**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q**





(Mark
      One)





**x**
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE****SECURITIES
                EXCHANGE ACT OF 1934**





**For
      the Quarterly Period Ended March 31, 2008**





or





 ̈
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
                EXCHANGE ACT OF 1934





**COMMISSION
      FILE NUMBER** **000-52852**





**STIRLING
      ACQUISITION CORPORATION**


(Exact
      name of registrant as specified in its charter)





**DELAWARE**
            **20-8121663**(State
                or other jurisdiction of
            (I.R.S.
                Employerincorporation
                or organization)
            Identification
                No.)





**914
      Curlew Road, Suite 403**


**Dunedin,
      Florida 34698**


(Address
      of principal executive offices)





**(727)
      683-9573**


(Registrant’s
      telephone number,


including
      area code)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports) and (2) has been subject to such filing requirements
      for
      the past 90 days.


Yes x  No  ̈





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


Large
                    accelerated filer
                 ̈
                Accelerated
                    filer
                 ̈Non-accelerated
                    filer
                 ̈
                Smaller
                    reporting company
                x





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


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.





Title
                of Each Class
            Outstanding
                at May 20, 2008Common
                Stock, $0.001 Par Value
            2,000,000
                Shares





**TABLE
      OF CONTENTS**





**PAGE****PART
                I**
            **FINANCIAL
                INFORMATION**
            ******ITEM
                1**
            **Financial
                Statements**Balance
                Sheets as of March 31, 2008 and December 31, 2007
            
            3Statements
                of Operations for the three-month periods
              ended
                March 31, 2008 and 2007
            
            4Statements
                of Cash Flow for the three-month periods
              ended
                March 31, 2008 and 2007
            
            5Notes
                to Financial Statements
            
            6**ITEM
                2**
            **Managements’
                Discussion and Analysis of Financial Condition and Plan of
                Operation**
            
            12**ITEM
                3**
            **Quantitative
                and Qualitative Disclosures About Market Risk**
            
            13**ITEM
                4**
            **Controls
                and Procedures**
            
            13**PART
                II**
            **OTHER
                INFORMATION****ITEM
                1**
            **Legal
                Proceedings**
            
            13**ITEM
                1A**
            **Risk
                Factors**
            
            13**ITEM
                2**
            **Unregistered
                Sales of Equity Securities and Use of Proceeds**
            
            19**ITEM
                3**
            **Defaults
                Upon Senion Securities**
            
            19**ITEM
                4**
            **Submission
                of Matters to a Vote of Security Holders**
            
            19**ITEM
                5**
            **Other
                Information**
            
            19**ITEM
                6**
            **Exhibits**
            
            19**SIGNATURES**
            
            20


2


**STIRLING
      ACQUISITION CORPORATION**


**(A
      DEVELOPMENT STAGE ENTITY)**


**BALANCE
      SHEETS**





**March 31, 2008**
              **(Unaudited)**
            
            **December 31, 2007**
              **Audited****ASSETS**Current
                Assets:Cash
            
            $
            2,954
            
            $
            3,236Other
                current assets
            
            
            
            
            
            —Total
                current assets
            
            
            2,954
            
            
            3,236Deferred
                offering costs
            
            
            66,690
            
            
            62,615Total
                assets
            
            $
            69,644
            
            $
            65,851**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                liabilities
            
            $
            42,726
            
            $
            31,487Long-term
                debt
            
            
            —
            
            
            —Total
                liabilities
            
            $
            42,726
            
            $
            31,487Stockholders’
                equityCommon
                stock, $0.001 par value:
              50,000,000
                shares authorized, 2,000,000 shares outstanding
              at
                March 31, 2008 and December 31, 2007
            
            $
            2,000
            
            $
            2,000Preferred
                stock, $0.001 par value:
              10,000,000
                shares authorized, no shares outstanding
              at
                March 31, 2008 and December 31, 2007
            
            
            —
            
            
            —Additional
                paid in capital
            
            
            37,140
            
            
            37,140Deficit
                accumulated during development stage
            
            
            (12,222
            )
            
            (4,777
            )Total
                stockholder’s equity
            
            $
            26,918
            
            $
            34,363Total
                liabilities and equity
            
            $
            69,644
            
            $
            65,851





**The
      accompanying notes are an integral part of this Balance
      Sheet.**


3


**STIRLING
      ACQUISITION CORPORATION**


**(A
      DEVELOPMENT STAGE ENTITY)**


**STATEMENT
      OF OPERATIONS**





**December 28,2006****Three Months Ended**
            
            **Three Months Ended**
            
            **(inception) through****March 31, 2008**
            
            **March 31, 2007**
            
            **March 31, 2008****(Unaudited)**
            
            **(Unaudited)**
            
            **(Unaudited)**Revenue
            
            $
            —
            
            $
            —
            
            $
            —Organization
                costs
            
            
            
            
            
            
            
            
            1,000General
                and administrative expenses
            
            
            7,445
            
            
            —
            
            
            11,222Total
                expenses
            
            
            7,445
            
            
            —
            
            
            12,222Deficit
                accumulated during development stage
            
            $
            (7,445
            )
            
            —
            
            $
            (12,222
            )Net
                loss per common share
            
            $
            (0.00
            )
            $
            (0.00
            )
            $
            (0.01
            )Weighted
                number of common shares issued and outstanding during
                period
            
            
            2,000,000
            
            
            2,000,000
            
            
            2,000,000





**The
      accompanying notes are an integral part of this Statement of
      Operations.**


4


**STIRLING
      ACQUISITION CORPORATION**


**(A
      DEVELOPMENT STAGE ENTITY)**


**STATEMENT
      OF CASH FLOW**





**December 28,2006****Three Months Ended**
            
            **Three Months Ended**
            
            **(inception) through****March 31, 2008**
            
            **March 31, 2007**
            
            **March 31, 2008****(Unaudited)**
            
            **(Unaudited)**
            
            **(Unaudited)****Cash
                flows from operating activities**Deficit
                accumulated during development stage
            
            $
            (7,445
            )
            $
            —
            
            $
            (12,222
            )Changes
                in operating assets and liabilities:Other
                current assets
            
            
            —
            
            
            —Organization
                and offering costs paid by founders
            
            
            —
            
            
            —
            
            
            15,000Increase
                in accounts payable
            
            
            11,239
            
            
            —
            
            
            42,726Net
                cash used in operating activities
            
            
            3,794
            
            
            —
            
            
            45,504**Cash
                flows from financing activities**Proceeds
                from sale of common stock to founders
            
            
            —
            
            
            —
            
            
            20,000Additional
                capital contributions from founders
            
            
            —
            
            
            —
            
            
            4,140Deferred
                offering costs
            
            
            (4,075
            )
            
            —
            
            
            (66,690
            )Net
                cash provided by financing activities
            
            
            (4,075
            )
            
            —
            
            
            (42,550
            )Net
                increase (decrease) in cash
            
            
            (281
            )
            
