UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM 10-Q  S QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2008  £ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______  to _______  Commission file number: 000-32047  Hamptons Luxury Homes, Inc. (Name of registrant as specified in its charter)  Delaware11-3320705(State or other jurisdiction of
incorporation or organization)(I.R.S. Employer Identification No.)   367 Butter LaneBridgehampton, New York11932(Address of principal executive offices)(Zip Code)  631- 537-1600 (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 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.  S  Yes   £  No  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. Large accelerated filer £ Accelerated filer £ Non-accelerated filer £ Smaller reporting company S  Indicate by check mark whether the registrant is a shell company. £YesSNo  Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date: At August 14, 2008, the registrant had outstanding a total of 57,971,650 shares of common stock.


Introductory Comment - Use of Terminology  Throughout this Quarterly Report on Form 10-Q, the terms the Company, we, us and our refers to Hamptons Luxury Homes, Inc. and, unless the context indicates otherwise, our subsidiaries Telemark, Inc. (Telemark), Telemark Service and Maintenance, Inc. (TSM), DWD Construction Services, Inc. (DWD) and our other subsidiaries and joint venture interests on a consolidated basis.  Note Regarding Forward-Looking Statements  This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the Securities Act) and Section 21E of the Securities Exchange Act of 1934 (the Exchange Act).  To the extent that any statements made in this Form 10-Q contain information that is not historical, these statements are essentially forward-looking.  Forward-looking statements can be identified by the use of words such as expect, plan, will, may, anticipate, believe, should, intend, estimate, and variations of such words.  Forward-looking statements are subject to risks and uncertainties that cannot be predicted or quantified and, consequently, actual results may differ materially from those expressed or implied by such forward-looking statements.  Such risks and uncertainties include, without limitation:  our ability to raise capital to finance our growth and operations, when needed and on terms advantageous to us;  our ability to manage growth, profitability and the marketability of our services;  general economic and business conditions;  the effect on our business of recent credit-tightening throughout the United States, especially within the construction and real estate markets;  the effect on our business of recently reported losses within the financial, banking and other industries and the effect of such losses on the income and financial condition of our current and potential clients;  the impact of developments and competition within the real estate and home construction industries;  adverse results of any legal proceedings;  the impact of current, pending or future legislation and regulation on the construction and real estate industries, including, but not limited to, changes in zoning and environmental laws and regulations within our target areas of operations;  our ability to maintain and enter into relationships with suppliers, vendors or contractors of acceptable quality of goods and services on terms advantageous to us;  the volatility of our operating results and financial condition;  our ability to attract and retain qualified senior management personnel; and  the other risks and uncertainties detailed in this Form 10-Q and, from time to time, in our other filings with the Securities and Exchange Commission.  Readers of this Quarterly Report on Form 10-Q should carefully consider such risks, uncertainties and other information, disclosures and discussions which contain cautionary statements identifying important factors that could cause our actual results to differ materially from those provided in forward-looking statements.  Readers should not place undue reliance on forward-looking statements contained in this Form 10-Q.  We do not undertake any obligation to publicly update or revise any forward-looking statements we may make in this Form 10-Q or elsewhere, whether as a result of new information, future events or otherwise.  2   PART I - FINANCIAL INFORMATION  Item 1. Financial Statements.  HAMPTONS LUXURY HOMES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET  June 30,December 31,20082007(Unaudited)ASSETSCurrent assets:Cash$912,760$123,648Contracts receivable1,506,1991,759,610Income tax receivable-176,000Prepaid expenses and other current assets25,20516,008Total current assets2,444,1642,075,266Property and equipment, net71,30161,043Advances to and investment in joint venture65,79556,170Other assets16,60016,600Total assets$2,597,860$2,209,079LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable$1,079,594$1,119,927Accrued expenses and other current liabilities13,92412,397Income taxes payable151,31930,500Total current liabilities1,244,8371,162,824Deferred taxes payable20,00029,000Total liabilities1,264,8371,191,824Stockholders' equityCommon stock, par value $0.0001, 200,000,000 sharesauthorized, 57,971,650 shares issued and outstanding5,7975,797Additional paid-in capital546,963533,913Retained earnings780,263477,545Total stockholders' equity1,333,0231,017,255Total liabilities and stockholders' equity$2,597,860$2,209,079  See notes to consolidated financial statements.  3   HAMPTONS LUXURY HOMES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)  For the three monthsFor the six monthsended June 30,ended June 30,2008200720082007Contract and service revenues$3,554,324$1,863,236$6,311,718$2,841,975Contract and service costs2,719,2391,224,4324,806,7041,838,581Gross profit835,085638,8041,505,0141,003,394Selling, general and administrative expenses410,620393,616891,209684,080Income from operations424,465245,188613,805319,314Other income (expense):Rental income-11,703-21,813Interest income (expense), net1,141(6,695)1,788(16,667)Equity in income of joint venture17,952-14,625-Income before income taxes443,558250,196630,218324,460Income tax expense265,60063,000327,50063,000Net income$177,958$187,196$302,718$261,460Basic and diluted earnings
