**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q/A**


**(AMENDMENT
      NO. 1)**





(Mark
      One)





x
            
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**For the quarterly period
                endedJune
                30, 2008**or**o
            
            **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:000-53234




**Interstate
      Data USA, Inc.**


(Exact
      name of Registrant as specified in its charter)





**Delaware**
            
            **61-1348524**(State or other jurisdiction of incorporation)
            
            (IRS Employer Identification Number)




**1900 West Loop South,
      # 1850**


**Houston,
      Texas 77027**


(Address
      of principal executive offices)





**(606)
      324-0048**


(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.


o Yes x 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.
      See
      definition of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





Large
                accelerated filero
            Accelerated
                fileroNon-accelerated
                filero
            Smaller
                reporting companyx





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


o Yes x No





Indicate
      the number of shares outstanding of each of the issuer’s classes of common
      stock, as of the latest practicable date.





The
      number of shares of common stock outstanding as of August 14, 2008 was
      6,366,231.







**EXPLANATORY
      NOTE**





Interstate
      Data USA, Inc. (the “Company”) is filing this Amendment No. 1 (the “Amendment
      No. 1”) to its Quarterly Report on Form 10-Q for the quarterly period ended June
      30, 2008, originally filed with the United States Securities and Exchange
      Commission (“SEC”), on August 14, 2008 (the “Original Filing”). This Amendment
      No. 1 amends and restates in its entirety Part 1. Item 1. “Financial Statements”
in order to make certain revisions in the Statements of Cash Flows so as to
      reclassify additional paid-in capital from a financing activity to an
      operational activity and to replace the caption “additional paid-in capital”
with more accurate and descriptive terms and expand Note 2 “Summary of
      Significant Accounting Practices” in the Company’s Notes to Unaudited Financial
      Statements. In addition, this Amendment No. 1 amends and restates in its
      entirety Item 2. “Management’s Discussion and Analysis of Financial Condition
      and Results of Operations” to make certain revisions to conform to the Company’s
      Registration Statement on Form 10, as amended, and to correct certain errors
      in
      the Original Filing including:
      (i) the increase in general and administrative expenses corrected to
      reflect $399,018 or 476% for the three months ended June 30, 2008; (ii) the
      percentage increase in general and administrative
      expenses corrected to reflect 493% for the six months ended June
      30, 2008; and (iii) the reference to a working capital deficit corrected to
      reference an accumulated deficit of $6,797,923 and $8,207,002 at December 31,
      2007 and June 30, 2008, respectively.





The
      Company has not modified or updated disclosures presented in the Original
      Filing, except as noted in Part 1. Item 1. “Financial Statements” and Item 2.
“Management’s Discussion and Analysis of Financial Condition and Results of
      Operations.” Accordingly, this Amendment No. 1 does not reflect events occurring
      after the Original Filing or modify or update those disclosures affected by
      subsequent events, except as specifically referenced herein. Information not
      affected by the Amendment No. 1 is unchanged and reflects the disclosures made
      at the time of the Original Filing. This Amendment No. 1 should be read in
      conjunction with the Company's other filings, if any, made with the SEC
      subsequent to the filing of the Original Filing, including the amendments to
      those filings, if any.





Pursuant
      to Rule 12b-15 under the Securities Exchange Act of 1934, as amended, this
      Amendment No. 1 amends the Original Filing and contains new certifications
      pursuant to Section 302 and 906 of the Sarbanes-Oxley Act of 2002.





**TABLE
      OF CONTENTS**





PART
                I — FINANCIAL INFORMATIONITEM
                1.
            Financial
                Statements.
            3CONDENSED
                BALANCE SHEETS
            3CONDENSED
                STATEMENTS OF OPERATIONS
            4CONDENSED
                STATEMENTS OF CASH FLOWS
            5NOTES
                TO CONDENSED INTERIM FINANCIAL STATEMENTS
            6ITEM
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations.
            14ITEM
                6.
            Exhibits.
            21SIGNATURES
            23EX-31.1
            Section
                302 Certification of Principal Executive OfficerEX-31.2
            Section
                302 Certification of Principal Financial OfficerEX-32.1
            Section
                906 Certification of Principal Executive OfficerEX-32.2
            Section
                906 Certification of Principal Financial Officer


2




**PART
      I — FINANCIAL INFORMATION**





**ITEM
      1. Financial Statements.**





**Interstate
                Data USA, Inc.**(A
                Development Stage Company)Condensed
                Balance Sheets





June
                30,
            
            December
                31,2008
            
            2007(Unaudited)ASSETSCURRENT
                ASSETSCash
            
            $
            1,494
            
            $
            68,984Total
                Current Assets
            
            
            1,494
            
            
            68,984Fixed
                AssetsEquipment
                net of Depreciation
            
            
            32,640
            
            
            35,978Other
                AssetsWebsite
                Development in Progress
            
            
            -
            
            
            274,500Leasehold
                Improvements net of Amortization
            
            
            29,850
            
            
            31,650Website
                Development net of accumulatedAmortization
            
            
            439,750
            
            
            273,333TOTAL
                ASSETS
            
            $
            503,734
            
            $
            684,445LIABILITIES
                AND STOCKHOLDERS' EQUITY (DEFICIT)Accounts
                payable
            
            $
            415,758
            
            $
            1,811Notes
                payable - related party - Current
            
            
            712,400
            
            
            6,900Accrued
                liabilities
            
            
            540,470
            
            
            407,513Convertible
                Notes Payable Current
            
            
            
            
            
            100,000Discount
                on Convertible Note Payable
            
            
            
            
            
            (38,024
            )Total
                Current Liabilities
            
            
            1,668,628
            
            
            478,200Notes
                payable-related parties
            
            
            239,850
            
            
            238,050Notes
                payable
            
            
            101,749
            
            
            101,749Total
                Liabilities
            
            
            2,010,227
            
            
            817,999STOCKHOLDERS'
                EQUITY (DEFICIT)Preferred
                Stock: 20,000,000 shares authorized, at $0.001   par value, 281,833
                shares issued and outstanding
            
            
            282
            
            
            282Common
                stock; 80,000,000 shares authorized,   at $0.001 par value, 6,366,231
                shares   issued and outstanding
            
            
            6,366
            
            
            6,267Additional
                paid-in capital
            
            
            4,670,484
            
            
            4,704,251Additional
                paid-in - capital share options
            
            
            2,023,377
            
            
            1,953,568Deficit
                accumulated during the development stage
            
            
            (8,207,002
            )
            
            (6,797,922
            )Total
                Stockholders' Equity (Deficit)
            
            
            (1,506,493
            )
            
            (133,554
            )TOTAL
                LIABILITIES AND STOCKHOLDERS'   EQUITY (DEFICIT)
            
            $
            503,734
            
            $
            684,445





*See
      accompanying notes to condensed interim financial
      statements.*


3





**Interstate
                Data USA, Inc.**(A
                Development Stage Company)Condensed
                Statements of Operations
                (Unaudited)





For the Three
              Months Ended
              June 30,
            
            For the Six
              Months Ended
              June 30,
            
            From Inception
              May 19,
              1999 Through
              June 30,2008
            
            2007
            
            2008
            
            2007
            
            2008REVENUES
            
            $
            -
            
            $
            52
            
            $
            -
            
            $
            66
            
            $
            35,421EXPENSESStock
                Option Expense
            
            
            69.908
            
            
            
            
            
            69,908
            
            
            0
            
            
            2,043,204Amortization
                Expense
            
            
            57,042
            
            
            34,167
            
            
            108,083
            
            
            68,333
            
            
            450,957Depreciation
                Expense
            
            
            2,567
            
            
            598
            
            
            5,138
            
            
            2,247
            
            
            39,189General
                andAdministrative
                Expenses
            
            
            482,948
            
            
            83,930
            
            
            1,225,951
            
            
            206,584
            
            
            5,709,073Total
                Expenses
            
            
            612,465
            
            
            118,695
            
            
            1,409,080
            
            
            277,164
            
            
            8,242,423NET
                LOSS
            
            $
            (612,465
            )
            $
            (118,643
            )
            $
            (1,409,080
            )
            $
            (277,098
            )
            $
            (8,207,002
            )BASIC
                LOSS PER SHARE
            