            —
            
            
            2,908Cash
                balance, beginning of period
            
            $
            3,236
            
            $
            20,000
            
            
            —Cash
                balance, end of period
            
            $
            2,954
            
            $
            20,000
            
            $
            2,908**Supplemental
                disclosure of non-cash transactions involving direct payment of certain
                costs by affiliates**Proceeds
                from direct payment of organization costs by affiliates
            
            
            —
            
            
            —
            
            $
            1,000Proceeds
                from direct payment of deferred offering costs by
                affiliates
            
            
            —
            
            
            —
            
            $
            14,000Total
                non-cash transactions involving direct payments by
                affiliates
            
            
            —
            
            
            —
            
            $
            15,000





**The
      accompanying notes are an integral part of this Statement of Cash
      Flow**


5


**STIRLING
      ACQUISITION CORPORATION**


**(A
      DEVELOPMENT STAGE ENTITY)**


**NOTES
      TO FINANCIAL STATEMENTS**


**(Information
      with respect to events occurring after December 31, 2007 is
      unaudited)**





**1.**  **Organization
      and Operations**





Stirling
      Acquisition Corporation (the “Company”) was incorporated under the laws of the
      State of Delaware on December 28, 2006. In connection with the organization
      of
      the Company, four executive officers purchased 2,000,000 shares of common stock
      for $20,000 in cash, or $.01 per share. Additionally, the officers paid
      approximately $1,000 in organization costs, consisting principally of filing
      fees and registered agent fees. In total, the Company’s initial capital was
      $21,000.





The
      Company was organized for the primary purpose of conducting a public
      distribution of securities and then effecting a merger, capital
      stock exchange or similar acquisition transaction (an “Acquisition”) with
      an unidentified privately held company (a “Target”). The Company’s principal
      business goal is to engage in an Acquisition on terms that will give its
      stockholders a reasonable share of the increased market value that ordinarily
      arises when a private company makes the transition to public
      ownership.





Since
      the
      Company has not yet identified a Target, persons who acquire securities in
      connection with the distribution will have virtually no substantive information
      available for advance consideration of any specific Target. The Company’s
      business strategy is also referred to as a “blind pool” because neither the
      management of the Company nor the persons who acquire securities in the
      distribution know what the business of the Company will be.





The
      Company is currently in the development stage. All activity of the Company
      to
      date relates to its organization and financing activities.





The
      Company has not engaged in any substantive business activities to date and
      has
      no specific plans to engage in any particular business in the future. The
      Company’s ability to commence operations is contingent upon completion of the
      distribution described in Note 2.





**2.**  **Public
      Distribution of Securities**





The
      Company has received an order of effectiveness for a Form S-1 registration
      statement under the Securities Act of 1933 that includes





·
            250,000
                presently issued and outstanding shares that the Company’s existing
                stockholders (“founders”) will transfer to a total of 500 donees selected
                by them;





·
            1,250,000
                presently issued and outstanding shares that the Company’s founders may
                offer to sell to the owners of a target and other participants in
                an
                acquisition; and





·
            13,000,000
                shares that the Company may issue in connection with an
                acquisition.





The
      distribution described in the registration statement is subject to and will
      be
      conducted in compliance with Securities and Exchange Commission Rule 419, which
      was adopted to strengthen the regulation of securities offered by “blank check”
companies. Rule 419 defines a blank check company as a development stage
      company (a) that has no specific business plan or has indicated that its
      business plan is to engage in a merger or acquisition with an unidentified
      company and (b) is proposing to issue a “penny stock.” For purposes of
      Rule 419, penny stocks include all shares that have a price of less than $5
      per share and are not listed on a stock exchange.





The
      Company’s founders will distribute a combined total of 250,000 shares of common
      stock to individuals selected by them (“Donees”). Each Donee will receive 500
      gift shares and will be subject to the resale restrictions described in the
      company’s prospectus. The founders will promptly deposit all gift shares in the
      Rule 419 escrow upon issuance. The stock on deposit in the Rule 419
      escrow will be held in trust for the sole benefit of the Donees until the shares
      are either released from escrow or returned to the founders in compliance with
      Rule 419.


6


**STIRLING
      ACQUISITION CORPORATION**


**(A
      DEVELOPMENT STAGE ENTITY)**


**NOTES
      TO FINANCIAL STATEMENTS**


**(Information
      with respect to events occurring after December 31, 2007 is
      unaudited)**





**2.**  **Public
      Distribution of Securities—continued**





In
      connection with the Company’s reconfirmation offering, each Donee must approve
      the proposed acquisition in writing and elect to accept delivery of his gift
      shares. In the absence of an affirmative election by a Donee, the escrow agent
      will surrender the Donee’s stock certificates to the officer who made the
      original gift.





During
      the year ended December 31, 2007, the Company incurred $62,615 in costs
      associated with registering its common stock under the Securities Act and
      conducting the Distribution. During the three months ended March 31, 2008,
      the
      company incurred $4,057 in additional costs associated with the Distribution.
      Since the Company’s capital needs are highly uncertain, its officers have agreed
      to contribute sufficient additional capital to pay all costs incurred prior
      to
      the completion of the gift share distribution and ensure that the Company has
      a
      cash and working capital balance of $40,000 when they complete the gift share
      distribution. The founders presently anticipate a total investment of
      approximately $106,000 in the Company





As
      a
      result of its limited resources, the Company will, in all likelihood, have
      the
      ability to affect only a single Acquisition. Accordingly, the prospects for
      the
      Company’s success will be entirely dependent upon the future performance of a
      single business.





The
      Company is unlikely to enter into an agreement with a Target that does not
      have
      sufficient net tangible assets or operating income to satisfy the minimum
      listing standards of the American Stock Exchange or the Nasdaq Stock Market.
      Therefore management expects an Acquisition to result in a change in control.
      After a change in control, the owners of the Target will have the right to
      appoint their own officers and directors, and the Company’s current officers
      will have no ability to influence future business decisions.





The
      Company may not qualify for listing on a national securities exchange after
      completion of an Acquisition. In such an event, the Company’s common stock will
      be traded on the over-the-counter market. It is anticipated that the common
      stock will qualify for quotation on the OTC Bulletin Board; an inter-dealer
      automated quotation system for equity securities that are not included in
      Nasdaq. It is also anticipated that the company’s common stock will qualify for
      inclusion in the National Quotation Bureau “OTC Pink Sheets.” There can be no
      assurance that the liquidity and prices of the Company’s common stock in the
      secondary market will not be adversely affected.





There
      is
      no assurance that the Company will be able to affect an Acquisition. If the
      Company is unable to close a transaction before April 4, 2009 (18 months from
      the effective date of its original registration statement), Rule 419 will
      require that all gift share transactions be unwound and all certificates for
      gift shares be returned to the founders. In that event, the Donees will receive
      nothing.





**3.**  **Summary
      of Significant Accounting Policies**





***Basis
      of Presentation*** **:** The
      financial statements have been presented in a “development stage” format. Since
      inception, our primary activities have been raising of capital and obtaining
      financing. We have not commenced our principal revenue producing
      activities.