per common share$*$*$0.01$*Basic weighted average number of
common shares outstanding57,971,65057,971,65057,971,65057,971,650Diluted weighted average number
of common shares outstanding58,138,31757,971,65058,138,31757,971,650* Less than $0.01 per share  See notes to consolidated financial statements.       4   HAMPTONS LUXURY HOMES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months EndedJune 30,20082007Cash flows from operating activities:Net income$302,718$261,460Adjustments to reconcile net income to net cashprovided by (used in) operating activities:Equity in income from investment in joint venture(14,625)-Depreciation and amortization7,81427,653Stock-based compensation13,050-Changes in assets and liabilitiesContract receivables253,411(737,822)Income tax refund receivable176,000-Prepaid expenses and other current assets(9,198)(7,286)Other assets-(16,600)Accounts payable(40,333)87,420Accrued expenses and other current liabilities1,52718,492Income taxes payable120,81946,400Deferred income taxes payable(9,000)Net cash provided by (used in) operating activities802,183(320,283)Cash flows from investing activities:Return on investment in joint venture5,000Purchases of property and equipment(18,071)(14,710)Transfer of land and building-(4,442)Net cash used in investing activities(13,071)(19,152)Cash flows from financing activities:Payoff and repayments of mortgage payable-(563,999)Loan from affiliated company-546,816Net cash used in financing activities-(17,183)Net increase (decrease)  in cash789,112(356,618)Cash, beginning of period123,648510,367Cash, end of period$912,760$153,749Supplemental disclosure of cash flow information:Interest expense$1,172$19,755Taxes paid$42,853$16,900Noncash transactions:Transfer of land and building$279,669Capitalization of loan payable$172,339  See notes to consolidated financial statements.  5   HAMPTONS LUXURY HOMES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   Note 1 - Organization  Hamptons Luxury Homes, Inc. (the Company) was incorporated in the State of Delaware on May 15, 1996 and operates as a builder of single-family homes, provider of construction consulting services and is a distributor of building materials in the Hamptons area of Long Island, New York.  The Company primarily operates through its wholly-owned subsidiary Telemark, Inc. (Telemark), which constructs, renovates and restores luxury homes and commercial property and manages construction, and Telemarks wholly-owned subsidiaries, Telemark Service and Maintenance, Inc. and Bridgehampton Lumber Corp., which provide ongoing property management and maintenance services and sells building materials and hardware.  On June 8, 2007, the Company completed the transfer of certain land and buildings that the Company, its subsidiaries and an entity in which Telemark is a joint venture partner occupy to an entity wholly-owned by the majority stockholders.   Note 2 - Significant Accounting Policies  Basis of Presentation  The consolidated financial statements include all the accounts of the Company and its wholly-owned subsidiaries.  All material intercompany balances and transactions have been eliminated.  The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements and with the rules and regulations of the Securities and Exchange Commission for Form 10-Q. Accordingly, they do not include all the information and notes required by accounting principles generally accepted in the United States for complete financial statement presentation.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to present fairly the financial position, results of operations and cash flows for the interim periods have been included.  These consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company together with the Companys management discussion and analysis in the Companys Form 10-K for the year ended December 31, 2007.  Interim results are not necessarily indicative of the results for a full year.  Investments in 50% or less owned entities are accounted for using the equity method.  Under the equity method, the Company includes the net income or loss from the equity entity.   6   Estimates  The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period.  Actual results could differ from those estimates.   Note 3 - Income Taxes  Effective January 1, 2007, the Company adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 (FIN 48).  FIN 48 clarifies the accounting for uncertainty in income taxes recognized in the Companys financial statements in accordance with FASB Statement 109, Accounting for Income Taxes, and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.  FIN 48 also provides guidance under recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.  Management has evaluated and concluded that there are no significant uncertain tax positions requiring recognition in the Companys financial statements.  The Companys policy is to classify assessments, if any, for tax related interest as interest expenses and penalties as general and administrative expenses.  During the second quarter of 2008, the Company changed its estimated tax accrual for the year ended December 31, 2007.  The effect of this change was to decrease the amount of income tax receivable as of June 30, 2008, and increase income taxes and decrease net income for the three and six months ended June 30, 2008, by approximately $80,000.  Basic and diluted earnings per share decreased by less than $.01 for each of the three and six month periods ended June 30, 2008.   Note 4  Employment Agreements  On February 11, 2008, the Company entered into an employment agreement with a vice president/chief accounting officer through February 11, 2010.  