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

                                 FORM 10-QSB

            [ X ]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                   OF THE SECURITIES EXCHANGE ACT OF 1934

                     For the quarter ended March 31, 2008

            [   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                   OF THE SECURITIES EXCHANGE ACT OF 1934

              For the transition period from _________to_________

                        Commission File No. 000-16534


                              Digital Fuel, Inc.
                              -----------------
            (Exact Name of Registrant as Specified in its Charter)


                   Delaware                                   45-0375367
                   --------                                   ----------
       (State or other jurisdiction of                       (IRS Employer
        incorporation or organization)                    Identification No.)


   6601 East Grant Road, Suite 101, Tucson, Arizona              85715
   ------------------------------------------------              -----
      (Address of principal executive offices)                 (Zip code)


                                (520) 886-5354
                                 -------------
              (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, and (2) has been subject to such filing
requirements for the past 90 days.

            Yes  [ X ]    No  [   ]

Number of shares of common stock outstanding: 4,343,262 Shares of Common
Stock, par value $.01 per share, were outstanding as of May 9, 2008.


                                      -1-


<PAGE>
                              DIGITAL FUEL, INC.


PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS




                        MANAGEMENT STATEMENT REGARDING
                             FINANCIAL STATEMENTS


The accompanying balance sheet of Digital Fuel, Inc. as of March 31, 2008 and
the related statements of operations and statements of cash flows for the
three-month period then ended have not been reviewed.

Management is searching for an auditor who is registered with the Public
Company Accounting Oversight Board as required by Section 102 of the
Sarbanes-Oxley Act of 2002.


                                      -2-


<PAGE>
                              DIGITAL FUEL, INC.
                           CONDENSED BALANCE SHEET
                                MARCH 31, 2008
                                (Not Reviewed)


                                    ASSETS

Current assets:
   Cash                                                       $577,957
                                                               -------
Total current assets                                           577,957
                                                               -------
Investments (Note 4):
   Holdback from sale of SiteScape                             181,142
                                                               -------
Total Assets                                                  $759,099
                                                               =======


                LIABILITIES AND STOCKHOLDERS' EQUITY DEFICIENCY

Current liabilities:
   Notes payable:
      Related parties (Note 2)                              $1,269,845
      Other (Note 3)                                           250,000

   Accounts payable, other                                     245,181

   Accrued interest expense, related parties
      (Note 2)                                                 911,225
                                                               -------
Total current liabilities                                    2,676,251
                                                             ---------

Stockholders' equity deficiency:
   Preferred stock, $.01 par value;
      authorized 10,000,000 shares;
      issued -0- shares
   Common stock, $.01 par value;
      authorized 20,000,000 shares;
      issued 4,343,262 shares                                   43,433
   Capital in excess of par value                            2,370,312
   Accumulated deficit                                      (4,330,897)
                                                             ---------
Total stockholders' equity deficiency                       (1,917,152)
                                                             ---------
Total Liabilities and Stockholders' Equity Deficiency         $759,099
                                                               =======


                       See Notes to Financial Statements


                                      -3-


<PAGE>
                              DIGITAL FUEL, INC.
                      CONDENSED STATEMENTS OF OPERATIONS
                  THREE MONTHS ENDED MARCH 31, 2008 AND 2007
                                (Not Reviewed)


                                                      2008           2007
                                                      ----           ----
Income:
   Sale of SiteScape                               $1,122,835
                                                    ---------
Total Income                                        1,122,835


Expenses:
   General and administrative                          16,481       $     69
   Write off certain accounts payable                 (20,235)             0
                                                       ------             --
   Total operating expenses                            (3,754)            69
                                                        -----             --
Operating income/loss                               1,126,589            (69)
                                                    ---------             --
Interest expense:
   Related parties (Note 2)                            28,511         28,265
   Other (Note 3)                                       5,992          5,988
                                                       ------         ------
   Total interest expense                              34,503         34,253
                                                       ------         ------
Net income/loss                                    $1,092,086       $(34,322)
                                                    =========         ======


Basic and diluted income/loss per common share:        $0.25            $*

Weighted average number of shares outstanding       4,343,262      4,343,262


* less than $.01 per share



                        See Notes To Financial Statements


                                      -4-


<PAGE>
                              DIGITAL FUEL, INC.
                           STATEMENTS OF CASH FLOWS
                  THREE MONTHS ENDED MARCH 31, 2008 AND 2007
                                (Not Reviewed)


                                                      2008           2007
                                                      ----           ----