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


7


**STIRLING
      ACQUISITION CORPORATION**


**(A
      DEVELOPMENT STAGE ENTITY)**


**NOTES
      TO FINANCIAL STATEMENTS**


**(Information
      with respect to events occurring after December 31, 2007 is
      unaudited)**





**3.**  **Summary
      of Significant Accounting Policies—continued**





***Fiscal
      Year*** **** The
      Company’s fiscal year begins on January 1 and ends on December 31 of each year.
      The Company’s Statements of Operations and Cash Flow reflect all transactions
      that arose during the three-month
      periods ended March 31, 2008 and 2007, thefiscal year ended December 31,
      2007, and the development period between inception (December 28, 2006) and
March
      31,
      2008.





***Cash
      and Cash Equivalents:*** **** For
      financial statement presentation purposes, the Company considers those
      short-term, highly liquid investments with original maturities of three months
      or less to be cash or cash equivalents.





***Organization
      and Start-up Costs*** During
      the period ended December 31, 2006, the Company’s founders incurred $1,000 in
      organization costs, which were paid by them from their personal funds and
      accounted for as start-up costs. In accordance with FASB Statement of Position
      98-5, all organization and start-up costs were charged to expense on a current
      basis during the period ended December 31, 2006.





***Deferred
      Offering*** ** ***Costs*** Deferred
      offering costs will be carried as an asset until the Company completes a
      business combination or abandons its business and liquidates. Upon the
      occurrence of either event, deferred offering costs will be offset against
      additional paid-in capital.





During
      the year ended December 31, 2007, the Company’s founders paid $14,000 in legal
      fees associated with the preparation of the Company’s registration statement.
      While the Company’s founders paid all such costs from their personal funds, the
      legal fees have been accounted for as deferred offering costs.





***Target
      Investigation Costs*** ** Target
      investigation costs will be carried as an asset until the Company negotiates
      an
      acquisition or abandons its efforts to acquire a particular target.





***Net
      Income (Loss) Per Common Share*** **** The
      Company computes net income (loss) per common share in accordance with Statement
      of Financial Accounting Standards (“SFAS”) No. 128, “ *Earnings
      Per Share* ”
and
      SEC
      Staff Accounting Bulletin No. 98 (“SAB No. 98”). Under the provisions of
      SFAS No. 128 and SAB No. 98, basic net income (loss) per common share (“Basic
      EPS”) is computed by dividing net income (loss) by the weighted average number
      of common shares outstanding.





The
      Company’s net income (loss) per common share has been calculated on the basis of
      2,000,000 shares issued and outstanding at March
      31,
      2008 andDecember 31, 2007. There were no warrants or other stock
      purchase rights outstanding on either date.





***Income
      Taxes*** **** Income
      taxes are accounted for in accordance with SFAS No. 109, “ *Accounting
      for Income Taxes* .”
Under
      this method, deferred income taxes are determined based on differences between
      the tax bases of assets and liabilities and their financial reporting amounts
      at
      each year-end, and are measured based on enacted tax rates and laws that will
      be
      in effect when the differences are expected to reverse. Valuation allowances
      are
      established, when necessary, to reduce deferred tax assets to the amount
      expected to be realized. We have determined it more likely than not that these
      timing differences will not materialize and have provided a valuation allowance
      against substantially all of our net deferred tax asset. Management will
      continue to evaluate the realizability of the deferred tax asset and its related
      valuation allowance.





***Stock
      Based Compensation*** Stock-based
      awards to non-employees are accounted for using the fair value method in
      accordance with SFAS No. 123(R), *Accounting
      for Stock-Based Compensation* ,
      and
      EITF Issue No. 96-18, *Accounting
      for Equity Instruments that are Issued to Other Than Employees for Acquiring,
      or
      in Conjunction with Selling Goods or Services* .


8


**STIRLING
      ACQUISITION CORPORATION**


**(A
      DEVELOPMENT STAGE ENTITY)**


**NOTES
      TO FINANCIAL STATEMENTS**


**(Information
      with respect to events occurring after December 31, 2007 is
      unaudited)**





**3.**  **Summary
      of Significant Accounting Policies—continued**





On
      December 28, 2006, the company adopted the provisions of Statement of Financial
      Accounting Standards (“SFAS”) 123R, “Share-Based Payment” (“SFAS 123(R)”), which
      requires that companies measure and recognize compensation expense at an amount
      equal to the fair value of share-based payments granted under compensation
      arrangements.





The
      company adopted SFAS 123(R) using the “modified prospective” method, which
      results in no restatement of prior period amounts. Under this method, the
      provisions of SFAS 123(R) apply to all awards granted or modified after the
      date
      of adoption. In addition, compensation expense must be recognized for any
      unvested stock option awards outstanding as of the date of adoption on a
      straight-line basis over the remaining vesting period. The Company calculates
      the fair value of options using a Black-Scholes option pricing model. The
      Company does not currently have any outstanding options subject to future
      vesting. SFAS 123(R) also requires the benefits of tax deductions in excess
      of
      recognized compensation expense to be reported in the Statement of Cash Flows
      as
      a financing cash inflow rather than an operating cash inflow. In addition,
      SFAS
      123(R) required a modification to the Company’s calculation of the dilutive
      effect of stock option awards on earnings per share. For companies that adopt
      SFAS 123(R) using the “modified prospective” method, disclosure of pro forma
      information for periods prior to adoption must continue to be made.





A ***ccounting
      For Obligations And Instruments Potentially To Be Settled In The Company’s Own
      Stock*** The
      Company accounts for obligations and instruments potentially to be settled
      in
      the Company’s stock in accordance with EITF Issue No. 00-19, “ *Accounting
      for Derivative Financial Instruments Indexed To, and Potentially Settled In
      a
      Company’s Own Stock* .”
This
      issue addresses the initial balance sheet classification and measurement of
      contracts that are indexed to, and potentially settled in, the Company’s own
      stock.





Under
      EITF Issue No. 00-19 contracts are initially classified as equity or as either
      assets or liabilities, in the following situations:





Equity





·
            Contracts
                that require physical settlement or net-share settlement;
                and


·
            Contracts
                that give the company a choice of net-cash settlement or settlement
                in its
                own shares (physical settlement or net-share settlement), assuming
                that
                all the criteria for equity classification have been
                met.





Assets
      or
      Liabilities





·
            Contracts
                that require net-cash settlement (including a requirement to net-cash
                settle the contract if an event occurs and if that event is outside
                the
                control of the company); and


·
            Contracts
                that give the counterparty a choice of net-cash settlement or settlement
                in shares (physical settlement or net-share
                settlement).





All
      contracts are initially measured at fair value and subsequently accounted for
      based on the current classification. Contracts initially classified as equity
      do
      not recognize subsequent changes in fair value as long as the contracts continue
      to be classified as equity. For contracts classified as assets or liabilities,
      the Company reports changes in fair value in earnings and discloses these
      changes in the financial statements as long as the contracts remain classified
      as assets or liabilities. If contracts classified as assets or liabilities
      are
      ultimately settled in shares, any previously reported gains or losses on those
      contracts continue to be included in earnings. The classification of a contract
      is reassessed at each balance sheet date.