            $
            (0.10
            )
            $
            (0.02
            )
            $
            (0.22
            )
            $
            (0.04
            )WEIGHTED
                AVERAGE NUMBER OF SHARES OUTSTANDING
            
            
            6,318,978
            
            
            6,261,853
            
            
            6,292,750
            
            
            6,261,853




*See
      accompanying notes to condensed interim financial
      statements.*


4





**Interstate
                Data USA, Inc.**(A
                Development Stage Company)Condensed
                Statements of Cash Flows
                (Unaudited)





For the Six
              Months Ended
              June 30,
            
            From Inception
              May 11,
              1999 Through
              June 30,2008
            
            2007
            
            2008OPERATING ACTIVITIESNet
                loss
            
            $
            (1,409,080
            )
            $
            (277,098
            )
            $
            (8,207,002
            )Adjustments
                to reconcile net loss to net cash used by operating
                activities:Additional
                Paid in Capital Share Options
            
            
            69,809
            
            
            
            
            
            2,023,377Depreciation
            
            
            5,138
            
            
            2,247
            
            
            25,909Amortization
            
            
            108,083
            
            
            68,333
            
            
            450,957Discount
                on notes payable
            
            
            
            
            
            
            
            
            41,193Stock
                for Services
            
            
            
            
            
            
            
            
            54,550Changes
                in operating assets and liabilitiesIncrease
                in accrued expenses
            
            
            132,957
            
            
            (3,077
            )
            
            540,470Increase
                in accounts payable - related
            
            
            -
            
            
            (7,768
            )
            
            0Increase
                in accounts payable
            
            
            413,947
            
            
            26,710
            
            
            415,758Net
                Cash Used by Operating Activities
            
            
            (679,146
            )
            
            (190,653
            )
            
            (4,654,788
            )INVESTING
                ACTIVITIESLeasehold
                Improvements Blg
            
            
            
            
            
            
            
            
            (36,000
            )Web
                site Development
            
            
            (274,500
            )
            
            (410,000
            )
            
            (890,707
            )Equipment
            
            
            -
            
            
            (9,536
            )
            
            (52,400
            )Development
                Cost in Progress
            
            
            274,500
            
            
            255,000
            
            
            -Net
                Cash provided from Investing
            
            
            -
            
            
            (164,536
            )
            
            (979,107
            )FINANCING
                ACTIVITIESAdditional
                Paid in Capital
            
            
            
            
            
            
            
            
            -Dividends
                Paid
            
            
            (33,767
            )
            
            
            
            
            (50,677
            )Proceeds
                from notes payable
            
            
            620,172
            
            
            74,975
            
            
            1,485,348Discounts
                on notes payable
            
            
            38,024Payments
                of long term debt
            
            
            (12,873
            )
            
            (4,596
            )
            
            (431,349
            )Proceeds
                from sale of common stock
            
            
            99
            
            
            91,500
            
            
            3,760,965Proceeds
                from sale of preferred stock
            
            
            
            
            
            
            
            
            871,101Net
                Cash Provided by
            
            
            611,655
            
            
            161,879
            
            
            5,635,388Financing
                ActivitiesNET
                DECREASE IN CASH
            
            
            (67,491
            )
            
            (193,310
            )
            
            1,493CASH
                AT BEGINNING OF PERIOD
            
            
            68,984
            
            
            204,314
            
            
            -CASH
                AT END OF PERIOD
            
            $
            1,493
            
            $
            11,004
            
            $
            1,493SUPPLEMENTAL
                DISCLOSURES OFCASH
                FLOW INFORMATIONCASH
                PAID FOR:Interest
            
            $
            58,892
            
            $
            4,501
            
            $
            100,575Income
                Taxes
            
            $
            -
            
            $
            -
            
            $
            -





*See
      accompanying notes to condensed interim financial
      statements.*


5





**Interstate
      Data USA, Inc.**


**(A
      Development Stage Company)**


**Notes
      to Unaudited Financial Statements**


**(June
      30, 2008)**




**Note
      1. General Organization and Business**





Interstate
      Data USA, Inc. (formerly Internet64.Net Inc. (the “Company”)) was incorporated
      on May 11, 1999 under the laws of the State of Kentucky. On June 24, 1999,
      Internet64.Net, Inc. changed its name to Interstate4U.Com, Inc. and again on
      May
      9, 2001, Interstate4U.com, Inc. changed its name to Interstate Data Inc. On
      May
      18, 2001, Interstate Data USA, Inc. incorporated under the laws of the State
      of
      Delaware to facilitate a reincorporation of the Company from Kentucky to
      Delaware. On that same date Interstate Data, Inc. the Kentucky corporation,
      merged with and into Interstate Data USA, Inc., the Delaware corporation. The
      Company has no operations and in accordance with SFAS # 7 is
      considered to be in the development stage.





Since
      its
      inception, the Company has been in the process of developing a web site
      containing information useful to automobile travelers, which includes, among
      other things, businesses and attractions located near interstate exits. The
      Company anticipates its revenues will be derived from offline database licensing
      fees and online web site advertising fees.





**Note
      2. Summary of Significant Accounting Practices**





Basis
      of Presentation





In
      the
      opinion of management, the accompanying balance sheets and related interim
      statements of income and cash flow include all adjustments, consisting only
      of
      normal recurring items, necessary for their fair presentation in conformity
      with
      accounting principles generally accepted in the United States of America (“U.S.
      GAAP”). Preparing financial statements requires management to make estimates and
      assumptions that affect the reported amounts of assets, liabilities, revenue,
      and expenses. Actual results and outcomes may differ from management’s estimates
      and assumptions.





Interim
      results are not necessarily indicative of results for a full year. The
      information included in this form 10-Q should be read in conjunction with
      information included in the Company’s registration statement on Form 10, as
      filed with the Securities Exchange Commission (“SEC”).





Fair
      Value of Financial Instruments




The
      carrying amounts reported in the balance sheet for cash, accounts payables
      and
      accrued expenses, and stockholder payables approximate their fair market value
      based on the short-term maturity of these instruments. Statement of Financial
      Accounting Standards (“SFAS”) No. 107 requires disclosures about the fair value
      for all financial instruments, whether or not recognized, for financial
      statement purposes. Disclosures about fair value of financial instruments are
      based on pertinent information available to management as of December 31, 2007
      and 2006. Accordingly, any estimates presented in our financial statements
      are
      not necessarily indicative of the amounts that could be realized on disposition
      of the financial instruments.




Management
      has estimated the fair values of cash, accounts payable, and accrued expenses
      to
      be approximately their respective carrying values reported on these statements
      because of their short maturities.





***Recently
      issued accounting pronouncements:***




In
      December 2007, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards No. 141 (revised 2007), “ *Business
      Combinations* ”
(“SFAS
      141(R)”). SFAS 141(R) which establishes principles and requirements for how the
      acquirer in a business combination recognizes and measures in its financial
      statements the fair value of identifiable assets acquired, the liabilities
      assumed and any non-controlling interest in the acquiree at the acquisition
      date. SFAS 141(R) determines what information to disclose to enable users of
      the
      financial statements to evaluate the nature and financial effects of the
      business combination. SFAS No. 141(R) is effective for fiscal years beginning
      after December 15, 2008.


6




In
      December 2007, the FASB issued SFAS No. 160, “ *Noncontrolling
      Interests in Consolidated Financial Statements - An Amendment of ARB
      No. 51* ”
(“SFAS
      160”). SFAS 160 requires reporting entities to present noncontrolling (minority)
      interests as equity as opposed to as a liability or mezzanine equity and
      provides guidance on the accounting for transactions between an entity and
      noncontrolling interests. SFAS 160 is effective the first fiscal year beginning
      after December 15, 2008, and interim periods within that fiscal year. SFAS
      160
      applies prospectively as of the beginning of the fiscal year SFAS 160 is
      initially applied, except for the presentation and disclosure requirements
      which
      are applied retrospectively for all periods presented subsequent to adoption.
      The adoption of SFAS 160 will not have a material impact on the Company’s
      results of operations or financial position; however, it could impact future
      transactions entered into by the Company.




