UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549







FORM
      10-KSB





x
      Annual Report Under
      Section 13 or 15 of The Securities Exchange Act of 1934




For
      the
      fiscal year ended April 30, 2007







o
      Transition Report Under
      Section 13 or 15 of The
      Securities Exchange Act of 1934





Commission
      File number: 000-49896





Downside
      Up, Inc.


(Exact
      name of small business issuer as specified in its charter)





Colorado


(State
      or
      other jurisdiction of Incorporation or organization)





84-1493159


(IRS
      Employee Identification No.)





750
      Broad
      Street


Shrewsbury,
      New Jersey 07702


(732)
      598-2543


(Address
      of principal executive offices)





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 and Exchange Act of 1934 during
      the preceding 12 months (or for such shorter period that the registrant was
      required to file such reports), and (2) has been subject to such filing
      requirements for the past 90 days. Yes x No o





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





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


Yes
x
      No o





State
      issuer's revenues for its most recent fiscal year: None.





The
      aggregate market value of the voting stock held by non-affiliates shares
      (230,000 of $0.001 par value Common Stock) was $0 as of June 30, 2007. The
      stock
      price for computation purposes was $-0-, based on the fact that there is
      presently no Market for the Company's securities. This value is not intended
      to
      be a representation as to the value or worth of the Registrant's shares of Common
      Stock. The number of shares of non-affiliates of the Registrant has been
      calculated by subtracting shares held by persons affiliated with the Registrant
      from outstanding shares.





Common
      Stock, $0.001 par value,1,230,000, common shares outstanding as of June 30,
      2007.









Downside
      Up, Inc.


Form
      10-KSB





Index





Page
                No:PART
                I
            
            3ITEM
                1.
            DESCRIPTION
                OF BUSINESS
            3ITEM
                2.
            DESCRIPTION
                OF PROPERTY
            12ITEM
                3.
            LEGAL
                PROCEEDINGS
            12ITEM
                4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDEDRS
            12PART
                II
            
            12ITEM
                5.
            MARKET
                FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
            12ITEM
                6.
            MANAGEMENT'S
                DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
            13ITEM
                7.
            FINANCIAL
                STATEMENTS
            14ITEM
                8.
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE
            15ITEM
                8A.
            CONTROLS
                AND PROCEDURES
            15ITEM
                8B.
            OTHER
                INFORMATION
            15PART
                III
            
            16ITEM
                9.
            DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
                SECTION
                16(a) OF THE EXCHANGE ACT
            16ITEM
                10
            EXECUTIVE
                COMPENSATION
            17ITEM
                11.
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                STOCKHOLDER MATTERS
            17ITEM
                12.
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS
            18ITEM
                13.
            EXHIBITS
            18ITEM
                14.
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            18Signatures
            
            20Certifications







2




Part
      I





Item
      1.
      Description of Business.





FORWARD
      LOOKING STATEMENTS





The
      following discussion should be read in conjunction with our audited financial
      statements and notes thereto included herein. In connection with, and because
      we
      desire to take advantage of, the "safe harbor" provisions of the Private
      Securities Litigation Reform Act of 1995, we caution readers regarding certain
      forward looking statements in the following discussion and elsewhere in this
      report and in any other statement made by, or on our behalf, whether or not
      in
      future filings with the Securities and Exchange Commission. Forward-looking
      statements are statements not based on historical information and which relate
      to future operations, strategies, financial results or other developments.
      Forward looking statements are necessarily based upon estimates and assumptions
      that are inherently subject to significant business, economic and competitive
      uncertainties and contingencies, many of which are beyond our control and many of
      which,
      with respect to future business decisions, are subject to change. These
      uncertainties and contingencies can affect actual results and could cause actual
      results to differ materially from those expressed in any forward-looking
      statements made by, or on our behalf. We disclaim any obligation to update
      forward-looking statements.





OVERVIEW





(a)
      History of the Company





Downside
      Up, Inc. (the "Company" or the "Registrant"), is a Colorado corporation. Our
      principal business address is 750 Broad Street, Shrewsbury, New Jersey 07702.
      Our phone number is 973-598-2543.





We
      were
      organized under the laws of the State of Colorado on April 9, 1998 to engage
      in
      any lawful corporate undertaking, including selected mergers and acquisitions.
      Our only activity to date has been to attempt to locate and negotiate with
      a
      business entity for the merger of that target company into our
      Company.





(b)
      Current Operations





Our
      current operations consist solely of seeking merger or acquisition
      candidates.





We
      will
      attempt to locate and negotiate with a business entity for the merger of that
      target company into the Company or a wholly owned subsidiary of the Company
      formed for the purpose of such a merger. In certain instances, a target company
      may wish to become a subsidiary of the Company or may wish to contribute assets
      to the Company rather than merge. No assurances can be given that the Company
      will be successful in locating or negotiating a transaction with any target
      company.





3




We
      have
      attempted to provide a method for a foreign or domestic private company to
      become a reporting ("public") company whose securities are qualified for trading
      in the United States secondary market.





We
      believe there are certain perceived benefits to being a reporting company with
      a
      class of publicly-traded securities. These benefits are commonly thought to
      include the following:





·
            the
                ability to use registered securities to acquire assets orbusinesses;




·
            increased
                visibility in the marketplace;




·
            ease
                of borrowing from financial
                institutions;




·
            improved
                stock trading efficiency;




·
            shareholder
                liquidity;




·
            greater
                ease in subsequently raising
                capital;




·
            compensation
                of key employees through stock
                options;




·
            enhanced
                corporate image;




·
            a
                presence in the United States capital
                market.





Target
      companies interested in a business combination with the Company may include
      the
      following:





·a company for whom a primary purpose of becoming public is the use
        of its
        securities for the acquisition of other assets or businesses;




·a
      company which is unable to find an
      underwriter of its securities or is unable
      to
      find an underwriter of securities on terms acceptable to it;




·a
      company which desires to become
      public with less dilution of its common
      stock than would occur upon an underwriting;




·a
      company which believes that it will
      be able to obtain investment capital
      on more favorable terms after it has become public;




·a
      foreign company which may wish an
      initial entry into the United States securities
      market;




·a
      special situation company, such as
      a company seeking a public market to
      satisfy redemption requirements under a qualified Employee Stock Option
      Plan;




·a
      company seeking one or more of the
      other mentioned perceived benefits of
      becoming a public company.