9


**STIRLING
      ACQUISITION CORPORATION**


**(A
      DEVELOPMENT STAGE ENTITY)**


**NOTES
      TO FINANCIAL STATEMENTS**


**(Information
      with respect to events occurring after December 31, 2007 is
      unaudited)**





**3.**  **Summary
      of Significant Accounting Policies—continued**





In
      accordance with EITF Issue No. 00-19, a transaction which includes a potential
      for net-cash settlement, including liquidated damages, requires that derivative
      financial instruments, including warrants and additional investment rights,
      initially be recorded at fair value as an asset or liability and subsequent
      changes in fair value be reflected in the statement of operations. The recorded
      value of the liability for such derivatives can fluctuate significantly based
      on
      fluctuations in the market value of the underlying common stock of the issuer
      of
      the derivative instruments, as well as in the volatility of the stock price
      during the term used for observation and the remaining term.





***Warrant
      Derivative Liabilities*** The
      Company accounts for warrants issued in connection with financing arrangements
      in accordance with EITF Issue No. 00-19, *Accounting
      for Derivative Financial Instruments Indexed to, and Potentially Settled in,
      a
      Company’s Own Stock* .
      Pursuant to EITF Issue No. 00-19, an evaluation of specifically identified
      conditions is made to determine whether the fair value of warrants issued is
      required to be classified as a derivative liability. The fair value of warrants
      classified as derivative liabilities is adjusted for changes in fair value
      at
      each reporting period, and the corresponding non-cash gain or loss is recorded
      in current period earnings.





***Recent
      Accounting Pronouncements***





In
      May
      2006, the FASB issued SFAS No. 154, “ *Accounting
      Changes and Error Corrections* ”,
      which
      replaces APB Opinion No. 20 “ *Accounting
      Changes* ”
and
      FASB Statement No. 3 “ *Reporting
      Accounting Changes in Interim Financial Statements* ”.
      SFAS
      No. 154 changes the requirements for the accounting and reporting of a
      change in an accounting principle. SFAS No. 154 requires retrospective
      application for voluntary changes in an accounting principle unless it is
      impracticable to do so. SFAS No. 154 is effective for accounting changes
      made in fiscal years beginning after December 15, 2006. The Company adopted
      SFAS
      No. 154 on January 1, 2007 with no expected material effect on its
      financial statements.





In
      February 2007, FASB issued SFAS No. 159, *“The
      Fair Value Option for Financial Assets and Financial
      Liabilities.”* SFAS 159
      is effective for fiscal years beginning after November 15, 2007. Early adoption
      is permitted subject to specific requirements outlined in the new Statement.
      The
      new Statement allows entities to choose, at specified election dates, to measure
      eligible financial assets and liabilities at fair value that are not otherwise
      required to be measured at fair value. If a company elects the fair value option
      for an eligible item, changes in that item's fair value in subsequent reporting
      periods must be recognized in current earnings. SFAS 159 also establishes
      presentation and disclosure requirements designed to draw comparison
      between entities that elect different measurement attributes for similar assets
      and liabilities.





In
      December 2007, the FASB issued SFAS No. 141(R), “ *Business
      Combinations* .”
This
      Statement replaces SFAS No. 141. SFAS 141(R) retains the fundamental
      requirements in SFAS 141 that the acquisition method of accounting (which SFAS
      141 called the purchase method) be used for all business combinations and for
      an
      acquirer to be identified for each business combination. This Statement also
      establishes principles and requirements for how the acquirer: a) recognizes
      and
      measures in its financial statements the identifiable assets acquired, the
      liabilities assumed, and any noncontrolling interest in the acquiree; b)
      recognizes and measures the goodwill acquired in the business combination or
      a
      gain from a bargain purchase and c) 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) will apply prospectively
      to
      business combinations for which the acquisition date is on or after Company’s
      fiscal year beginning October 1, 2009. While the Company has not yet evaluated
      SFAS 141(R) for the impact, if any, that it will have on its future consolidated
      financial statements, the Company will be required to expense costs related
      to
      any acquisitions after September 30, 2009.


10


**STIRLING
      ACQUISITION CORPORATION**


**(A
      DEVELOPMENT STAGE ENTITY)**


**NOTES
      TO FINANCIAL STATEMENTS**


**(Information
      with respect to events occurring after December 31, 2007 is
      unaudited)**





**4.**  **Capital
      Stock**





The
      Company’s Certificate of Incorporation authorizes the issuance of 50,000,000
      shares of common. The Company’s board of directors has the power to issue any or
      all of the authorized but unissued common stock without stockholder approval.
      The Company currently has no commitments to issue any shares of common stock;
      however, the Company will, in all likelihood, issue a substantial number of
      additional shares in connection with an acquisition. Since the company expects
      to issue shares of common stock in connection with an acquisition, the ultimate
      ownership of the gift share donees is likely to be less than 5% of the issued
      and outstanding common stock of the Company. It is impossible to predict whether
      an acquisition will ultimately result in dilution to gift share donees; however,
      management believes the possibility of significant dilution is very
      remote.





The
      Company’s Board of Directors is empowered, without stockholder approval, to
      issue up to 10,000,000 shares of “blank check” preferred stock with dividend,
      liquidation, conversion, voting or other rights that could adversely affect
      the
      voting power or other rights of the holders of the Company’s common stock. There
      are no shares of preferred stock issued or outstanding and the Company has
      no
      current plans to issue shares of preferred stock for any purpose.





**5.**  **Stockholders’
      Equity**





In
      connection with the incorporation of the Company, its founders paid $20,000
      to
      purchase 2,000,000 shares of common stock at a price of $0.01 per share.
      Pursuant to an agreement among themselves, the Company’s founders are
      contractually obligated to contribute sufficient capital to pay the Company’s
      cumulative registration and operating costs and ensure that the Company has
      cash
      and working capital balances of at least $40,000 when the founders complete
      the
      planned gift share distribution. The company’s officers contributed $21,000 in
      capital during 2006 and $18,140 in additional capital during 2007. The Company
      presently believes its founders will be obligated to contribute a total of
      $106,000 to its capital.





The
      Company has no obligation to reimburse organization, operating and offering
      costs paid by its founders. In accordance with the requirements of SEC Staff
      Accounting Bulletin Topic 1B, all costs that are paid directly by the Company’s
      founders will be treated as additional capital contributions from the founders
      and the associated costs will be accounted for in accordance with the Company’s
      established accounting policies





**6.**  **Incentive
      Stock Plan**





The
      Company’s 2006 Incentive Stock Plan was adopted and approved in connection with
      the organization of the Company. The common stock reserved for issuance under
      the plan will be the lesser of 750,000 shares, or 10% of the total number of
      shares outstanding after the closing of an acquisition.





The
      class
      of persons eligible to participate in the plan includes all full-time and
      part-time employees of the Company, provided that the eligible participants
      do
      not include employees who are eligible to receive awards under the terms of
      any
      employment contract or specialty plan adopted by us in the future. The plan
      permits the grant of a variety of incentive awards including (i) non-qualified
      stock options, (ii) incentive stock options, (iii) shares of restricted stock,
      (iv) shares of phantom stock, and (v) stock bonuses. In addition, the plan
      allows us to grant cash bonuses that will be payable when an employee is
      required to recognize income for federal income tax purposes because of the
      vesting of shares of restricted stock or the grant of a stock
      bonus.