In
      December 2007, the SEC issued SAB No. 110, *“Share-Based
      Payment”* (“SAB
      110”). SAB 110 establishes the continued use of the simplified method for
      estimating the expected term of equity based compensation.  The simplified
      method was intended to be eliminated for any equity based compensation
      arrangements granted after December 31, 2007.  SAB 110 is being
      published to help companies that may not have adequate exercise history to
      estimate expected terms for future grants. The adoption of SAB 110 has not
      had a material effect on the Company’s consolidated financial
      statements.





In
      March
      2008, the FASB issued SFAS No. 161, *“Disclosures
      about Derivative Instruments and Hedging Activities - An Amendment to FASB
      Statement No. 133* ”
(“SFAS
      161”). SFAS 161 is intended to improve financial standards for derivative
      instruments and hedging activities by requiring enhanced disclosures to enable
      investors to better understand their effects on an entity’s financial position,
      financial performance, and cash flows. Entities are required to provide enhanced
      disclosures about: (a) how and why an entity uses derivative instruments, (b)
      how derivative instruments and related hedged items are accounted for under
      Statement 133 and its related interpretations, and (c) how derivative
      instruments and related hedged items affect an entity’s financial position,
      financial performance, and cash flows. It is effective for financial statements
      issued for fiscal years beginning after November 15, 2008, with early adoption
      encouraged. The adoption of this statement is not expected to have a material
      effect on the Company’s financial statements.





In
      May
      2008, the FASB issued SFAS No. 162 *,
      “The Hierarchy of Generally Accepted Accounting Principles”* (“SFAS
      162”). SFAS 162 identifies the sources of accounting principles and the
      framework for selecting the principles to be used in the preparation of
      financial statements of nongovernmental entities that are presented in
      conformity with generally accepted accounting principles in the United States.
      It is effective 60 days following the SEC’s approval of the Public Company
      Accounting Oversight Board amendments to Auditing Interpretation Section 411, *“The
      Meaning of Present Fairly in Conformity With Generally Accepted Accounting
      Principles.”* The
      adoption of this statement is not expected to have a material effect on the
      Company’s financial statements.




In
      May
      2008, the FASB issued SFAS No. 163 (“SFAS 163”) *,
      “Accounting for Financial Guarantee Insurance Contracts - An interpretation
      of
      FASB Statement No. 60”* (“SFAS
      163”) *.* SFAS 163
      requires that an insurance enterprise recognize a claim liability prior to
      an
      event of default when there is evidence that credit deterioration has occurred
      in an insured financial obligation. It also clarifies how Statement 60 applies
      to financial guarantee insurance contracts, including the recognition and
      measurement to be used to account for premium revenue and claim liabilities,
      and
      requires expanded disclosures about financial guarantee insurance contracts.
      It
      is effective for financial statements issued for fiscal years beginning after
      December 15, 2008, except for some disclosures about the insurance enterprise’s
      risk-management activities. SFAS 163 requires that disclosures about the
      risk-management activities of the insurance enterprise be effective for the
      first period beginning after issuance. Except for those disclosures, earlier
      application is not permitted. The adoption of this statement is not
      expected to have a material effect on the company’s financial
      statements.




Management
      does not believe that any other recently issued, but not yet effective,
      accounting pronouncements, if currently adopted, would have a material effect
      on
      the Company’s condensed interim financial statements.


7




***Recently
      adopted accounting standards:***




In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      No.
      157, “ *Fair
      Value Measurements* ”
(“SFAS
      157”). 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 where the FASB requires or permits fair value
      measurements but does not require any new fair value measurements. In February
      2008, the FASB issued FASB Staff Position No. 157-2, “ *Effective
      Date of FASB Statement No. 157* ”
(“FSP
      No. 157-2”), which delayed the effective date of SFAS 157 for certain
      non-financial assets and non-financial liabilities to fiscal years beginning
      after November 15, 2008, and interim periods within those fiscal years. The
      Company adopted SFAS 157 for financial assets and liabilities on January 1,
      2008. SFAS 157 did not have any impact on the Company’s 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. 155* ”
(“SFAS
      159”). This statement permits entities to choose to measure selected assets and
      liabilities at fair value. The Company adopted SFAS 159 on January 1, 2008
      resulting in no impact to the Company’s financial condition, results of
      operations or cash flows.




Cash
      and Cash Equivalents





For
      the
      purpose of the statement of cash flows, cash equivalents include all highly
      liquid investments with maturity of three months or less.





Earnings
      (Loss) per Share





The
      basic
      earnings (loss) per share are calculated by dividing the Company’s net income
      available to common stockholders by the weighted average number of common shares
      outstanding during the year.




Basic
      Loss Per Share





**For
                the Three Months Ended June 30, 2008****Loss**
              **Numerator**
            
            **Shares**
              **Denominator**
            
            **Per**
              **Share Amount**( 612,465)
            
            6,318,978
            
            (.10
            )**For
                the Three Months Ended June 30, 2007****Loss**
              **Numerator**
            
            **Shares**
              **Denominator**
            
            **Per**
              **Share Amount**(118,643)
            
            
            6,261,853
            
            
            (.02
            )


8




Basic
                and DilutedSix Months Ended
              June 30, 20082008
            
            2007Basic earnings
                per share:Net
                Income ( loss)
            
            $
            (1,409,080
            )
            $
            (277,098
            )Weighted
                average shares outstanding, basic
            
            
            6,292,750
            
            
            6,261,853Weighted
                average shares outstanding, diluted
            
            
            8,972,563
            
            
            8,046,010Basic
                earnings per share
            
            $
            (0.22
            )
            $
            (0.04
            )Diluted
                earnings per share
            
            $
            (0.22
            )
            $
            (0.04
            )





Dividends





Common
      Stock: The Company has not adopted any policy regarding payment of dividends
      on
      its common stock. No dividends have been paid during the period
      shown.





Preferred
      Stock: An 8% Series A Convertible Preferred Stock was designated during May
      2007; 281,833 shares are currently issued and outstanding. The Company began
      paying dividends on October 1, 2007; $16,910 dividends were paid for the year
      2007. Dividends are to be paid quarterly. The Company paid dividends totaling
      $16,857 during the first quarter of 2008. As of the date of this report, the
      Company is in arrears with respect to payment of its quarterly dividend for
      the
      second quarter ended June 30, 2008. The Company’s management has refrained from
      making payment at this time because of the absence of surplus
      funds.





Revenue
      Recognition





The
      Company anticipates that it will generate its revenue from two primary sources:
      the sale of advertising on its web site and the licensing of the web site
      content. To date, the Company has generated no revenues. Advertising revenue
      will be recognized using the lesser of the ratio of impressions delivered over
      total guaranteed impressions or on a straight line basis over the term of the
      contract in the period the advertising is displayed, provided that no
      significant Company obligations remain and collection of the resulting
      receivable is probable. Data licensing revenues will be recognized ratably
      over
      the term of the licensing agreement or amounts based on the number of
      third-party web site subscribers that use the service each month.





Web
      Site and Web Site Operations and Maintenance





Costs
      incurred in the application and development stage have been capitalized. Costs
      incurred in planning, upgrades and enhancements are generally expensed as
      incurred unless such upgrade or enhancement results in additional functionality.
      Costs of web site maintenance, data collection, and conversion are expensed
      as
      incurred. Costs incurred for web site hosting arrangements are expensed over
      the
      period of benefit.





During
      2003 the Company developed a new web site adding numerous enhancements and
      additional functionality. These enhancements and additional functionality were
      necessary to remain current with technology changes and the changing economy.
      The cost of this redesign was $206,207 which has been capitalized over three
      years. Implementation of the new web site took place on January 1,
      2004.





During
      2006 the Company further expanded its web site development adding enhancements
      and functionality necessary to remain current with technology changes and the
      changing economy. The cost of these enhancements was $310,000 which has been
      capitalized over three years. Implementation of these changes took place on
      January 1, 2007.


9





During
      2007 the Company continued to expand its web site development adding
      enhancements and functionality necessary to remain current with technology
      changes and the changing economy. The cost of these web site enhancements was
      $274,500. Implementation of these changes took place on January 1,
      2008.




Depreciation
      and Amortization





Depreciation
      expenses were $2,567 and $598 for the three months ended June 30, 2008 and
      2007,
      respectively.





Amortization
      expenses were $57,042 and $34,166 for the three months ended June 30, 2008
      and
      2007, respectively.