Compensation under the agreement was to include an annual salary of $90,000, a bonus to be determined and an option to purchase up to 250,000 shares of the Companys common stock.  If the officer had continued to be employed by the Company through February 11, 2009, the Company would have granted an option to purchase up to an additional 250,000 shares of common stock.  The options are exercisable, at the closing market price of the common stock on the date of the option grants ($.08, per share, for the initial grant), for periods of five years.  The options issued were valued at $7,250, using a Black-Scholes option pricing model assuming a risk free interest rate of 5.0%, average life of 5 years and expected volatility of 30%.  On March 20, 2008, the officer was  7   terminated and retained the initial option.  The Company does not believe there will be any addition expenses related to the termination.  (See Note 6)  On March 24, 2008, the Company entered into an employment agreement with a vice president/director of operations through March 2010.  Compensation under the agreement includes a base salary of $110,000, per year, and incentives based on the Companys attainment of to be agreed-upon levels of sales and earnings and an option to acquire 200,000 shares of common stock.  The option is exercisable at $.08, per share, through March 24, 2013.  If the employee continues to be employed on March 24, 2009, the Company will grant the employee an option to purchase an additional 200,000 shares of common stock, exercisable at a price equal to the market price of the common stock on the date of grant, through March 2014.  The options issued were valued at $5,800, using a Black-Scholes option pricing model assuming a risk free interest rate of 5.0%, average life of 5 years, and expected volatility of 30%.   Note 5 - Fair Value Measurements  Effective January 1, 2008, the Company adopted both FAS 157 and FAS 159, without any effect.  Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements (SFAS 157), defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.  SFAS 157 applies to other accounting pronouncements that require the use of fair value measurements.  A fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability, or, in the absence of a principal market, the most advantageous market for the asset or liability.  SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement 115 (SFAS 159), permits an entity to elect to measure various financial instruments and certain other items at fair value that are not currently required to be measured at fair value.  Unrealized gains and losses on items for which the fair value option has been elected should be reported in earnings at each subsequent reporting date.   Note 6  Contingent Liability  On April 28, 2008, the Company was notified by the Occupational Safety and Health Administration of the U.S. Department of Labor (OSHA), that a complaint has been filed with OSHA by the former chief accounting officer of the Company, alleging discriminatory employment practices, et al.  The former chief accounting officer, aside from other remedies, is seeking damages for lost future compensation of $990,000, plus lost bonuses and the value of options to purchase an additional 250,000 shares of common stock of the Company.  The Company has been advised by OSHA that the complaint, supplemented as appropriate by interviews with Mr. Williams, will be dismissed if OSHA determines that Mr. Williams has not made a prima facie showing that protected activity was a contributing factor in the unfavorable personnel action alleged in the complaint.  The complaint also will be dismissed if Mr. Williams has made a prima facie showing, but OSHA determines that the Company has demonstrated by  8   clear and convincing evidence that the Company would have taken the same unfavorable personnel action in the absence of the complainants protected activity. On June 27, 2008, the Company submitted to OSHA a written account of the facts, as well as affidavits and documents, explaining and defending the Companys position.  The Company also has requested a meeting to present to OSHA the Companys position.  If investigation provides OSHA with reasonable cause to believe that SOX has been violated by the Company and reinstatement of Mr. Williams is warranted, the Company will again be contacted by OSHA prior to the issuance of findings and a preliminary order, at which time the Company will be advised of the substance of the relevant evidence supporting Mr. Williams allegations, and the Company will be given the opportunity to submit a written response, to meet with the investigator to present statements from rebuttal witnesses and to present legal and factual arguments.  The Company believes the complaint is totally without merit and intends to vigorously defend its position during the OSHA investigation.  9   Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.   Overview  We are a regional construction services company that builds, provides renovation construction services for and maintains custom homes, luxury vacation homes and ultra-luxury estate homes (High-End Residences) primarily in the eastern Long Island (New York) communities commonly referred to as the Hamptons.  The Company also provides other construction-related services and products.  We maintain an industry leading reputation for construction of High-End Residences from foundation to completion, with values ranging up to $60 million.  We believe our company combines ultra-high quality materials with the most innovative methods of superb old-world craftsmanship to create the ultimate in luxury homes with outstanding aesthetic appeal.  Already a recognized and well-established entity in the exclusive environs of the Hamptons through our Telemark subsidiary, we plan to expand into similar luxury markets within the United States.  