A
      business combination with a target company will normally involve the transfer
      to
      the target company of the majority of the issued and outstanding common stock
      of
      the Company, and the election by the target business of its own management
      and
      board of directors.





The
      proposed business activities described herein classify the Company as a "blank
      check" company. The Securities and Exchange Commission and many states have
      enacted statutes, rules and regulations limiting the sale of securities of
      blank
      check companies. At the present time, there is no market for the Company's
      securities.





4




(c)
      Risks
      Related to the Plan of Operation





The
      Company's business is subject to numerous risk factors, including the
      following:




WE
      HAVE
      NO RECENT OPERATING HISTORY, NO OPERATING REVENUES, AND WE HAVE MINIMAL ASSETS.
      The Company has had no operations nor any revenues or earnings from operations.
      The Company has only limited assets and financial resources. The Company will,
      in all likelihood, sustain operating expenses without corresponding revenues,
      at
      least until the consummation of a business combination. This may result in
      the
      Company incurring a net operating loss which will increase continuously until
      the Company can consummate a business combination
      with a target company. There is no assurance that the Company can identify
      such
      a target company and consummate such a business combination.





THE
      SPECULATIVE NATURE OF OUR PROPOSED OPERATIONS. The success of the Company's
      proposed plan of operation will depend to a great extent on the
      operations,


financial
      condition and management of the identified target company. While management
      intends to seek business combinations with entities having established operating
      histories, there can be no assurance that the Company will be successful in
      locating candidates meeting such criteria. In the event the Company completes
      a
      business combination the success of the Company's operations may be dependent
      upon the management, operations, and financial condition of the target company,
      and numerous other factors beyond the Company's control.





THERE
      IS
      A SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES AND COMBINATIONS.
      The
      Company is and will continue to be an insignificant participant in the business
      of seeking mergers with and acquisitions of business entities. A large number
      of
      established and well-financed entities, including venture capital firms, are
      active in mergers and acquisitions of companies which may be merger or
      acquisition target candidates for the Company. Nearly all such entities have
      significantly greater financial resources, technical expertise and managerial
      capabilities than the Company. Consequently, the Company will be at a competitive
      disadvantage in identifying possible business opportunities and successfully
      completing a business combination.





WE
      HAVE
      NO AGREEMENT FOR ANY BUSINESS COMBINATION OR OTHER TRANSACTION. The Company
      has
      no arrangement, agreement or understanding with respect to engaging in a merger
      with or acquisition of a business entity. There can be no assurance the Company
      will be successful in identifying and evaluating suitable business opportunities
      or in concluding
      a business combination. Management has not identified any particular industry
      or
      specific business within an industry for evaluation by the Company. There is
      no
      assurance the Company will be able to negotiate a business combination on terms
      favorable to the Company. The Company has not established a specific length
      of
      operating history or a specified level of earnings, assets, net worth or other
      criteria which it will require a target business opportunity to
      have
      achieved to consider a business combination with it. Accordingly, the Company
      may enter into a business combination with a business entity having no
      significant operating history, losses, limited or no potential for earnings,
      limited assets, negative net worth or other negative
      characteristics.




5




OUR
      MANAGEMENT HAS ONLY A LIMITED TIME COMMITMENT TO THE COMPANY. Our CEO has
      several business interests and will devote a limited amount of his time to
      the
      Company's business. While seeking a business combination, our CEO anticipates devoting
      up to ten hours per month to the business of the Company. The Company's CEO
      has
      not entered into a written employment agreement with the Company and he is
      not
      expected to do so in the foreseeable future. We have not obtained key man life
      insurance on our CEO. Notwithstanding the combined limited experience and time
      commitment of our CEO, loss of the services of this individual would adversely
      affect development of the Company's business and its likelihood of continuing
      operations.




OUR
      OFFICERS AND DIRECTORS MAY HAVE CONFLICTS OF INTEREST WITH THE BUSINESS OF
      OUR
      COMPANY. The Company's officers and directors participate in other business
      ventures, which may result in conflicts of interest and non- arms length
      transactions arising in the future. Management has adopted a policy that the
      Company will not seek a merger with, or acquisition of, any entity in which
      any
      member of management serves as an officer, director or partner, or in which
      they
      or their family members own or hold any ownership interest.





BEING
      A
      REPORTING COMPANY COMPLICATES AND COULD DELAY AN AQCQUISITION. Section 13 of
      the
      Securities Exchange Act of 1934 (the "Exchange Act") requires us to provide
      certain information about significant acquisitions including certified financial
      statements for the company acquired covering one or two years, depending on
      the
      relative size of the acquisition. The time and additional costs that may be
      incurred by some target companies to prepare such statements may significantly
      delay or essentially preclude consummation of an otherwise desirable acquisition
      by the Company. Acquisition prospects that do not have or are unable to obtain
      the required audited statements may not be appropriate for


acquisition
      so long as the reporting requirements of the Exchange Act are
      applicable.





WE
      HAVE A
      LACK OF MARKET RESEARCH AND NO MARKETING ORGANIZATION. We have neither
      conducted, nor have others made available to us, results of market research indicating
      that market demand exists for the transactions contemplated by the Company.
      Moreover, the Company does not have, and does not plan to establish, a marketing
      organization. Even in the event demand is identified for the type of merger
      or
      acquisition contemplated by the Company, there is no assurance the Company
      will
      be successful in completing any such business combination.





CERTAIN
      REGULATIONS MAY APPLY TO OUR OPERATIONS. Although the Company will be subject
      to
      regulation under the Exchange Act, management believes the Company will
      not
      be subject to regulation under the Investment Company Act of 1940,insofar as
      the
      Company will not be engaged in the business of investing or trading in
      securities. In the event the Company engages in business combinations, which
      result in the Company holding passive investment interests in a number of
      entities, the Company could be subject to regulation under the Investment
      Company Act of 1940. In such event, the Company would be required to register
      as
      an investment company and could be expected to incur significant registration
      and compliance costs. We have not obtained a formal determination from the
      Securities and Exchange Commission as to the status of the Company under the
      Investment Company Act of 1940. If weinadvertently violate such Act, we could
      be
      subjected to material adverse consequences.




