORP. ~~Consolidated~~ Condensed Consolidated Balance Sheets ~~(in thousands, except per share data)~~

	March 31,	December 31,
	2006	2005
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$ 8,678	$ 5,442
Marketable securities	1,561	3,322
Trade receivables, less allowance for doubtful accounts of $123 and $111	253	252
Inventories, net	1,793	1,237
Taxes receivable	4,365	3,523
Deferred costs	534	470
Deferred income taxes	40	16
Prepaid expenses and other current assets	3,354	1,845
Total current assets	20,578	16,107
Property, plant and equipment, net (Note 3)	33,072	25,730
Construction in progress and advances	10,110	9,563
Prepaid pension expense (Note 9)	5,190	5,111
Intangible assets, net (Note 4)	4,825	4,850
Goodwill (Note 4)	5,232	5,115
Investment in Institute for Automated Systems (Note 6)	7,183	7,128
Deferred costs	888	712
Other assets	2,608	716
Total assets	$ 89,686	$ 75,032
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt	$ 571	$ 598
Payable to affiliate	418	531
Accounts payable and accrued liabilities	6,707	4,849
Deferred revenue	192	354
Total current liabilities	7,888	6,332
Note payable to shareholder	30,822	20,211
Long-term debt, less current maturities	3,017	1,773
Other long-term obligations	799	720
Deferred revenue	571	380
Deferred income taxes	4,603	4,584
Total liabilities	47,700	34,000
Commitments and contingencies (See Note 11)
Stockholders’ equity:
Series A cumulative convertible preferred stock, no par value; 800,000 shares authorized; 150,144 shares issued and outstanding; liquidation preference $18.75 per share	2,792	2,792
Series B convertible preferred stock, $.01 par value, 25,000,000 shares authorized 4,500,000 shares issued and outstanding	45	45
Common stock, $.01 par value; 40,000,000 shares authorized; 8,905,746 Shares and 8,860,746 shares, respectively, issued and outstanding	89	89
Additional paid-in capital	68,511	66,243
Accumulated deficit	(30,340)	(27,957)
Treasury stock, at cost, 24,500 shares	(180)	(180)
Accumulated other comprehensive income	1,069	-
Total stockholders’ equity	41,986	41,032
Total liabilities and stockholders’ equity	$ 89,686	$ 75,032

(unaudited) (in thousands, except per share data)

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

	March 31,	December 31,
	2007	2006
Assets
Current assets:
Cash and cash equivalents	$ 4,571	$ 3,536
Marketable securities	2	4,802
Trade receivables, less allowance for doubtful accounts of $255 and $206, respectively	237	193
Inventories, net	4,636	2,639
Taxes receivable	7,371	6,648
Deferred income taxes	652	547
Prepaid expenses and other current assets	7,229	6,453

Total current assets	24,698	24,818
Property, plant and equipment, net (Note 3)	66,629	58,347
Construction in progress and advances	16,622	15,739
Prepaid pension expense (Note 9)	3,262	3,230
Intangible assets, net (Note 4)	4,486	4,596
Goodwill (Note 4)	4,834	4,775
Investment in Institute for Automated Systems (Note 6)	7,096	7,210
Other assets	514	511

Total assets	$ 128,141	$ 119,226
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt (Note 5)	$ 497	$ 497
Payable to affiliate	867	731
Accounts payable and accrued liabilities (Note 11)	16,413	13,150
Deferred revenue, current	115	115

Total current liabilities	17,892	14,493
Notes payable to shareholder (Note 5)	43,244	32,100
Long-term debt, less current maturities (Note 5)	2,520	2,555
Other long-term obligations	984	923
Deferred revenue, noncurrent	658	677
Deferred income taxes	2,269	2,179

Total liabilities	67,567	52,927
Commitments and contingencies (Note 11)
Stockholders’ equity:
Series A cumulative convertible preferred stock, no par value; 800,000 shares authorized; 149,962 shares and 150,144 shares issued and outstanding, respectively; liquidation preference $18.75 per share	2,789	2,789
Series B convertible preferred stock, $.01 par value, 25,000,000 shares authorized 4,500,000 shares issued and outstanding; liquidation preference up to $5.00 per share until December 2008	45	45
Common stock, $.01 par value; 40,000,000 shares authorized; 13,983,615 shares and13,927,365 shares, respectively, issued and outstanding	140	139
Treasury stock, at cost, 24,500 shares	(180)	(180)
Additional paid-in capital	112,369	111,458
Accumulated deficit	(54,677)	(47,946)
Accumulated other comprehensive income (loss)	88	(6)

Total stockholders’ equity	60,574	66,299

Total liabilities and stockholders’ equity	$ 128,141	$ 119,226

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

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MOSCOW CABLECOM CORP.

~~Consolidated~~ Condensed Consolidated Statement of Operations

(In thousands, except per share data)

(unaudited)

	Three Months Ended
	March 31, 2006	March 31, 2005
	March 31, 2007	March 31, 2006
Sales and revenues
Sales and revenues:
Subscription fees, connection fees and equipment sales	$411,~~053~~131	$24,~~189~~053
Other	56161	4256
Total revenue	4,109	2,231
Total sales and revenues	11,292	4,109
Cost of sales
Cost of sales and revenues:
Services from related party	~~938~~2,069	~~371~~938
Salaries and benefits	~~752~~495	~~275~~752
Depreciation and amortization	~~785~~2,766	~~414~~785
Other	~~383~~1,886	~~428~~383
Total cost of sales	2,858	1,488
Total cost of sales and revenues	7,216	2,858
Gross margin	14,~~251~~076	~~743~~1,251
Operating expenses
Operating expenses:
Salaries and benefits	24,~~441~~731	12,~~303~~441
Depreciation	~~231~~367	~~100~~231
General and administrative	15,~~713~~663	1,~~029~~713
Total operating expenses	410,~~385~~761	24,~~432~~385
Loss from operations	(36,~~134~~685)	(13,~~689~~134)
Equity in losses of Institute for Automated Systems	(~~131~~189)	(57131)
Investment income and other income	~~125~~121	~~249~~125
Interest expense	(~~609~~948)	(~~579~~609)
Foreign currency transaction gain (loss)	1,357	(3)
Foreign currency transaction gain	1,099	1,357
Loss before income taxes	(26,~~392~~602)	(2,~~079~~392)
Income tax benefit	65	32
Income tax expense	(73)	(168)
Net loss	(26,~~327~~675)	(2,~~047~~560)
Preferred dividends	(56)	(56)
Beneficial conversion feature	-	(10,781)
Net loss applicable to common shares	$(6,731)	$(2,616)
Net loss applicable to common shares	$(2,383)	$(12,884)
Loss per common share:
Earnings per common share:
Basic and diluted (Note 7)	$(0.48)	$(0.29)
Basic and diluted (Note 7)	$(0.27)	$(1.46)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of these consolidated condensed financial statements.

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MOSCOW CABLECOM CORP. ~~Consolidated~~ Condensed ~~Statement~~Consolidated Statements of ~~Stockholders’~~Cash ~~Equity and Comprehensive Loss~~ Flows (In thousands) (unaudited)

	Series A Preferred Stock	Series B Preferred Stock	Common Stock	Additional Paid In Capital	Accumulated Deficit	Treasury Stock	Accumulated Other Comprehensive Income	Total Stockholders’ Equity
	Three Months Ended
Balance December 31, 2005	$2,792	$45	$89	$66,243	$(27,957)	$(180)	$ -	$41,032
	March 31, 2007	March 31, 2006
Net loss	-	-	-	-	(2,327)	-	-	(2,327)
Cash flows from operating activities:
Currency translation gain	-	-	-	-	-	-	1,069	1,069
Net loss	$(6,675)	$(2,560)
Comprehensive loss								(1,258)
Adjustments to reconcile net loss to net cash
Stock grant expense	-	-	-	221	-	-	-	221
provided by operating activities:
Stock options expense	-	-	-	294	-	-	-	294
Equity in losses of Institute for Automated Systems	189	131
Exercise of stock options	-	-	-	29	-	-	-	29
Depreciation and amortization	3,214	1,016
Extension of warrant	-	-	-	1,724	-	-	-	1,724
Net change in valuation accounts for receivables, inventory and construction in progress	374	(258)
Preferred dividends	-	-	-	-	(56)	-	-	(56)
Stock-based compensation	912	515
Balance March 31, 2006	$2,792	$45	$89	$68,511	$(30,340)	$(180)	$ 1,069	$41,986
Deferred income taxes	8	190
Pension income	(101)	(79)
Net (losses) gains from marketable securities	-	1
Interest capitalized into principal	1,064	611
Foreign currency gains	(1,099)	(1,357)
Changes in operating assets and liabilities:
Net proceeds from sales of marketable securities	4,800	1,760
Accounts and other receivables	(90)	(13)
Inventories	(2,035)	(262)
Prepaid expenses and other assets	(1,326)	(2,519)
Deferred revenue	(29)	7
Accounts payable, accrued liabilities and other long-term obligations	3,943	2,964
Net cash provided by operating activities	3,149	147
Cash flows from investing activities:
Purchases of property and equipment	(12,054)	(8,121)
Net cash used in investing activities	(12,054)	(8,121)
Cash flows from financing activities:
Proceeds from term debt	10,000	11,244
Principal payments on term debt	(35)	(27)
Stock options exercised	-	29
Preferred dividends paid	(56)	(56)
Net cash provided by financing activities	9,909	11,190
Effect of exchange rate changes on cash and cash equivalents	31	20
Net increase cash and cash equivalents	1,035	3,236
Cash and cash equivalents - beginning of period	3,536	5,442
Cash and cash equivalents – end of period	$4,571	$8,678
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~The accompanying notes are an integral part of these consolidated condensed financial statements.~~ 6

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MOSCOW CABLECOM CORP. ~~Consolidated~~Notes to Condensed ~~Statements~~Consolidated ofFinancial ~~Cash~~Statements ~~Flows~~ (~~In thousands) (~~unaudited)

	Three Months Ended
	March 31, 2006	March 31, 2005
Cash flows from operating activities:
Net loss	$(2,327)	$(2,047)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Equity in losses of Institute for Automated Systems	131	57
Depreciation and amortization	1,016	514
Net change in valuation accounts for receivables, inventory and construction in progress	(258)	3
Stock-based compensation	515	175
Deferred income taxes	(43)	(42)
Pension income	(79)	(46)
Net (losses) gains from marketable securities	1	(5)
Changes in operating assets and liabilities:
Accounts and other receivables	(13)	(24)
Inventories	(262)	165
Prepaid expenses and other assets	(2,519)	(899)
Deferred costs	(208)	(741)
Deferred revenue	7	(218)
Accounts payable, accrued liabilities and other long-term obligations	2,218	(349)
Net cash used in operating activities	(1,821)	(3,457)
Cash flows from investing activities:
Purchases of property and equipment	(7,913)	(1,853)
Purchases of marketable securities	(300)	(4,040)
Proceeds from sales of marketable securities	2,060	41
Net cash used in investing activities	(6,153)	(5,852)
Cash flows from financing activities:
Proceeds from issuance of Series B Preferred Stock, net of expenses paid	-	20,152
Proceeds from term debt, net of fee paid	11,244	18,037
Principal payments on term debt	(27)	(4,042)
Stock options exercised	29	11
Preferred dividends paid	(56)	(56)
Net cash provided by financing activities	11,190	34,102
Effect of exchange rate changes on cash and cash equivalents	20	-
Net increase cash and cash equivalents	3,236	24,793
Cash and cash equivalents - beginning of period	5,442	1,817
Cash and cash equivalents - end of period	$8,678	$26,610
The accompanying notes are an integral part of these consolidated condensed financial statements.

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MOSCOW CABLECOM CORP. Notes to Consolidated Condensed Financial Statements (unaudited)

(1)

General

Moscow CableCom Corp. (“the Company”) is ~~constructing~~the aparent ~~“last~~company ~~mile”~~of ~~hybrid~~ZAO ~~fiber~~ComCor-TV ~~coaxial network in Moscow~~(“CCTV”), ~~and~~which is inconstructing ~~the~~a ~~business~~“last ofmile” ~~providing~~hybrid ~~cable~~fiber ~~television~~coaxial ~~and~~network ~~Internet~~(“HFC ~~access~~Network”) ~~services through its marketing efforts~~ in ~~the areas of~~ Moscow, toRussia, through which it ~~has~~provides ~~gained~~cable ~~access. The Company operates in one reportable segment~~television, ~~which includes ZAO ComCor~~pay-TVper-view ~~(“CCTV”)~~television, ~~its~~high ~~terrestrial~~speed ~~television,~~data ~~cable~~transmission ~~television~~ and Internet access ~~operating~~services ~~company~~using inthe ~~Moscow~~brand name AKADO.

~~The~~On ~~Company~~February ~~has incurred losses in recent years and the expansion of its business activities requires a significant amount of capital to meet its cash flow requirements. As discussed in Note 12~~21, in2007 ~~May 2006,~~ the Company ~~received~~entered ~~$20.2~~into ~~million~~an ofagreement ~~new~~with equity capital through the private placement of units comprised of one share of its common stock and one-half warrant to purchase common stock. Prior to this transaction, the Company had relied on a commitment from its largest shareholder, Renova Media Enterprises Ltd, (“Renova Media”), pursuant to which ~~it would have provided the Company with sufficient capital, either debt or equity, on terms~~ Renova Media ~~deemed~~will ~~satisfactory,~~acquire toall ~~ensure that~~ the ~~Company’s~~equity ~~operations~~interests ~~would have continued uninterrupted for a period not less than one year from the date~~ of the ~~filing~~Company ofthat ~~its~~is ~~Form~~does ~~10-K~~not ~~for~~directly ~~the year ended December 31, 2005~~own. Upon ~~This~~the ~~commitment~~closing ~~was further supported with a guarantee and with $5.0 million~~ of ~~escrowed~~this ~~funds from Renova US Holdings~~transaction, ~~an affiliate of Renova Media. Also as discussed in Note 12,~~ the Company ~~has~~will ~~entered~~be ~~into~~wholly-owned ~~agreements~~by ~~to cancel the~~ Renova Media ~~commitment,~~and ~~the~~there ~~Renova~~will USno ~~Holdings~~longer ~~guarantee~~be ofa ~~the~~public ~~commitment,~~market ~~and~~for the ~~escrow~~Company’s ~~arrangement that supported this guarantee~~securities.