Cash flows from operating activities:
   Net income/loss                                 $1,092,086       $(34,322)
                                                    ---------         ------
   Adjustments to reconcile net loss
   to net cash used in operations:

   Change in operating liabilities:
      Decrease in accounts payable                    (50,339)        (4,586)
      Increase in accrued interest                      5,992          5,988
      Decrease in accounts payable,
         related parties                              (45,554)             0
      Increase in accrued interest,
         related parties                               28,511         28,266
      Decrease in accrued salaries                   (271,667)             0
                                                      -------         ------
   Total adjustments                                 (333,057)        29,668
                                                      -------         ------
Net cash used in operating activities                 759,029         (4,654)
                                                      -------          -----

Cash flows from financing activities:
   Proceeds from notes payable, related parties
      (Note 2)                                              0          4,600
                                                       ------          -----
Net cash provided by financing activities                   0          4,600
                                                       ------          -----

Cash flows from investing activities:
   Holdback from sale of interest in
      SiteScape (Note 4)                             (181,142)             0
                                                      -------          -----
Net cash provided by investing activities            (181,142)             0
                                                      -------          -----

Increase/decrease in cash                             577,887            (54)

Cash, beginning                                            70            133
                                                      -------            ---
Cash, ending                                         $577,957           $ 79
                                                      =======            ===


During the three months ended March 31, 2008, $0 was paid in interest.


                                      -5-


<PAGE>
                              DIGITAL FUEL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                  THREE MONTHS ENDED MARCH 31, 2008 AND 2007


1.  Basis of presentation:

    The financial statements of Digital Fuel, Inc. (the "Company") included
    in this Form 10-QSB have not been reviewed. Although certain information
    and footnote disclosures normally included in financial statements
    prepared in accordance with generally accepted accounting principles have
    been condensed or omitted, the Company believes that the disclosures are
    adequate to make the information presented not misleading. The
    accompanying financial statements should be read in conjunction with the
    Company's Annual Report on Form 10-KSB for the fiscal year ended December
    31, 2007.

    In the opinion of management, all adjustments, including normal recurring
    adjustments, necessary for a fair presentation of the results of
    operations for the three-month periods ended March 31, 2008 and 2007 have
    been included. The results of operations for the interim periods
    presented are not necessarily indicative of the results to be expected
    for the full year.

    On June 1, 2000, Deucalion held a Special Meeting of its stockholders to
    consider and vote upon the reincorporation, recapitalization, and merger
    of Deucalion with and into its wholly owned Delaware subsidiary, Digital
    Fuel, Inc., as described in the Schedule 14C Information Statement filed
    with the Securities and Exchange Commission on May 9, 2000 and
    incorporated herein by reference. The effect of the transaction approved
    at the Special Meeting included: changing the name of the Company from
    Deucalion Research, Inc. to Digital Fuel, Inc.; effecting a one-for-6,800
    reverse stock split; reducing the authorized capital of the Company from
    1,500,000,000 shares to 30,000,000 shares; increasing the par value of
    the Company's common stock from $.0001 to $.01 per share; and authorizing
    the Board of Directors to issue up to 10,000,000 shares of blank check
    preferred stock. All share and per share amounts in the accompanying
    financial statements reflect the reverse stock split.

    There has not been any change in the significant accounting policies of
    the Company for the periods presented.


                                      -6-


<PAGE>
                              DIGITAL FUEL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                  THREE MONTHS ENDED MARCH 31, 2008 AND 2007


2.  Notes payable, related parties:

    Short-term:

        Farley Family Partnership, 9%, unsecured,
        due on demand                                             $  200,000

        Forrest L. Metz, 9%, unsecured, due on demand                150,000

        Multiple advance promissory note, Metz Trust,
        maximum borrowings of $150,000, 9%, unsecured,
        due on demand                                                180,275

        Multiple advance promissory note, Grant Papanikolas,
        maximum borrowings of $100,000, 9%, unsecured,
        due on demand                                                 85,000

        Multiple advance promissory note, Michael R. Farley,
        maximum borrowings of $100,000, 9%, unsecured,
        due on demand                                                 65,650

        Multiple advance promissory note Farley & Associates,
        Inc., maximum borrowings of $800,000, 9%, unsecured,
        due on demand                                                588,920
                                                                     -------
                                                                  $1,269,845
                                                                   =========

    Under the terms of the short-term notes, upon completion of the
    recapitalization, the Company issued to Farley & Associates 100,000
    shares, Farley Family Partnership 200,000 shares and Metz Trust 100,000
    shares at par value of the Company's post recapitalization common stock.
    Management believes that these shares have nominal market value based on
    various factors including the Company's financial position and the fact
    that there is no current market for the Company's stock.