6




THERE
      WILL BE A CHANGE IN MANAGEMENT. A business combination involving the issuance
      of
      the Company's common stock will, in all likelihood, result in shareholders
      of a
      target company obtaining a controlling interest in the Company. Any such
      business combination may require our Management to sell or transfer all or
      a
      portion of the Company's common stock held by them, and to resign as directors
      and officers of the Company. The resulting change in control of
      the
      Company will likely result in removal of the present officers and directors
      of
      the Company and a corresponding reduction in or elimination of their
      participation in the future affairs of the Company.





THE
      PLAN
      OF OPERATION PROVIDES FOR SUBSTANTIAL DILUTION TO OUR EXISTING SHAREHOLDERS
      AS A
      RESULT OF A MERGER. Our plan of operation is based upon a business combination
      with a business entity which, in all likelihood, will result in the Company
      issuing securities to shareholders of such business entity. The issuance of
      previously authorized and unissued common stock of the Company would result
      in a
      reduction in percentage of shares owned by the present shareholders of the
      Company and would most likely result in a change in control or management of
      the
      Company.





WE
      MAY
      NOT BE ABLE TO ENGAGE IN A TAX FREE ACQUISITION. We intend to structure any
      business combination so as to minimize the federal and state tax consequences
      to
      both the Company and the target entity. However, there can be no assurance
      that
      such a business combination will meet the statutory requirements of a tax-free
      reorganization or that the parties will obtain the intended tax-free treatment
      upon a transfer of stock or assets. A non-qualifying reorganization
      could result in the imposition of both federal and state taxes which may have
      an
      adverse effect on the parties to the transaction and therefore the transaction
      itself.





THE
      REQUIREMENT OF AUDITED FINANCIAL STATEMENTS MAY DISQUALIFY BUSINESS
      OPPORTUNITIES. Management of the Company will require any potential business
      combination entity to provide audited financial statements. One or more
      attractive prospects may choose to forego the possibility of a business
      combination with the Company rather than incur the expenses associated with
      preparing audited financial statements. Such audited financial statements may
      not be immediately available. In such case, the Company intends to obtain
      certain assurances as to the target company's assets, liabilities, revenues
      and
      expenses prior to consummating a business combination, with further assurances
      that an audited financial statement will be provided after closing of such
      a
      transaction. Closing documents relative thereto will include representations
      that the audited financial statements will not materially differ from the
      representations included in such closing documents.





7





(d)
      Plan
      of Operation





We
      intend
      to merge with or acquire a business entity in exchange for our securities.
      We
      have no particular acquisition in mind and have not entered into any
      negotiations regarding such an acquisition.





We
      anticipate seeking out a target business through solicitation. Such solicitation
      may include newspaper or magazine advertisements, mailings and other
      distributions to law firms, accounting firms, investment bankers, financial
      advisors and similar persons, the use of one or more World Wide Web sites and
      similar methods. No estimate can be made as to the number of persons who will
      be
      contacted or solicited. Such persons will have no relationship to
      management.





We
      have
      no full time employees. The Company's CEO and other officers have agreed to
      allocate a portion of their time to the activities of the Company as
      consultants. The President/CEO anticipates that the business plan of the Company
      can be implemented by his devoting approximately 10 hours per month to the
      business affairs of the Company and, consequently, conflicts of interest may
      arise with respect to the limited time commitment by such officer.





The
      Articles of Incorporation of the Company provide that the Company may indemnify
      officers and/or directors of the Company for liabilities, which can include
      liabilities arising under the securities laws. Therefore, assets of the Company
      could be used or attached to satisfy any liabilities subject to such
      indemnification.





Our
      plan
      is to seek, investigate and, if such investigation warrants, acquire an interest
      in a business entity which desires to seek the perceived advantages of a
      corporation which has a class of securities registered under the Exchange Act.
      The Company will not restrict its search to any specific business, industry,
      or
      geographical location and the Company may participate in a business venture
      of
      virtually any kind or nature. This discussion of the proposed business is not meant
      to
      be restrictive of the Company's virtually unlimited discretion to search for
      and
      enter into potential business opportunities.





We
      may
      seek a business opportunity with entities which have recently commenced
      operations, or which wish to utilize the public marketplace in order to raise
      additional capital in order to expand into new products or markets, to develop
      a
      new product or service, or for other corporate purposes. The Company may acquire
      assets and establish wholly-owned subsidiaries in various businesses or acquire
      existing businesses as subsidiaries.





8




We
      anticipate that the selection of a business opportunity in which to participate
      will be complex and extremely risky. Due to general economic conditions, rapid
      technological advances being made in some industries and shortages of available
      capital, management believes that there are numerous firms seeking the perceived
      benefits of a publicly registered corporation. Such perceived
      benefits may include facilitating or improving the terms on which additional
      equity financing may be sought, providing liquidity for incentive stock options
      or similar benefits to key employees, and providing liquidity for shareholders
      and other factors. Business opportunities may be available in many different
      industries and at various stages of development, all of which will make the
      task
      of comparative investigation and analysis of such business opportunities
      difficult and complex.





The
      Company has, and will continue to have, only limited capital with which to
      provide the owners of business opportunities with any cash or other assets.
      However, we believe the Company will be able to offer owners of acquisition
      candidates the opportunity to acquire a controlling ownership interest in a
      publicly registered company without incurring the cost and time required to
      conduct an initial public offering. Management has not conducted market research
      and is not aware of statistical data to support the perceived benefits of a
      merger or acquisition transaction for the owners of a business
      opportunity.