The Company’s ~~Board~~has incurred losses in recent years and the expansion of ~~Directors~~its ~~has~~business ~~similarly~~activities ~~removed~~requires a significant amount of capital to meet its cash flow requirements. Concurrent with entering into the ~~operating~~merger ~~restrictions~~agreement ~~that~~with ~~had~~Renova ~~been~~Media, ~~imposed~~in onFebruary ~~management~~2007, ~~that~~the ~~restricted~~Company ~~their~~entered ~~ability~~into a $45 million bridge loan agreement with RME Finance Ltd (“RME Finance”), an affiliate of Renova Media. Pursuant to ~~enter~~this ~~into~~bridge ~~new~~loan, ~~commitments~~the ~~for~~Company ~~new~~received ~~construction~~a ~~after~~total ~~April~~of 30$10 million during the fiscal quarter ended March 31, ~~2006~~2007 and ~~controlled~~an additional $10 million through May 31, 2007. The Company is entitled to receive up to five additional monthly draws of $5 million during the pendency of the merger, subject to its ~~business~~meeting ~~activities~~certain operational milestones. The Company has also received a renewal of Renova Media’s financing commitment to ~~cause~~provide the Company with sufficient capital to ~~operate~~ensure inthat its operations will continue uninterrupted for a ~~manner~~period ~~that~~of ~~would~~no ~~have~~less ~~enabled~~than itone toyear ~~live~~from ~~within~~the ~~then~~date of the filing its Form 10-~~existing~~Q ~~cash~~for ~~resources.~~the three month period ended March 31, 2007. This ~~limitation~~financing ~~had~~commitment ~~also~~has ~~temporarily~~been ~~restricted~~further supported with a guarantee from Renova Industries Ltd., the ~~Company~~majority stockholder of Renova Media, which has committed to provide any funding that Renova Media does not provide during the term of the Renova Media commitment in ~~proceeding~~accordance with, ~~certain~~and ~~sales~~during ~~and~~the ~~marketing~~term ~~initiatives~~of, ~~and~~Renova ~~this~~Media's ~~restriction~~financing ~~has~~commitment. ~~similarly~~This ~~been~~financing ~~removed~~commitment asdoes anot ~~result~~specify the amount of capital to be provided or the ~~receipt~~terms on which such capital would be provided. Further, the Company cannot give any assurance that the funding provided by RME Finance to date, or that which may be provided in the future, will be sufficient to enable it to continue the construction of the ~~funds~~HFC ~~from~~Network to cover a sufficiently desirable portion of Moscow, or to otherwise position the ~~private~~Company ~~placement~~to attract adequate customers to increase recurring revenues with the goal of achieving profitability and positive cash flows.

Although the Company believes that the funds received from the May 2006 private placement will greatly assist it in its further expansion plans, it cannot give any assurance that the funding provided by this private placement, or that which may be obtained in the future, will be sufficient to enable it to continue the expansion of the HFC Network to cover all of the additional sections of Moscow which it has targeted, or to otherwise enable it to achieve profitability and positive cash flows. In the absence of any new funding that the Company may receive in the future, the Company’s Board of Directors has directed management to operate within existing cash resources and to develop a scaled-down operating plan for possible implementation in the third fiscal quarter of 2006. Accordingly, management believes that its existing cash resources are sufficient to enable it to continue in business for a period of not less than 12 months.

(2)

Summary of Significant Accounting Policies

The accompanying unaudited interim financial statements and related notes should be read in conjunction with the audited ~~Consolidated~~consolidated ~~Financial~~financial ~~Statements~~statements ~~of Moscow CableCom Corp. (the “Company”)~~ and related notes as contained in the Annual Report on Form 10-K for the year ended December 31, ~~2005~~2006. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. The accompanying unaudited interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) and accruals necessary in the judgment of management for a fair statement of the results for the interim period. The condensed consolidated statements of operations for the interim periods are not necessarily indicative of the results for a full fiscal year.

Accounting for Stock Options

On January 1, 2006, the Company adopted Financial Accounting Standards No. 123R, Share-Based Payment (“SFAS No. 123R”), that addresses the accounting for share-based payment transactions in which an enterprise receives employee services in exchange for either equity instruments of the enterprise or liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments.

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SFAS No. 123R eliminates the ability to account for share-based compensation transactions, as the Company formerly did, using the intrinsic value method as prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and generally requires that such transactions be accounted for using a fair-value-based method and recognize such fair value of share-based payments as expenses in the consolidated statement of operations. Since the Company adopted SFAS No. 123R using the modified prospective method, the consolidated financial statements for prior periods have not been restated to reflect, and do not include, the impact of SFAS No. 123R (See Note 8). For awards granted pre-SFAS No.123R adoption that vest on a cliff basis the Company recognizes compensation cost on a straight line basis. For awards granted pre-SFAS No.123R adoption that vest on a graded basis the Company recognizes compensation cost on a straight line basis over the requisite service period of the last separately vesting portion of each award.

Stock-based compensation expense recognized is based on the value of the portion of stock-based payment awards that vested during the period and is expected to be exercised. Stock-based compensation expense recognized in the condensed consolidated statement of operations during the three months ended March 31, 2006 included compensation expense for stock-based payment awards granted prior to, but not yet vested, as of December 31, 2005 based on the grant date fair values. As stock-based compensation expense recognized in the statement of operations for the three months ended March 31, 2006 is based on awards ultimately expected to be vested, the Company has considered the level of estimated forfeitures. SFAS No. 123R requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. As of March 31, 2006, the Company has estimated that there will be no forfeitures based on an analysis which considered, among other factors, the limited distribution of unvested options at that date. In the pro forma information required under SFAS No. 123 for the periods prior to 2006, the Company accounted for forfeitures as they occurred.

Functional and reporting currency

The U.S. dollar is the functional currency and reporting currency of the Company. Prior to January 1, 2006, the U.S. dollar, as opposed to the Russian ruble, was used as the functional currency of CCTV and Institute for Automated Systems (“IAS”) an equity investee. The Company changed its functional currency with regard to this Russian operating subsidiary and IAS to the Russian ruble, as of January 1, 2006. The impact of utilizing the U.S. dollar as the functional currency did not have a material effect on the financial statements of prior periods.

Recently Issued Accounting Standards

InOn ~~November 2004~~January 1, 2007, the Company adopted the provisions of Financial Accounting Standards Board (“‘‘FASB”’’) ~~issued~~Interpretation ~~Statement~~No. of48, ~~Financial~~ “Accounting ~~Standards~~for ~~No.~~Uncertainty ~~151,~~in ~~“Inventory~~Income ~~Costs,~~Taxes — an ~~amendment~~interpretation of ~~ARB~~SFAS No. ~~43, Chapter 4~~109” (“~~SFAS~~FIN No. ~~151~~48”). ~~which~~FIN ~~clarifies~~No. ~~that~~48 ~~abnormal~~creates ~~amounts~~a ofsingle ~~idle~~model ~~facility~~to ~~expense,~~address ~~freight,~~uncertainty ~~handling~~in ~~costs~~tax positions and ~~wasted~~clarifies ~~materials~~the ~~(spoilage)~~accounting ~~should~~for beincome ~~recognized~~taxes asby ~~current-period~~prescribing ~~charges.~~the Inminimum ~~addition,~~recognition ~~SFAS~~threshold ~~No.~~a ~~151~~tax ~~requires~~position ~~that~~is ~~allocation~~required ~~of fixed production overhead~~ to ~~inventory~~meet bebefore ~~based~~being onrecognized ~~the~~in ~~normal capacity of~~ the ~~production~~financial ~~facilities~~statements. ~~SFAS~~FIN No. ~~151~~48 isalso ~~effective~~provides ~~for~~guidance ~~inventory~~on ~~costs~~derecognition, ~~incurred~~measurement, ~~during~~classification, ~~fiscal~~interest ~~years~~and ~~beginning after June 15~~penalties, ~~2005.~~accounting ~~The~~in ~~Company~~interim ~~adopted~~periods, ~~SFAS~~disclosure Noand transition. ~~151~~In ~~on January 1~~addition, ~~2006~~FIN No. ~~The~~48 ~~adoption~~carves ofout ~~this~~income ~~Standard~~taxes ~~did~~from ~~not~~SFAS ~~have~~No. a5, ~~material~~“Accounting ~~effect~~for ~~on the Company’s consolidated financial statements~~Contingencies”.

InThe ~~May~~Company ~~2005,~~included ~~FASB~~accruals ~~issued~~for ~~Statement~~additional ofincome ~~Financial~~tax ~~Accounting~~totaling ~~Standards~~$97,000 ~~No. 154~~as ~~“Accounting~~a ~~Changes~~component ~~and~~of ~~Error~~accrued ~~Corrections”~~liabilities ~~(“SFAS 154”). This pronouncement applies to all voluntary changes in accounting principle~~ and ~~revises~~ the ~~requirements for accounting for and reporting a change in accounting principle. SFAS No. 154 requires retrospective application to prior periods~~Company’s ~~financial~~income ~~statements~~tax ofprovision afor ~~voluntary change in accounting principle, unless it is impracticable to do so. This pronouncement also requires that a change in~~ the ~~method~~three ofmonth ~~depreciation,~~period ~~amortization,~~ended orMarch ~~depletion for long-lived~~31, ~~non-financial~~2007 ~~assets~~The beadoption ~~accounted~~of ~~for~~FIN ~~as a change in accounting estimate that is effected by a change in accounting principle. SFAS~~ No. ~~154~~ is48 ~~effective~~did ~~for~~not ~~accounting~~result ~~changes and corrections of errors made~~ in ~~fiscal~~a ~~years~~cumulative ~~beginning~~adjustment ~~after~~to ~~December 15,~~stockholders’ ~~2005~~equity. The ~~Statement~~Company does not ~~change~~consider ~~the~~it ~~transition~~reasonably ~~provisions~~possible ~~of any existing accounting pronouncements, including those~~ that ~~are~~the inadditional aincome ~~transition~~tax ~~phase~~will ~~(such~~be asreversed ~~FAS~~by ~~No.123R, stock-based payments) as of~~ the ~~effective~~end ~~date~~ of ~~SFAS No~~2007. ~~154.~~

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The Company recognizes accrued interest related to unrecognized tax benefits or additional tax liabilities in interest expense and penalties in operating expenses. During the three months ended March 31, 2007, the Company recognized approximately $20,000 of penalties and $8,000 of interest.

As of the adoption date of FIN No.48, the tax years ended December 31, 2004, 2005 and 2006 remained subject to examination by tax authorities.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This statement applies to other accounting pronouncements where the FASB requires or permits fair value measurements. Accordingly, this statement does not require any new fair value measurements. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is required to adopt SFAS No. 157 in the first quarter of 2008 and has not yet determined the effect, if any, the adoption of SFAS No. 157 will have on its results of operations or financial position.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities -- Including an amendment of FASB Statement No. 115.” SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been elected will be recognized in earnings at each subsequent reporting date. SFAS No. 159 is effective for the Company on January 1, 2008. The Company is evaluating the impact that the adoption of SFAS No. 159 will have on its future results of operations and financial position.

Basis of presentation

Certain amounts from prior years’ financial statements have been revised to conform with the current year presentation.

In 2006, the Company did not separately present $611,000 relating to interest capitalized into principal in the consolidated statement of cash flows as an operating activity. This has been reclassified to be consistent with the current year presentation.

The Company has revised deferred costs relating to customer installations as property, plant and equipment. Accordingly, $208,000 of such the change in such costs in 2006 has been revised to purchases of property and equipment in the consolidated statement of cash flows to conform to the current year presentation.

(3)

Property, Plant and Equipment

Property, plant and equipment consist of the following (in thousands):

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	March 31, 2007	December 31, 2006
Land, building and improvements	$ 6,417	$ 6,417
Network equipment	49,385	44,388
Internet equipment	3,527	3,453
Subscriber equipment	12,682	9,716
Other	10,337	7,636
	82,348	71,610
Less accumulated depreciation	(15,719)	(13,263)
	$ 66,629	$ 58,347

	March 31, 2006	December 31, 2005
Land, building and improvements	$ 6,416	$ 6,410
Network equipment	25,077	19,261
Internet equipment	3,617	2,617
Subscriber equipment	3,305	2,155
Other	2,167	1,703
	40,582	32,146
Less accumulated depreciation	(7,510)	(6,416)
	$ 33,072	$ 25,730

(4)

Intangible Assets and Goodwill

~~The~~For ~~Company’s~~the ~~agreement~~three ~~with~~month ~~Moscow~~periods ~~Telecommunications~~ended ~~Corp.~~March ~~(“COMCOR”)~~31, ~~pursuant~~2007 ~~to which COMCOR provides signal delivery~~ and ~~other services from its fiber optic network to CCTV~~2006, ~~were concluded at rates more favorable to~~ the Company ~~than~~recorded ~~current~~$164,000 ~~market~~and ~~terms. Accordingly~~$151,000, ~~the~~respectively, ~~Company~~in ~~has~~amortization ~~recorded an intangible asset~~ related to ~~the~~service ~~economic~~agreements ~~savings associated~~ with ~~this~~Moskovskaya ~~relationship. Although~~Telecommunikationnaya ~~this~~Corporatsiya ~~agreement as further amended in March 2005 does not expire until 2055~~(“COMCOR”), ~~the~~a ~~Company~~company ~~believes~~controlled ~~that~~by ~~obsolescence,~~Renova ~~demand~~Media, ~~competition,~~ and ~~other~~broadcast ~~economic~~license ~~factors may limit the usefulness of the these agreements and, accordingly, the relationship is being amortized over a useful life of 10 years based on the consideration of the aforementioned factors~~assets.

CCTV’s licenses to provide television broadcast services have been determined to have a finite life of ten years based upon the expectation of obsolescence, demand, competition, and other economic factors that may possibly limit the economic useful life of the licenses. The Company expects that such licenses will be renewed in the ordinary course upon each periodic expiration, the next of which will occur in May 2010. This renewal process is not viewed by management as a factor to limit the useful life. The licenses were recorded at their fair value at the date of acquisition and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of these licenses may not be recoverable.8

For each of the three month periods ended March 31, 2006 and 2005, the Company recorded $151,000 in amortization related to the agreement with COMCOR and broadcast license assets.

At March 31, 2006, intangible assets were comprised as follows (in thousands):

	Gross value	Accumulated amortization	Translation adjustment	Net value
Agreement with COMCOR	$3,490	$ (786)	$ 63	$2,767
Broadcasting licenses	2,572	(578)	64	2,058
Totals	$6,062	$(1,364)	$ 127	$4,825

Goodwill recorded in connection with the acquisition of CCTV represents the excess of the acquisition price over the currently estimated fair value of the identified tangible and intangible assets of CCTV. In accordance with SFAS 142, goodwill is not being amortized and will be tested for impairment at least annually. The impairment test involves a comparison of the fair value of its reporting unit as defined under SFAS 142, with carrying amounts. The Company has one reporting unit and considers its fair value to be the quoted market capitalization of the Company. If the reporting unit’s aggregated carrying amount exceeds its fair value, then an indication exists that the reporting unit’s goodwill may be impaired. The impairment to be recognized is measured by the amount by which the carrying value of the reporting unit being measured exceeds its fair value, up to the total amount of the assets.