Merger  Our acquisition of Telemark has been recorded on the purchase method of accounting at historical amounts as our company and Telemark were under common control at the time of the acquisition.  Telemark, Inc., a construction company based in Bridgehampton, New York was founded in 1978 by Frank Dalene and Hugo Dalene, (Franks father) as Telemark Construction, Inc. Telemark manages and constructs custom homes, luxury vacation homes, ultra-luxury estate homes, renovations, historical restorations, commercial construction.  Through its subsidiaries, it provides ongoing construction services, property management, maintenance, service, and supplies building materials.  We perform our construction services and provide our construction products primarily through four wholly-owned operating subsidiaries and one joint venture.  The wholly-owned subsidiaries are:  Telemark, which manages the construction of, constructs and renovates High-End Residences, and performs historical restorations and commercial construction;  Telemark Service and Maintenance, Inc. (TSM), which provides ongoing property management, maintenance and service;  Bridgehampton Lumber Corp. (Bridgehampton), which supplies building material and is an independent dealer of The Barden & Robeson Corporation (Barden), a custom panelized manufacturer that supplies materials for the housing and light commercial industries; and  DWD Construction Services, Inc. (DWD), which performs construction administration and advisory services in connection with the construction of homes and business development of major commercial projects.   10   Telemark is a 50% equity owner in a joint venture known as Architectural Woodwork of the Hamptons, LLC (AWH).  AWH manufactures and installs custom millwork, custom cabinetry, custom built-ins and furniture.  Seasonality  Construction business in the Northeast portion of the United States is affected by the weather.  During unusually harsh winters it is possible that less work may be done in winter months than is done throughout the remainder of the year. During unusually rainy weather it is possible that less work may be done since a portion of the work is performed outdoors.  The Hamptons vacation season is from Memorial Day to Labor Day.  Our construction projects typically tend to be scheduled for completion by Memorial Day or, at the latest, by the July 4th weekend. The completion date and the duration of the construction project will determine the start date of the project. For example, if a construction project is required to be complete by Memorial Day of the following year and it is a six month project, we would be required to start that project by late November of the current year.  Work, along with revenues and income, varies throughout the duration of a construction project, typically in the shape of a bell curve. We cannot control the start dates and the duration of construction projects; these matters are dependent on the clients desires.  It is possible that from quarter to quarter revenues and income can vary due to the combination of construction projects and their respective start dates and durations.  We also provide carpentry and painting labor for our construction projects. There is a profit center in providing carpentry and painting labor. It is possible that the amount of carpentry and painting labor will vary throughout the duration of a construction project and cause variations in the percentage of gross profit and net income in relation to revenues when comparing quarter to quarter at any given time.  It is possible that our service and maintenance operations will experience seasonality fluctuations due to high demand in late-Winter and throughout the Spring for services to ready properties for the vacation season and due to the increase in maintenance and general repair services during the Summer months for clients in residence.  The service and maintenance operations generally generate a higher percentage of gross profits and net income.  Accordingly, it is possible that the mix of service and maintenance work and construction work may cause variations in the percentage of gross profits and net income in relation to revenues when comparing quarter to quarter results.  Results of Operations for Fiscal Quarters and Six Months Ended June 30, 2008 and 2007  Three Months Ended June 30, 2008 Compared To Three Months Ended June 30, 2007  We believe the following selected revenue and expense data, the percentage relationship between contract and service revenues and major categories in our consolidated statements of operations and the percentage change in the dollar amounts of each of the items presented is important in evaluating the performance of our business operations for the three months ended June 30, 2008 and 2007.    11    Three Months Ended June 30,20082007%%Amount%ofofIncreaseIncreaseAmountRevenueAmountRevenue(Decrease)(Decrease)Contract and service revenues$ 3,554,324$ 1,863,2361,691,08891%Contract and service costs2,719,23977%1,224,43266%1,494,807122%Gross profit835,08523%638,80434%196,28131%Selling, general and administrative expenses410,62012%393,61621%17,0044%Income from operations424,46512%245,18813%179,27773%Other income (expense):Rental income--11,7031%(11,703)-Interest income (expense), net1,1410%(6,695)(0)%7,836117%Equity income of joint vent.17,9521%-17,952-Income before income taxes443,55812%250,19613%193,36277%Income tax expense265,6007%63,0003%202,600322%Net income$    177,9585%$    187,19610%(9,238)(5)%  Contract and service revenues.  2008 and 2007 revenues are comprised primarily of construction service revenues from contracts to construct, renovate, manage and maintain luxury estate homes and single family residences.  Contract and service revenues for the three months ended June 30, 2008 increased by $1,691,088 or approximately 91% to $3,554,324 as compared with $1,863,236 for the comparable period in 2007.  