The
      analysis of new business opportunities will be undertaken by, or under the
      supervision of the Company's CEO who is not a professional business analyst.
      In
      analyzing prospective business opportunities, management will consider such
      matters as available technical, financial and managerial resources; working
      capital and other financial requirements; history of operations, if any;
      prospects for the future; nature of present and expected competition; the
      quality and experience of management services which may be available and the
      depth of that management; the potential for further research, development,
      or
      exploration; specific risk factors not now foreseeable, but which then may
      be
      anticipated to impact the proposed activities of the Company; the potential
      for
      growth or expansion; the potential for profit; the perceived public recognition
      or acceptance of products, services, or trades; name identification; and other relevant
      factors. Management will meet personally with management and key personnel
      of
      the target business entity as part of its investigation. To the extent possible,
      the Company intends to utilize written reports and personal investigation to
      evaluate the above factors. The Exchange Act requires that any merger or
      acquisition candidate comply with all certain reporting requirements, which
      include providing audited financial statements to be included in the reporting
      filings made under the Exchange Act. The Company will not acquire or merge
      with
      any company for which audited financial statements cannot be obtained at or
      within a reasonable period of time after closing of the proposed
      transaction.





We
      will
      in all likelihood not be experienced in matters relating to the business of
      a
      target company, and management will rely upon its own experience in
      accomplishing the business purposes of the Company. Therefore, it is anticipated
      that outside consultants or advisors may be utilized to assist us in the search
      for and analysis of qualified target companies.





9




The
      Company will not restrict its search to any specific kind of firm, but may
      acquire a venture which is in its preliminary or development stage, one which
      is
      already in operation, or in a more mature stage of its corporate existence.
      The
      acquired business may need to seek additional capital, may desire to have its
      shares publicly traded, or may seek other perceived advantages which the Company
      may offer. However, the Company does not intend to obtain additional funds
      to
      finance the operation of any acquired business opportunity until such time
      as
      the Company has successfully consummated the merger or acquisition
      transaction.





MANNER
      OF
      ACQUISITION




In
      implementing a structure for a particular business acquisition, the Company
      may
      become a party to a merger, consolidation, reorganization, joint venture, or
      licensing agreement with another entity. We also may acquire stock or assets
      of
      an existing business. On the consummation of a transaction it is probable that
      the present Management and shareholders of the Company will no longer be in
      control of the Company. In addition, the Company's CEO and director, as part
      of
      the terms of the acquisition transaction, likely will be required to resign
      and be
      replaced by one or more new officers and directors without a vote of our
      shareholders.





It
      is
      anticipated that any securities issued in any such reorganization would be
      issued in reliance upon exemption from registration under applicable federal
      and
      state securities laws. In some circumstances, however, as a negotiated element
      of a transaction, the Company may agree to register all or a part of such
      securities immediately after the transaction is consummated or at specified
      times thereafter. If such registration occurs, of which there can be no
      assurance, it will be undertaken by the surviving entity after the Company
      has
      entered into an agreement for a business combination or has consummated a
      business combination and the Company is no longer considered a blank check
      company. Until such time as this occurs, the Company will not attempt to
      register any additional securities. The issuance of substantial additional
      securities and their potential sale into any trading market which may develop
      in
      the Company's securities may have a depressive effect on that
      market.





While
      the
      actual terms of a transaction to which the Company may be a party cannot be
      predicted, it may be expected that the parties to the business transaction
      will
      find it desirable to avoid the creation of a taxable event and thereby structure
      the acquisition as a "tax-free" reorganization under Sections 351 or 368 of
      the
      Internal Revenue Code of 1986, as amended.





With
      respect to any merger or acquisition, negotiations with target company managemnt
      are expected to focus on the percentage of the Company which the target company
      shareholders would acquire in exchange for all of their shareholdings in the
      target company. Depending upon, among other things, the target company's assets
      and liabilities, the Company's shareholders will in all likelihood hold a
      substantially lesser percentage ownership interest in the Company following
      any
      merger or acquisition. The percentage ownership may be subject to significant
      reduction in the event the Company acquires a target company with substantial
      assets. Any merger or acquisition effected by the Company can be expected to
      have a significant dilutive effect on the percentage of shares held by the
      Company's shareholders at such time.





10





The
      Company will participate in a business opportunity only after the negotiation
      and execution of appropriate agreements. Although the terms of such agreements
      cannot be predicted, generally such agreements will require certain
      representations and warranties of the parties thereto, will specify certain
      events of default, will detail the terms of closing and the conditions which must
      be
      satisfied by the parties prior to and after such closing, will outline the
      manner of bearing costs, including costs associated with the Company's attorneys
      and accountants, and will include miscellaneous other terms.





We
      are
      presently subject to all of the reporting requirements included in the Exchange
      Act. Included in these requirements is the duty of the Company to file audited
      financial statements as part of its Form 8-K to be filed with the Securities
      and
      Exchange Commission upon consummation of a merger or acquisition, as well as
      the
      Company's audited financial statements included in its annual report on Form
      10-K (or 10-KSB, as applicable). If such audited financial statements
      are not available at closing, or within time parameters necessary to insure
      the
      Company's compliance with the requirements of the Exchange Act, or if the
      audited financial statements provided do not conform to the representations
      made
      by the target company, the closing documents may provide that the proposed
      transaction will be voidable at the discretion of the present management of
      the
      Company.





COMPETITION




The
      Company will remain an insignificant participant among the firms which engage
      in
      the acquisition of business opportunities. There are many established venture
      capital and financial concerns which have significantly greater financial and
      personnel resources and technical expertise than the Company. In view of the
      Company's limited financial resources and limited management availability,
      the
      Company may be at a competitive disadvantage compared to the Company's
      competitors.





Subsequent
      Events





On
      May 4,
      2006, the Company entered into a Letter of Intent, dated May 1, 2006, with
      Protection Sciences, Inc. ("Protection"). Pursuant to the Letter of Intent,
      at
      the time of the execution of a Definitive Stock Purchase Agreement and the
      conclusion of the transaction between the parties, Protection (and any assignees
      as set forth by them) shall be the owners of a total of 91.8% of the total
      issued and outstanding shares of Downside. The current shareholders shall own
      8.2% of the issued and outstanding shares. The transaction has not closed as
      of
      the date of this Report.





11




Item
      2.
      Description of Property





We
      sublet
      a total 3100 square feet from Mortgage Loan Solutions. The rent is a nominal
      amount, and is sufficient for the purposes of the Company at this
      time.





Item
      3.
      Legal Proceedings.