Depreciation
      and amortization are calculated over the estimated useful lives of the related
      assets using the straight-line method. Estimated useful lives assigned for
      these
      purposes are as follows:




Web
      Site                                 
3 Years


Equipment                              
      5 Years


Leasehold
      Improvements      10 Years





Management
      periodically reassesses the estimated useful lives used for depreciation and
      amortization purposes.





Current
      Liabilities





Accounts
      Payable were $415,758 and $26,710 for the three months ended June 30, 2008
      and
      2007, respectively.





Accrued
      Liabilities were $540,470 and $383,180 for the three months ended June 30,
      2008
      and 2007, respectively.





Current
      Portion of Notes Payable for the three months ended June 30, 2008 and 2007
      were
      $712,400 and $6,900, respectively.





Notes
      Payable




Notes
      Payable for the three months ended June 30, 2008 and 2007 were $341,600 and
      $464,855, respectively.





a.)
            On
                March 31, 2008, the Company issued a promissory note in the principal
                amount of $296,000 to Vincent O. Ebuh, a stockholder and director
                of the
                Company. The note accrues interest at a rate of 12% per annum and
                both the
                principal and interest are due and payable on March 31,
                2009.





b.)
            On
                December 13, 2007, the Company issued a convertible promissory note
                in the
                principal amount of $100,000 to Apollos Ikpobe, a stockholder of
                the
                Company. The note accrues interest at a rate of 12% per annum, payable
                monthly, and matures on June 30, 2008. Due to the convertible nature
                of
                this note an adjustment was made in the amount of $41,193 as a discount
                to
                notes payable.





On
      April
      10, 2008, the convertible promissory note issued to Apollos Ikpobe was assigned
      to Vincent O. Ebuh, a stockholder and director of the Company. The maturity
      date
      was extended to December 31, 2008 and the remaining terms will remain consistent
      with the original terms of this note.





c.)
            On
                April 30, 2008, the Company issued a promissory note in the principal
                amount of $80,000 to Vincent O. Ebuh, a stockholder and director
                of the
                Company. The note accrues interest at a rate of 12% per annum and
                both
                principal and interest are due and payable on April 30,
                2009.





d.)
            On
                May 19, 2008, the Company issued a promissory note in the principal
                amount
                of $17,500 to Randall R. Carpenter, a stockholder and director
                of the Company. The note accrues interest at a rate of 12% per annum
                and
                both the principal and interest are due and payable on May 19,
                2009.


10





e.)
            On
                May 29, 2008, the Company issued a promissory note in the principal
                amount
                of $66,000 to Vincent O. Ebuh, a stockholder and director of the
                Company.
                The note accrues interest at a rate of 12% per annum and both principal
                and interest are due and payable on May 29,
                2009.





f.)
            On
                June 19, 2008, the Company issued a promissory note in the principal
                amount of $146,000 to Vincent O. Ebuh, a stockholder and director
                of the
                Company. The note accrues interest at a rate of 12% per annum and
                both the
                principal and interest are due and payable on June 19,
                2009.





g.)
            On
                July 16, 2008, the Company issued a promissory note in the principal
                amount of $1,209.52 to Randall R. Carpenter, a stockholder and director
                of
                the Company. The note accrues interest at a rate of 12% per annum
                and both
                the principal and interest are due and payable on July 16,
                2009.





h.)
            The
                Company has obtained a line of credit with Town Square Bank of Ashland,
                KY. This line of credit is for a total of $100,000. This note was
                guaranteed by David E. Carter, Robert Lowe, and Randall R.
                Carpenter, all of whom are officers and directors of the Company.
                On June
                28, 2006, the Company repaid loans to Town Square Bank of $100,000
                in
                principal together with $1,749 in accrued interest and obtained a
                new loan
                from Palmetto Heritage Bank and Trust in the principal amount of
                $101,749.
                Under the terms of this loan the Company is required to make twenty-three
                (23) monthly interest payments beginning June 1, 2006 through June
                1, 2008
                and one (1) final payment of the principal amount of $101,749 plus
                the
                last month’s interest. Interest accrues on the loan at a variable rate of
                8.5% per annum. During the three months ended March 31, 2008, the
                Company
                extended the maturity of the loan from Palmetto Heritage Bank for
                (1) one
                additional year until June 28,
                2009.





i.)
            The
                Company has issued non-interest bearing promissory notes to David
                Carter,
                its Chief Executive Officer and a corporation owned by David Carter.
                Notes
                due to Mr. Carter and his affiliate include:


June, 30, 2008
            
            June 30, 2007David
                E. Carter
            
            $
            15,000
            
            $
            15,000DEC,
                Inc
            
            $
            103,747
            
            $
            103,747Total
            
            $
            118,747
            
            $
            118,747




j.)
            The
                Company has issued promissory notes to Randall R. Carpenter, its
                President
                in the amounts set forth below. The Company is currently making monthly
                payments to Mr. Carpenter in the amount of $575. The current portion
                of
                each notes is $24,400 and 6,900 for the three months ended June 30,
                2008
                and 2007, respectively.





June 30, 2008
            
            June 30, 2007Randall
                R. Carpenter
            
            $
            61,859
            
            $
            75,433




k.)
            The
                Company has issued promissory notes to Vincent O. Ebuh and Robert
                Lowe in
                the amounts set forth below, which includes non-interest bearing
                loans in
                the amounts of $48,507 and $35,138, respectively. Mr. Ebuh and Mr.
                Lowe
                own shares representing 31.65% and 14.05%, respectively, of the Company’s
                shares outstanding as of June 30, 2008.


June 30, 2008
            
            June 30, 2007Vincent
                O. Ebuh
            
            $
            636,506
            
            $
            130,688Robert
                Lowe
            
            $
            35,138
            
            $
            25,138Total
            
            $
            671,644
            
            $
            155,826


11




**Note
      3. Stockholders Equity**





Common
      Stock





In
      connection with the Company’s reincorporation in Delaware during 2001 and its
      offering of capital stock, the capital structure was reorganized from 1,000
      authorized shares of common stock, no par value, at March 31, 2001, December
      31,
      2000 and December 31, 1999, to 80,000,000 authorized, shares of common stock,
      $.001 par value. All share and per share amounts, reflected in the accompanying
      financial statements, have been retroactively restated to reflect the newly
      authorized and outstanding number of shares of common stock.





In
      March
      2007 the Company’s board of directors authorized a four to one (4:1) reverse
      stock split. The accompanying financial statements have been revised to reflect
      this reverse split.





In
      March
      2007 the capital structure of the Company was restructured by charter amendment
      from 80,000,000 authorized shares of common stock, $.001 par value, to
      20,000,000 authorized shares of common stock, $.001 par value. All share and
      per
      share amounts reflected in the accompanying financial statements have been
      retroactively restated to reflect the newly authorized and outstanding number
      of
      shares of common stock





During
      the three months ended March 31, 2007, the Company issued 42,602 shares of
      $.001
      par value common stock for $91,500 cash.





In
      April
      2008 the capital structure of the Company was restructured by charter amendment
      from 20,000,000 authorized shares of common stock, $.001 par value, to
      80,000,000 authorized shares of common stock, $.001 par value. All share and
      per
      share amounts reflected in the accompanying financial statements have been
      retroactively restated to reflect the newly authorized and outstanding number
      of
      shares of common stock.





In
      May
      2008 the Company issued 100,000 shares of restricted common stock to an officer
      of the company.





As
      of
      June 30, 2008, there were 6,366,231 shares of the Company’s common stock issued
      and outstanding.




Stock
      Options and Equity Awards





During
      the three months ended June 30, 2008, the Company granted options to purchase
      common stock totaling 187,500 shares and granted 100,000 shares of restricted
      common stock to certain executive officers of the Company.





The
      Company has granted stock options totaling 1,971,657. As of June 30, 2008,
      no
      stock options have been exercised.





Three Months
              EndedJune 30, 2008SharesOutstanding
                at beginning of year
            
            
            1,784,157Granted
            
            
            187,500Exercised
            
            
            -Forfeited
                or expired
            
            
            -Outstanding
                at end of period
            
            
            1,971,657Options
                exercisable at end of period
            
            
            1,784,157


12




The
      Company also has authorized 20,000,000 shares of preferred stock, par value
      $.001 of which 700,000 shares have been designated as 8% Series A Convertible
      Preferred Stock, par value $.001 per share. As of June 30, 2008, there were
      281,833 shares of Series A Convertible Preferred Stock issued and
      outstanding.