The increase was due to an increase in construction activity for the period resulting from an increase in sales and marketing efforts.  Contract and service costs.  Contract and service costs as a percentage of total contract and service revenues was approximately 77% and 66% for the three months ended June 30, 2008 and 2007, respectively.  Contract and service costs increased by $1,494,807 or 122% to $2,719,239 for the three months ended June 30, 2008 from $1,224,432 for the comparable period in 2007. The increase in the percentage of contract and service costs to revenues was primarily the result of contract operations having an increase of in-house labor and greater number of larger projects with a reduced contract fee. Typically, the contract fee will decrease as the cost of the entire project increases. The fluctuation in contract and service costs also is the result of cost ratios between in-house labor and materials or other subcontractors that change based on the stage of construction of major projects. The increase of contract and service costs was primarily a result of an increase of revenue.  Gross profit. Gross profit as a percentage of total revenues was approximately 23% and 34% for the three months ended June 30, 2008 and 2007, respectively. Gross profit increased by $196,281 or 31% to $835,085 for the three months ended June 30, 2008 from $638,804 for the comparable period in 2007. The decrease in the percentage of gross profit to revenues was primarily the result of a greater amount of work performed on larger projects with reduced contract fee. The company also captures gross profit from its in-house labor force as well as from its contract fee. The cost ratios between in-house labor and materials or other subcontractors may change based on the stage of construction during a certain period and cause slight variations in the percentage  12   of gross profit. The increase of gross profit was primarily a result of an increase of contract and service revenues.  Selling, general and administrative expenses. Selling, general and administrative expenses as a percentage of total contract and service revenues was approximately 12% and 21% for the three months ended June 30, 2008 and 2007, respectively. Selling, general and administrative expenses increased $17,004 or 4% to $410,620 for the three months ended June 30, 2008 compared to $393,616 for the comparable period in 2007.  The decrease in the percentage of selling, general and administrative expenses to revenues was primarily due to a decrease in percentage of insurance expenses due to a softer insurance market and our ability to buy insurance more competitively. There was an overall decrease in percentage of general expenses as it relates to revenues as a result of those expenses not having a direct correlation to the increase of contract and service revenues and management maintaining discipline on spending. Even though management realized a significant reduction of the percentage of selling, general and administrative expenses there was an increase of professional fees of consultants associated with SOX 404 compliance and the increase of those costs are expected to continue in 2008. The increase in selling, general and administrative expenses was primarily due to an increase of contract and service revenues.  Income from operations.  Income from operations as a percentage of total contract and service revenues was approximately 12% and 13% for the three months ended June 30, 2008 and 2007, respectively. Income from operations increased by $179,277 or 73% to $424,465 for the three months ended June 30, 2008 from $245,188 for the comparable period in 2007. The decrease in the percentage of income from operations to revenues was the result of a percentage decrease of selling, general and administrative offset by a percentage increase of gross profit. The increase of income from operations was the result of an increase in contract and service revenues, an increase in gross profit offset by an increase in selling, general and administrative expenses.  Other income (expense).  Other income increased by a net of $14,085 for the three months ended June 30, 2008 compared to the same period in 2007. The net increase of other income was primarily the result of an increase in our equity in a joint venture, Architectural Woodwork of the Hamptons, LLC., and an increase in interest income, offset by a decrease in rental income.  Income before income taxes.  Income before income taxes as a percentage of total contract and service revenues was approximately 12% and 13% for the three months ended June 30, 2008 and 2007, respectively. Income before income taxes increased by $193,362 or 77% to $443,558 for the three months ended June 30, 2008 from $250,196 for the comparable period in 2007.  The decrease in the percentage of income before income taxes to revenues was primarily the result of a percentage decrease of selling, general and administrative expenses offset by a percentage increase of gross profit.  The increase of income from operations was primarily a result of an increase in contract and service revenues, an increase in gross profit offset by an increase in selling, general and administrative expenses.  Income tax expense.  For the three months ended June 30, 2008 and 2007, we recorded a provision for income taxes of $265,600 and $63,000, respectively.  The increase in income tax expense primarily resulted from an increase of income in the current three month period and the use of a net operating loss carry forward in the 2007 three month period.  The NOL carry forward was fully utilized prior to 2008.  In addition, during the second quarter of 2008, we  13   changed our estimated tax accrual for the year ended December 31, 2007.  The effect of this change was to decrease the amount of income tax receivable as of June 30, 2008, and increase income taxes and decrease net income for the three and six months ended June 30, 2008, by approximately $80,000.  