    The Farley Family Partnership note, entered into on September 30, 1999,
    provided the Company with working capital. The Farley & Associates, Inc.
    note was entered into in connection with the Company's investment
    activities. Farley Family Partnership and Farley & Associates are
    entities controlled by Michael R. Farley, who is an officer, director and
    major stockholder of the Company. The Metz Trust note, entered into on
    October 28, 1999, provided the Company working capital. The Metz Trust is
    an entity controlled by Forrest L. Metz, who was a member of the Board of


                                      -7-


<PAGE>
                              DIGITAL FUEL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                  THREE MONTHS ENDED MARCH 31, 2008 AND 2007


2.  Notes payable, related parties (continued):

    Directors until his resignation effective February 1, 2006 and is a major
    stockholder of the Company. The Papanikolas note, entered into on
    February 22, 2000, provided the Company with working capital. Papanikolas
    is an officer of the Company.

    The Farley note, entered into on April 28, 2000, provided the company
    with working capital. Farley is an officer of the Company. On September
    1, 1999, Farley & Associates contributed its interest in SiteScape, Inc.
    to Digital Fuel in exchange for a note. When Farley & Associates
    purchased the interest in SiteScape on June 22, 1999, $300,000 of the
    purchase price was borrowed from Horseshoe Management Company, which is
    located in Tucson, Arizona. Both Mr. Metz and Mr. Farley personally
    guaranteed the loan, and the loan became due in January of 2006. Mr. Metz
    and Mr. Farley personally paid back the loan to Horseshoe, and Farley &
    Associates transferred $150,000 of the principal due under its note to
    Digital Fuel to Forrest L. Metz. The effect on the Company's balance
    sheet is zero because the loan from Farley & Associates to Digital Fuel
    was reduced by $150,000 plus accrued interest and a new note of $150,000
    plus accrued interest from the original date was given to Forrest L.
    Metz. Since both Mr. Farley and Mr. Metz are related parties it had no
    net effect on the Balance Sheet.

3.  Notes payable, other:

    Short-term:

        Townsdin, 9%, unsecured, due on demand        $200,000

        Torrance, 9%, unsecured, due on demand          50,000
                                                       -------
                                                      $250,000
                                                       =======

    The short-term notes were entered into during the three months ended
    March 31, 2000, and provided the Company with working capital.

    Under the terms of the short-term notes, upon completion of the
    recapitalization, the Company issued to Townsdin 200,000 shares and
    Torrance 50,000 shares at par value of the Company's post
    recapitalization common stock. Management believes that these shares have
    nominal market value based on various factors including the Company's
    financial position and the fact that there is no current market for the
    Company's stock. Additionally, Townsdin and Torrance had the option to
    convert through December 31, 2000, all or part of any outstanding
    principal to post recapitalization Units at the rate of $1.00 per Unit.
    Each Unit consists of one share of common stock and one share of 8%
    preferred stock.


                                      -8-


<PAGE>
                              DIGITAL FUEL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                  THREE MONTHS ENDED MARCH 31, 2008 AND 2007


4.  Investment in SiteScape:

    In February 2000, the Company exercised the remaining one-half of its
    SiteScape option shares and purchased 258,333 shares of Series A
    Convertible Preferred Stock for $500,000. At completion of the
    transaction, the Company owned 516,667 shares of SiteScape's Series A
    Convertible Preferred Stock, which represented approximately 20% of the
    voting stock of SiteScape.

    SiteScape's Series A Convertible Preferred Stock had, among other rights,
    the right to vote on general matters, the ability of a one for one
    conversion into Class A Voting Common Stock of SiteScape, dividend
    participation with common shares, and the right to elect two members to
    the board of directors of SiteScape. The Series A Convertible Preferred
    Stock was to be automatically converted to common stock if SiteScape
    completed an initial public offering and realized at least $20 million.

    The Series A Convertible Preferred Stock was also entitled to receive
    dividends, if and when declared by SiteScape's Board of Directors, at the
    cumulative rate of 8% per year compounded annually. Dividends were due
    only if declared by the Board of Directors and the tangible net worth of
    SiteScape exceeded $25 million. SiteScape is an Internet based start up
    company that acquired AltaVista FORUM from Compaq Computer in April 1999.
    AltaVista FORUM is a collaboration software, which provides ways to
    communicate, share resources, and collaborate with groups of people
    within a company or across organizations.