Warrants





As
      of
      June 30, 2008, the Company has outstanding warrants to purchase 366,383 shares
      of common stock.





Each
      warrant entitles the holder to purchase one (1) share of common stock at an
      exercise price of $4.50 per warrant or $4.50 per share subject to adjustment
      for
      stock splits, reverse stock splits and other events of recapitalization. The
      Warrants may be called at any time by the Company if (a) a registration
      statement under the Securities Act with respect to the shares of Common Stock
      issuable upon exercise of the Warrants is effective during the entire Exercise
      Period (as defined below) that follows the Warrantholder’s receipt of Notice
      regarding the call and (b) at least one of the following events occur (each,
      a
“Call Event”) (i) the closing or last sale price, if the Common Stock is traded
      on an Exchange, or the average of the closing bid and ask prices, if the Common
      Stock is not traded on an Exchange, of the Common Stock is equal to or greater
      than $13.50 for a period of twenty consecutive trading days or (ii) (1) any
      company or individual acquires direct or indirect ownership or control of any
      voting shares of the Company if, after such acquisition, such company or
      individual directly or indirectly owns or controls more than 50% of our Common
      Stock; (2) any company or individual acquires a majority of the assets of the
      Company; or (3) any company merges or consolidates with us, which results in
      the
      members of our Board of Directors in office immediately prior to such
      transaction or event constituting less than a majority of such Board of
      Directors thereafter.





Callable
      by the Company





This
      warrant may be called at any time by the Company if (a) a registration statement
      under the Securities Act is effective during the entire Exercise Period which
      follows the Warrantholder’s receipt of the Notice with respect to the Warrant
      Shares and (b) at least one of the following events occur (each a “Call Event”)
      (i) the closing or last sale price, if the Common Stock is traded on an
      Exchange, or the average of the closing bid and ask prices, if the Company’s
      common stock is not traded on an Exchange, of the Common Stock is equal to
      or
      greater than the callable price of $13.50 for a period of twenty (20)
      consecutive trading days or (ii) (1) any company or individual acquires direct
      or indirect ownership or control of any voting shares of the Company if, after
      such acquisition, such company or individual will directly or indirectly own
      or
      control more than 50% of the voting shares of the Company; (2) any company
      or
      individual acquires a majority of the assets of the Company; or (3) any company
      merges or consolidates with the Company, which results in the members of the
      Company’s Board of Directors in office immediately prior to such transaction or
      event constituting less than a majority of such Board of Directors
      thereafter.





**Note
      4.**  **Related
      Party Transactions**





The
      Company has issued promissory notes to certain of its officers, directors and
      stockholders. For a detailed discussion of the terms of these notes please
      see
      Note 2 "Notes Payable."





The
      officers and directors of the Company are involved in other business activities
      and may, in the future, become involved in other business opportunities that
      become available. As a result of the foregoing, our officers and directors
      may
      become involved in one or more business activities that would present a conflict
      of interest in selecting between the Company and other business interests.
      The
      Company has not formulated a policy for the resolution of such
      conflicts.





**Note
      5. Going Concern**





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in the notes to the financial
      statements, the Company has no established source of revenue. This raises
      substantial doubt about the Company’s ability to continue as a going concern.
      Without realization of additional capital, it would be unlikely for the Company
      to continue as a going concern. The financial statements do not include any
      adjustments that might result from this uncertainty.





The
      Company’s activities to date have been supported by equity financing. It has
      sustained losses in all previous reporting periods with an inception to date
      loss of $8,207,002 as of June 30, 2008. Management continues to seek funding
      from its stockholders and other qualified investors to pursue its business
      plan.
      In the alternative, the Company may be amenable to a sale, merger or other
      acquisition in the event such transaction is deemed by management to be in
      the
      best interests of the stockholders.


13




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





The
      data
      set forth in “Management’s Discussion and Analysis of Financial Condition and
      Results of Operations” below should be read in conjunction with our financial
      statements and other financial information included elsewhere in this Amendment
      No. 1. On March 21, 2007, we amended our Amended and Restated Certificate of
      Incorporation to effectuate a 1 for 4 reverse stock split of our outstanding
      Common Stock which became effective on that date. The financial information
      included herein is reflective of the reverse stock split.





**MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION**


**AND
      RESULTS OF OPERATIONS**




Statements
      included in this document, or incorporated herein by reference, that do not
      relate to present or historical conditions are “forward-looking statements”
within the meaning of that term in Section 21E of the Securities Exchange Act
      of
      1934, as amended. Additional oral or written forward-looking statements may
      be
      made by the Company from time to time, and such statements may be included
      in
      documents that are filed with the SEC. Such forward-looking statements involve
      risks and uncertainties that could cause results or outcomes to differ
      materially from those expressed in the forward-looking statements.
      Forward-looking statements may include, without limitation, statements relating
      to the Company’s plans, strategies, objectives, expectations and intentions and
      are intended to be made pursuant to the safe harbor provisions of the Private
      Securities Litigation Reform Act of 1995. Words such as “believes,” “forecasts,”
“intends,” “possible,” “estimates,” “anticipates,” “expects,” and “plans” and
      similar expressions are intended to identify forward-looking statements. The
      Company’s ability to predict projected results or the effect of events on the
      Company’s operating results is inherently uncertain. Forward-looking statements
      involve a number of risks, uncertainties and other factors that could cause
      actual results to differ materially from those discussed in this document.
      Factors that could affect the Company’s assumptions and predictions include, but
      are not limited to, risks  related to :





·
            industry
                competition, conditions, performance and consolidation;·
            product
                demand and market acceptance risks;·
            legislative
                and/or regulatory developments;·
            the
                presence of competitors with greater financial resources than
                us;·
            exposure
                to obsolescence due to rapid technological changes occurring in Internet
                industries; and·
            effects
                of adverse general economic conditions within the United States;
                or
                financial performance.





References
      in this report to “we,” “us” or “our company” refer to Interstate Data USA,
      Inc.




**Overview**




We
      are an
      application service provider distributing our unique and customized travel
      content through our web site located at www.TravMatix.com .
      We have
      identified what we believe is an unsatisfied need for travel information within
      the rapidly growing and what we perceive to be a profitable consumer travel
      market. We target domestic automobile travelers who want information regarding
      businesses and attractions located near interstate exits. We expect to derive
      our revenues in the future primarily from advertising sales by our delivery
      of
      relevant, cost-effective online advertising for primarily travel and tourism
      related businesses, which intend to promote their products and services with
      targeted advertising. We anticipate that in connection with an affiliation
      or
      advertising agreement with us, our advertisers will pay us a fee each time
      an
      advertiser’s impression or icon is generated and displayed in a trip plan
      generated on our web site (Pay Per Impression or PPM). Additionally, we intend
      to drive a portion of our revenues from our web site users who make hotel
      accommodations through our web site hotel reservation feature, HotelMatch (Pay
      Per Action or PPA). When a web site user completes a hotel reservation utilizing
      the HotelMatch feature on our web site, our agreement with Ian.com, doing
      business as Hotels.com, provides that we will be remitted a portion of the
      hotel
      reservation fee, while a portion of the fee will be paid to Ian.com.
      Additionally, we hope to generate revenues from database licensing meaning
      that
      we intend to charge a fee to provide an organization’s or institution’s users
      with unlimited or limited access to our database travel content.


14


We
      do not
      currently engage in any business activities that provide significant cash flow.
      During the next twelve months we anticipate incurring costs and expenses related
      to filing of Exchange Act reports and costs related to the management of a
      newly
      public company. Management will fund the costs and expenses to be incurred
      as a
      result of such activities through loans or further investment in us by debt
      and
      equity financing  by private accredited investors. We intend to pursue a
      private equity or debt offering of securities to provide additional funding
      to
      support these reporting company expenses during the third and fourth quarters
      of
      2008. Based on our history as a developmental stage company, it is difficult
      to
      predict our future results of operations. Our operations may never generate
      significant revenues or any revenues whatsoever, and we may never achieve
      profitable operations.