Basic and diluted earnings per share decreased by less than $.01 for each of the three and six month periods ended June 30, 2008.  Net income.  Net income as a percentage of total contract and service revenues was approximately 5% and 10% for the three months ended June 30, 2008 and 2007, respectively. Net income decreased by $9,238 or 5% to $177,958 for the three months ended June 30, 2008 from $187,196 for the comparable period in 2007. The decrease in the percentage of net income to revenue was the result of a percentage decrease of selling, general and administrative expenses offset by a percentage increase of gross profit and tax expense. The decrease of income from operations was a result of an increase in contract and service revenues, an increase in gross profit offset by an increase in selling, general and administrative expenses and tax expense.  Six Months Ended June 30, 2008 Compared To Six Months Ended June 30, 2007  We believe the following selected revenue and expense data, the percentage relationship between contract and service revenues and major categories in our consolidated statements of operations and the percentage change in the dollar amounts of each of the items presented is important in evaluating the performance of our business operations for the six months ended June 30, 2008 and 2007.  Six Months Ended June 30,20082007%%Amount%ofofIncreaseIncreaseAmountRevenueAmountRevenue(Decrease)(Decrease)Contract and service revenues$ 6,311,718$ 2,841,9753,469,743122%Contract and service costs4,806,70476%1,838,58165%2,968,123161%Gross profit1,505,01424%1,003,39435%501,62050%Selling, general and administrative expenses891,20914%684,08024%207,12930%Income from operations613,80510%319,31411%294,49192%Other income (expense):Rental income-21,813-(21,813)-Interest income (expense), net1,7880%(16,667)(1%)18,455111%Equity income of joint vent.14,6250%--14,625-Income before income taxes630,21810%324,46011%305,75894%Income tax expense327,5005%63,0002%264,500420%Net income$    302,7184%$    261,4609%41,25816%  Contract and service revenues.  2008 and 2007 revenues are comprised primarily of construction service revenues from contracts to construct, renovate, manage and maintain luxury estate homes and single family residences.  Contract and service revenues for the six months ended June 30, 2008 increased by $3,469,743 or approximately 122% to $6,311,718 as compared with $2,841,975 for the comparable period in 2007.  The increase was due to an increase in construction activity for the period resulting from an increase in sales and marketing efforts.  14    Contract and service costs.  Contract and service costs as a percentage of total contract and service revenues was approximately 76% and 65% for the six months ended June 30, 2008 and 2007, respectively.  Contract and service costs increased by $2,968,123 or 161% to $4,806,704 for the six months ended June 30, 2008 from $1,838,581 for the comparable period in 2007. The increase in the percentage of contract and service costs was primarily the result of contract operations having an increase of in-house labor and greater number of larger projects with a reduced contract fee. Typically, the contract fee will decrease as the cost of the entire project increases. It also is the result of cost ratios between in-house labor and materials or other subcontractors that may change based on the stage of construction during a certain period that will cause slight variations in the percentage of contract and service costs. The increase of contract and service costs was primarily a result of an increase of revenue.  Gross profit. Gross profit as a percentage of contract and service revenues was approximately 24% and 35% for the six months ended June 30, 2008 and 2007, respectively. Gross profit increased by $501,620 or 50% to $1,505,014 for the six months ended June 30, 2008 from $1,003,394 for the comparable period in 2007. The decrease in the percentage of gross profit to revenues was primarily the result of a greater amount of work performed on larger projects with reduced contract fee. The company also captures gross profit from its in-house labor force as well as from its contract fee. The cost ratios between in-house labor and materials or other subcontractors may change based on the stage of construction during a certain period and cause slight variations in the percentage of gross profit. The increase of gross profit was primarily a result of an increase of contract and service revenues.  Selling, general and administrative expenses. Selling, general and administrative expenses as a percentage of total contract and service revenues was approximately 14% and 24% for the six months ended June 30, 2008 and 2007, respectively. Selling, general and administrative expenses increased $207,129 or 30% to $891,209 for the six months ended June 30, 2008 compared to $684,080 for the comparable period in 2007.  The decrease in the percentage of selling, general and administrative expenses to revenues was primarily due to a decrease in percentage of insurance expenses due to a softer insurance market and our ability to buy insurance more competitively. There was an overall decrease in percentage of general expenses as it relates to revenues as a result of those expenses not having a direct correlation to the increase of contract and service revenues and management maintaining discipline on spending. Even though management realized a significant reduction of the percentage of selling, general and administrative expenses there was an increase of professional fees of consultants associated with SOX 404 compliance and the increase of those costs are expected to continue in 2008. The increase in selling, general and administrative expenses was primarily due to an increase of contract and service revenues.  Income from operations.  Income from operations as a percentage of total contract and service revenues was approximately 10% and 11% for the three months ended June 30, 2008 and 2007, respectively.  