There
      were no stock options or other incentive awards outstanding at March 31, 2008
      and no options or other awards may be granted until the Company closes an
      acquisition transaction.


11




**ITEM
              2.**
            **MANAGEMENTS’
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
                OPERATIONS**





***Financial
      Condition*** **** We
      were
      incorporated in Delaware on December 28, 2006. Our founders purchased 2 million
      shares of our common stock for $20,000, or $0.01 per share. Concurrently,
      founders agreed in writing to contribute sufficient capital to pay our
      cumulative registration and operating costs and ensure that we have cash and
      working capital balances of at least $40,000 after completion of the gift share
      distribution.





During
      the year ended December 31, 2006, we incurred $1,000 in organization costs,
      which were paid by one of our founders and accounted for as an additional
      capital contribution. During the year ended December 31, 2007 our efforts were
      focused on drafting our registration statement and planning our future
      activities. We incurred $3,777 in operating expenses during the year ended
      December 31, 2007. We incurred $7,445 in operating expenses during the three
      months ended March 31, 2008, consisting principally of costs associated with
      the
      preparation of our Annual Report on Form 10-K for the year ended December 31,
      2007.





From
      inception to date, we have incurred approximately $66,690 in costs to register
      our securities
      and conduct the gift share distribution. The only line item that
      represented more than 10% of our cumulative offering costs was $60,307 in legal
      fees. During the year ended December 31, 2007, our founders contributed $18,140
      in additional capital to our company. Upon completion of the gift share
      distribution, our founders will be required to contribute approximately $80,000
      in additional capital in order to bring our cash and working capital balances
      up
      to $40,000, which we believe will be sufficient for our planned
      activities.





We
      have
      no obligation to reimburse any organization, operating and registration costs
      paid by our founders. In accordance with the requirements of SEC Staff
      Accounting Bulletin Topic 1B, all costs that are paid directly by our founders
      will be treated as additional capital contributions from the founders and the
      associated costs will be accounted for in accordance with our established
      accounting policies.





***Plan
      of Operations*** **** After
      the
      capital contributions that our founders are required to make upon completion
      of
      the gift share distribution, we will have $40,000 in cash and working capital.
      We will use our available cash resources to pay the costs of operating our
      company, investigating potential targets, negotiating an acquisition and
      preparing a post-effective amendment to our registration statement. We will
      not
      pay any cash compensation to our officers, but we will reimburse any
      out-of-pocket costs they incur on our behalf.





We
      intend
      to request a reasonable due diligence fee before we begin a detailed
      investigation into the affairs of a potential target. We will also request
      that
      the target pay the legal and accounting fees and other costs associated with
      the
      preparation of a post-effective amendment to our registration statement. There
      can be no assurance that a potential target will be willing to pay the
      out-of-pocket costs we expect to incur in connection with our due diligence
      investigations and future SEC filings.





Rule 419
      will require us to unwind gift share distribution if we fail to identify a
      target, negotiate an acquisition, complete our reconfirmation offering and
      close
      the acquisition transaction before April 4, 2009. We believe our available
      cash
      resources will be adequate for our expected needs. Nevertheless, we may run
      out
      of money if our investigation of a potential target requires significant
      technical expertise, or we spend substantial funds investigating a potential
      target and then determine that the potential target is not
      suitable.





The
      SEC’s
      integration and general solicitation doctrines will preclude future private
      placement transactions until we complete our reconfirmation offering and close
      an acquisition. Therefore, we will be unable to obtain funds by selling
      additional securities. We have the corporate power to borrow money, but under
      our circumstances credit is not likely to be available. Our founders may, but
      have no duty or obligation to loan our company money. If we spend our available
      cash and cannot obtain additional financing, we will be forced to abandon our
      business plan. In that event, donees will have no interest in our company and
      our founders will incur substantial losses.





***Contractual
      Obligations*** **** We
      have
      no long-term debt, capital lease obligations, operating lease obligations,
      purchase obligations or other long term liabilities.





***Off-balance
      Sheet Arrangements*** **** We
      have
      no off-balance sheet arrangements.





12




**ITEM
              3**
            **QUANTITATIVE
                AND QUALITATIVE DISCLOSURES ABOUT MARKET
                RISK**





Substantially
      all of our financial assets consist of bank deposits and we own no portfolio
      investments that would expose our Company to the type of risks described in
      Item
      304 of Regulation S-K.





**ITEM
              4.**
            **CONTROLS
                AND PROCEDURES**





*Evaluation
      of Disclosure Controls and Procedures*





As
      of the
      end of the period covered by our Annual Report on Form 10-K for the year ended
      December 31, 2007, management performed, with the participation of our Chief
      Executive Officer and Chief Financial Officer, an evaluation of the
      effectiveness of our disclosure controls and procedures as defined in Rules
      13a-15(e) and 15d-15(e) of the Exchange Act. Our disclosure controls and
      procedures are designed to ensure that information required to be disclosed
      in
      the report we file or submit under the Exchange Act is recorded, processed,
      summarized, and reported within the time periods specified in the SEC’s forms,
      and that such information is accumulated and communicated to our management
      including our Chief Executive Officer and our Chief Financial Officer, to allow
      timely decisions regarding required disclosures. Based on the evaluation our
      Chief Executive Officer and our Chief Financial Officer concluded that, as
      of
      March 31, 2008, our disclosure controls and procedures were
      effective.





*Management’s
      Report on Internal Control Over Financial Reporting*





Management
      is responsible for establishing and maintaining adequate internal control over
      financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
      Act. Internal control over financial reporting is a process designed to provide
      reasonable assurance regarding the reliability of financial reporting and the
      preparation of financial statements in accordance with GAAP. Because of its
      inherent limitations, internal control over financial reporting may not prevent
      or detect misstatements. Also, projection of any evaluation of effectiveness
      to
      future periods is subject to the risk that controls may become inadequate
      because of changes in conditions, or that the degree of compliance with the
      policies or procedures may deteriorate.





Management
      has conducted, with the participation of our Chief Executive Officer and our
      Chief Financial Officer, an assessment, including testing of the effectiveness,
      of our internal control over financial reporting as of March 31, 2008.
      Management’s assessment of internal control over financial reporting was
      conducted using the criteria in *Internal
      Control over Financial Reporting - Guidance for Smaller Public
      Companies* issued
      by the Committee of Sponsoring Organizations of the Treadway Commission
      (“COSO”). Based on the evaluation our Chief Executive Officer and our Chief
      Financial Officer concluded that, as of March 31, 2008, our internal
      control over financial reporting was effective.





This
      quarterly report does not include an attestation report of the company's
      registered public accounting firm regarding internal control over financial
      reporting. Management's report was not subject to attestation by the company's
      registered public accounting firm pursuant to temporary rules of the Commission
      that permit the company to provide only management's report in this quarterly
      report.