For
      the
      three and six months ended June 30, 2007, we incurred operating losses in the
      amounts of $118,643 and $277,098, respectively, as compared to $612,465 and
      $1,409,080 for the three and six months ended June 30, 2008, respectively.
      As of
      December 31, 2007 and June 30, 2008, we had an accumulated deficit of
      approximately $6,797,923 and $8,207,002 respectively. These losses, among
      other things, have had and will continue to have an adverse effect on our
      working capital, total assets and stockholders’ (deficit) equity.





**Our
      Business Strategy**




Our
      objective is to position TravMatix TM as the
      leader in travel planning for the domestic automobile traveler. Using our
      intellectual property, including our pending patent and our proprietary
      interstate data, we believe we are well positioned to grow our business.
      Elements of our strategy include:




·
            Providing
                what we believe is superior travel mapping and interstate highway
                exit
                information;


·
            Growing
                our TravMatix TM brand and our Internet presence through an advertising
                and public relations campaign;


·
            Promoting
                an integrated advertising approach;


·
            Creating
                and promoting strategic relationships;
                and


·
            Expanding
                our data services to include cellular and other navigational
                devices.




In
      order
      to attract and promote relationships with advertisers and affiliates, the
      Company believes it needs to increase its web site user base and traffic through
      an expanded marketing and advertising campaign to consist of the following
      four
      components:




·
            Cost
                per click (CPC) advertising (payments to search engines and other
                Internet
                publishers for one click on the Company’s ad that brings one visitor to
                the Company’s web site);


·
            On-line
                advertising (advertisements on established web sites such as CNN.com
                and
                Weather Channel.com);


·
            Television
                advertising; and


·
            Print
                advertising (magazines and
                newspapers).





Currently,
      the Company is engaged in only CPC advertising, and because of budgetary
      constraints has not engaged in on-line, television or print advertising to
      date.
      Following the Company’s private placement funding during 2007, the Company
      increased its spending for CPC marketing and advertising and increased its
      users
      on a daily basis from an average of 74 users to an average of 5,500 users.
      During the second half of 2008, the Company intends to increase spending for
      a
      web site marketing and advertising campaign to drive additional users to the
      web
      site, assuming it is able to successfully complete an equity or debt financing
      during the third or fourth quarter of 2008.





**Satisfaction
      of our cash obligations for the next 12 months**




We
      will
      incur significant additional costs as an Exchange Act reporting company and
      related advertising costs required to brand the TravMatix TM name,
      attract travelers to our web site, and build relationships and strategic
      partnerships with sponsors and advertisers. We believe that we will need
      approximately $2,000,000 in additional funding to continue operations and
      execute our proposed expanded marketing and advertising campaign for the next
      12
      months. Our cash obligations are anticipated to increase over the next 12 months
      for costs related to our reporting company obligations by approximately $300,000
      to $400,000. The cash will be utilized to fund specifically:





·
            our
                operating expenses;·
            our
                continued web site improvement;·
            payment
                of professional fees, including independent certified public auditing
                services and legal fees;·
            our
                marketing and advertising campaign; and·
            our
                dividend payments to our Series A preferred
                stockholders.


15


We
      intend
      to seek the necessary funding to continue operations for the next 12 months
      during the third and fourth quarters of 2008 through a private offering of
      our
      equity or debt securities. It is expected that members of management and
      existing stockholders including Messrs. Ebuh, Carter, Lowe and Carpenter will
      make follow-on investments in the Company until such time as the proposed
      private placement is completed. In the event that we are unable to secure at
      least $2.0 million in funding during the second half of 2008, the we may be
      required to consider the discontinuation of our operations and ultimately cease
      to exist as a going concern.





From
      May
      through September 2007, we received net proceeds of $695,824.09 from a private
      placement to accredited investors (the “2007 Private Placement”) of 281,833
      units. Each unit was comprised of shares of our Series A convertible
      preferred stock and five-year warrants to purchase our Common Stock at an
      exercise price of $3.00 per share. We also issued unit purchase warrants to
      purchase an aggregate of 42,275 units to our placement agent, Newbridge
      Securities Corporation, under the terms of a placement agency
      agreement.




Additionally,
      during December 2007 we received proceeds of $100,000 from an accredited
      investor pursuant to the sale of a 12% convertible promissory note convertible
      into shares of our Common Stock at a fixed conversion price of $1.50. The
      original maturity date of the note was June 30, 2008 and the
      noteholder and the Company agreed to extend the maturity of the note to December
      31, 2008.




We
      do not
      currently have sufficient cash flows or liquidity to sustain our operations
      for
      the next twelve months. We will need additional funding to pursue our long-term
      strategy of branding the TravMatix TM name and
      web site service and attracting sponsorships and advertisers. While we have
      various alternative plans to secure such financing as described above, there
      can
      be no assurance that any such plans will be successful.





**Financial
      Condition and Changes**




*Accrued
      Expenses and Other Liabilities*




Accrued
      expenses at June 30, 2008 and 2007 consisted primarily of professional fees
      and
      payroll. Listed below is a summary of the transactions related to accrued
      expenses and other liabilities:




Accrued
      liabilities were $383,180 and $540,470 for the six months ended June 30, 2007
      and June 30, 2008, respectively.





Six
                Months ended
              June
                30,2007
            
            2008Accrued
                Interest
            
            $
            -0-
            
            $
            17,977Accrued
                Payroll
            
            
            266,667
            
            
            375,000DEC
                Management Fee Payable (to affiliate)
            
            
            33,000
            
            
            33,000DEC
                Health Insurance Payable (to affiliate)
            
            
            82,484
            
            
            114,687Payroll
                Taxes Payable
            
            
            973
            
            
            -0-Local
                Taxes Payable
            
            
            56
            
            
            (194
            )Total
            
            $
            383,180
            
            
            540,470


16




Notes
      Payable for the Six Months Ended June 30, 2007 and 2008





Notes
      Payable for the six months ended June 30, 2007 and June 30, 2008 were $464,855
      and $1,053,999, respectively.





a.)
            On
                March 31, 2008, the Company issued a promissory note in the principal
                amount of $296,000 to Vincent O. Ebuh, a stockholder and director
                of the
                Company. The note accrues interest at a rate of 12% per annum and
                both the
                principal and interest are due and payable on March, 31,
                2009.





b.)
            On
                December 13, 2007, the Company issued a convertible promissory note
                in the
                principal amount of $100,000 to Apollos Ikpobe, a stockholder of
                the
                Company. The note accrues interest at a rate of 12% per annum, payable
                monthly, and matures on June 30, 2008. Due to the convertible nature
                of
                this note an adjustment was made in the amount of $41,193 as a discount
                to
                notes payable.
              
              On
                April 10, 2008, the convertible promissory note
                issued to Apollos Ikpobe was assigned to Vincent O. Ebuh, a stockholder
                and director of the Company. The maturity date was extended to December
                31, 2008 and the remaining terms will remain consistent with the
                original
                terms of this note.





c.)
            On
                April 30, 2008, the Company issued a promissory note in the principal
                amount of $80,000 to Vincent O. Ebuh, a stockholder and director
                of the
                Company. The note accrues interest at a rate of 12% per annum and
                both
                principal and interest are due and payable on April 30,
                2009.




d.)
            On
                May 19, 2008, the Company issued a promissory note in the principal
                amount
                of $17,500 to Randall R. Carpenter, a stockholder and director of
                the
                Company. The note accrues interest at a rate of 12% per annum and
                both the
                principal and interest are due and payable on May 19,
                2009.




e.)
            On
                May 29, 2008, the Company issued a promissory note in the principal
                amount
                of $66,000 to Vincent O. Ebuh, a stockholder and director of the
                Company.
                The note accrues interest at a rate of 12% per annum and both principal
                and interest are due and payable on May 29,
                2009.





f.)
            On
                June 19, 2008, the Company issued a promissory note in the principal
                amount of $146,000 to Vincent O. Ebuh, a stockholder and director
                of the
                Company. The note accrues interest at a rate of 12% per annum and
                both the
                principal and interest are due and payable on June 19,
                2009.





g.)
            On
                July 16, 2008, the Company issued a promissory note in the principal
                amount of $1,209.52 to Vincent O. Ebuh, a stockholder and director
                of the
                Company. The note accrues interest at a rate of 12% per annum and
                both the
                principal and interest are due and payable on July 16,
                2009.





h.)
            The
                Company obtained a line of credit with Town Square Bank of Ashland,
                KY.
                This line of credit is for a total of $100,000. This note was guaranteed
                by David E. Carter, Robert Lowe, and Randall R. Carpenter, all of
                whom are
                officers and directors of the Company. On June 28, 2006, the Company
                repaid loans to Town Square Bank of $100,000 in principal together
                with
                $1,749 in accrued interest and obtained a new loan from Palmetto
                Heritage
                Bank and Trust in the principal amount of $101,749. Under the terms
                of
                this loan the Company is required to make 23 monthly interest payments
                beginning June 1, 2006 through June 1, 2008 and one (1) final payment
                of
                the principal amount of $101,749 plus the last month’s interest. Interest
                accrues on the loan at a variable rate of 8.5% per annum. During
                the three
                months ended March 31, 2008, the Company extended the maturity of
                the loan
                from Palmetto Heritage Bank and Trust for one additional year until
                June 28, 2009.