No
      legal
      proceedings to which the Company is a party were pending during the reporting
      period, and the Company knows of no legal proceedings of a material nature,
      pending or threatened, or judgments entered against the Company.





Item
      4.
      Submission of Matters To A Vote Of Security Holders





None





Part
      II





Item
      5.
      Market for Common Equity and Related Stockholder Matters





(a)
      Principal Market or Markets. The Company's stock has not traded and, at the
      present time, it has no trading symbol.





(b)
      Approximate Number of Holders of Common Stock. The number of holders of record
      of the Company's Common Stock as of June 30, 2006 was approximately
      50.





(c)
      Dividends. Holders of common stock are entitled to receive such dividends as
      may
      be declared by the Company's Board of Directors. No dividends on the common
      stock were paid by the Company during the periods reported herein nor does
      the
      Company anticipate paying dividends in the foreseeable future.





(d)
      Recent Sales of Unregistered Securities. NOT APPLICABLE





12




Item
      6.
      Management's Discussion and Analysis or Plan of Operations





Forward-Looking
      Statements




Certain
      statements contained in this annual report on Form 10-KSB including without
      limitation, statements containing the words "believes," "anticipates,"
      "estimates," "expects," and words of similar import, constitute "forward-looking
      statements." You should not place undue reliance on these forward-looking
      statements. Our actual results and the structure of transactions which may
      occur
      in the future could differ materially from those described in these
      forward-looking statements for many reasons, including those set forth in the
      risk factors included herein and for other reasons including the demands of
      the
      specific business entity with which the company may elect to engage in a
      transaction.





Plan
      of
      Operation




See
      Part
      I, Item 1, "Description of Business-Plan of Operation."





Liquidity
      and Capital Resources





At
      April
      30, 2007, the Company's fiscal year end, the Company had cash and cash
      equivalents of $0, reflecting no change from April 30, 2006. While the Company
      has no foreseeable capital commitments, it also has no present expectations
      of
      generating any cash flow from operations until such time as it may successfully
      complete the acquisition of the business, operations, or assets of an operating
      entity.





We
      believe that our current cash and equivalents will satisfy our expected working
      capital requirements through fiscal 2007.





13




Item
      7.
      Financial Statements


**Page**Report
                  of Independent Registered Public Accounting Firm
              
              
              F-1Balance
                  Sheet at April 30, 2007
              
              
              F-2Statements
                  of Operations for the years ended April 30, 2007 and 2006
              
              
              F-3Statement
                    of Changes in Shareholders' Deficit for the period from May 1,
                    2004
                    through April 30, 2007
              
              
              F-4Statements
                  of Cash Flows for the years ended April 30, 2007 and 2006
              
              
              F-5Notes
                  to Financial Statements
              
              
              F-6





14




**Report
      of Independent Registered Public Accounting Firm**





The
      Board
      of Directors and shareholders


Downside
      Up, Inc.:





We
      have
      audited the accompanying balance sheet of Downside Up, Inc. as of April 30,
      2007, and the related statements of operations, changes in shareholders’ equity,
      and cash flows for the years ended April 30, 2007 and 2006. These financial
      statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audits provide a
      reasonable basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Downside Up, Inc. as of April
      30,
      2007, and the results of its operations and its cash flows for the years ended
      April 30, 2007 and 2006 in conformity with accounting principles generally
      accepted in the United States of America.




The
      accompanying financial statements have been prepared assuming the Company will
      continue as a going concern. As discussed in Note 1 to the financial statements,
      the Company has incurred losses since inception and has a capital deficit at
      April 30, 2007. These factors raise substantial doubt about the Company’s
      ability to continue as a going concern. Management’s plans regarding these
      matters are also described in Note 1. The financial statements do not include
      any adjustments that might result from the outcome of this
      uncertainty.








Cordovano
      and Honeck LLP


Englewood,
      Colorado


July
      16,
      2007





F-1


**DOWNSIDE
                  UP, INC.****Balance
                  Sheet****April
                  30, 2007**
 **Assets**Total
                    assets
                
                $
                —**Liabilities
                    and Shareholders’ Deficit**Current
                    liabilities:Accounts
                    payable
                
                $
                845Accrued
                    liabilities
                
                
                3,000Indebtedness
                    to merger candidate (Note 5)
                
                
                6,700Total
                    current liabilities
                
                
                10,545Shareholders’
                    deficit:Preferred
                    stock , no par value; 5,000,000 shares authorized, -0- shares
                    issued and
                    outstanding
                
                
                —Common
                    stock , no par value; 20,000,000 shares authorized, 1,230,000
                    shares
                    issued and outstanding
                
                
                2,672Additional
                    paid-in capital
                
                
                21,271Accumulated
                    deficit
                
                
                (34,488
                )Total
                    shareholders’ deficit
                
                
                (10,545
                )Total
                    liabilities and shareholders' deficit
                
                $
                —
 See
          accompanying notes to financial statements
  F-2
 
 **DOWNSIDE
                  UP, INC.****Statements
                  of Operations**
  **For
                    the Years EndedApril
                    30,****2007**
              
              **2006**Costs
                  and expenses:Contributed
                  rent (Note 2)
              
              $
              1,200
              
              $
              1,200Other
                  general and administrative costs
              
              
              4,545
              
              
              3,500Total
                  costs and expenses
              
              
              5,745
              
              
              4,700Loss
                  before income taxes
              
              
              (5,745
              )
              
              (4,700
              )Income
                  tax provision (Note 3)
              
              
              —
              
              
              —Net
                  loss
              
              $
              (5,745
              )
              $
              (4,700
              )Basic
                  and diluted loss per common share
              
              $
              (0.00
              )
              $
              (0.00
              )Weighted
                  average common shares outstanding
              
              
              1,230,000
              
              
              1,230,000
 
 See
        accompanying notes to financial statements
  F-3
 
 **DOWNSIDE
                  UP, INC.****Statement
                  of Changes in Shareholders'
                  Deficit**
 
 **Preferred
                  Stock**
              
              **Common
                  Stock**
              
              **Additional
                  paid-in**
              
              **Accumulated****Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**
              
              **capital**
              
              **Deficit**
              
              **Total**Balance
                  at May 1, 2005
              
              
              —
              
              $
              —
              
              
              1,230,000
              
              $
              2,672
              
              $
              18,871
              
              $
              (24,043
              )
              $
              (2,500
              )Contributed
                  rent (Note 2)
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              1,200
              