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At March 31, 2007 and December 31, 2006, intangible assets were comprised as follows (in thousands):

	March 31, 2007			December 31, 2006
	Gross amount	Accumulated amortization	Net book value	Gross Amount	Accumulated amortization	Net book value
Agreement with COMCOR	$3,827	$(1,244)	$2,583	$ 3,780	$ (1,134)	$ 2,646
Broadcasting licenses	2,820	(917)	1,903	2,785	(835)	1,950
	$ 6,647	$ (2,161)	$ 4,486	$ 6,565	$ (1,969)	$ 4,596

(5)

Note Payable to Shareholder and Long-Term Debt

Note payable to Shareholder and Long-term debt consist of the following (in thousands):

	March 31, 2006	December 31, 2005
	March 31, 2007	December 31, 2006
RM Term Loan, due January 2010, interest at 12.0%	$ 30,822	$ 20,211
RME Finance term loan, due January 2010, interest at 12.0%, net of unamortized discount	$ 33,192	$ 32,100
Convertible subordinated debentures interest at 10.5%, due October 2007	788	788
RME Finance bridge loan, due October 2009, interest at 10%	10,052	-
Mortgage loan, due March 2013; interest at 6.54%	2,800	-
Convertible subordinated debentures interest at 10.5%, due October 2007, unsecured	357	357
Mortgage loan, due June 2010; interest at LIBOR plus 2.25%	-	1,583
Mortgage loan, due March 2013; interest at 7.02%, monthly principal payment of $12	2,660	2,695
	34,410	22,582
	46,261	35,152
Less current maturities	(~~571~~497)	(~~598~~497)
	$ 33,839	$ 21,984
	$ 45,764	$ 34,655

~~During~~The ~~the~~RME ~~three~~Finance ~~months~~term ~~ended~~loan ~~March~~is ~~31,~~presented ~~2006,~~net ~~the Company received the final $10 million available under the terms~~ of ~~the~~unamortized ~~$28.5~~discount ~~million Renova Media Term Loan. Such advances were made pursuant to an agreement under which the Company agreed to extend the exercise period~~ of ~~warrants to acquire 8~~$1,~~283~~288,000 shares of Series B Preferred Stock from January 13, 2010 until October 13, 2010 in exchange for a waiver of a condition precedent that had required the Company to have passed 500,000 homes with its HFC Network in Moscow and ~~a waiver of a~~ $~~250,000 fee that would have otherwise been paid upon the drawdown of the remaining $10 million. The $~~1,~~724~~368,000, ofrespectively, ~~fair~~as ~~value~~ of ~~this~~March ~~warrant~~31, ~~extension~~2007 ~~was recorded as an increase to additional paid-in capital~~ and asDecember a31, ~~deferred debt issuance cost which is being amortized over the life of the loans extended pursuant to this agreement~~2006.

InConcurrent ~~March~~with ~~2006~~the execution of the merger agreement, pursuant to which Renova Media ,the single largest stockholder of the Company would ~~also~~acquire ~~refinanced~~all of the equity interests of the Company which it does not currently own, the Company entered into a bridge ~~mortgage~~facility ~~loan~~agreement ~~secured~~with byRME ~~real~~Finance ~~estate~~LTD, ~~property~~a inwholly-owned ~~Connecticut~~subsidiary of Renova Media. Pursuant to the bridge facility agreement, ~~pursuant~~RME Finance has agreed, subject to ~~which~~the terms and conditions therein, to make available up to $45,000,000 of unsecured, subordinated debt financing to CCTV in nine equal monthly installments during the ~~maturity~~pendency of the ~~loan~~merger. ~~was~~The ~~extended~~obligations ~~until~~of ~~March~~RME ~~2013,~~Finance to provide loans subsequent to the ~~interest~~first ~~rate~~installment ~~was~~will ~~fixed~~be atsubject 6to CCTV’s satisfaction of certain conditions on each proposed funding date.54 The bridge loan bears interest at the rate of 10% per annum, and the ~~monthly~~Company has the right to roll accrued interest into the principal ~~payments~~balance ~~were~~of ~~reduced~~the toloan ~~$11,666~~at the end of each calendar quarter.

(6)

Investment in Institute For Automated Systems

Institute for Automated System (“IAS”) is a telecommunications company that operates a data communications network in Russia. As a result of the acquisitions of CCTV and MBC in February 2004, the Company ~~had~~owns aapproximately 43.5% of the equity ~~interest~~securities inof IAS. For the three months ended March 31, ~~2006~~2007, the Company recorded $~~131~~189,000 as its 43.5% equity in IAS’s losses which ~~totalled~~totaled $~~226~~355,000 for the quarter. The Company’s equity in IAS’s losses also includes an adjustment relating to depreciation of the fair market ~~vale~~value of the allocated portion of the purchase price attributable to IAS’s buildings.

The Company’s investment in IAS is recorded at $7,~~183~~096,000 as compared to 43.5% of IAS’s shareholders’ equity which is $3,~~197~~060,000. The difference is due to the valuation of IAS as part of the process to allocate the purchase price for the acquisition of CCTV and MBC in 2004. Such difference is primarily attributable to the fair value of real estate owned by IAS and is being depreciated over a useful life of 30 years.

The following presents the summarized financial condition of IAS as of March 31, ~~2006~~2007 and December 31, ~~2005~~2006, and the results of its operations for the three month periods ended March 31, ~~2006~~2007 and ~~2005~~2006 (in thousands):

Balance Sheet	March 31, 2006	December 31, 2005
Current assets	$2,007	$1,347
Non-current assets	7,194	7,354
Total assets	$9,201	$8,701
Current liabilities	$1,396	$ 691
Non-current liabilities	455	434
Total liabilities	1,851	1,125
Shareholders’ equity	7,350	7,576
	$9,201	$8,701

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			Three months ended March 31,
Balance Sheet	March 31, 2007	December 31, 2006
Statement of Operations		2006		2005
Current assets	$ 2,241	$ 2,064
Revenues		$1,756		$1,340
Non-current assets	8,639	8,740
Cost of revenues		(1,490)		(1,093)
Total assets	$10,880	$10,804
Operating expenses		(480)		(370)
Current liabilities	$ 2,845	$ 2,512
Loss from operations		(214)		(123)
Non-current liabilities	1,000	987
Foreign currency transaction income (loss)		2		(2)
Total liabilities	3,845	3,499
Interest expense		(14)		-
Shareholders’ equity	7,035	7,305
Income tax expense		-		(6)
	$10,880	$10,804
Net loss		$ (226)		$ (131)

	Three months ended March 31,
Statement of Operations	2007	2006
Revenues	$ 2,759	$1,756
Cost of revenues	(2,396)	(1,490)
Operating expenses	(688)	(480)

Loss from operations	(325)	(214)
Foreign currency transaction income (loss)	(1)	2
Interest expense	(29)	(14)
Income tax expense	-	-

Net loss	$ (355)	$ (226)

(7)

Loss Per Share

Loss per share is computed based on the weighted average number shares of ~~Common~~common ~~Stock~~stock and equivalent shares outstanding. Diluted ~~earnings~~loss per share assumes full conversion of all convertible securities into common stock at the later of the beginning of the year or date of issuance, unless they are antidilutive. For the three months periods ended March 31, ~~2006~~2007 and ~~2005~~2006, the assumed conversion of the Company’s convertible securities, including the Series B ~~Preferred~~preferred ~~Stock~~stock, had antidilutive effects on the Company’s earnings per share.

	Three Months Ended March 31,
(in thousands, except per share amounts)	~~2006~~2007	~~2005~~2006
Numerator for basic and diluted loss per share:
Net loss, as reported	$ (26,~~257~~675)	$ (2,~~047~~560)
Preferred dividends	(56)	(56)
Beneficial conversion feature	-	(10,781)
Numerator for basic and diluted loss per share	$ (6,731)	$(2,616)
Numerator for basic and diluted loss per share	$(2,313)	$(12,884)
Denominator for basic loss per share:
Weighted average number of shares outstanding during the period	813,~~891~~972	8,~~812~~891
Effect of dilutive securities	-	-
Denominator for diluted loss per share	813,~~891~~972	8,~~812~~891
Basic and diluted loss per share	$ (0.2648)	$ (10.4629)

(8)

Stock -Based Compensation Plans

The Company’s ~~2003~~recognized ~~Stock Option Plan~~$304, ~~as amended in December 2004, (the “2003 Option Plan”) provides for option grants totaling up to 1,700,~~000 ~~shares to directors~~ and ~~key employees at exercise prices equal to at least 50% of the stock’s fair market value at date of grant. Options have a maximum term of ten years. As of March 31~~$294, ~~2006~~000, ~~the Company had reserved 1~~respectively,~~129,924~~ ~~shares~~ of ~~Common~~compensation ~~Stock~~costs ~~for~~related ~~the~~to ~~exercise of~~ stock options ~~including~~for ~~3,000~~the ~~options~~three ~~issued~~month ~~pursuant~~periods toended ~~an expired plan. At~~ March 31, 2007 and 2006, ~~437,621~~which ~~options~~are ~~remained~~included ~~available~~in ~~for~~selling, ~~grant.~~general and administrative

Effective January 1, 2006, the Company adopted the provisions of SFAS No.123R requiring that compensation cost relating to share-based payment transactions be recognized in the financial Statement of Operations. The cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity award). Prior to January 1, 2006, the Company accounted for share-based compensation to employees in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”), and related interpretations. The Company also followed the disclosure requirements of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation”, as amended by Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure”. The Company adopted SFAS No. 123R using the modified prospective method and, accordingly, financial statement amounts for prior periods 10

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~~presented~~expenses. inThere ~~this~~were ~~Form~~no ~~10-Q~~components ~~have~~of ~~not~~these ~~been~~costs ~~restated~~which were required to ~~reflect~~be capitalized into the ~~fair~~cost ~~value~~of ~~method~~the construction of ~~recognizing~~our ~~compensation~~HFC ~~cost~~Network. The ~~relating~~Company todid ~~non-qualified~~not ~~stock~~recognize ~~options~~any associated future income tax benefits in the three month periods ended March 31, 2007 and 2006.

~~There~~The ~~was~~fair ~~$294,000~~value of ~~compensation~~each ~~costs~~option ~~related~~award tois ~~non-qualified~~estimated ~~stock~~on ~~options~~the ~~recognized~~date inof ~~operating~~grant ~~results~~using ~~(included~~the inBlack-Scholes ~~selling,~~option-pricing ~~general~~model. ~~and~~Expected ~~administrative~~volatility ~~expenses)~~is inbased ~~the~~on ~~three~~implied ~~months~~volatilities ~~ended~~from ~~March~~long-term ~~31,~~traded ~~2006.~~options ~~There~~on ~~were~~the noCompany’s ~~components~~Common ofStock. Such ~~these~~model ~~costs~~uses ~~which~~historical ~~were~~data ~~required~~ to beestimate ~~capitalized~~option ~~into~~exercise ~~our~~and ~~construction~~employee termination behavior. ~~This~~The ~~expense~~expected ~~equates~~term torepresents an ~~additional~~estimate ~~expense~~ of ~~$0.03~~the ~~per~~time ~~share,~~options ~~basic~~are ~~and~~expected ~~diluted.~~to remain outstanding. The ~~adoption~~risk-free ofrate ~~SFAS~~for ~~No.~~periods ~~123R~~within ~~did~~the ~~not~~contractual ~~have~~life ~~any~~of ~~impact~~the option is based on the ~~Company’s~~U.S. ~~cash~~treasury ~~flow,~~yield ascurve ~~the~~in ~~Company~~effect ~~did~~at ~~not~~the ~~recognize~~time ~~any~~of ~~associated~~grant. ~~future~~The ~~income~~following ~~tax~~table ~~benefit~~sets inforth the ~~three~~assumptions ~~months~~used ~~ended~~to ~~March~~determine ~~31,~~compensation ~~2006~~cost for our non-qualified stock options consistent with the requirements of SFAS No. 123(R):

The Company has net operating losses for U.S. income tax reporting purposes and does not have a basis to assume that it will have taxable income in the U.S. for the foreseeable future. Accordingly, in accordance with SFAS No. 123R, an excess tax benefit (windfall) resulting from the exercise of the awards through March 31, 2006, and a related credit to Additional Paid-in Capital of approximately $723,000 was not recorded in the Company’s books. The Company will recognize the windfall upon realization.

		Three Months Ended March 31, 2007
Expected volatility		65.1% - 70.4%
Expected annual dividend yield		0%
Risk free rate of return		3.36% - 4.89%
Expected option term (years)		1.5 - 5.0

AtThe ~~March~~following ~~31,~~table ~~2006,~~summarizes ~~there~~information ~~were~~about ~~302,000~~ stock ~~options~~option ~~outstanding~~activity for ~~which~~ the ~~Company~~three ~~has~~months ~~provided~~ended for a “cashless” exercise through the immediate repurchase of shares issuable upon exercise to satisfy the aggregate exercise price of the options. Based upon the market price for the common stock of $7.63 per share at March 31, 2006, the assumed exercise of these options on a cashless basis would have resulted in the issuance of a net of 104,097 shares of common stock. There are no other buyback requirements or provisions in these options or the other outstanding stock options at March 31, 2006.2007:

The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. Expected volatility is based on implied volatilities from long-term traded options on the Company’s Common Stock. Such model uses historical data to estimate option exercise and employee termination behavior. The expected term represents an estimate of the time options are expected to remain outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. treasury yield curve in effect at the time of grant. The following table sets forth the assumptions used to determine compensation cost for our non-qualified stock options consistent with the requirements of SFAS No. 123R.

	Number of Options	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2006	1,090,265	$6.41
Granted	-	-
Exercised	-	-
Forfeited	(22,000)	5.21
Outstanding at March 31, 2007	1,068,265	$6.43

Exercisable at March 31, 2007	286,833	$3.24

		Three Months Ended March 31, 2006
Expected volatility		65.3% - 70.4%
Expected annual dividend yield		0%
Risk free rate of return		3.35% - 4.52%
Expected option term (years)		1.5 - 5.0

The following table summarizes information about nonvested stock option awards as of March 31, 2007 and changes for the three months ended March 31, 2007:

The weighted average grant-date fair value of equity options granted during the three months ended March 31, 2006 was $3.80 per share.