17




i.)
            The
                Company has issued non-interest bearing promissory notes to Mr. Carter
                and
                a corporation owned by Mr. Carter, DEC, Inc. Notes due to Mr. Carter
                and
                his affiliate include:





June 30, 2008
            
            June
                30, 2007David
                E. Carter
            
            $
            15,000
            
            $
            15,000DEC,
                Inc.
            
            $
            103,747
            
            $
            103,747Total
            
            $
            118,747
            
            $
            118,747





j.)
            The
                Company has issued the following promissory notes to Mr. Carpenter,
                pursuant to which the Company is currently making monthly payments
                to Mr.
                Carpenter in the amount of $575.




June
                30, 2008
            
            June
                30, 2007Randall
                R. Carpenter
            
            $
            61,859
            
            $
            75,433





k.)
            The
                Company has issued promissory notes to Vincent O. Ebuh and Robert
                Lowe in
                the amounts set forth below, which includes non-interest bearing
                loans in
                the amounts of $48,507 and $35,138, respectively. Mr. Ebuh and Mr.
                Lowe own shares representing 31.65% and 14.05%, respectively, of
                the
                Company’s shares outstanding as of June 30,
                2008.





June
                30, 2008
            
            June
                30, 2007Vincent
                O. Ebuh
            
            $
            636,506
            
            $
            130,688Robert
                Lowe
            
            $
            35,138
            
            $
            25,138Total
            
            $
            671,644
            
            $
            155,826




**Affiliated
      Party Debt and Loans**




To
      date,
      our operations have been funded primarily by loans from members of management
      as
      more particularly described above including Messrs. Ebuh, Carpenter, Lowe and
      Carter and a convertible promissory note issued by the Company for $100,000
      in
      favor of a non-affiliated stockholder of the Company (the “Convertible
      Promissory Note”).




**Contractual
      Obligations**





During
      the three and six months ended June 30, 2008 we issued promissory notes to
      certain of our officers, directors and stockholders. For a detailed discussion
      of the terms of these notes, please see Note 2 “Notes Payable.” Notwithstanding
      the foregoing, there have been no material changes to our contractual
      obligations.





**Results
      of Operations**




We
      have
      generated minimal revenues since inception and do not anticipate generating
      significant revenue during the current fiscal year ending December 31,
      2008.




*Three
      Months Ended June 30, 2008 Compared to the Three Months Ended June 30,
      2007*





General
      and administrative expenses were $482,948 for the three months ended June 30,
      2008, as compared to $83,930 for the three months ended June 30, 2007, an
      increase of $399,018 or 476%. The increase from the previous period was
      attributable to increased web site development costs, marketing and advertising
      costs, dividend payments to our Series A convertible preferred stockholders,
      increased interest expense on loans payable, and increased accounting and legal
      expenses during the first quarter of 2008 related to the preparation of our
      Registration Statement.


18





Interest
      expense was $33,424 for the three months ended June 30, 2008, compared to $2,275
      for the three months ended June 30, 2007, an increase of $31,149, or 1,369%.
      The
      increase was the result of additional loans to the Company from our
      affiliates.





Dividends
      paid on the Company’s Series A convertible preferred stock were $16,910 for the
      three months ended June 30, 2008, compared to $0.00 for the three months
      ended June 30, 2007. The increase was due to the issuance of the Company’s
      Series A convertible preferred stock in the third and fourth quarters of 2007.
      As of the date of this report, we are in arrears with respect to payment of
      our
      quarterly dividend for the second quarter ended June 30, 2008.





As
      a
      result of the increased expenses during the second quarter of 2008, we incurred
      a net loss of $(612,465) for the three months ended June 30, 2008 compared
      to a
      net loss of $(118,643) for the three months ended June 30, 2007.





*Six Months
      Ended June 30, 2008 Compared to the Six Months Ended June 30,
      2007*





General
      and administrative expenses were $1,225,951 for the six months
      ended June 30, 2008, as compared to $206,584 for the six months
      ended June 30, 2007, an increase of $1,019,367 or 493%. The increase
      from the previous period was attributable to increased web site
      developments costs, increased interest expense on loans payable, as well as
      increased accounting and legal expenses during the first half of 2008
      related to the preparation of our Registration Statement.





Interest
      expense was $58,890 for the six months ended June 30, 2008, compared
      to $4,501 for the six months ended June 30, 2007, an increase of $54,389,
      or 1,208%. The increase was the result of additional loans to us
      from our affiliates.




Dividends
      were not paid on our Series A Convertible Preferred Stock for the second
      quarter ended June 30, 2008.





As
      a
      result of the increased expenses during the first half of 2008, we incurred
      a net loss of $(1,409,080) for the six months ended June 30, 2008
      compared to a net loss of $(277,098) for the six months
      ended June 30, 2007.





**Liquidity
      and Capital Resources**




At
      December 31, 2007 and June 30, 2008, our cash balance was $68,984 and
      $1,494, respectively, and we had an accumulated deficit of $6,797,923 and
      $8,207,002, respectively.




To
      date,
      the Company’s operations have been funded by private placement investors, loans
      from affiliates of the Company, including Messrs. Ebuh, Carpenter, Lowe, Carter,
      the Convertible Promissory Note and the 2007 Private Placement. This funding
      included paying professional fees, interest on the affiliated debt, as well
      as accruing $8,333 per month for Mr. Carpenter’s annual deferred
      salary of $100,000.




During
      2007 we issued 281,833 Units to accredited investors through Newbridge
      Securities Corporation (the “Placement Agent”), a FINRA-registered broker-dealer
      in the 2007 Private Placement. Each Unit is comprised of one share of
      Series A convertible preferred stock and one warrant to purchase one share
      of
      Common Stock. We paid the Placement Agent a managing placement agent commission
      of 10% of the aggregate gross proceeds of the offering. In addition to this
      commission, we paid the Placement Agent a cash fee of 2% of the aggregate gross
      proceeds of the offering. As part of the Placement Agent’s compensation, the
      Placement Agent received three-year warrants (the “Placement Agent Warrants”) to
      purchase, at an exercise price of $3.00, a number of units equal to 15% of
      the
      Units sold by us in the Offering. If any Warrants are exercised, we will also
      pay the Placement Agent a fee equal to 8% of the Aggregate Warrant Exercise
      Price (defined below) paid to us by each exercising Warrantholder.




An
      8%
      coupon is paid on the Series A convertible preferred stock in arrears on a
      cash
      basis, at a rate of 8% per annum, and prorated if redemption or conversion
      occurs prior to the end of any quarter. The first monthly preferred dividend
      was
      due on October 1, 2007 and is paid on a quarterly basis. As of the date of
      this
      report, we are in arrears with respect to payment of our quarterly dividend
      for
      the second quarter ended June 30, 2008 in the aggregate amount of
      $16,900.