    SiteScape was acquired by Novell pursuant to an Agreement and Plan of
    Merger dated February 13, 2008 for approximately $18.5 million in cash
    and SiteScape became a fully owned subsidiary of Novell (the "SiteScape
    Merger"). As a result of the acquisition, additional shares were issued
    to management of SiteScape which reduced our interest in SiteScape to
    6.5%. All holders of outstanding shares of SiteScape were given the right
    to receive a cash payment in exchange for their stock. As a holder of
    6.5% of SiteScape's stock, on a fully diluted basis, we received a cash
    payment of $941,693 at the closing of the SiteScape Merger. Additionally,
    $181,142 was placed in an escrow account which will be released to us
    eighteen (18) months after the closing of the SiteScape Merger, in the
    event that Novell does not seek indemnification for inaccuracies
    contained in the representations and warranties of SiteScape in the
    merger agreement.


                                      -9-


<PAGE>
                              DIGITAL FUEL, INC.
                         NOTES TO FINANCIAL STATEMENTS
                  THREE MONTHS ENDED MARCH 31, 2008 AND 2007


5.  Stock Purchase Agreement:

    Per the terms of the Stock Purchase Agreement, certain liabilities of
    Deucalion were settled including $38,836 owed for legal fees and $93,412
    owed for management service fees. These liabilities were settled through
    the issuance of common stock equal to 0.5% or 10,538 shares and 1% or
    21,076 shares, respectively, after completion of the reincorporation,
    recapitalization, and merger. Effective August 31, 1999, the Stock
    Purchase Agreement between the Company and Michael Farley and Forrest
    Metz was closed. Under the agreement, Farley and Metz purchased 2,002,226
    shares of common stock for $110,000. Effective August 31, 1999, the
    Company issued 147,766 shares in exchange for $100,000 and after the
    reincorporation, recapitalization, and merger, the purchasers were issued
    1,855,460 additional shares of the Company's common stock in exchange for
    the $10,000 in debt due to them.

6.  Extraordinary Income:

    From 1992 until July 1999 the Company was inactive. The current
    management embarked on settling certain outstanding payables that were on
    the books in 1999. During the three months ended March 31, 2000 and the
    three months ended September 30, 2000, the company settled accounts
    payable with a carrying value of $42,370 for $6,500, resulting in
    extraordinary income from the extinguishment of debt of $35,870. The
    Company's net tax loss carryforward was reduced by this $35,870 gain.

    In December 2000, the Company entered into an agreement with the original
    license holders from whom license agreements were purchased in late 1999.
    Because the Company was unable to successfully use this technology, the
    licenses were returned to the original owners and the $45,000 financed by
    the original owners was forgiven. In addition, the $205,000 due to the
    licensor, M2Direct, Inc., for services that were never provided but
    charged on the Company's books as an expense in 1999, was reversed
    resulting in recognition of $205,000 of income in 2000. The $45,000 due
    the original licensees was also recorded as income in 2000. The Company
    has an agreement with the current licensees that should the legal
    problems surrounding the licenses ever be resolved, the Company would
    have the option to re-purchase the licenses under new terms and
    conditions.

7.  Income taxes:

    At December 31, 2007, the Company had a net operating loss carryforward
    of approximately $4,858,453, which is available to offset future taxable
    income, if any, through 2021. Based on statutory rates, the Company's
    expected tax benefit arising from the net operating loss carryforward is
    approximately $1,651,874. A valuation allowance has been provided to
    reduce the deferred tax asset, as realization of the asset is not
    assured. In addition, the Company's net operating loss carryforward may
    be subject to annual limitations which could reduce or defer the
    utilization of the losses due to the Company's ownership changes that
    occurred in 1999.


                                      -10-


<PAGE>
PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

Cautionary Notes Regarding the Forward Looking Statements

This report contains forward-looking statements that are based on our current
expectations, assumptions, beliefs, estimates and projections about our
company, our industry and other related industries. The forward-looking
statements are subject to various risks and uncertainties that could cause
actual results to differ materially from those described in the forward-
looking statements. Generally, these forward-looking statements can be
identified by the use of forward-looking terminology such as "anticipate,"
"believe," "estimate," "expect," "intend," "plan," "project," "should" and
variations of such words or similar expressions. These statements by their
nature involve substantial risks and uncertainties, certain of which are
beyond our control, and actual results may differ materially depending on a
variety of important factors, including those discussed under the captions
"Risks Related to Our New Business Ventures" and "Risks Related to the
Internet and the Internet Industry."