Income from operations increased by $294,491 or 92% to $613,805 for the six months ended June 30, 2008 from $319,314 for the comparable period in 2007. The decrease in the percentage of income from operations to revenues was the result of a percentage decrease of selling, general and administrative offset by a percentage increase of gross profit. The increase of income from operations was the result of an increase in contract and service revenues, an increase in gross profit offset by an increase in selling, general and administrative expenses.  15    Other income (expense).  Other income increased by a net of $11,267 for the six months ended June 30, 2008 compared to the same period in 2007. The net increase of other expense was primarily the result of a decrease in equity of the joint venture with Architectural Woodwork of the Hamptons, LLC., offset by an increase in interest income and decrease in rental income.  Income before income taxes.  Income before income taxes as a percentage of contract and service revenues was approximately 10% and 11% for the six months ended June 30, 2008 and 2007, respectively. Income before income taxes increased by $305,758 or 94% to $630,218 for the six months ended June 30, 2008 from $324,460 for the comparable period in 2007.  The decrease in percentage of income before income taxes to revenues was primarily the result of a percentage decrease of selling, general and administrative expenses offset by a percentage increase of gross profit. The increase of income before income taxes was primarily a result of an increase in contract and service revenues, an increase in gross profit offset by an increase in selling, general and administrative expenses.  Income tax expense.  For the six months ended June 30, 2008 and 2007, we recorded a provision for income taxes of $327,500 and $63,000, respectively.  The increase in income tax expense primarily resulted from an increase of income in the current three month period and the use of a net operating loss carry forward in the 2007 six month period.  The NOL carry forward was exhausted prior to 2008.  In addition, during the second quarter of 2008, we changed our estimated tax accrual for the year ended December 31, 2007.  The effect of this change was to decrease the amount of income tax receivable as of June 30, 2008, and increase income taxes and decrease net income for the three and six months ended June 30, 2008, by approximately $80,000.  Basic and diluted earnings per share decreased by less than $.01 for each of the three and six month periods ended June 30, 2008.  Net income.  Net income as a percentage of contract and service revenues was approximately 4% and 9% for the six months ended June 30, 2008 and 2007, respectively. Net income increased by $41,258 or 16% to $302,718 for the six months ended June 30, 2008 from $261,460 for the comparable period in 2007. The decrease in the percentage of net income to revenues was the result of a percentage decrease of selling, general and administrative expenses offset by a percentage increase of gross profit and tax expense. The increase of net income was a result of an increase in contract and service revenues, an increase in gross profit offset by an increase in selling, general and administrative expenses.  Liquidity and Capital Resources  We had cash of $912,760 at June 30, 2008 compared to $123,648 at December 31, 2007, none of which was restricted.  In addition, we had working capital of approximately $1,199,327 as of June 30, 2008 and $912,000 as of December 31, 2007.  The increase in cash and working capital primarily is the result of an increase of construction activities and net income recognized for the six month period ended June 30, 2008.  We had retained earnings of $780,263 as of June 30, 2008. It is currently expected that cash flows from our existing contracts and our current assets, including cash and accounts receivable, will be sufficient to fund our liquidity and capital requirements for the next twelve months.   16   Cash flows provided by operations were $802,183 for the six months ended June 30, 2008 primarily the result of increased revenues.  We have no committed source of debt or equity capital. However, we believe that our backlog and committed contracts of approximately $6.5 million of work as of August 7, 2008 will result in positive cash flow for the next twelve months.  As of August 7, 2008, we also had approximately $15.5 million of bids outstanding.  There can be no assurance that all or any of such bids or other potential work will result in contract commitments.  In addition, our acceptance of work may not result in net income to us.  A failure to realize anticipated revenues may have a material adverse affect on our liquidity and capital resources and may negatively impact the market price of our common stock.  Critical Accounting Policies  Financial Reporting Release No. 60 requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements.  Note 2 to the unaudited consolidated financial statements, included elsewhere in this Quarterly Report on Form 10-Q, includes a summary of the significant accounting policies and methods used in the preparation of our financial statements.  An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.  The following is a brief discussion of the more significant accounting policies and methods used by us.  Estimates  The preparation of financial statements and related notes in conformity with accounting principles generally accepted in the United States of America requires us to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.  On an on-going basis, we evaluate the estimates we use in preparing our financial statements, including those related to bad debts, income taxes, contingencies and litigation and make adjustments as we believe appropriate.  We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates.  