**PART
      II - OTHER INFORMATION**





**ITEM
              1.**
            **LEGAL
                PROCEEDINGS**





**NONE**





**ITEM
              1A —**
            **RISK
                FACTORS**





Readers
      of this report on Form 10-Q should consider carefully the following risk factors
      in evaluating our company and its prospects. Any of the following risks, as
      well
      as other risks and uncertainties that are not yet identified or that we
      currently believe are immaterial, could harm our business, financial condition
      and operating results, and could result in the liquidation of our
      company.





13




**Even
      if we negotiate and close a business combination, an active, sustained and
      stable public market for our shares may never develop.**





Sally
      A.
      Fonner, our president, has previously served as an officer and director of
      several shell companies that effected acquisition transactions with private
      companies. Following each of these transactions, the post-acquisition company’s
      shares have only qualified for quotation on the OTC Bulletin Board, the markets
      have not been active, liquid or sustained and the market prices have been
      volatile. Even if we close an acquisition, an active, liquid, stable and
      sustained public market for our shares may never develop.





**Our
      officers have previously registered two similar Rule 419 transactions that
      were not successful.**





Transactions
      under Rule 419 are considerably more complex than transactions where a
      shell company that is not subject to Rule 419 acquires the assets or stock
      of an
      operating company. Our officers have previously registered two Rule 419
      offerings that were not successful. Our officers’ experience in transactions
      involving shell companies that were not subject to Rule 419 may not be a fair
      indicator of their ability to complete a transaction that is subject to the
      requirements of Rule 419. There can be no assurance that we will identify a
      suitable target or negotiate and close an acquisition.





**We
      will compete with a variety of SPACs, public shells and other entities that
      have
      a business plan similar to ours and it may be more difficult for us to do
      so.**





The
      term
“shell company” is broad enough to include SPACs that conduct IPOs for the
      purpose of raising a large capital pool that can be used to purchase assets
      or
      companies; unsuccessful public companies have no substantial assets; companies
      that have voluntarily registered their shares under the Exchange Act; blank
      check companies like ours; and other acquisition-oriented companies that are
      not
      registered with the SEC. We will compete with a variety of entities that have
      business plans similar to ours, including SPACs, which have the substantial
      financial resources that our company lacks and may be able to offer owners
      of
      targets immediate liquidity or provide specialized executive management
      expertise to targets. Because of the intense competition among shell companies,
      there is no assurance that we will be able to compete effectively, or negotiate,
      document and close a transaction before April 4, 2009. If we cannot negotiate
      and close a timely acquisition, our founders will unwind the gift share
      distribution and we will withdraw our registration statement. In that event,
      you
      will have no interest in our company.





**Our
      business potential depends upon our ability to conduct adequate due diligence
      investigations and our limited financial resources or time pressures may
      increase the risk that we will truncate our due diligence or lower our target
      selection standards.**





We
      do not
      intend to enter into an acquisition without performing an adequate due diligence
      investigation of our target. Since we do not have sufficient financial resources
      to conduct a thorough legal, business and accounting investigation, we plan
      to
      ask potential targets to pay our reasonable due diligence costs. If potential
      targets are not willing to pay our due diligence costs, we may be forced to
      limit our due diligence investigations to simple inquiries that can be paid
      for
      with our limited financial resources. If we cannot investigate a target,
      negotiate an acquisition, comply with the requirements of Rule 419 and
      close a transaction by April 4, 2009, our founders will suffer substantial
      losses. Financial constraints or time pressures will increase the risk that
      we
      will truncate our due diligence or lower our target selection standards. If
      we
      select an unsuitable target, the post-acquisition company may not be
      successful.





**Stockholders
      will not be able to sell gift shares until we complete an
      acquisition.**





All
      gift
      shares will be deposited in the Rule 419 escrow and held in trust until we
      negotiate an acquisition, comply with the requirements of Rule 419 and
      close the transaction. Stockholders will not be able to sell or transfer any
      gift shares until we have closed an acquisition and our stock certificates
      are
      released from the Rule 419 escrow.





14




**Donees
      will be required to retain 100 shares for up to six months after we close an
      acquisition.**





Donees
      and transferees will be required to retain 100 shares for a period of six months
      following the closing of an acquisition unless our shares are listed on a
      national securities exchange at an earlier date. A simple quotation on the
      OTC
      Bulletin Board will not satisfy this requirement. When our shares are released
      from escrow, each donee and transferee will receive two certificates; a
      certificate for 100 shares that will be imprinted with a restrictive legend
      and
      a second certificate for the remaining shares that will not be subject to any
      transfer restrictions. If and when our shares are listed on a national
      securities exchange, all restrictions on transfer will terminate.





**We
      will not be able to sell additional securities until we complete an
      acquisition.**





We
      will
      not be able to sell additional securities until we complete an acquisition.
      If
      we spend our available cash before we close a transaction, we may abandon our
      business and withdraw our registration statement.





**Our
      founders expect the gift share distribution to significantly increase the value
      of their remaining shares, which means they will indirectly benefit from their
      gifts.**





Upon
      completion of the gift share distribution we will be a publicly held blank
      check
      company that has over 500 round lot shareholders. Our founders believe this
      status will make our company attractive to potential targets and significantly
      increase the value of their remaining shares. If we successfully implement
      our
      business plan, our founders expect to realize substantial gains from the sale
      of
      1,250,000 founders’ shares that have been included in our registration
      statement. They also expect to benefit from the eventual sale of 500,000 shares
      they will retain for investment. Therefore, our founders will indirectly benefit
      from their gifts.





**Our
      reconfirmation offering will be a “take it or leave it”
proposition.**





We
      must
      conduct our reconfirmation offering when we negotiate an acquisition where
      the
      fair value of the target exceeds $1,168,000. If we negotiate an acquisition
      and
      file a post-effective amendment and our stockholders reject the terms of our
      reconfirmation offering, our founders will unwind the gift share distribution
      and we will withdraw our registration statement. Rule 419 only requires
      that our prospectus disclose the reconfirmation threshold negotiated by our
      company and a target. In the event that the threshold is not met and the gift
      share distribution is unwound, the donees will have no interest in our company.
      Therefore, our reconfirmation offering will be a “take it or leave it”
proposition and your individual decision to accept the reconfirmation offering
      may be overruled by other donees who reject the reconfirmation offering or
      fail
      to respond.





**We
      do not intend to comply with the corporate governance standards that apply
      to
      exchange listed issuers before we complete an acquisition.**





Upon
      completion of the gift share distribution, our officers will own 87.5% of our
      voting stock and have both the executive power and voting control to approve
      all
      corporate actions without your consent. We do not have any independent directors
      or an audit committee to review related party transactions. We do not intend
      to
      comply with the corporate governance standards that apply to exchange listed
      issuers before we complete an acquisition and there can be no assurance that
      the
      post-acquisition company will fully comply with such standards after an
      acquisition.