We caution you that reliance on any forward-looking statement involves risks
and uncertainties, and that although we believe that the assumptions on which
our forward-looking statements are based are reasonable, any of those
assumptions could prove to be inaccurate, and, as a result, the forward-
looking statements based on those assumptions could be incorrect. In light of
these and other uncertainties, you should not conclude that we will
necessarily achieve any plans and objectives or projected financial results
referred to in any of the forward-looking statements. We do not undertake to
release the results of any revisions of these forward-looking statements to
reflect future events or circumstances.

Management's Plan of Operation

Management will actively seek to acquire companies involved in the software
development business and/or Internet business. Because of the difficulty in
raising working capital, management believes there are a number of small
companies seeking an opportunity to expand their ability to raise capital by
becoming part of Digital Fuel. We plan to work with several investment
banking firms that can help actively seek companies that meet our
requirements and we have sufficient cash to operate for an additional two
years.

Investment in Preferred Stock Shares of SiteScape, Inc.

Effective September 1, 1999, management completed an agreement with Farley &
Associates, Inc., an Arizona corporation, wholly owned by Michael R. Farley
who is also chief executive officer, a director and a majority stockholder of
Digital Fuel, whereby Digital Fuel acquired from Farley & Associates an
option to purchase 516,667 shares of Series A Preferred Stock of SiteScape,
Inc. SiteScape is a provider of open collaboration software, including
teaming plus conferencing products and they acquired AltaVista FORUM from
Compaq Computer in April 1999. AltaVista FORUM is a collaboration software
that provides ways to communicate, share resources and collaborate with
groups of people within a company or across organizations.


                                      -11-


<PAGE>
We acquired this option to purchase shares of SiteScape in exchange for a
$200,000 draw on a multiple advance promissory note extended to us by Farley
& Associates of up to $800,000, bearing interest at 9% and due on demand (the
"Farley & Associates Note"). The option to purchase the SiteScape Series A
Convertible Preferred Stock was originally agreed to through negotiations
between Farley & Associates and SiteScape and allowed Farley & Associates (or
its designee) to purchase 516,667 shares of SiteScape Preferred Stock at an
exercise price of $1.9354 per share. The $200,000 represents reimbursement of
travel and other direct expenses incurred by Farley & Associates in
connection with their negotiations with SiteScape and also a fee for Farley &
Associates' services. The $200,000 was recorded as general and administrative
expense.

Prior to September 1999, Farley & Associates provided $400,000 to SiteScape
as a deposit on the option to purchase the Series A Convertible Preferred
Stock. On September 1, 1999, we acquired Farley & Associates' rights to this
deposit in exchange for a $400,000 draw on the Farley & Associates Note.

Effective November 5, 1999, we exercised one-half of the SiteScape option
shares and purchased 258,334 shares of Series A Convertible Preferred Stock
at a total cost of $500,000. We paid $100,000 cash directly to SiteScape and
applied the $400,000 SiteScape deposit described above. In February 2000, we
exercised the remaining one-half of the SiteScape option shares and purchased
258,333 shares of Series A Convertible Preferred Stock for $500,000. At that
point, we owned approximately 20% of the voting stock of SiteScape.

On June 30, 2001, SiteScape issued to us options to purchase 103,338 shares
of its common stock at $1.93 per share. Based on the SAIC Venture Capital
Corporation ("SAIC") investment described below, the common shares of
SiteScape had a value substantially less than the option price.

In October 2001, SiteScape received a term sheet from SAIC to purchase up to
$2.5 million of its Series B Convertible Preferred Stock. On March 12, 2002
the first transaction was closed. The Series B Convertible Preferred Stock
sold to the new investors were senior to our Series A Convertible Preferred
Stock in both payment of dividends and distribution. Each share of Series B
Convertible Preferred Stock was sold for $.4164 per share and will be
redeemed for $0.6246 per share or 1.5 times the original investment.

As part of the investment agreement, the domicile of SiteScape was changed to
Delaware and the Series A Convertible Preferred Stock was split five for one.
We owned 2,583,335 shares of Series A Convertible Preferred Stock which had,
among other rights, the right to vote on general matters and the election of
one member to the seven member Board of Directors of SiteScape, the ability
of a one for one conversion into the common stock of SiteScape and dividend
participation with common shares. We then owned approximately 7.9% of
SiteScape on a fully diluted basis.