19





Each
      Warrant issued in the 2007 Private Placement permits the holder to purchase,
      at
      any time prior to the third anniversary following the date of issuance of the
      Warrant, one share of Common Stock at an exercise price of $4.50 per share
      (the
“Warrant Exercise Price”). The Warrants may be called at any time by us if (a) a
      registration statement under the Securities Act, with respect to the shares
      of
      Common Stock issuable upon exercise of the Warrants is effective during the
      entire Exercise Period (as defined in the Warrant) that follows the
      Warrantholder’s receipt of Notice (as defined in the Warrant) regarding the call
      and (b) at least one of the following events occurs (each, a “Call Event”) (i)
      the closing or last sale price, if the Common Stock is traded on an Exchange,
      or
      the average of the closing bid and ask prices, if our Common Stock is not traded
      on an Exchange, of the Common Stock is equal to or greater than $13.50 for
      a
      period of twenty consecutive trading days or (ii) (1) any company or individual
      acquires direct or indirect ownership or control of any voting shares of the
      Company if, after such acquisition, such company or individual will directly
      or
      indirectly own or control more than 50% of our Common Stock; (2) any company
      or
      individual acquires a majority of the assets of the Company; or (3) any company
      merges or consolidates with us, which results in the members of our Board of
      Directors in office immediately prior to such transaction or event constituting
      less than a majority of such Board of Directors thereafter. The Warrants will
      expire unless exercised within 30 days following receipt of notice of our
      exercise of our right to call the Warrants following the occurrence of a Call
      Event.





For
      the
      six months ended June 30, 2008, we had negative cash flows from operating
      activities of $(679,146) compared to negative cash flows of $(190,653) for
      the
      six months ended June 30, 2007. We have been dependent upon proceeds of loans
      from affiliates, private placement investors and the Series A convertible
      preferred stockholders to fund continuing activities. For the six months ended
      June 30, 2008, our loans from affiliates and the Convertible Promissory Note
      investor increased by $605,500.




During
      the first quarter of 2008, the non-affiliated note investor assigned the
      Convertible Promissory Note to Mr. Ebuh.




We
      currently do not have sufficient cash reserves to meet all of our anticipated
      obligations for the next six months, and there can be no assurance that we
      will
      ultimately obtain the necessary financing. In addition to any third-party
      financing that may be obtained, we currently expect that loans from our
      stockholders may be a continuing source of liquidity to meet our obligations.
      Accordingly, we intend to seek funding through an equity or debt financing
      during the third and fourth quarters of 2008. We will require funding of at
      least $2.0 million to meet our anticipated capital requirements for the next
      six
      months.




Our
      independent auditors have included a going concern paragraph in their opinion
      on
      the financial statements for the year ended December 31, 2007 that states there
      is substantial doubt about our ability to continue as a going concern. Our
      ability to continue as a going concern is dependent on our ability to access
      capital through debt and equity funding.




**Critical
      Accounting Policies**




The
      Company's significant accounting policies are summarized as
      follows:




*Use
      of Estimates*




Our
      management has made a number of estimates and assumptions relating to the
      reporting of assets and liabilities and the disclosure of contingent assets
      and
      liabilities to prepare these financial statements in conformity with accounting
      principles generally accepted in the United States. Actual results could differ
      from those estimates.




*Fair
      Value of Financial Instruments*




The
      carrying amounts reported in the balance sheet for cash, accounts payable and
      accrued expenses, and stockholder payable approximate their fair market value
      based on the short-term maturity of these instruments. Statement of Financial
      Accounting Standards (“SFAS”) No. 107 requires disclosures about the fair value
      for all financial instruments, whether or not recognized, for financial
      statement purposes. Disclosures about fair value of financial instruments are
      based on pertinent information available to management as of December 31, 2007
      and 2006. Accordingly, any estimates presented in our financial statements
      are
      not necessarily indicative of the amounts that could be realized on disposition
      of the financial instruments.




Management
      has estimated the fair values of cash, accounts payable, and accrued expenses
      to
      be approximately their respective carrying values reported on these statements
      because of their short maturities.





Our
      summary of significant accounting practices is described in Note 2 to our
      financial statements.





*Off-Balance
      Sheet Arrangements*





We
      do not
      have any off-balance sheet arrangements, investments in special purpose entities
      or undisclosed borrowings or debt. Additionally, we are not a party to any
      derivative contracts or synthetic leases.




20




**ITEM
      6. Exhibits.**





**Exhibit**
              **Number**
            
            **Description****2.1**
            
            Plan
                and Agreement of Merger and Reorganization of Interstate Data, Inc.
                into
                and with Interstate Data USA, Inc. (1)**3.1**
            
            Amended
                and Restated Certificate of Incorporation filed with the Secretary
                of
                State of the State of Delaware on October 24, 2006 (1)**3.2**
            
            Certificate
                of Amendment to Amended and Restated Certificate of Incorporation
                filed
                with the Secretary of State of the State of Delaware on March 21,
                2007 (1)**3.3**
            
            Certificate
                of Designation of 8% Series A Convertible Preferred Stock filed with
                the
                Secretary of State of the State of Delaware on July 24, 2007
                (1)**3.4**
            
            Certificate
                of Amendment to Amended and Restated Certificate of Incorporation
                filed
                with the Secretary of State of the State of Delaware on April 24,
                2008
                (1)**3.5**
            
            Amended
                and Restated By-Laws (1)**3.6**
            
            First
                Amendment to Amended and Restated By-Laws (2)**4.1**
            
            Unit Purchase
                Warrant issued to Newbridge Securities Corporation (1)**4.2**
            
            Form
                of Common Stock Purchase Warrant issued to Series A Convertible Preferred
                Stock investors (1)**10.2**
            
            Placement
                Agency Agreement, between Interstate Data USA, Inc. and Newbridge
                Securities Corporation (1)**10.2**
            
            Amendment
                No. 1 to Placement Agency Agreement, between Interstate Data USA,
                Inc. and
                Newbridge Securities Corporation (1)**10.3**
            
            Amendment
                No. 2 to Placement Agency Agreement, between Interstate Data USA,
                Inc. and
                Newbridge Securities Corporation (1)**10.4**
            
            Form
                of Subscription Agreement for Series A Convertible Preferred Stock
                Offering (1)**10.5**
            
            Form
                of Registration Rights Agreement for Series A Convertible Preferred
                Stock
                Offering (1)**10.6**
            
            Form
                of Promissory Note executed by Interstate Data USA, Inc. in favor
                of
                officers and directors (1)**10.7**
            
            Convertible
                Promissory Note executed by Interstate Data USA, Inc. in favor of
                Mr.
                Apollos Ikpobe (1)**10.8**
            
            Employment
                Agreement between Interstate Data USA, Inc. and Mr. Randall R. Carpenter
                (1)**10.9**
            
            Form
                of Stock Option Agreement (1)**10.10**
            
            2008
                Stock Incentive Plan (1)**10.11**
            
            Lease
                Agreement, dated August 16, 2007, by and between Interstate Data
                USA, Inc.
                and Community Trust Bank Inc. for Ashland, Kentucky office space
                (1)**10.12**
            
            Lease
                Agreement, dated February 1, 2008, by and between Interstate Data
                USA,
                Inc. and Community Trust Bank Inc. for Ashland, Kentucky office space
                (1)**10.13**
            
            Loan
                Agreement, dated June 28, 2006, by and between Interstate Data USA,
                Inc.
                and Palmetto Heritage Bank and Trust (2)**10.14**
            
            Amendment
                to Convertible Note between Interstate Data USA, Inc. and Vincent
                O. Ebuh
                (2)


21





**Exhibit**
              **Number**
            
            **Description****31.1***
            
            Chief
                Executive Officer Certification Pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002**31.2***
            
            Chief
                Financial Officer Certification Pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002**32.1***
            
            Chief
                Executive Officer Certification Pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002**32.2***
            
            Chief
                Financial Officer Certification Pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002







*Filed
      Herewith




(1)
            Incorporated
                by reference to the corresponding exhibit filed with the Registration
                Statement on Form 10 (File No. 000-1143705) with the SEC on May 13,
                2008.(2)
            Incorporated
                by reference to the corresponding exhibit filed with Amendment No.
                1 to
                the Registration Statement on Form 10 (File No. 000-1143705) filed
                with
                the SEC on July 3, 2008.


22




**SIGNATURES**




Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the Registrant has duly caused this Amendment No. 1 to be signed on its
      behalf by the undersigned, thereunto duly authorized.


October
                  20, 2008
              **INTERSTATE
                  DATA USA, INC.**By:
              /S/Randall
                  R. CarpenterRandall
                  R. CarpenterTitle:President(Principal
                  Executive Officer)By:
              /S/
                  Duane JamesDuane
                  JamesTitle:  
                  Vice President - Finance
                (Principal
                  Financial Officer and
                Principal
                  Accounting Officer)


23