	Number of Options	Weighted Average Grant Date Fair Value
Non-vested at December 31, 2006	841,349	$3.81
Granted	-	-
Vested	(37,917)	$4.24
Forfeited	(22,000)	$3.05

Non-vested at March 31, 2007	781,432	$3.81

~~Under~~At ~~APB No. 25 compensation cost recognized for our non-qualified stock options awarded in the three months ended~~ March 31, ~~2005~~2007, there was ~~limited~~$1,979,000 toof ~~the~~total ~~recognition~~unrecognized ofcompensation ~~the~~ cost ~~relating~~related to ~~the~~non-vested ~~options~~non-qualified ~~granted with an exercise price that was lower than the market value of the underlying~~ stock atoption ~~the~~awards ~~grant~~which ~~date.~~is ~~The~~expected ~~following~~to ~~table~~be ~~sets~~recognized ~~forth~~over ~~pro~~a ~~forma~~weighted-average ~~information~~period ~~for the three months ended March 31, 2005 as if compensation cost had been determined consistent with the requirements~~ of ~~SFAS~~1.59 Noyears. ~~123R:~~

(in thousands, except per share amounts)
Net loss as reported	$	(2,047)
Add back: Stock based compensation expensed		24
Deduct: Total stock-based employee compensation determined under fair value method for fixed stock option plans, net of related tax effects		(372)
Pro forma net loss	$	(2,395)
Earnings per share of common stock:
Basic and diluted- as reported	$	(1.46)
Basic and diluted – pro forma	$	(1.50)

The following table summarizes information about stock option activity for the three months ended March 31, 2006:

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	Number of Options	Weighted Average Exercise Price
Outstanding at December 31, 2005	1,137,424	$5.28
Granted	7,500	3.81
Exercised	(7,500)	3.81
Expired unexercised	(7,500)	3.81
Outstanding at March 31, 2006	1,129,924	$5.29
Exercisable at March 31, 2006	446,333	$5.35

The total intrinsic value of options (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) exercised during the three months ended March 31, 2006 was $30,000. During the three months ended March 31, 2006, the amount of cash received from the exercise of stock options was $29,000 with no associated tax benefits realized.

The following table summarizes information about nonvested stock option awards as of March 31, 2006 and changes for the three months ended March 31, 2006:

	Number of Options	Weighted Average Grant Date Fair Value
Non-vested at December 31, 2005	733,257	$3.11
Granted	-	-
Vested	49,666	$3.17
Forfeited	-	-
Non-vested at March 31, 2006	683,591	$3.11

At March 31, 2006, there was $1,645,000 of total unrecognized compensation cost related to non-vested non-qualified stock option awards which is expected to be recognized over a weighted-average period of 2.75 years.

(9)

Retirement Plans

The ~~Company~~components ~~maintains~~of anet ~~non-contributory~~periodic ~~defined~~ benefit ~~plan~~gain ~~and~~from a defined ~~contribution~~benefit ~~plan~~pension ~~which~~plans ~~collectively~~were ~~cover~~as ~~substantially~~follows: all U.S.-based full-time employees. The defined contribution plan is funded through employees’ contributions and employer’s matching contributions. Pension expense for the Company’s defined contribution plan totaled $0 for the three month period ended March 31, 2006 and March 31, 2005, respectively, due to the use of forfeitures of previous Company contributions to meet current Company matching funding requirements.

~~The projected benefit obligations were determined using the following assumptions:~~11

	2006	2005
Discount rate	5.75%	5.75%
Future compensation growth rate	5.00%	5.00%
Long-term rate of return on plan assets	7.50%	7.50%

The required use of expected long-term rate of return on plan assets may result in recognized pension income that is greater or less than the actual returns of those plan assets in any given year. Over time, however, the expected long-term returns are designed to approximate the actual long-term returns and therefore the pattern of income and expense recognition will more closely match the pattern of the services provided by the employees. Differences between actual and expected returns are recognized in the calculation of net periodic pension cost or (income) over five years as provided for in the accounting rules.

These expected returns on plan assets take into account long-term expectations for future returns and investment strategy.

The discount rate assumptions used for pension benefit plan accounting reflects the prevailing rates available on high-quality, fixed-income debt instruments. The rate of compensation increase is another significant assumption

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used in the actuarial model for pension accounting and is determined by the Company based upon its long-term plans for such increases.

	Three Months Ended March 31,
(in thousands)	2007	2006
Components of periodic benefit cost:
Service cost of benefits accrued	$ 2	$ 5
Interest cost on projected benefit obligations	195	201
Expected return on plan assets	(311)	(304)
Amortization of unrecognized actuarial losses	13	19

Net periodic benefit gain	$(101)	$ (79)

	Three Months Ended March 31,
(in thousands)	2006	2005
Components of periodic benefit cost:
Service cost of benefits accrued	$ 5	$ 7
Interest cost on projected benefit obligations	201	201
Expected return on plan assets	(304)	(286)
Amortization of unrecognized actuarial losses	19	32
Net periodic benefit gain	$ (79)	$ (46)

The Company has not made any contributions to the defined benefit plan since it was acquired in 1991, and it expects that it will not be required to make any contributions during 2007.

~~The~~During ~~Company~~the ~~has~~three ~~never~~month ~~made~~periods ~~any~~ended ~~contributions~~March to31, 2007 and 2006, the ~~defined~~Company ~~benefit~~made ~~plan~~matching contributions totaling $13,000 and it$0, ~~expects~~respectively, ~~that~~to itits ~~will~~defined ~~not~~contribution beretirement ~~required~~plan. The toCompany ~~make~~used ~~any~~forfeitures of previous employer contributions ~~during~~to meet matching funding requirements in 2006.

(10)

Related Party Transactions

The Company receives signal delivery services, data network services and traffic services from COMCOR. During the three-month periods ended March 31, ~~2006~~2007 and ~~2005~~2006, charges for such services totaled $~~938~~2,069,000 and $~~371~~938,000, respectively. At March 31, ~~2006~~2007, the Company was indebted to COMCOR in the amount of $~~418~~867,000.

~~CCTV~~The Company leases office space from IAS for which it ~~paid~~incurred arent ~~total~~expense totalling of $214,000 and $168,000, respectively, for the three ~~months~~month periods ended March 31, 2007 and 2006.

During the three months ended March 31, 2007, the Company recorded $65,000 of other revenue in connection with data traffic services that were provided to give high-speed internet access to Teleinform via COMCOR’s fiber optic network. The increased traffic from Teleinform’s subscribers resulted in an increase of approximately $26,000 in traffic fees charged by COMCOR. Teleinform is a Moscow, Russia-based cable company affiliated with Renova Media.

In addition, subsequent to March 31, 2007, under an informal arrangement with Teleinform, the Company began limited testing to determine the technical feasibility of providing AKADO content to Teleinform’s subscribers. Depending on the outcome of this testing, the Company may enter into negotiations with Teleinform to make AKADO content available to all homes connected to Teleinform’s network.

(11)

Commitments and Contingencies

Litigation

The Company is involved in various legal proceedings generally incidental to its business. The outcome of any litigation or regulatory issues contains an element of uncertainty. Given the legal and factual issues that remain outstanding related to the Company’s litigation, the Company currently has no basis to ascertain the range of loss, should any occur, with respect to an outcome that may be considered unfavorable.

Morton International, Inc. v. A.E. Staley Mfg. Co. et al. and Velsicol Chemical Corp. v. A.E. Staley Mfg. Co. et al.

As originally reported in the Company’s Form 10-K for the year ended February 28, 1997, in July 1996, two companion lawsuits were filed in the United States District Court for the District of New Jersey, by various owners and operators of the Ventron-Velsicol Superfund Site (the “Site”) in Middlesex County, New Jersey (“Lawsuits”). The Lawsuits, which were subsequently consolidated, were filed under the Comprehensive Environmental Resource Compensation and Liability Act (“CERCLA”), the Resource Conservation and Recovery Act, the New Jersey Spill Act and New Jersey common law, alleging that the defendants (over 100 companies, including the Company’s then wholly-owned subsidiary, The JM Ney Company (“JM Ney”) were generators of certain wastes allegedly processed at the Site. The Lawsuits seek recovery of costs incurred and a declaration of future liability for costs to be incurred by the owners and operators in studying and remediation the Site.

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Subsequent to the filing of the Lawsuits, the Company sold JM Ney’s operations in 2002 in an asset transaction. JM Ney, which has been renamed Andersen Land Corp. (“ALC”), retained certain liabilities of JM Ney under the contractual terms of the sale, including certain legacy liabilities arising out of the Lawsuits.

As further reported in the Company’s Form 10-Q for the period ended November 30, 2001, this case was dismissed without prejudice and the plaintiffs did not have the ability to reinstate their claims for a minimum of three years until October 2004. In November 2006, the Plaintiffs notified the Company, along with other former defendants in the 1996 lawsuits that it intended to reinstate the 1997 actions because the United States Environmental Protection Agency (“USEPA”) had selected a remedy for Operable Unit 1 (“OU1”) of the Remedial Action for the Site. Before reinstating the lawsuits, however, plaintiffs invited the defendants to participate in an alternate dispute resolution process or mediation (collectively, “ADR”) to determine if the parties are able to settle plaintiffs’ past costs demands for OU1 as well any future costs incurred to investigate and remediate the Berry’s Creek Area of the Site, also known as Operable Unit 2 (“OU2”).

Subsequent to the Plaintiffs’ notice, the USEPA sent a letter to the Company, along with more than 140 other parties, notifying each of its potential liability at the OU2 area and inviting the parties to perform the Remedial Investigation and Feasibility Study for the OU2 Study Area. The parties have until July 2007 to respond to this request.

Given the legal and factual issues that remain outstanding, the Company currently has no basis to ascertain the range of loss, should any occur, with respect to an outcome that may be considered unfavorable. Nor is there any basis on which to predict the timing of any such loss. The Company is advised that ALC and the Company appear to have meritorious defenses and senior management of ALC and the Company are committed to defend in an appropriate manner any litigation that may arise subsequent to termination of ADR proceedings being undertaken in connection with the pending Lawsuits.

Levy Investments, Ltd. v. Moscow CableCom Corp., Oliver R. Grace, Jr., Jay M. Haft, Andrew Intrater, Ivan Isakov, Valentin V. Lazutkin, James J. Pinto, Vladimir A. Serdyuk, Mikhail Smirnov, David R. Van Valkenburg, Alexander P. Vladislavlev, and Renova Media Enterprises Ltd.

On November 7, 2006, following Renova Media’s announcement of its initial proposal to acquire the equity interest in the Company that it does not directly own in a negotiated acquisition at $10.80 per share of common stock, Levy Investments, Ltd. filed a purported class action on behalf of our public stockholders in the Court of Chancery for the State of Delaware, against us, each of our directors and Renova Media. The plaintiff alleges, among other things, that the consideration offered to our stockholders pursuant to Renova Media’s initial proposal of $10.80 per share of common stock is not adequate and constitutes an unfair price. In addition, the plaintiff alleges that Renova Media’s initial proposal is an unfair attempt to freeze out our public stockholders and is designed to enrich Renova Media at the expense of our public stockholders. Plaintiff seeks injunctive relief or, in the alternative, rescission, and an accounting and damages. We believe the allegations are without merit and plan to defend them vigorously

Purchase Commitments

AtPurchase ~~March~~commitments ~~31,~~for ~~2006,~~network ~~CCTV~~design ~~had~~and ~~issued~~construction, ~~commitments~~including ~~totaling~~equipment ~~$4,008,000~~for insubscriber ~~connection~~equipment ~~with~~and ~~technology~~other ~~upgrades,~~materials ~~the~~totaled ~~build~~approximately ~~out~~$11,447,000 as of March ~~its~~31, ~~“last-mile”~~2007. Commitments ~~access~~for ~~network~~the inlease ~~Moscow~~of space, ~~the~~all ~~purchase~~ of ~~subscriber~~which ~~equipment~~expire ~~and~~within ~~other~~one ~~operating~~year, ~~requirements~~total $1,277,000.

Content Providers

Due to undefined procedures regulating the legal relationships between cable TV operators, the Company is contingently liable for amounts that may be due from organizations which operate collective copyright agreements with respect to copyright programs transmitted through the Company’s HFC Network.

Access to MFON

The Company gains access to its signals through COMCOR’s MFON pursuant to service agreements for the preferred use of secondary nodes which expire at the end of 2054. The service agreements are cancelable at anytime by the Company subject to a cancellation penalty of 140,000 rubles for each secondary node connected to the Company’s network for less than three years. At March 31, 2007, 390 of COMCOR’s 625 secondary nodes connected to the Company’s network had been in service for less than three years.

Licenses

The Company has licenses for construction engineering and construction services which were issued in August and September 2003 and expire in 2008. The Company similarly expects these licenses will be renewed upon their expiration. Due to the absence of defined procedures regulating cable TV operators, the Company has not made a provision for the possible payment to organizations which operate collective copyright agreements with respect to certain copyright programs transmitted through its HFC Network.

~~Russian Taxation and Legislation~~13

Russian tax, currency and customs legislation is subject to varying interpretations, and changes, which can occur frequently. Management’s interpretation of such legislation as applied to transactions and activity conducted by the Company, including those between and among the Company and its consolidated subsidiaries, may be challenged by the relevant regional and federal authorities and could result in assessments not provided for in the consolidated financial statements. In particular, recent developments in the Russian environment suggest that the Russian authorities are becoming more active in seeking to enforce interpretations of the tax legislation, which may be different from their previous interpretations or practices. Fiscal periods remain open to review by the authorities for three calendar years preceding the year of review (one year in the case of customs). Significant additional taxes, penalties and interest may be assessed on taxpayers in the Russian Federation as a result of such reviews. Under certain circumstances reviews may cover longer periods.