In addition, both the Series A and Series B Convertible Preferred Stock were
also entitled to receive dividends if and when declared by SiteScape's Board
of Directors at the cumulative rate of 8% per year compounded annually.
Dividends were due only if the tangible net worth of SiteScape exceeded $25
million and if declared by the Board of Directors of SiteScape. As of
December 31, 2007, no dividends were declared by SiteScape. The Series A
dividends were junior to the Series B Convertible Preferred Stock dividends,
but senior to the common stock dividends.


                                      -12-


<PAGE>
SiteScape Acquisition by Novell, Inc.

Pursuant to an Agreement and Plan of Merger dated February 13, 2008, Novell,
Inc. acquired SiteScape for approximately $18.5 million in cash and SiteScape
became a fully owned subsidiary of Novell (the "SiteScape Merger"). As a
result of the acquisition, additional shares were issued to management of
SiteScape which reduced our interest in SiteScape to 6.5%. All holders of
outstanding shares of SiteScape were given the right to receive a cash
payment in exchange for their stock. As a holder of 6.5% of SiteScape's
stock, on a fully diluted basis, we received a cash payment of $941,693 at
the closing of the SiteScape Merger. Additionally, $181,142 was placed in an
escrow account which will be released to us eighteen (18) months after the
closing of the SiteScape Merger, in the event that Novell does not seek
indemnification for inaccuracies contained in the representations and
warranties of SiteScape in the merger agreement.

Management's Discussion and Analysis for the three months ended March 31,
2008: Results of Operations

From September 1992 until July 1999, we had no operations and activities
primarily consisted of maintaining the corporation's status as a corporation
in good standing with the state of North Dakota and negotiating the Stock
Purchase Agreement. From July 29, 1999 through March 31, 2008, activities
primarily consisted of bringing our filings under the Securities and Exchange
Act of 1934 current; closing the Stock Purchase Agreement; effecting a
reverse stock split, name change and reincorporation into Delaware; seeking
business opportunities in the software development and Internet businesses;
and accounting for these transactions. During the three months ended March
31, 2008, we incurred general and administrative expenses of $16,481 related
to these activities.

We incurred interest expense for the three months ended March 31, 2008 of
$34,503 in connection with the various loans as described in the notes to the
financial statements. Through March 31, 2008, entities controlled by Mr.
Farley and Mr. Farley himself have made loans to us totaling $854,570 for
certain investment transactions and our ongoing cash needs. Through March 31,
2008, an entity controlled by Mr. Metz and Mr. Metz himself have made loans
to us totaling $330,275 for certain investment transactions and our ongoing
cash needs.

We currently have no off balance sheet arrangements.

Liquidity and Capital Resources

As of March 31, 2008, we had a working capital deficiency of $1,917,152.

We anticipate an increased need for working capital during 2008 as we
continue to seek companies that are potential merger candidates that
have a requirement for additional capital. We are seeking additional
working capital through debt and/or equity offerings, which will be
used for the above-described purposes.


                                      -13-


<PAGE>
PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS
        In August 2002, we entered into an agreement with Gelfond Hochstadt
        Pangburn, PC, a company that previously provided accounting services
        to us. We were required in the terms of the agreement to make monthly
        payments to Gelfond Hochstadt Pangburn to pay down the outstanding
        bills. In July 2005, we were unable to continue such payments, and as
        a result, a judgment was filed with the District Court in Denver
        County, Colorado against Digital Fuel, Inc. in the amount of
        $19,592.74. We were required to pay that balance plus 8% in interest
        from June 30, 2006 until such time as the obligation has been paid in
        full. On April 7, 2008 we agreed to settle all outstanding
        obligations with Gelfond Hochstadt Pangburn for $15,000.

Item 2. CHANGES IN SECURITIES
        None

Item 3. DEFAULTS UPON SENIOR SECURITIES
        None

Item 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
        None

Item 5. OTHER INFORMATION
        None

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a) Exhibit Description:

            15  Letter on unaudited interim financial information.
                (See Management Statement included herein.)

        (b) The Company filed no reports on Form 8-K during the quarter
            covered by this report.


                               SIGNATURES

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




                            DIGITAL FUEL, INC.
                              (Registrant)

By: /s/ Michael R. Farley
    --------------------
    Michael R. Farley
    Chief Executive Officer


Date: May 13, 2008


                                      -14-