**The
      personal pecuniary interests of our executive officers may conflict with the
      interests of donees.**





Our
      registration statement includes 1,250,000 shares that our founders may resell
      to
      the owners of a target and other third parties who are involved in an
      acquisition. Each of our founders is an officer of our company. While our
      founders cannot resell founders’ shares at a price that represents a premium to
      the book value per share we receive in exchange for acquisition shares, it
      is
      likely that an acquisition and the related sale of founders’ shares will result
      in the transfer of property to our company and the payment of cash to our
      founders. Under those circumstances, the personal pecuniary interests of our
      founders may conflict with the interests of donees.





**All
      our officers are engaged in other business activities and will face conflicts
      of
      interest in allocating their time among their various business
      affairs.**





Our
      officers are not required to devote any specific amount of time to our business.
      Each of our officers is actively involved in other business activities and
      they
      will all face conflicts in allocating their time among their various business
      interests. Such conflicts may delay or prevent us from effecting an acquisition.
      In connection with a prior unsuccessful Rule 419 distribution, our officers
      resolved conflicting time demands by giving their other affairs priority. They
      would likely make the same choices today if they were faced with a similar
      factual scenario.





15




**If
      we lose the services of our chief financial officer, we may be unable to pay
      the
      fees of other professionals.**





John
      Petersen has agreed to serve as our chief financial officer, represent us in
      connection with an acquisition and assist in the preparation of the required
      post-effective amendment to our registration statement. Mr. Petersen will not
      receive any compensation from us in connection with these services, though
      he
      will have an interest in our success due to his share ownership. If Mr. Petersen
      is unavailable because of conflicting client demands or otherwise fails to
      provide needed services, we may be unable to retain other professionals to
      perform the work because we do not have sufficient resources to pay substantial
      professional fees.





**We
      expect an acquisition to result in a change in control and our officers will
      not
      have any power to influence future decisions of the post-acquisition
      company.**





We
      will
      issue up to 13,000,000 shares to acquire a target, and our founders may sell
      up
      to 1,250,000 founders’ shares in connection with an acquisition. Therefore we
      expect an acquisition to result in a change in control. After a change in
      control, the owners of the target will have the right to appoint their own
      management team and our current officers will not be able to influence future
      decisions. There is no assurance that we will be able to negotiate appropriate
      agreements relating to corporate governance, exchange listing, after-market
      support and similar matters in connection with an acquisition. There is no
      assurance that any terms we negotiate will be effective. If successor management
      does not implement appropriate corporate governance practices and devote
      sufficient resources to listing the post-acquisition company’s shares on a
      national securities exchange and developing and promoting a public market,
      you
      may be unable to sell our shares at any price.





**We
      have registered the bulk of our outstanding shares and all of the shares we
      plan
      to issue, which may depress any eventual market price of our
      shares.**





We
      have
      registered the bulk of our outstanding shares and all of the shares we plan
      to
      issue. If we are able to close an acquisition, the substantial bulk of the
      shares held by donees, transferees and stockholders of the target who are not
      affiliates of the post-acquisition company will be eligible for resale. If
      a
      substantial number of shares are offered for sale at the same time, the market
      price is likely to decline and the decline may be permanent.





**Our
      regulatory status may make an acquisition more complex and
      expensive.**





Our
      entire public distribution has been registered on Form S-1, and the decision
      to
      use that form may make future compliance with the disclosure and reconfirmation
      requirements of Rule 419 more difficult. All of our future SEC filings must
      comply with the requirements of Regulations S-K and S-X, which can be more
      complex than their counterparts under Regulation S-B, which is available to
      smaller reporting companies. Therefore, the owners of a desirable target may
      decide that cost of regulatory compliance will make our company less desirable
      than a competing public shell.





**There
      has never been a public market for our shares and such a market may never
      develop.**





No
      market
      makers have expressed any interest in our company, and we do not intend to
      engage in discussions with potential market makers until we have negotiated
      an
      acquisition. There has never been a public market for our shares, and a market
      for the shares of the post-acquisition company may never develop. If an active
      public market does not develop, you may be unable to resell your shares at
      any
      price.





**After
      completion of an acquisition, our shares may be subject to the SEC’s penny stock
      regulations, which would discourage brokers from effecting transactions in
      those
      shares.**





SEC
      rule
      3a51-1 defines a “penny stock” as any equity security that is not listed on a
      national securities exchange and has a bid price of less than $5 per share.
      Even
      if we complete an acquisition, there is no assurance that the penny stock rules
      will not apply to our shares. Before effecting an open market transaction that
      is subject to the penny stock rules, a broker-dealer must determine that the
      purchaser is a suitable investor; deliver certain disclosure materials to the
      purchaser and receive the purchaser’s written approval. Because of these
      restrictions, most broker-dealers refrain from effecting transactions in penny
      stocks and many actively discourage their clients from buying penny stocks.
      Restrictions on the ability of broker-dealers to recommend our stock could
      make
      it more difficult for our stockholders to sell their shares, may decrease
      liquidity, adversely affect prevailing prices and make it difficult or
      impossible for you to use our shares as collateral.





16




***Additional
      Risks for Owners of Potential Targets***





**A
      transaction with our company may not be less expensive than an
      IPO.**





We
      do not
      have any substantial financial resources or meaningful access to additional
      financing. Our plan of operations assumes that our target will ultimately pay
      the costs and expenses of the lawyers and other professionals we retain to
      represent us in connection with an acquisition. We also believe targets will
      expend substantial sums for:





·
            Our
                reasonable due diligence costs and
                expenses;


·
            The
                fees of their lawyers and accountants who will bear primary responsibility
                for preparing the information that must be included in our post-effective
                amendment and the related
                prospectus;


·
            The
                costs of preparing any additional registrations and applications
                necessary
                to facilitate the closing of an acquisition, comply with state law
                or
                facilitate the development of a trading market;
                and


·
            The
                costs of preparing, filing and distributing regular reports under
                the
                Exchange Act, together with the specific reports required by
                Rule 419.





Accordingly,
      a transaction with our company may not be less expensive than an IPO. We believe
      that an IPO is usually a better alternative than a transaction with a public
      shell. If you have the ability to conduct an IPO, we encourage you to do so.
      If
      you are not in a position to conduct an IPO and you still want to be a public
      reporting company, you should be aware that the process of effecting a
      transaction with a public shell is difficult, expensive and subject to numerous
      substantial risks that will make it very difficult to develop an active, liquid,
      stable and sustained trading market for the post-acquisition company’s
      shares.





**You
      should not consider a transaction with our company if you need additional
      capital or will require additional capital within 12 to 18
      months.**





A
      transaction with our company will not give you immediate access to the capital
      markets. You should not consider a transaction with our company if you need
      additional capital or expect to need additional capital within 12 to 18 months.
      Until the post-acquisition company has been active for a sufficient period
      of
      time to demonstrate credible operating performance, it will be very difficult,
      if not impossible, for the post-acquisition company to raise additional capital.
      You cannot assume that additional capital will ever be available.