Russian tax authorities have recently begun to increase control over companies regarding their ability to recover VAT paid to suppliers in excess of VAT received from customers for companies which have debt within their capital structures. CCTV has received both favorable and unfavorable rulings from tax courts in Russia. CCTV is

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~~currently defending our interpretations of tax regulations which if CCTV is not successful, may result in a write-down of a portion of the value of the VAT recoverable recorded as of December 31, 2005~~expiration. ~~Accordingly,~~ inDue ~~the event that CCTV’s appeals are not successful, certain portions of VAT recoverable that have been recorded and future payments of VAT~~ to ~~suppliers may not be fully recoverable through~~ the ~~offset~~absence of ~~VAT~~defined ~~received~~procedures byregulating ~~CCTV~~cable ~~from~~TV ~~its customers as has been customary. At this time~~operators, the Company ~~believes that its position will prevail and that it will be able to recover the tax receivable recorded as of December 31, 2005 and any future VAT paid. Accordingly, no provision for nonrecoverability~~ has ~~been~~not made ~~in the accompanying consolidated financial statements as of March 31, 2006. However, because of~~ a ~~certain~~provision ~~degree~~for ~~of unpredictability in~~ the ~~overall~~possible ~~process,~~payment ~~there~~to ~~can~~organizations bewhich nooperate ~~assurances~~collective ~~that~~copyright ~~the~~agreements ~~expected~~with ~~recoverability~~respect ~~of this VAT asset will actually occur and accordingly, at March 31, 2006, there is a possibility for a write-down of as much as $300,000~~ to ~~$700,000~~certain ofcopyright ~~the~~programs ~~value~~transmitted ofthrough ~~this~~its ~~asset~~HFC ~~in a future period~~Network.

AsRussian ofTaxation ~~March 31, 2006, management believes that its interpretation of the relevant legislation is appropriate~~ and ~~CCTV’s tax, currency and customs positions will be sustained.~~Legislation

~~Litigation~~Russian tax, currency and customs legislation is subject to varying interpretations, and changes, which can occur frequently. Management’s interpretation of such legislation as applied to transactions and activity conducted by the Company, including those between and among the Company and its consolidated subsidiaries, may be challenged by the relevant regional and federal authorities and could result in assessments not provided for in the consolidated financial statements. In particular, recent developments in the Russian environment suggest that the Russian authorities are becoming more active in seeking to enforce interpretations of the tax legislation, which may be different from their previous interpretations or practices. During the three months ended March 31, 2007, the Company added $314,000 to its provision for income taxes, VAT, penalties and interest that could possibly be assessed relating to activities conducted by the Company and its Russian and Cyprus-based subsidiaries that could lead the Russian tax authorities to conclude that the Company has a permanent establishment in Russia.

~~The~~Fiscal ~~Company~~periods isremain ~~involved~~open into ~~various~~review ~~legal~~by ~~proceedings~~the ~~generally~~authorities ~~incidental~~for tothree ~~its~~calendar ~~business. The~~years ~~outcome~~preceding ofthe ~~any~~year ~~litigation~~of orreview ~~regulatory~~(one ~~issues~~year ~~contains~~in anthe ~~element~~case of ~~uncertainty~~customs). ~~Given~~Significant ~~the~~additional ~~legal~~taxes, penalties and ~~factual~~interest ~~issues~~may ~~that~~be ~~remain~~assessed ~~outstanding~~on ~~related~~taxpayers toin the ~~Company’s~~Russian ~~litigation,~~Federation ~~the~~as ~~Company~~a ~~currently~~result ~~has no basis to ascertain the range~~ of ~~loss,~~such ~~should~~reviews. Under ~~any~~certain ~~occur,~~circumstances ~~with~~reviews ~~respect to an outcome that~~ may becover ~~considered~~longer ~~unfavorable~~periods.

During 2006, the Company recorded a provision of $1,118,000 relating to the Company having offset value added taxes (“VAT”) it received from its customers against VAT paid to suppliers and vendors in 2003 and 2004. These claims are being contested in the Russian tax court system. Although the Company believes it has properly accounted for the payment and receipt of VAT in accordance with relevant legislation, there can be no assurance that Company will prevail in this process. The Russian Tax Inspector has made several additional claims, several of which the Company’s position prevailed upon appeal. In the event that the Company is not successful in defending its position on known claims and claims that have yet to be asserted, the provision as of March 31, 2007 ultimately may not be adequate.

(12)

~~Subsequent~~Comprehensive ~~Events~~Loss

~~Renova~~Components ~~Media~~of ~~Commitment~~comprehensive loss include net loss and certain transactions that have generally been reported in the consolidated statement of stockholders’ equity, and consisted of the following (in thousands):

Subsequent to March 31, 2006, the Company received a commitment from Renova Media pursuant to which Renova Media agreed to provide sufficient capital to enable the Company to continue its operations for a period of at least one year from the date the Company filed its Annual Report on Form 10-K for the year ended December 31, 2005, which report was filed on April 28, 2006. This commitment was further guaranteed by Renova U.S. Holdings (“RUSH”), an affiliate of Renova Media. RUSH’s guarantee was supported by $5 million of escrowed funds which had been placed in a non-interest bearing account, and for which the Company is accruing a fee based upon the amount of the escrowed funds and the Federal Funds Rate in the U.S. Following the receipt of the proceeds from a private placement of Company securities in May 2006, the Company has entered into agreements to cancel the Renova Media commitment, the RUSH guarantee and escrow agreement that supported this guarantee.

	Three Months Ended
	March 31, 2007	March 31, 2006
Net loss applicable to common shareholders	$ (6,731)	$ (2,560)

Currency translation gain	136	1,053
Pension expense, net of tax	(42)	–

Comprehensive loss	$ (6,637)	$ (1,507)

~~Private~~The ~~Placement~~components of ~~Common~~accumulated ~~Stock~~other comprehensive income (loss) at March 31, 2007 and ~~Warrant~~December ~~Units~~31, 2006 consisted of the following (in thousands):

In May 2006, the Company received $20,174,000 of proceeds from the sale of 2,438,684 units of the Company’s securities at an issue price of $8.2725 per unit. Each unit consists of one share of the Company’s Common Stock and one-half warrant. Each whole warrant entitles the holder to purchase one share of the Company’s Common Stock for $9.852 per share at anytime through May 5, 2008. Renova Media purchased 1,208,824 units, officers and directors of the Company, or entities controlled by them purchased a total of 608,860 units, while the remaining 621,000 units were purchased by unaffiliated investors.

	March 31, 2007	December 31, 2006
Currency translation gain	$ 1,460	$ 1,324
Pension expense, net of tax	(1,372)	(1,330)

Total accumulated other comprehensive income (loss)	$ 88	$ (6)

~~Shareholder Transaction~~14

InBack ~~June 2006, Renova Media Enterprises Ltd. announced that they had reached an agreement~~ to ~~acquire~~Table ~~a controlling ownership position in COMCOR. As~~ of ~~the date of the announcement, Renova Media and COMCOR own approximately 35.9% and 26.6%, respectively, of the Company’s outstanding voting equity shares.~~ Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The accompanying Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the MD&A in the Company’s Annual Report on Form 10FORWARD-KLOOKING ~~for the year ended December 31, 2005.~~STATEMENTS

~~Back~~This report contains "forward-looking statements". All statements other than statements of historical facts are “forward-looking statements” for purposes of these provisions, including any projections of earnings, revenues or other financial items, any statement of the plans and objectives of management for future operations, and any statement of assumptions underlying any of the foregoing. These statements may contain words such as “expects,” “anticipates,” “plans,” “believes,” “projects” and words of similar meaning. These statements relate to ~~Table~~our future business and financial performance, including CCTV's development, its ability to attract new subscribers, to continue to expand its network, to achieve positive cash flow and our ability to raise funds for CCTV's development. The actual outcome may differ materially from these statements. The risk factors listed in our Annual Report on Form 10-K for the year ended December 31, 2006, as well as any cautionary language in this quarterly report, provide examples of ~~Contents~~risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. There may be other risks that we have not described that may adversely affect our business and financial condition. We disclaim any obligation to update developments of these risks or to announce publicly any revision to any of the forward-looking statements contained in this report, or to make corrections to reflect future events or developments.

Overview

We are a company that delivers cable television, high speed data transmission and Internet services to our customers in Moscow, Russia. Our Moscow operations are in an early stage of growth and we are currently expanding our network and increasing the customer base for our services.

~~During~~Business ~~the~~Plans ~~three months ended March 31, 2006, we used the remaining proceeds from a $51 million debt and equity financing arrangement~~ with Renova Media which closed in January 2005. Such proceeds used in the first quarter include the final $10 million of additional borrowings available pursuant to the debt portion of this financing arrangement. These proceeds were used to expand our HFC Network, support our ambitious sales and marketing efforts, and support the administrative cost of a growing organization.Affiliates

InCommencing ~~May~~in ~~2006,~~the wefirst ~~raised~~quarter ~~$20~~2007,~~174,000~~ ~~from~~we ~~the~~generated ~~private~~additional ~~placement~~revenue ofin ~~our~~connection ~~equity securities. We believe that the proceeds from this private placement provide us~~ with ~~sufficient~~data ~~capital~~traffic toservices ~~enable us to manage our business activities uninterrupted without the need for the commitments and guarantees of such commitments received from Renova Media and its affiliates~~ that ~~had~~were ~~been~~provided ~~entered into during April 2006~~ to ~~address~~give ~~our~~high-speed ~~concerns~~internet ~~about~~access ~~our ability~~ to ~~continue~~Teleinform tovia ~~fund~~COMCOR’s ~~our~~multi-fiber ~~operating~~optic ~~activities for at least one year~~network. The ~~Accordingly,~~increased wetraffic ~~have~~from ~~entered~~Teleinform’s ~~into~~subscribers ~~agreements~~resulted toin ~~cancel~~an ~~the~~increase ~~Renova Media commitment, the guarantee~~ of ~~such~~approximately ~~commitment by Renova US Holdings~~$26,000 ~~and~~in the ~~escrow~~traffic ~~arrangement~~fees ~~that~~charged ~~supported~~by ~~this guarantee~~COMCOR.

~~Our~~In ~~Board~~addition, ofsubsequent ~~Directors has similarly removed the operating restrictions that had been imposed on management that restricted our ability~~ to ~~enter~~March ~~into~~31, ~~new~~2007, ~~commitments~~under ~~for~~an ~~new~~informal ~~construction~~arrangement ~~and~~with ~~controlled~~Teleinform, ~~our~~we ~~business~~began ~~activities~~limited totesting ~~cause us~~ to ~~operate~~determine inthe atechnical ~~manner~~feasibility ~~that~~of ~~would~~providing ~~have~~AKADO ~~enabled~~content us to ~~live~~Teleinform’s ~~within~~subscribers. ~~then-existing~~Depending ~~cash~~on ~~resources.~~the ~~These~~outcome ~~operating~~of ~~restrictions~~this ~~had~~testing, ~~also~~we ~~temporarily~~may ~~restricted~~enter usinto innegotiations ~~proceeding~~ with ~~certain~~Teleinform ~~sales~~to ~~and~~make ~~marketing~~AKADO ~~initiatives~~content inavailable to all the ~~second~~homes ~~quarter~~connected ofto ~~2006~~Teleinform’s network.

~~Although~~As wepart ~~believe~~of ~~that~~our ~~the~~“triple ~~funds~~play” ~~received~~strategy, ~~from~~we ~~the~~also ~~May~~may ~~2006~~offer ~~private~~telephone ~~placement~~service ~~will~~through ~~greatly~~the ~~assist~~Internet us in collaboration with our ~~further~~43.5% ~~expansion~~owned ~~plans~~affiliate, weInstitute ~~cannot~~for ~~give~~Automated ~~any~~Systems ~~assurance~~(“IAS”). ~~that~~Technical ~~the~~collaboration ~~funding~~with ~~provided~~IAS byis ~~this~~continuing ~~private~~and ~~placement, or that~~ which ~~may~~we behope ~~obtained~~will result in the ~~future,~~development ~~will~~of bebusiness ~~sufficient~~terms tobetween ~~enable~~the ustwo tocompanies ~~continue~~and ~~the~~a ~~construction~~future offering of the ~~HFC~~services ~~Network~~within ~~to cover all~~ the ~~additional~~areas ~~sections~~ of Moscow to which we have ~~targeted,~~gained ~~or to otherwise position us to achieve profitability and positive cash flows~~access.

InRESULTS ~~the~~OF ~~absence~~OPERATIONS of- ~~any~~THREE ~~new~~MONTHS ~~funding~~ENDED ~~that~~MARCH ~~we may receive in the future~~31, ~~the~~2007 ~~Company’s~~VS. ~~Board~~THREE ofMONTHS ~~Directors~~ENDED ~~has~~MARCH ~~directed management to operate within existing cash resources and to develop a scaled-down operating plan for possible implementation in the third fiscal quarter. Accordingly~~31, ~~we believe that our existing cash resources are sufficient to enable us to continue in business for a period of not less than 12 months.~~2006

~~Changes~~For inthe ~~Critical~~three ~~Accounting~~months ~~Policies~~ended March 31, 2007, the Company reported net loss applicable to common shareholders of $6,731,000, or $0.48 per share, as compared to a loss applicable to common shareholders of $2,616,000 or $0.29 per share for the three months ended March 31, 2006.

With the implementation of SFAS No. 123(R) effective January 1, 2006, stock based compensation changes our financial statements as detailed in Note 8 to the financial statements. The fair value of stock options is determined using the Black-Scholes valuation model. Determining the amount of expense for stock-based compensation, as well as the associated impact to the balance sheets and statement of cash flows, requires the use of estimates. The most significant factors of that expense that require estimates or projections include the expected volatility, and expected life of employee stock options.

The expected volatility of options is determined based upon an analysis of historical volatility using a rolling 12 month period for reference. The expected lives of options are determined based upon our historical share option exercise experience using options exercised during the last three years.

RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2006 VS. THREE MONTHS ENDED MARCH 31, 2005

For the three months ended March 31, 2006, the Company reported net loss applicable to common shareholders of $2,383,000, or $0.27 per share, as compared to a loss applicable to common shareholders of $12,884,000 or $1.46 per share for the three months ended March 31, 2005. The per share results are not comparable because the calculations of the prior year’s, first quarter loss per share includes the recognition of non-cash beneficial conversion feature charges to accumulated deficit totaling $10,781,000 relating to securities issued to Renova Media which added $1.22 per share to our per share loss for that period.

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The per share results for each of the three month periods ended March 31, 2006 and 2005 do not reflect the inclusion in the Company’s outstanding equity securities of the Series B Preferred Stock issued to Renova Media in January 2005. The inclusion of such shares, which have a limited liquidation preference for four years, in the per share loss calculations are considered to be anti-dilutive because their inclusion would have the effect of lowering our reported loss per share. Had such shares been included in the per share calculations, our pro forma loss per share for the three months ended March 31, 2006 and 2005 would have been $0.18 and $0.73, respectively, instead of $0.27 and $1.46 per share as reported.