              
              —
              
              
              1,200Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (4,700
              )
              
              (4,700
              )Balance
                  at April 30, 2006
              
              
              —
              
              
              —
              
              
              1,230,000
              
              
              2,672
              
              
              20,071
              
              
              (28,743
              )
              
              (6,000
              )Contributed
                  rent (Note 2)
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              1,200
              
              
              —
              
              
              1,200Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (5,745
              )
              
              (5,745
              )Balance
                  at April 30, 2007
              
              
              —
              
              $
              —
              
              
              1,230,000
              
              $
              2,672
              
              $
              21,271
              
              $
              (34,488
              )
              $
              (10,545
              )
 
 See
        accompanying notes to financial statements
  F-4
 
 **DOWNSIDE
                  UP, INC.****Statements
                  of Cash Flows**
 **For
                    the Years Ended April 30,****2007**
                
                **2006**Cash
                    flows from operating activities:Net
                    loss
                
                $
                (5,745
                )
                $
                (4,700
                )Adjustments
                    to reconcile net loss to net cash used by operating
                    activities:Office
                    space contributed by an affiliate (Note 2)
                
                
                1,200
                
                
                1,200Changes
                    in operating assets and liabilities:Accounts
                    payable
                
                
                845
                
                
                —Accrued
                    liabilities
                
                
                (3,000
                )
                
                —Indebtedness
                    to merger candidate
                
                
                6,700
                
                
                3,500Net
                    cash used in operating activities
                
                
                —
                
                
                —Net
                    change in cash
                
                
                —
                
                
                —Cash:Beginning
                    of year
                
                
                —
                
                
                —End
                    of year
                
                $
                —
                
                $
                —Supplemental
                    disclosure of cash flow information:Cash
                    paid during the year for:Income
                    taxes
                
                $
                —
                
                $
                —Interest
                    .
                
                $
                —
                
                $
                —
  See
          accompanying notes to financial statements
  F-5




**Footnotes
      to Financial Statements**





**(1)**  **Summary
      of Significant Accounting Policies**





***Organization
      and Basis of Presentation***





Downside
      Up, Inc. (the “Company”) was incorporated under the laws of Colorado on April 9,
      1998 to engage in any lawful corporate undertaking. The Company has no revenue
      producing operations to date. The Company is classified as a “blank check” shell
      company. The Company’s business plan is to evaluate, structure and complete a
      merger with or acquisition of, a privately owned corporation.





On
      June
      2, 2005, two of the Company’s major shareholders completed a Stock Purchase
      Agreement with Atlantic Capital E & F, LLC (“Atlantic”), resulting in a
      change of control of the Company (see Note 5).





**Going
      concern**





The
      accompanying financial statements have been prepared on a going concern basis,
      which contemplates the realization of assets and the satisfaction of liabilities
      in the normal course of business. As shown in the accompanying financial
      statements, the Company has incurred losses since inception and has a capital
      deficit at April 30, 2007. These factors, among others, may indicate that the
      Company will be unable to continue as a going concern for reasonable period
      of
      time.





The
      financial statements do not include any adjustments relating to the
      recoverability and classification of liabilities that might be necessary should
      the Company be unable to continue as a going concern. The Company’s continuation
      as a going concern is dependent upon its ability to complete a merger or
      acquisition with an operating entity and ultimately to attain profitability.
      The
      Company intends to evaluate, structure and complete a merger with, or
      acquisition of, a privately owned operating entity. There is no assurance that
      the Company will ever be successful in completing a merger or
      acquisition.





***Cash
      and Cash Equivalents***





For
      financial accounting purposes and the statements of cash flows, the Company
      considers all highly liquid debt instruments purchased with original maturities
      of three months or less when acquired to be cash equivalents. The Company had
      no
      cash equivalents at April 30, 2007.





***Fair
      Value of Financial Instruments***





The
      Company has determined, based on available market information and appropriate
      valuation methodologies, the fair values of its financial instruments
      approximate carrying values. The carrying amounts of current liabilities
      approximate fair value.





***Use
      of Estimates***





The
      preparation of financial statements in accordance with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities and the disclosure of
      contingent assets and liabilities at the date of financial statements and the
      reported amounts of revenues and expenses during the reporting period. Actual
      results could differ from those estimates.




F-6





***Income
      Taxes***





The
      Company accounts for income taxes under the provisions of SFAS No. 109, *Accounting
      for Income Taxes* .
      SFAS
      No. 109 requires recognition of deferred tax liabilities and assets for the
      expected future tax consequences of events that have been included in the
      financial statements or tax returns. Under this method, deferred tax liabilities
      and assets are determined based on the difference between the financial
      statement and tax bases of assets and liabilities using enacted tax rates in
      effect for the year in which the differences are expected to
      reverse.





***Earnings
      (Loss) per Common Share***





Basic
      net
      income per share is computed by dividing the net income available to common
      shareholders (the numerator) for the period by the weighted average number
      of
      common shares outstanding (the denominator) during the period. The computation
      of diluted earnings is similar to basic earnings per share, except that the
      denominator is increased to include the number of additional common shares
      that
      would have been outstanding if potentially dilutive common shares had been
      issued.





At
      April
      30, 2007, there was no variance between basic and diluted loss per share as
      there were no potentially dilutive common shares outstanding.





**(2)
      Related Party Transactions**





An
      affiliate provided free office space to the Company, on an as needed basis,
      for
      all periods presented in the accompanying financial statements. The Company’s
      Board of Directors valued this service at approximately $100 per month, based
      on
      prevailing local market conditions. The accompanying financial statements
      include a charge to “Contributed rent” and a credit to “Additional paid-in
      capital” of $1,200 and $1,200, respectively, for the years ended April 30, 2007
      and 2006.