Financial Instruments  The carrying amounts of financial instruments, including cash, contracts receivable, income tax refund receivable, prepaid expenses and other assets, accounts payable, accrued expenses and other current liabilities and income taxes payable approximate their fair values because of their relatively short maturities.  17    Revenue Recognition  Construction work is generally performed under cost-plus contracts.  The services performed under these contracts are substantially all subcontracted to various trade contractors.  The lengths of our contracts vary, but typically range from less than one year to two years.  Revenues from long term, cost-plus construction contracts are recognized monthly as amounts are billed by subcontracts in accordance with the terms of the contracts.  Contracts are cancellable for nonpayment and require payment for work through the date of cancellation.  Contract costs include all direct material and labor costs and all other direct and indirect costs related to contract performance, on a monthly basis.  General and administrative costs are charged to expenses as incurred.   Item 3. Quantitative and Qualitative Disclosures About Market Risk.  This Item is not applicable to smaller reporting companies.   Item 4T. Controls and Procedures.  Evaluation of Disclosure Controls and Procedures  Our chief executive officer and chief financial officer have each reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934), as of June 30, 2008.  Based on their review and evaluation, our chief executive officer and chief financial officer have concluded that, as of June 30, 2008, our disclosure controls and procedures were adequate and effective to ensure that information required to be disclosed by us in the reports that we it file or submit to the Securities and Exchange Commission pursuant to the reporting obligations of the Exchange Act, including this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC.  However, in evaluating our disclosure and procedures, our Chief Executive Officer and Chief Financial Officer recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and such officers necessarily were required to apply their judgment in evaluating the cost-benefit relationship of possible controls and procedures.  Changes in Internal Control Over Financial Reporting  There has been no change in our internal control over financial reporting during the most recently completed fiscal quarter that will affect or are reasonably likely to materially affect, our internal control over financial reporting.  18   PART II - OTHER INFORMATION  Item 1. Legal Proceedings.  We are a party to various legal proceedings arising in the ordinary course of our business, but we are not currently a party to any legal proceeding that we believe would have a material adverse effect on our financial position or results of operations.  We have been notified, by a letter from the Occupational Safety and Health Administration of the U.S. Department of Labor (OSHA), dated April 28, 2008, that a complaint has been filed with OSHA by Arthur R. Williams alleging discriminatory employment practices in violation of Section 806 of the Corporate and Criminal Fraud Accountability Act of 2002 (SOX).  We hired Mr. Williams on February 11, 2008 as our chief accounting officer and terminated him on March 20, 2008.  We have been advised by OSHA that the complaint, supplemented as appropriate by interviews with Mr. Williams, will be dismissed if OSHA determines that Mr. Williams has not made a prima facie showing that protected activity was a contributing factor in the unfavorable personnel action alleged in the complaint.  The complaint also will be dismissed if Mr. Williams has made a prima facie showing, but OSHA determines that we have demonstrated by clear and convincing evidence that we would have taken the same unfavorable personnel action in the absence of the complainants protected activity.  On June 27, 2008, we submitted to OSHA a written account of the facts, as well as affidavits and documents, explaining and defending our position.  At such time, we requested a meeting to present to OSHA our position.  If investigation provides OSHA with reasonable cause to believe that SOX has been violated by us and reinstatement of Mr. Williams is warranted, we will again be contacted by OSHA prior to the issuance of findings and a preliminary order, at which time we will be advised of the substance of the relevant evidence supporting Mr. Williams allegations, and we will be given the opportunity to submit a written response, to meet with the investigator to present statements from rebuttal witnesses and to present legal and factual arguments.  We believe Mr. Williams complaint is totally without merit and intend to vigorously defend our position.  Item 1A. Risk Factors.  This Item is not applicable to smaller reporting companies.   Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.  We did not issue and securities during the three month period ended June 30, 2008 that were not registered under the Securities Act of 1933, as amended.    19   Item 3. Defaults Upon Senior Securities.  None.   Item 4. Submission of Matters to a Vote of Security Holders.  None.   Item 5. Other Information.  None.   Item 6. Exhibits.  The following exhibits are being filed as part of this Quarterly Report on Form 10-Q.  Exhibit Number Exhibit Description 31.1 Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer. 31.2 Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer. 32.1 Section 1350 Certification of Principal Executive Officer. 32.2 Section 1350 Certification of Principal Financial Officer.   20   SIGNATURES  Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.  Date:  August 14, 2008 Hamptons Luxury Homes, Inc.   By: /s/ Roy Dalene Roy Dalene Chief Executive Officer (Duly Authorized Officer and Principal Executive Officer)    By: /s/ Frank Dalene Frank Dalene Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)  21