Subscription revenue, connection fees and equipment sales

For the three months ended March 31, ~~2006~~2007, we recorded total revenues of $411,~~109~~292,000 from which we recognized a gross margin of $14,~~251~~076,000, or 3036.41% of revenues. In the first quarter of ~~2005~~2006, the Company recorded total revenues of $24,~~231~~109,000, from which it recognized a gross margin of $~~743~~1,251,000, or 3330.34% of revenues. Components of ~~revenue~~sales and revenues and gross margin are as follows (in thousands):

	Three Months Ended March 31,
	2006	2005	Change
Television services	$1,003	$ 544	84.4%
Internet access services	2,777	1,549	79.3%
Connection fees and equipment sales	273	96	184.4%
	4,053	2,189	85.2%
Other revenue	56	42	33.3%
Total revenue	4,109	2,231	84.2%
Cost of sales	2,858	1,488	92.1%
Gross margin	$1,251	$ 743	68.4%

Television and Internet service revenues increased as a result of the continued expansion of our HFC Network and further progress in gaining subscribers and improving market penetration, as noted in the following table:

	March 31,	December 31,	March 31,	Year-to-date	One-year
	2006	2005	2005	Change	Change
Homes Passed	398,895	325,954	203,244	22.4 %	96.3%
Active Subscribers
Terrestrial television	96,914	85,994	67,714	12.7 %	43.1%
Cable television	22,256	15,618	6,821	42.5 %	226.3%
Internet	46,444	34,600	19,127	34.2 %	142.8%
Penetration levels
Terrestrial television	24.3%	26.4%	33.3%
Cable television	5.6%	4.8%	3.4%
Internet	11.6%	10.6%	9.4%

During the three month period ended March 31, 2006, aggressive marketing efforts and the continued expansion of our HFC Network have led to increases in subscribers and increases in market penetration levels for our cable television and Internet access services. This growth in the number of subscribers has been the primary factor in the revenue increases noted. During the quarter we had a net increase of 6,638 cable television customers and 11,844 Internet customers. During the first quarter of 2005 the number of active cable television customers had declined by 447 due to a suspension of our marketing efforts pending the receipt of subscriber equipment supporting the new digital platform that was installed in the third quarter of 2005. Such marketing efforts resumed late in the second quarter of 2005 upon the receipt of this subscriber equipment. The first quarter 2006 Internet subscriber growth of 11,844 subscribers was nearly 3.9 times as many new Internet subscribers as the 3,064 net new active customers for these services which were gained during the first quarter of 2005.

We maintained our average monthly revenue per active subscriber (“ARPU”) for terrestrial services at approximately $1.50 for the first quarter of 2006. ARPU for cable television services was $10.61 for the first quarter of 2006 as compared to $11.74 for the comparable period in 2005, ARPU from Internet access services was $23.14 for the three months ended March 31, 2006 as compared to $29.78 for the three months ended March 31, 2005. This decrease in the cable television ARPU is due to the effects of the discounts offered in bundling these services with Internet, although we have noted an increase in the proportion of cable television revenues being

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derived from subscriptions to NTV Plus content, which generally has higher monthly tariff rates. ARPU for Internet services reflects the continuation of pricing pressures noted in the prior year, and was lower than the $24.13 per subscriber APRU noted for the fourth quarter of 2005.

(unaudited)	Three Months Ended March 31,
	2007	2006	Change
Terrestrial broadcasting television services	$ 1,092	$ 416	162.5%
Digital cable television services	2,774	587	372.6%
Internet access services	6,905	2,777	148.6%
Connection fees and equipment sales	360	273	31.9%
	11,131	4,053	174.6%
Other revenue	161	56	187.5%

Total sales and revenues	11,292	4,109	174.8%
Cost of sales	7,216	2,858	152.5%

Gross margin	$ 4,076	$ 1,251	225.8%

	March 31,	December 31,	March 31,	Year-to-date	One-year
	2007	2006	2006	Change	Change

Homes Passed	853,537	782,249	398,895	9.1 %	114.0%
Active Subscribers
Terrestrial television	203,760	173,558	96,914	17.4%	110.2%
Cable television	84,431	65,310	22,256	29.3%	279.4%
Internet	118,158	98,106	46,444	20.4%	154.4%

Penetration levels
Terrestrial television	23.9%	22.2%	24.3%
Cable television	9.9%	8.3%	5.6%
Internet	13.8%	12.5%	11.6%

During the three month period ended March 31, 2007, enhanced marketing efforts and the continued expansion of our HFC Network have led to increases in subscribers and increases in market penetration levels for our cable television and Internet access services. This growth in the number of subscribers has been the primary factor in the revenue increases noted. During the quarter we had a net increase of 19,121 cable television customers and 20,052 Internet customers. In seven selected areas in which we have had a presence for an extend period of time and which comprise approximately 20.8% of the total homes passes as of March 31, 2007, market penetration for cable television services increased from 10.8% as of December 31, 2006 to 12.5%, and penetration levels for Internet services increased from 24.7% to 26.2%. As a result of the expansion of our HFC Network and the increases in our market penetration, our subscriber service revenues during the first three months of 2007 totaled approximately $10,771,000, which is an increase of approximately 184.9% over 2006 first quarter subscriber service revenues of $3,780,000. Average revenue per subscriber (“ARPU”) for terrestrial television services improved from $1.50 during the first quarter of 2006 to $1.92 during the first quarter of 2007, due to a tariff increase in 2006 and to the strengthening of the Russian ruble as compared to the US dollar. ARPU for cable television services increased from $10.61 during the first quarter of 2006 to $12.30 in 2007 due to increased take-up of additional premium services, including content offered by NTV Plus and the introduction of pay-per-view services. ARPU for Internet services declined from $23.14 during the first quarter of 2006 to $21.37 during the first quarter of 2007, primarily due to the Company’s need to adjust its pricing to maintain competitiveness in the Moscow market. The impact of change in the exchange rate of the Russian ruble to the US dollar contributed approximately $712,000, or 10.2% of the overall increase in service revenues.

Connection fees and equipment sales

For the three months ended March 31, ~~2006~~2007, we recorded revenue of $~~273~~360,000 from connection fees and installation revenue as compared to the $96273,000 of revenues recorded during the three months ended March 31, ~~2005~~2006. The increase in revenue relates to a significant increase in the number of new subscribers for our cable television and Internet access services, which has resulted from the expansion of our HFC Network and ~~aggressive~~enhanced sales and marketing initiatives. During the first quarter of 2005, sales of our cable television services had stopped, as we were waiting for the installation of our digital platform and the set-top boxes compatible with this more advance technology

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Other revenue

For the three months ended March 31, ~~2006~~2007, we recorded $56161,000 of other revenue which represents an increase of 33187.35% from the $4256,000 of other revenue recorded in the prior year. During the three months ended March 31, 2007, the Company recorded $65,000 of other revenue in connection with data traffic services that were provided to give high-speed internet access to Teleinform’s subscribers via COMCOR’s multi-fiber optic network. Teleinform is a Moscow, Russia-based cable company affiliated with Renova Media.

We also generated approximately $30,000 of revenue from the construction of an access network within a hotel complex through which we provide our television and internet services.

Cost of sales

Cost of sales for the three months ended March 31, ~~2006~~2007 totaled $27,~~858~~216,000 or 6963.69% of total ~~revenue~~sales and revenues to produce gross margin of $14,~~251~~076,000. During the prior year’s first quarter, cost of sales totaled $12,~~488~~858,000, or 6669.76% of revenue to produce $~~743~~1,251,000 of gross margin. Payments for use of secondary nodes increased by approximately 3178% as a result of an increase in the number of secondary nodes leased ~~and increased monthly charges for such nodes which took effect in March 2005~~. At March 31, ~~2006~~2007, we were leasing ~~352~~625 secondary nodes from COMCOR, as compared to ~~253~~352 nodes as of March 31, ~~2005~~2006. Deprecation and amortization expense increased by 89252.54% as a result of the expansion of our HFC Network and other infrastructure additions during the past year and from $516,000 of accelerated depreciation of our network in specific zones where we have over built outdated technology. Compensation expense ~~increased~~decreased by ~~173~~34.52% due to ~~increase~~increased incapitalization ~~personnel~~of these costs into the value of our network construction. This includes an adjustment of $439,000 for ~~installation~~costs ~~and~~that tohave ~~manage~~been ~~Internet~~determined ~~growth~~should have been capitalized in prior years. WeAll ~~are~~other ~~deferring~~expenses ~~certain~~increased ~~installation~~392.4% ~~and~~principally ~~equipment~~due to costs ~~and~~related ~~amortizing~~to ~~them~~providing ~~over~~our digital television product to our subscriber base which grew 302.5% from March 31, 2006 to March 31, 2007. Despite increasing our traffic by 299% from March 31, 2006, the ~~estimated~~total ~~lives~~traffic ofcost increased by only 137% as we were able to renegotiate the ~~customers for~~terms ~~Internet~~and ~~access~~significantly ~~services.~~reduce the costs of our traffic through our related party traffic provider

Operating expenses

Operating expenses totaled $410,~~385~~761,000 during the three months ended March 31, ~~2006~~2007, which is a 80145.34% increase from the $24,~~432~~385,000 of such expenses reported for the three months ended March 31, ~~2005~~2006. The increased costs of approximately $16,~~830~~376,000 are primarily due to increased compensation ~~expense,~~and ~~including~~benefits ~~$249,000~~due ~~relating~~ to ~~stock~~the ~~options~~expansion of our activities, increased advertising cost and ~~also~~increased tolegal anand ~~increase~~professional offees ~~$144~~incurred in connection with the proposal for a negotiated acquisition from Renova Media,~~000~~ the negotiation of the merger agreement entered into in ~~advertising~~February ~~and~~2007, work ~~marketing~~relating ~~costs~~to required SEC filings and other activities in connection with the ~~remaining~~proposed ~~increase~~merger ~~relates~~and tothe ~~administrative~~increased costs toassociated ~~support~~with the ~~needs~~audits of our ~~growing~~year ~~business.~~end financial statements and the review of interim financial statements.

Equity in losses of IAS

For the three months ended March 31, ~~2006~~2007, we recorded a $~~131~~189,000 ~~expense~~ as our 43.5% equity in the losses of IAS as compared to $57131,000 of such equity in IAS’s losses for the three months ended March 31, ~~2005~~2006. IAS’s losses for the quarter ended March 31, ~~2006~~2007 were ~~higher~~larger than the losses we reported in the prior year primarily due to ~~the~~increased ~~depreciation~~legal ofand administrative costs which have more than offset the ~~fair~~increased ~~value~~gross ~~recorded~~margin generated from a 57.1% increase in ~~connection~~revenues, as compared with the ~~2004~~revenues ~~acquisition~~from ofthe ~~CCTV~~three months ended March 31, 2006.

Investment income and other income

For the three months ended March 31, ~~2006~~2007, investment income and other income totaled $~~125~~121,000 as compared to $~~249~~125,000 in the comparable period in the prior fiscal year. The ~~decline~~modest indecrease ~~such income~~ is ~~primary~~primarily due to ~~the~~ lower levels of ~~available funds to invest on a short-term basis. In the prior year’s first quarter, we received investment~~ income recorded from ~~the~~deferred ~~investment~~compensation intrust ~~liquid marketable income securities of the proceeds of the Renova Media equity and debt financing that were not immediately required to be employed in the expansion of our business activities~~accounts.

Interest expense

Interest expense totaled $~~609~~948,000 for the three months ended March 31, ~~2006~~2007 which is a $30339,000 increase from the $~~579~~609,000 of interest expense ~~recorded~~reported in the comparable period of the prior fiscal year. ~~Interest expense on the RME Term Loan, which was slightly offset by lower outstanding balances on the Company’s 10.5% Subordinated Debentures, accounted for the increase.~~ Actual interest costs increased by $~~192~~434,000 as the reported expense for the three months ended March 31, ~~2006~~2007 and ~~2005~~2006, excludes $~~197~~292,000 and $35197,000, respectively, of interest on the RME Finance Term Loan and on a bridge loan agreement with RME Finance which ~~has~~have been capitalized into construction in process. ~~The~~Interest ~~Company~~expense ~~has~~increased from the ~~option~~RME ofTerm ~~rolling~~Loan ~~interest~~due onto the ~~RME~~quarterly ~~Term~~rolling ~~Loan~~of accrued interest into the principal balance of the loan, orand ~~paying~~from $10 million of borrowings under the ~~interest~~RME ~~quarterly~~Finance bridge loan. To ~~date,~~These weincreases ~~have~~were ~~rolled~~slightly ~~the~~offset by lower interest ~~into~~amounts ~~the~~on ~~principal~~reduced atoutstanding ~~each~~balances ~~quarterly~~of ~~payment~~the ~~date~~Company’s 10.5% Subordinated Debentures.

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Foreign currency transaction gain ~~(loss)~~

During the three months ended March 31, ~~2006~~2007, we recorded a functional currency transaction gain of $1,~~357~~099,000, as compared to a ~~loss~~gain of $31,357,000 for the comparable period in ~~2005~~2006. The Russian Ruble is the functional currency of our primary operating subsidiary in Russia, which has our dollar denominated long-term borrowings recorded in ~~Rubles~~rubles. As a result of the strengthening of the ~~Ruble~~ruble against the U.S. Dollar during the three months ended March 31, ~~2006~~2007, the Company recognized athe indicated gain.

Income tax benefit

Income tax expense has been accrued based upon the estimated effective tax rates for the fiscal year, after considering valuation allowances related to our ability to realize such tax benefits and based upon an evaluation of deferred income tax liabilities relating to changes in the recorded values of certain non-current assets~~, including but not limited to, the amortization of intangible assets.~~ Accordingly, we recorded income tax ~~benefit~~expense of $~~135~~73,000, ~~or 5.6% of the net loss before taxes~~ for the three months ended March 31, ~~2006~~2007, asprimarily ~~compared~~due to anincreases ~~income~~in the deferred tax ~~benefit~~liability ofrelating ~~$32,000,~~to orour ~~1.5%~~prepaid ofpension ~~the~~plan ~~net~~asset ~~loss~~and ~~before~~to ~~taxes~~tax ~~for~~accruals ~~the~~relating ~~three~~to ~~months~~uncertain ~~ended~~tax ~~March~~positions ~~31,~~pursuant ~~2005~~to our adoption of FIN 48.

Beneficial conversion feature of securities issued

In 2005, we recorded a beneficial conversion feature charge relating to Series B Preferred Stock, which are convertible into our Common Stock on a share-for-share basis, and which were issued for a price of $5.00 per share when the market value of our Common Stock was $6.11. This non-cash charge was reflected as a credit to additional paid-in-capital.