**If
      you enter into a transaction with our company, you will be subject to
      substantial restrictions and limitations under applicable SEC rules for a
      significant period of time.**





The
      SEC
      has promulgated a series of special rules for private companies that enter
      into
      transactions with shell companies like ours that have no significant assets.
      If
      you enter into a transaction with our company, those rules will limit your
      ability to engage in certain activities and enjoy certain privileges for a
      significant period of time. For example, our company will be unable to register
      stock on Form S-8, which is typically used to register the offering and sale
      of
      shares pursuant to employee option plans, until 60 days after the closing of
      an
      acquisition. We will also be an “ineligible issuer” under the Securities Act for
      a period of three years after the closing of an acquisition, which means that
      we
      will not be able to use certain streamlined registration procedures, including
      those that permit the use of free writing prospectuses, permit incorporation
      by
      reference from other SEC filings, define safe harbors from “gun-jumping” rules
      and provide other benefits to “well-known seasoned issuers.”





17




**You
      should expect increased regulatory scrutiny and a high degree of skepticism
      from
      the financial community if you enter into a transaction with our
      company.**





Blank
      check companies have been used as vehicles for fraud and manipulation in the
      penny stock market. Therefore, you should expect more regulatory scrutiny at
      the
      Federal and state level than you might otherwise encounter if you simply filed
      a
      registration statement for an IPO. Moreover, the financial community views
      shell
      transactions with a high degree of skepticism until the post-acquisition company
      has been active for a sufficient period of time to demonstrate credible
      operating performance. Increased regulatory scrutiny may increase your
      compliance costs and market skepticism may make it more difficult to establish
      and maintain an active, liquid, stable and sustained trading market for the
      post-acquisition company’s shares.





**You
      should not consider a transaction with our company if you are seeking short-term
      investment liquidity for corporate insiders.**





While
      the
      acquisition and founders’ shares have been registered under the Securities Act,
      all shares held by persons who are affiliates of the post-acquisition company
      will be classified as “restricted securities” that were issued on the closing
      date of the acquisition. These shares will not be eligible for resale for a
      period of one year from the closing date unless the resale is registered under
      the Securities Act. Even after one year, shares held by affiliates will be
      subject to volume and manner of sale restrictions unless they are separately
      registered. You should not consider a transaction with our company if you are
      seeking short-term investment liquidity for corporate insiders.





**Our
      shares will not automatically qualify for an immediate listing on a national
      securities exchange, and unless successor management implements appropriate
      corporate governance practices, our shares may never qualify for such a
      listing.**





Even
      if
      our company completes an acquisition that satisfies the public float, operating
      history, stockholders’ equity, net income and market capitalization standards
      for a national securities exchange, we must also comply with the applicable
      distribution, minimum price and corporate governance standards. Accordingly,
      our
      shares may have to begin trading on the OTC Bulletin Board or the Pink Sheets,
      and wait to apply for a national securities exchange listing until all of the
      applicable listing standards have been satisfied. There can be no assurances
      that our shares will ever qualify for listing on a national securities exchange.





**The
      holders of gift shares are likely to be “sellers” and the availability of large
      quantities of gift shares may impede the development of a trading market or
      increase market volatility.**





Gift
      share donees will have no money at risk in our company. If you enter into a
      transaction with us, donees are likely to be willing to sell gift shares at
      a
      price that is significantly less than the minimum price required for a national
      securities exchange listing. Therefore, the market may have to absorb a
      substantial number of outstanding gift shares before the prevailing market
      price
      stabilizes.





**If
      the post-acquisition company is successful, there may not be enough shares
      available.**





Our
      capital structure has been designed to facilitate the development of an orderly
      trading market. However, if the post-acquisition company is successful, the
      relatively small number of freely transferable shares may make it difficult
      to
      satisfy market demand. Our existing stockholders can be expected to maximize
      their personal benefit, and if substantial quantities of gift shares are
      withheld from the market, the resulting supply and demand imbalances could
      drive
      the market price of our shares to unsustainable levels.





**Successor
      management will need to devote substantial time, effort and expense to
      developing and maintaining an active trading market.**





Once
      an
      acquisition is completed, our founders do not plan to be actively involved
      in
      the post-acquisition company’s affairs. Our founders do not intend to
      participate in future fundraising activities, offer unsolicited advice on future
      management decisions, assist in the promotion of the post-acquisition company’s
      stock or exercise any other control or influence over the activities of
      successor management. Therefore, successor management will need to devote
      substantial time, effort and expense to developing and maintaining an active
      trading market. If successor management fails to devote adequate time and
      resources to that effort, any market that does develop is likely to be
      short-lived and volatile. If an active and liquid trading market does not
      develop, the market price for the post-acquisition company’s shares will decline
      and those price declines are likely to be permanent.





18




**ITEM
              2.**
            **UNREGISTERED
                SALES OF EQUITY SECURITIES AND USE OF
                PROCEEDS**





**NONE**





**ITEM
              3.**
            **DEFAULTS
                ON SENIOR SECURITIES**





**NONE**





**ITEM
              4.**
            **SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY
                HOLDERS**





**NONE**





**ITEM
              5.**
            **OTHER
                INFORMATION**





Our
      registration statement was declared effective on October 5, 2007 and our
      founders promptly commenced the gift share distribution described in our
      prospectus. Concurrently our officers commenced their search for acquisition
      targets. The following table identifies each founder who intends to distribute
      gift shares to Donees in compliance with our prospectus and summarizes the
      progress of the gift share distribution as of March 31, 2008.





**Gift Shares to**
            
            **Gift Shares Accepted**
            
            **Number of****Name**
            
            **be distributed**
            
            **at November 13, 2007**
            
            **Donees**John L. Petersen
            
            
            62,500
            
            
            61,000
            
            
            122Rachel
                A. Fefer
            
            
            62,500
            
            
            61,500
            
            
            123Sally
                Fonner
            
            
            62,500
            
            
            23,500
            
            
            47Mark
                Dolan
            
            
            62,500
            
            
            20,500
            
            
            41Total
            
            
            250,000
            
            
            166,500
            
            
            333





Between
      the effective date of our registration statement and the date of this report,
      our officers have engaged in preliminary discussions with representatives of
      several potential targets and commenced the process of exchanging information.
      None of these discussions have progressed to a point where an acquisition is
      probable.





**ITEM
              6.**
            **EXHIBITS**





**(a)**
            **EXHIBITS**31.1
            Certification
                of Chief Executive Officer Pursuant to Rule 13a-14(a)31.2
            Certification
                of Chief Financial Officer Pursuant to Rule 13a-14(a)32.1
            Statement
                of Chief Executive Officer Pursuant to Section1350
                of Title 18 of the United States Code32.2
            Statement
                of Chief Financial Officer Pursuant to Section1350 of Title 18 of
                the
                United States Code





**(b)**  **REPORTS
      ON FORM
      8-K** **NONE**




19


**SIGNATURES**





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


**STIRLING
                  ACQUISITION CORPORATION**/s/
                  Sally A. FonnerSally
                  A. Fonner, Chief Executive OfficerDated:
                  May 20, 2008/s/
                  John L. PetersenJohn
                  L. Petersen, Chief Accounting OfficerDated:
                  May 20, 2008




20