**(3)
      Income Taxes**





Following
      are reconciliations of U.S. statutory federal income tax rate to the effective
      rate:


**Years
                  Ended****April
                  30,****2007**
              
              **2006**U.S.
                  statutory federal rate
              
              
              15.00
              %
              
              15.00
              %State
                  income tax rate, net of federal benefit
              
              
              3.94
              %
              
              3.94
              %Contributed
                  rent
              
              
              -3.96
              %
              
              -4.84
              %Net
                  operating loss (NOL) for which no taxbenefit
                  is currently available
              
              
              -14.98
              %
              
              -14.10
              %0.00
              %
              
              0.00
              %
  At
        April
        30, 2007, deferred taxes consisted of a net tax asset of $4,469 due to operating
        loss carryforwards of $23,588, which were fully allowed for, in the valuation
        allowance of $4,469. The valuation allowance offsets the net deferred tax
        asset
        for which there is no assurance of recovery. The change in the valuation
        allowance for the years ended April 30, 2007 and 2006 were $861 and $663,
        respectively. Net operating loss carryforwards will expire through 2027.
  F-7





The
      valuation allowance will be evaluated at the end of each year, considering
      positive and negative evidence about whether the asset will be realized. At
      that
      time, the allowance will either be increased or reduced; reduction could result
      in the complete elimination of the allowance if positive evidence indicates
      that
      the value of the deferred tax asset is no longer impaired and the allowance
      is
      no longer required.





Should
      the Company undergo an ownership change, as defined in Section 382 of the
      Internal Revenue Code, the Company’s tax net operating loss carryforwards
      generated prior to the ownership change will be subject to an annual limitation
      which could reduce or defer the utilization of those losses.





**(4)
      Shareholders’ Equity**





***Preferred
      stock***





The
      preferred stock may be issued in series as determined by the Board of Directors.
      As required by law, each series must designate the number of shares in the
      series and each share of a series must have identical rights of (1) dividend,
      (2) redemption, (3) rights in liquidation, (4) sinking fund provisions for
      the
      redemption of the share, (5) terms of conversion and (6) voting
      rights.





***Stock
      Purchase Agreement***





On
      June
      2, 2005, two of the Company’s major shareholders completed a Stock Purchase
      Agreement with Atlantic Capital E & F, LLC (“Atlantic”), whereby Atlantic
      purchased 750,000 shares of the Company’s issued and outstanding common stock
      for $80,000. The 750,000 shares constituted approximately 61% of the Company’s
      issued and outstanding common stock, which resulted in a change of
      control.





***Changes
      in officers/directors***





On
      June
      17, 2005, following the closing of the Stock Purchase Agreement, Mr. James
      B.
      Wiegand, who had been serving as the Company’s sole director and officer,
      resigned from his positions as director and officer. Michael Cavaleri was
      subsequently appointed the Company’s director and executive officer.





**(5)
      Letter of Intent**





On
      May 1,
      2006 the Company entered into a Letter of Intent with Protection Sciences,
      Inc.
      (“PSI”), whereby the Company would acquire all of the issued and outstanding
      common shares of PSI in exchange for 91.8% of the Company’s total issued and
      outstanding common shares. The transaction would result in a change in control
      of the Company. The transaction had not closed as of April 30,
      2007.





During
      the year ended April 30, 2007, PSI advanced the Company $6,700 for working
      capital to pay certain professional fees. The advances carry no interest rate
      and are due on demand.





F-8




Item
      8
      Changes in and Disagreements with Accountants on Accounting and Financial Disclosure





The
      Company did not have any disagreements on accounting and financial disclosures
      with its past or present accounting firm during the reporting
      period.





Item
      8A.
      Controls and Procedures




Within
      the ninety-day period preceding the filing of this report, our management
      evaluated the effectiveness of the design and operation of its disclosure
      controls and procedures (the "Disclosure Controls") as of the end of the period
      covered by this Form 10-KSB and (ii) any changes in internal controls over
      financial reporting that occurred during the last quarter of our fiscal year.
      This evaluation ("Controls Evaluation") was done under the supervision and
      with the
      participation of management, including the Chief Executive Officer /Chief
      Financial Officer ("CEO/CFO"), who joined the registrant in June
      2005.





Limitations
      on the Effectiveness of Controls




A
      control
      system, no matter how well conceived and operated, can provide only reasonable,
      not absolute, assurance that the objectives of the control system are met.
      Further, the design of a control system must reflect the fact that there are
      resource constraints, and the benefits of controls must be considered relative
      to their costs. Because of the inherent limitations in all control systems,
      no
      evaluation of controls can provide absolute assurance that all control issues
      and instances of fraud, if any, have been detected. Because of the inherent
      limitations in a cost effective control system, misstatements due to error
      or
      fraud may occur and not be detected. We will conduct periodic evaluations of
      our
      internal controls to enhance, where necessary, our procedures and
      controls.





Item
      8B
      Other Information





Not
      Applicable




15




Part
      III





Item
      9
      Directors, Executive Officers, Promoters and Control Persons; Compliance with
      Section 16(a) of the Exchange Act





The
      following individuals have been appointed by to our Board of Directors,
      effective June 21, 2005, to serve until the next annual meeting of the
      shareholders of the registrant or until their successors are elected and
      qualified or appointed:


Name
              
              Age
              
              PositionMichael
                  J. Cavaleri
              
              50
              
              Director,
                  CEO/CFOAngelo
                  Luca
              
              48
              
              Director,
                  Vice President, Corporate
                  Secretary





Michael
      J. Cavaleri was appointed Director, Chief Executive Officer and Chief Financial
      Officer by the controlling shareholder until the next annual meeting of the
      shareholders of the Company, or until his successor is elected or appointed
      and
      qualified. Mr. Cavaleri has since 1990 been the Chief Financial Officer of
      Commercial Data Processing, Inc., of Fairfield, NJ, where he has directed
      the financial affairs, including the coordination of the fiscal policies and
      budgets, been involved with the reporting and analysis of financial results
      as
      well as improving profitability, contract and lease negotiations, and
      coordination of outside legal, accounting and tax functions. Improved
      reliability of financial management through the introduction and implementation of
      a
      department specific financial reporting system, automated the daily accounting
      system facilitating timely and accurate billing and accounts receivable
      management, directed the effort to implement EDI for client billing, developed
      a
      gross profit analysis program to ensure optimum profitability by customer,
      negotiated leases for office space and multi-year customer contracts worth
      in
      excess of $10 million with Fortune 100 companies, being involved in the
      acquisition of a subsidiary including the negotiation of financing, negotiate
      outsourcing arrangements with both domestic and international organizations,
      negotiate banking arrangements and lines of credit and provide guidance in
      raising capital through debt and equity opportunities, represented and negotiated
      over 20 financial contracts with various suppliers obtaining the best value
      on
      behalf of the company and its customer base, proactively manage the company's
      cash flow and capital expenditures, review all potential bid proposals for
      financial accuracy allowing the company to maintain a stable financial
      environment and coordinate and communicate all financial requests and results
      with the Senior Leadership Team, Board of Directors and external stakeholders
      to


ensure
      all are aware of any and all potential and actual financial
      impacts.