Preferred dividends

Dividends on our Series A Preferred Stock totaled $56,000 for each of the three months ended March 31, ~~2006~~2007 and ~~2005~~2006 due to relatively consistent numbers of shares of our Series A Preferred Stock being outstanding during each of these periods.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, ~~2006~~2007, our consolidated cash position was $84,~~678~~571,000, as compared to cash of $53,~~442~~536,000 as of December 31, ~~2005~~2006. During the quarter ended March 31, ~~2006~~2007, ~~we used $1,821,000 in~~ our operating activities, ~~which~~provided ~~is comprised of a use of cash of~~ $13,~~044~~149,000 ~~in net losses as adjusted for non-cash items, and $777,000~~ of cash ~~used~~primarily bydue ~~changes in operating assets and liabilities. The net loss adjusted for non-cash items compares~~ to athe ~~loss~~sales ~~adjusted for non-cash items~~ of $34,~~457~~800,000 ~~for~~of ~~the~~auction ~~comparable~~rate ~~period~~securities inand ~~the~~increases ~~prior year. Increases~~ in accounts payable, ~~and~~ accrued liabilities, ~~including~~and ~~amounts~~other ~~advanced~~long ~~from~~term ~~customers~~obligations ~~and~~which ~~accrued~~more ~~compensation,~~than ~~helped~~offset ~~reduce~~ the ~~use~~negative of cash ~~during~~effects ~~the~~of ~~quarter~~our net losses for ~~operating~~the ~~activities~~period.

During the quarter ended March 31, 2006, we utilized $612,~~153~~054,000 in our investing activities, ~~primarily~~which ~~for~~was comprised of capital expenditures to improve technology and expand our HFC Network. ~~This use of cash was partially offset by the liquidation of variable rate auction securities to provide funds for our operating needs.~~

Financing activities provided $119,~~190~~909,000 during the three months ended March 31, ~~2006~~2007, of which $10,000,000 relates to proceeds received from drawdowns on the Renova Media ~~debt~~bridge loan financing ~~and~~which ~~$1,244,000~~ was ~~received~~entered ~~from~~into in connection with the ~~refinancing~~signing of athe ~~mortgage~~merger ~~loan~~agreement with Renova Media. Principal debt payments on ~~the~~a ~~original~~ mortgage loan and dividend payments on our Series A Preferred Stock used a combined total of $8391,000 of cash.

We have ~~incurred~~used cash to fund our operating losses and the construction of our HFC Network since inception and we ~~expect~~remain ~~that~~dependent ~~such~~upon ~~losses~~external ~~will~~financing to continue ~~through~~these ~~2006~~activities. ~~and~~Concurrent ~~possibly~~with ~~beyond. Our~~entering ~~current~~into ~~marketing~~the ~~efforts~~Merger ~~involve~~Agreement ~~significant~~with ~~subsidies~~Renova Media pursuant to which it will acquire all of ~~the~~our ~~installation~~equity ~~costs~~interests that it does not directly own, ~~including~~in ~~subscriber~~February ~~equipment~~2007 ~~for~~we ~~new~~entered ~~customers~~into a $45 million bridge loan agreement with RME Finance, an affiliate of Renova Media, from which we received $10 million of proceeds during the three months ended March 31, 2007. ~~These~~ ~~costs~~We have ~~the~~received ~~effect~~an additional total of ~~increasing~~$10 ~~both~~million ~~recognized~~from this bridge loan in April and ~~deferred~~May ~~expenses~~2007, ~~that~~and ~~generally~~we ~~exceed~~are ~~the~~entitled ~~revenues~~to receive up to befive ~~received~~additional bymonthly draws of $5 million during the ~~subscribers~~pendency ~~for~~of ~~several~~the ~~months~~merger through October 2007, orsubject ~~entirely~~to our meeting certain operational milestones. ~~Accordingly~~In the first quarter of 2007, we ~~are~~continued ~~dependent~~the ~~upon~~expansion ~~subscriber~~of ~~retention~~our HFC Network. In the second quarter of 2007, we plan to ~~ensure~~accelerate ~~that~~such growth as a result of the ~~aggregate~~receipt ~~growth~~of funds from the bridge loan. In addition, we have also continued to invest in the growth of our subscriber ~~revenues~~base, ~~exceeds~~which ~~these~~require ~~incremental~~funds ~~costs~~to aspay ~~well~~for asboth ~~other~~current ~~incremental~~and ~~operating~~deferred installation and equipment costs, and thus, contribute to a continuing requirement for funds.

We have ~~used~~received ~~cash~~a renewal of Renova Media’s financing commitment to ~~fund~~provide us with sufficient capital to ensure that our ~~operating~~operations ~~losses~~will ~~and~~continue uninterrupted for a period of no less than one year from the ~~construction~~date of our ~~HFC~~filing ~~Network~~this ~~since~~quarterly ~~inception~~report ~~and~~on weForm ~~remain~~10-Q. ~~dependent~~This ~~upon~~commitment ~~external~~has ~~financing~~been tofurther ~~continue~~supported ~~these~~with ~~activities.~~a Inguarantee from Renova Industries Ltd., the ~~first~~majority ~~quarter~~stockholder of ~~2006~~Renova Media, wewhich ~~continued~~has committed to provide any funding that Renova Media does not provide in accordance with, and during the ~~expansion~~term of, ~~our~~Renova ~~HFC~~Media's ~~Network~~financing ~~and~~commitment. This ~~have~~commitment ~~also~~does ~~continued~~not specify the amount of capital to ~~invest~~be inprovided or the ~~growth~~terms ofon ~~our~~which ~~subscriber~~such ~~base~~capital would be provided. Further, ~~which~~we ~~require~~cannot ~~funds~~give toany ~~pay~~assurance ~~for~~that ~~both~~the ~~current~~funding ~~and~~provided ~~deferred~~by ~~installation~~Renova ~~and~~Media ~~equipment~~to ~~costs~~date, ~~and~~or ~~thus~~that which may be provided in the future, ~~contribute~~will be sufficient to enable us to continue the construction of the HFC Network to cover a ~~continuing~~sufficiently ~~requirement~~desirable ~~for~~portion ~~funds.~~of Moscow, or to otherwise position us to attract adequate subscriptions to increase recurring revenues with the goal of achieving profitability and positive cash flows.

In May 2006, we received $20,174,000 of proceeds from the sale of 2,438,684 units of the Company’s securities at an issue price of $8.2725 per unit. Each unit consists of one share of the Company’s Common Stock and one-half 18

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~~warrant. Each~~At ~~whole~~March ~~warrant~~31, ~~entitles~~2007, ~~the~~we ~~holder~~were indebted to ~~purchase~~RME onFinance ~~share~~in the ~~Company’s~~amount ~~Common~~of ~~Stock for~~ $~~9.852~~34,480,000 ~~per~~under ~~share~~the atTerm ~~anytime~~Loan ~~through~~entered ~~May~~into 5,in ~~2008~~January 2005. ~~Renova~~Pursuant ~~Media~~to ~~purchased~~this 1loan,~~208,824~~ ~~units~~we have been rolling the quarterly interest into the principal balance, ~~officers~~which ~~and~~has ~~directors~~the effect of compounding our interest costs and increasing our indebtedness to RME Finance. In connection with the ~~Company~~Term Loan, orwe ~~entities~~pledged ~~controlled~~substantially byall ~~them~~of ~~purchased~~our assets to RME Finance. As a ~~total~~result, ofthis ~~608~~reduces our flexibility in obtaining third party financing. In addition,~~860~~ ~~units~~at March 31, ~~while~~2007, we were indebted to RME Finance in the ~~remaining~~amount ~~621~~of $10,052,000 ~~units~~pursuant ~~were~~to ~~purchased~~the byinitial ~~unaffiliated~~drawdowns ~~investors.~~on a $45 million bridge loan and accrued interest thereon that has been rolled into the principal of the loan.

We ~~believe~~expect ~~that~~to use the proceeds ~~from~~of ~~this~~the ~~private~~bridge ~~placement~~loan ~~provide us with sufficient capital~~ to ~~enable~~continue usthe toexpansion ~~manage~~of our ~~business~~HFC ~~activities~~Network ~~uninterrupted~~in ~~without~~Moscow ~~the~~and ~~need~~to ~~for~~continue ~~the~~to ~~commitments~~promote and ~~guarantees~~market ofour ~~such~~services ~~commitments~~with ~~received~~the ~~from~~goals ~~Renova~~of ~~Media~~gaining ~~and~~further ~~its~~market ~~affiliates~~share ~~that~~in ~~had~~the ~~been~~areas ~~entered~~of ~~into~~Moscow ~~during~~in ~~April~~which ~~2006. Accordingly,~~ we currently have ~~entered~~a ~~into agreements to cancel the commitment from Renova Media~~presence, ~~the~~and ~~guarantee~~ of ~~such~~establishing ~~commitment~~a bystrong ~~Renova~~market USposition ~~Holdings,~~in ~~and~~ the ~~escrow~~areas ~~arrangement~~to ~~that~~be ~~supported~~newly ~~this guarantee~~accessed.

~~Our~~The ~~Board~~following ofis ~~Directors~~a ~~has~~summary ~~similarly~~of ~~removed~~capital ~~the~~expenditures ~~operating restrictions that had been imposed on management that restricted our ability to enter into new commitments~~ for ~~new~~the ~~construction~~three ~~and~~month ~~controlled~~periods ~~our~~ended ~~business~~March ~~activities~~31, to2007 ~~cause us to operate in a manner that would have enabled us to live within then-existing cash resources. This situation had temporarily restricted us in proceeding with certain sales~~ and ~~marketing initiatives.~~2006:

Although we believe that the funds received from this private placement will greatly assist us in our further expansion plans, we cannot give any assurance that the funding provided by this private placement, or that which may be obtained in the future, will be sufficient to enable us to continue the expansion of the HFC Network to cover all of the additional sections of Moscow which we have targeted, or to otherwise position us to achieve profitability and positive cash flows.

	Three Months ended March 31,
	2007	2006
Line extensions (network costs associated with entering new service areas)	$ 5,363	$7,118
Scalable infrastructure (primarily internet equipment)	3,292	343
Other administrative	3,032	660
	$11,687	$8,121

In the absence of any new funding that we may receive in the future, the Company’s Board of Directors has directed management to operate within existing cash resources and to develop a scaled-down operating plan for possible implementation in the third fiscal quarter. Accordingly, we believe that our existing cash resources are sufficient to enable us to continue in business for a period of not less than 12 months.

OFF BALANCE SHEET ARRANGEMENTS

The Company is also party to certain operating leases which will require $~~765~~1,044,000 of payments to be made during the remainder of ~~2006~~2007 and $233,000 of payments during 2008.

The following is a summary of capital expenditures for the three month periods ended March 31, 2006 and 2005 (in thousands):

		Three Months ended March 31,
	2006		2005
Line extensions (network costs associated with entering new service areas)	$7,118		$1,435
Scalable infrastructure (primarily internet equipment)	343		285
Other administrative	452		133
	$7,913		$1,853

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Company is exposed to market risk from changes in interest rates and from factors that impact equity investments in Russia, as discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2005~~2006.

FOREIGN INVESTMENT RISK

Since the Company’s wholly-owned subsidiary, CCTV, operates in Russia, the Company is subject to the economic and political risks associated with operating in Russia. In addition, fluctuations in the value of the Russian ruble may affect the reporting of the Company’s results of operation and financial condition in terms of U.S. dollars. CCTV’s current pricing strategies involve monthly tariffs that are closely tied to the value of the U.S. dollar but which are still invoiced and paid in Russian rubles. This could result in fluctuations in revenues that are not met equally or proportionally with changes in the Company’s expenses. Furthermore, certain significant components of CCTV’s financial statements are U.S.-dollar based, including, but not limited to, notes payable to shareholder, interest expense and certain of its customer equipment and construction costs. Accordingly, the Company is exposed to the economic risks associated with an entity which conducts its business in more than one currency, and the financial reporting risks that accompany the judgments involved in determining the functional currency and the potential impacts that such determinations may have on the Company’s consolidated financial statements. The Company has not entered into any derivative instruments to hedge its foreign currency exchange risks.

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financial reporting risks that accompany the judgments involved in determining the functional currency and the potential impacts that such determinations may have on the Company’s consolidated financial statements. The Company has not entered into any derivative instruments to hedge its foreign currency exchange risks.

Operating CCTV also involves the risk of CCTV’s ability to increase its revenues through the addition of subscribers for its cable television, high-speed data transmission and Internet services. The subscriber growth is largely dependent upon CCTV’s ability to build-out its HFC Network from the MFON which it leases from COMCOR, which is largely dependent upon it receiving a sufficient amount of capital to pay for the equipment and construction costs, and also through increasing penetration

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INTEREST RATE RISK

The Company’s debt obligations are comprised entirely of fixed rate obligations. Accordingly, the Company bears no interest rate risk.

Item 4. Controls and Procedures.

We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”) designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Pursuant to the rules and regulations promulgated under Section 404 of the Sarbanes-Oxley Act of 2002, the Company will be required to include an internal control report, including Management’s Assessment of Internal Control Over Financial Reporting, in its annual reports beginning with the year ending December 31, 2007.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, as of March 31, 2006 we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) and 15d-15(b) of the Exchange Act. As part of such evaluation, management considered the matters discussed below and in Item 9A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, (the “Annual Report”) relating to internal control over financial reporting. Based on this evaluation, the Company’s chief executive officer and chief financial officer have concluded that the Company’s disclosure controls and procedures were not effective as of March 31, 2006 due to the material weaknesses in internal control over financial reporting described in Item 9A of the Annual Report.

Changes in Internal Control Over Financial Reporting

The following is a description of the two material weaknesses in the Company’s internal control over financial reporting as of March 31, 2006, and developments implemented and remediation measures taken during the preparation of our March 31, 2006 financial statements:

Notwithstanding the material weaknesses described below, management believes the consolidated financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America.

As of March 31, 2006, the Company did not maintain effective controls over its anti-fraud programs. Specifically, the Company did not (i) prepare a formalized assessment of fraud risk or implement certain corporate governance policies that had been approved by our Board of Directors (including an Employee Complaint procedure, a policy on Securities Trading by Employees, Officers and Directors, and the Code of Ethics for our Chief Executive Officer, Chief Financial Officer and All Accounting and Financial Personnel), (ii) implement a Code of Business Conduct for all employees and (iii) monitor compliance with the Company’s anti-fraud programs and controls. This control weakness could result in more than a remote likelihood that a misstatement of the Company's annual or interim consolidated financial statements would not be prevented or detected. Accordingly, management has concluded that this control deficiency constitutes a material weakness.

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To address this material weakness, the Company has begun to implement remediation plans. The documentation of the communication of the Code of Ethics for our Chief Executive Officer, Chief Financial Officer and all Accounting and Finance Personnel has been completed and we expect to complete the documentation of the communication of an Employee Complaint Procedure in the second fiscal quarter. In addition, a Code of Business Conduct for all employees has been reviewed by outside counsel and will be presented to the Board of Directors for approval. Furthermore, during 2006, we intend to prepare a formalized assessment of the risk of fraud within the Company, and based upon the assessment developed, we will design and implement specific internal control testing measures to ensure our overall policies and procedures with respect to fraud detection and prevention are adequate and functioning effectively.

As of March 31, 2006, the Company did not have an adequate level of review of complex and judgmental accounting issues primarily because it did not maintain a sufficient complement of personnel with an appropriate level of accounting knowledge, experience and training in the application of accounting principles generally accepted in the United States commensurate with the Company’s financial reporting requirements. Specifically, the Company lacked adequate review and analysis with respect to: (i) the accuracy of the valuation allowance relating to deferred tax assets; (ii) the completeness and accuracy of the inventory and construction material obsolescence reserves; (iii) the application of accounting principles generally accepted in the United States of America with respect to the accounting for stock options with intrinsic value on the date of grant or with provisions that give rise to variable accounting for such options; (iv) the determination of the functional currency of our Moscow-based operating subsidiary and (v) the application of accounting principles generally accepted in the United States of America with respect to the accounting for revenue and costs at the time of installation of Internet or cable television services. This control deficiency contributed to audit adjustments which were made during the preparation of the 2005 consolidated financial statements. Additionally, this control deficiency could result in more than a remote likelihood that a misstatement of the Company's annual or interim consolidated financial statements would not be prevented or detected. Accordingly, management has concluded that this control deficiency constitutes a material weakness.

To address this material weakness the Company has taken several remediation measures. We have improved our analysis and review of (i) deferred income taxes; (ii) the valuation accounts with respect to inventories and construction in process and (iii) the accounting for revenue and costs at the time of installation of Internet or cable television services. We have fully implemented new accounting standards with respect to the accounting for stock options. We retained outside consultants to assist in the accounting for the functional currency of our operating subsidiary.

In addition, we fully expect that our staffing will improve during the second quarter and we will diligently work toward continuing the process towards developing a fully staffed accounting and finance department, as well as an expanded Internal Audit Department to enable us to make improvements towards correcting these control deficiencies.

Part II. Other Information

Management is responsible for establishing and maintaining adequate disclosure controls and procedures, as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934 (the “Exchange Act”), designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Pursuant to the rules and regulations promulgated under Section 404 of the Sarbanes-Oxley Act of 2002, the Company is not required to include an internal control report, including Management’s Assessment of Internal Control Over Financial Reporting, until it files its in its annual reports beginning with the year ending December 31, 2007. However, the Company expects that following the completion of the Renova Media acquisition of all of our outstanding equity interests that it does not directly own, we will terminate the registration of our Common Stock under the Exchange Act upon application to the SEC. As a result, the Company expects that it will not become subject to these requirements.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) and 15d-15(b) of the Exchange Act. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2007, our disclosure controls and procedures were not effective.

As of March 31, 2007, management identified the following material weaknesses in the Company’s internal control over financial reporting:

As of March 31, 2007, the Company did not maintain effective controls over its anti-fraud programs due to the incomplete implementation of the Company’s anti-fraud program. Specifically, the Company did not (i) prepare a formalized assessment of fraud risk, (ii) fully implement certain corporate governance policies that had been approved by our Board of Directors, particularly the Code of Business Conduct, and (iii) monitor compliance with the Company’s anti-fraud programs and controls. This control deficiency could result in more than a remote likelihood that a misstatement of the Company’s annual or interim consolidated financial statements would not be prevented or detected.

As of March 31, 2007, the Company did not have adequate controls around its financial close process, including the level of analysis and review of complex and judgmental accounting issues, primarily because it did not maintain a sufficient complement of personnel with an appropriate level of accounting knowledge, experience and training in the application of U.S. GAAP commensurate with the Company’s financial reporting requirements. This control deficiency could result in more than a remote likelihood that a misstatement of the Company’s annual or interim consolidated financial statements would not be prevented or detected.

Remediation Initiatives

As part of the remediation process, which will be implemented in 2007, we will prepare a formalized assessment of the risk of fraud within the Company and based upon the assessment developed, we will design and implement specific internal control testing measures to ensure that our overall policies and procedures with respect to fraud detection and prevention are adequate and functioning effectively.

During 2006, the Company established a Department of Internal Audit to systematically review, evaluate and report on the effectiveness of operations and internal control at all levels of the Company’s operations. The Department of Internal Audit reports directly to the Audit Committee, which provides direction and oversight to the implementation of approved recommendations from the Department of Internal Audit.

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During 2006 the Board approved the Code of Business Conduct for the Company. During the first quarter of 2007, all executives and key staff at its main operating entities were instructed on and signed this corporate governance policy. The Company also formally activated an employee complaint procedure which provides employees with Internet or telephone-based methods of reporting perceived violations of the Company’s corporate governance policies. The Company is continuing to educate all employees with respect to its corporate governance policies and employee complaint procedures and to fully implement the policies by obtaining signed acknowledgements from all employees.

The Company began analyzing and started the steps to be taken to remediate the material weakness described above relating to the financial statement close process. The Company has considered, and will undertake in the near future, a number of steps to design and implement more effective internal controls, including, but not limited to:

•

Increasing training of staff on the application of accounting pronouncements;

•

Preparing sufficient supporting documentation for and performing timely review to support our position on the basis of governing principles with regard to complex accounting standards and transactions;

•

Adopting a policy of requiring periodic review of existing accounting policies to ensure continued applicability and compliance;

•

Increasing review of adherence to corporate policies and procedures; and

•

Documenting and improving procedures for the financial statement close process.

We expect to complete the above remediation actions during 2007.

Sarbanes-Oxley Preparedness

During 2006, with the approval of our Audit Committee, we developed and commenced the process to document, test and otherwise prepare for anticipated compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. Updates regarding this documentation and testing process were presented to and discussed with the Audit Committee on a quarterly basis during 2006. The Company expects to continue this process and to devote the necessary resources to achieve full compliance with these requirements during 2007. However, if the Renova Media acquisition transaction closes, the Company will no longer be required to comply with such requirements.

Item 1. Legal Proceedings.

Morton International, Inc. v. A.E. Staley Mfg. Co. et al. and Velsicol Chemical Corp. v. A.E. Staley Mfg. Co. et al.

As originally reported in the Company’s Form 10-K for the year ended February 28, 1997, in July 1996, two companion lawsuits were filed in the United States District Court for the District of New Jersey, by various owners and operators of the Ventron-Velsicol Superfund Site (the “Site”) in Middlesex County, New Jersey (“Lawsuits”). The ~~lawsuits~~Lawsuits, which were subsequently consolidated, were filed under the Comprehensive Environmental Resource Compensation and Liability Act (“CERCLA”), the Resource Conservation and Recovery Act, the New Jersey Spill Act and New Jersey common law, alleging that the defendants (over 100 companies, including the Company’s then wholly-owned subsidiary, The JM Ney, Company (“JM Ney”) were generators of certain wastes allegedly processed at the Site. The ~~lawsuits~~Lawsuits seek recovery of costs incurred and a declaration of future liability for costs to be incurred by the owners and operators in studying and ~~remediating~~remediation the Site.

AsSubsequent ~~further~~to ~~reported in~~ the ~~Company’s~~filing ~~Form~~of ~~10-Q for~~ the ~~period ended November 30~~Lawsuits, ~~2001, this case was dismissed without prejudice and~~ the ~~plaintiffs~~Company ~~did~~sold ~~not~~JM ~~have~~Ney’s ~~the~~operations ~~ability~~in to2002 ~~reinstate~~in ~~their~~an ~~claims~~asset ~~for a minimum of three years until October 2004~~transaction. ~~Although~~JM ~~this~~Ney, ~~limitation~~which onhas ~~the~~been ~~plaintiffs’~~renamed ~~ability~~Andersen toLand ~~reinstate~~Corp. ~~their claims has expired~~(“ALC”), ~~the~~retained ~~plaintiffs~~certain ~~have~~liabilities ~~not~~of ~~yet~~JM ~~reinstated~~Ney ~~this~~under ~~case. If~~ the ~~plaintiffs~~contractual doterms ~~reinstate~~of the ~~case~~sale, ~~given~~including ~~the~~certain ~~legal~~legacy ~~and~~liabilities ~~factual~~arising ~~issues~~out of the Lawsuits.

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~~that~~Subsequent ~~remain~~to ~~outstanding~~the Plaintiffs’ notice, the USEPA sent a letter to the Company, ~~currently~~along ~~has~~with nomore ~~basis~~than to140 ~~ascertain~~other ~~the~~parties, ~~range~~notifying each of ~~loss,~~its ~~should~~potential ~~any~~liability ~~occur,~~at ~~with~~the ~~respect~~OU2 toarea anand ~~outcome~~inviting ~~that~~the ~~may~~parties beto ~~considered~~perform ~~unfavorable. This~~the ~~contingent~~Remedial ~~liability~~Investigation ~~was~~and ~~not~~Feasibility ~~assumed~~Study byfor the ~~buyer~~OU2 ofStudy JMArea. The ~~Ney’s~~parties ~~net~~have ~~assets~~until July 2007 to respond to this request.

~~Loretta~~Given ~~Brienza~~the legal and ~~Brent~~factual ~~Brienza~~issues vthat remain outstanding, the Company currently has no basis to ascertain the range of loss, should any occur, with respect to an outcome that may be considered unfavorable. Nor Ais there any basis on which to predict the timing of any such loss.W. The ~~Chesterton~~Company is advised that ALC and the Company etappear ~~al.~~to ~~(New~~have ~~York~~meritorious ~~State~~defenses ~~Supreme~~and ~~Court,~~senior ~~Nassau~~management ~~County~~of ALC and the Company are committed to defend in an appropriate manner any litigation that may arise subsequent to termination of ~~New~~ADR ~~York,~~proceedings ~~Index~~being ~~104076-04)~~undertaken in connection with the pending Lawsuits.

AsLevy ~~originally~~Investments, ~~reported~~Ltd. inv. ~~the~~Moscow ~~Company’s~~CableCom ~~Form~~Corp., ~~10-K~~Oliver ~~for~~R. ~~the year ended February 29~~Grace, ~~2004~~Jr., inJay ~~March~~M. ~~and~~Haft, ~~April~~Andrew ~~2004~~Intrater, JMIvan ~~Ney~~Isakov, ~~now~~Valentin ~~known~~V. asLazutkin, ~~Andersen~~James ~~Land Corp~~J. Pinto, ~~was~~Vladimir ~~served~~A. ~~with~~Serdyuk, aMikhail ~~summons and a complaint in the above-captioned Brienza matter and one other matter that has since been dismissed~~Smirnov, inDavid ~~which~~R. itVan and in excess of one hundred (100) other parties were named as defendants in an asbestos-related civil action for negligence and product liability filed in the Supreme Court of New York for the Nassau County of New York in which the plaintiffs claim damages from being exposed to asbestos and asbestos products alleged to have been manufactured or supplied by the defendantsValkenburg, ~~including~~Alexander ~~JM Ney’s former dental division~~P. ~~The~~ ~~plaintiffs~~Vladislavlev, ~~have not provided any specific allegations of facts as to which defendants may have manufactured or supplied asbestos~~ and ~~asbestos~~Renova ~~products~~Media ~~which~~Enterprises ~~are alleged to have caused the injuries~~Ltd.

~~The~~ On ~~Company~~November ~~believes~~7, ~~that~~2006, itfollowing ~~has~~Renova ~~insurance~~Media’s announcement of its initial proposal to acquire the equity interest in the Company that ~~potentially~~it ~~covers~~does ~~this~~not ~~claim~~directly ~~and~~own ~~has~~in ~~notified~~a ~~its~~negotiated ~~insurance~~acquisition ~~carriers~~at to$10.80 ~~provide~~per ~~reimbursement~~share of ~~defense~~common ~~costs~~stock, ~~and~~Levy ~~liability~~Investments, ~~should~~Ltd. ~~any~~filed ~~arise. Based~~a ~~upon~~purported ~~the~~class ~~answers~~action toon ~~the~~behalf ~~interrogatories~~of ~~that~~our ~~have~~public ~~been~~stockholders ~~supplied~~in bythe Court of Chancery for the ~~plaintiffs’~~State ~~attorneys~~of Delaware, itagainst ~~does~~us, ~~not~~each ~~appear~~of toour ~~the~~directors ~~Company~~and Renova Media. The plaintiff alleges, among other things, that JMthe ~~Ney~~consideration ~~manufactured~~offered ~~any~~to ~~products~~our ~~containing~~stockholders ~~asbestos~~pursuant ~~that~~to ~~are~~Renova ~~the~~Media’s ~~subject~~initial proposal of ~~this matter~~$10. As80 per share of ~~this~~common ~~date~~stock is not adequate and constitutes an unfair price. In addition, the ~~Company~~plaintiff ~~has~~alleges nothat ~~basis~~Renova Media’s initial proposal is an unfair attempt to ~~conclude~~freeze ~~that~~out ~~the~~our ~~litigation~~public ~~may~~stockholders beand ~~material~~is designed to enrich Renova Media at the ~~Company’s~~expense ~~financial~~of ~~condition~~our public stockholders. Plaintiff seeks injunctive relief or, ~~business~~in the alternative, rescission, and an accounting and damages. ~~The~~ ~~Company~~We ~~intends~~believe tothe ~~vigorously~~allegations are without merit and plan to defend ~~the~~them ~~lawsuit~~vigorously.

Item 1 A. Risk Factors.

There have been no material changes in the risk factors from those presented in our Annual Report on Form 10-K for the year ended December 31, ~~2005~~2006.

Item 6. Exhibits.

(a) Exhibits required by Item 601 of Regulation S-K:

Exhibit	Description

31.1	Certification of the Company’s Chief Executive Officer pursuant to Rule 13a-14(a).

31.2	Certification of the Company’s Chief Financial Officer pursuant to Rule 13a-14(a).

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

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SIGNATURES

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

MOSCOW CABLECOM CORP.

By: /s/ Mikhail A. Smirnov Mikhail A. Smirnov ~~Chairman, President and~~ Chief Executive Officer Date: June 165, ~~2006~~2007

By: /s/ ~~Andrew~~Tate M.Fite ~~O’Shea~~Tate ~~Andrew~~Fite ~~M. O'Shea~~ Chief Financial Officer ~~and Secretary~~ Date: June 165, ~~2006~~2007

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