Angelo
      Luca was appointed Director, and Vice-President and Corporate Secretary by
      the
      controlling shareholder until the next annual meeting of the shareholders of
      the
      Company, or until his successor is elected or appointed and qualified. From
      2000
      until 2004 Mr. Luca was Director of Production for Early Warning, Inc. of New
      York City, where he held the title of Director of Production where he as
      involved with and worked closely with CEO and President on all managing aspects
      of 100 million dollar company, developed, approved and purchased fabrics, trims
      and hardware for domestic and overseas production, directed staff to meet deadlines
      and insure on-time deliveries, followed-up through execution of production
      schedules utilizing bi-lingual ability, re-organized structure of production
      department to enhance effectiveness of information flow, generated and finalized
      production schedules and account status reports , organized information needed
      to manage resources, arranged and process proper documentation
      for various clients, maintained daily communication with vendors and suppliers
      and resolved issues in all areas of production.





16




On
      June
      30, 2005, which transaction was completed on or about July 1, 2005, control
      of
      the Registrant was assumed by Atlantic Capital E & F, LLC, of 750 Broad
      Street, Shrewsbury, New Jersey 07702, with the purchase from James B. Wiegand
      and Max Gould, equally, of a total of 750,000 shares of common stock of the
      Registrant.





The
      Control Person(s) of Atlantic E & F Capital, LLC are: Elliot Bauer and
      Francesca Anello.





The
      transaction involved the payment of a total of $80,000 for the 750,000 amount
      of
      shares, previously owned by James B. Wiegand and Max Gould. The source of the
      funds used in this transaction was the funds of the purchaser.





Item
      10.
      Executive Compensation




Our
      Officers and Directors do not receive compensation at this time.





Item
      11.
      Security Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters





The
      following table sets forth, as of June 30, 2006, each person known by the
      Company to be the beneficial owner of five percent or more of the Company's
      Common Stock, all directors individually and all directors and officers of
      the
      Company as a group. Except as noted, each person has sole voting and investment
      power with respect to the shares shown.


Name
                  and Address of Beneficial Owner
              
              Amount
                      and Nature
                    of
                      Beneficial Ownership
              
              Percentage
                  of ClassCorporate
                  Management Services, Inc. (1)
              
              
              250,000
              
              
              20.3
              %1823
                  S Quincy StreetTulsa,
                  OK 74120Atlantic
                  Capital E & F LLC
              
              
              287,000
              
              
              23.3
              %750
                  Broad StreetShrewsbury,
                  New Jersey 07702Innovative
                  Marketing Concepts
              
              
              176,000
              
              
              14.3
              %Roadwings
                  Financial Services, LLC
              
              
              287,000
              
              
              23.3
              %Michael
                  J. Cavaleri
              
              
              -0-
              
              
              -0-CEO
                  of the CompanyAngelo
                  Luca
              
              
              -0-
              
              
              -0-Vice
                  PresidentAll
                  Executive Officersand
                  Directors as a Group (2 Persons)
              
              
              -0-
              
              
              -0-




17




Item
      12.
      Certain Relationships and Related Transactions





Not
      Applicable





Item
      13.
      Exhibits





3.1
            Articles
                of Incorporation of the Registrant, as
                amended*


3.2
            By-laws
                of the Registrant, as amended*


31.1
            Section
                302 Certification of Chief Executive Officer and Chief
                Accounting/FinancialOfficer
                (1)


31.2
            Section
                302 Certification of Vice-President
                (1)


32.1
            Section
                906 Certification of Chief Executive Officer and Chief
                Accounting/FinancialOfficer
                (1)


32.2
            Section
                906 Certification of Vice-President
                (1)







*
      Previously filed as an exhibit to the Company's Form 10-SB filed on June 28,
      2002




(1)
      Filed
      herewith





Item
      14.
      Principal Accountant Fees And Services





Audit
      and
      audit-Related Fees





During
      the year ended April 30, 2006, the Company's principal accountant billed $3,500
      in fees that were directly associated with the preparation of annual 6udit
      reports and quarterly review reports.





During
      the year ended April 30, 2007, the Company's principal accountant billed$4,200
      in fees that were directly associated with the preparation of annual audit
      reports and quarterly review reports.





Tax
      Fees





The
      Company's principal accountant did not bill any tax fees during the years ended
      April 30, 2007 and 2006.





18




All
      Other
      Fees





The
      Company's principal accountant did not bill any other fees during the years
      ended April 30, 2007 and 2006.





The
      officers and directors of Downside Up have determined that the services provided
      by our Company's principal accountant, as referred to in the above paragraphs,
      are compatible with maintaining the principal accountant's
      independence.





Audit
      Committee's Pre-Approval Policies and Procedures





Due
      to
      the fact that Downside Up had only two active officers and directors at the
      present time, the Company does not have an audit committee at this
      time.





Percentage
      of Hours Expended





All
      hours
      expended on the principal accountant's engagement to audit the registrant's
      financial statements for the most recent fiscal year were attributable to work
      performed by persons that are the principal accountant's full-time, permanent
      employees.





19




Signatures





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.


Date:
              July 31, 2007
            Downside
              Up,
              Inc./s/
              Michael J. CavaleriMichael
                J. Cavaleri,
              Chief
                ExecutiveOfficer
                and Chief Financial Officer


/s/
              Angelo LucaAngelo
                Luca,
              Vice
                President andCorporate
                Secretary





20