================================================================================
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(Mark One)

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

              For the quarterly period ended February 28, 2006

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

              For the transition period from ________ to __________


                     DISTRIBUTION MANAGEMENT SERVICES, INC.
                     --------------------------------------
             (Exact name of registrant as specified in its charter)


           FLORIDA                     0-27539              65-0574760
           -------                     -------              ----------
(State or other jurisdiction of       Commission         (I.R.S. Employer
 incorporation or organization)       File Number       Identification No.)


            11601 BISCAYNE BOULEVARD, SUITE 201, MIAMI, FLORIDA 33181
            ---------------------------------------------------------
                    (Address of principal executive offices)


                                 (305) 893-9270
                                 --------------
              (Registrant's telephone number, including area code)


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ] No [X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).                                  Yes [ ] No [X]

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: At July 24, 2007, there were
10,567,328 outstanding shares of common stock, $.001 par value per share.

Transitional Small Business Disclosure Format (Check one):        Yes [ ] No [X]

================================================================================
<PAGE>

           CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

This quarterly report contains forward-looking statements. These forward-looking
statements are subject to risks and uncertainties and other factors that may
cause our actual results, performance or achievements to be materially different
from the results, performance or achievements expressed or implied by the
forward-looking statements. You should not unduly rely on these statements.
Forward-looking statements can be identified by the fact that they do not relate
strictly to historical or current facts. They use words such as "anticipate,"
"estimate," "expect," "project," "intend," "plan," "believe," "project,"
"contemplate," "would," "should," "could," or "may." With respect to any
forward-looking statement that includes a statement of its underlying
assumptions or bases, we believe such assumptions or bases to be reasonable and
have formed them in good faith, assumed facts or bases almost always vary from
actual results, and the differences between assumed facts or bases and actual
results can be material depending on the circumstances. When, in any
forward-looking statement, we express an expectation or belief as to future
results, that expectation or belief is expressed in good faith and is believed
to have a reasonable basis, but there can be no assurance that the stated
expectation or belief will result or be achieved or accomplished. All subsequent
written and oral forward-looking statements attributable to us, or anyone acting
on our behalf, are expressly qualified in their entirety by the cautionary
statements.

<PAGE>

                     DISTRIBUTION MANAGEMENT SERVICES, INC.
                                   FORM 10-QSB
                    QUARTERLY PERIOD ENDED February 28, 2006

                                      INDEX

                                                                           Page
                                                                           ----
PART I - FINANCIAL INFORMATION

   Item 1 - Financial Statements

   Balance Sheet
      February 28, 2006 (Unaudited) ........................................3
   Statements of Operations (Unaudited)
      For the Three and Nine months Ended February 28, 2006 and 2005........4
   Statements of Cash Flows (Unaudited)
      For the Nine months Ended February 28, 2006 and 2005 .................5

   Notes to Financial Statements ...........................................6-13

   Item 2 - Management's Discussion and Analysis or Plan of Operation......14-18

   Item 3 - Controls and Procedures........................................19

PART II - OTHER INFORMATION

   Item 1 - Legal Proceedings..............................................20

   Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds....20

   Item 3 - Default upon Senior Securities.................................20

   Item 4 - Submission of Matters to a Vote of Security Holders............20

   Item 5 - Other Information..............................................20

   Item 6 - Exhibits.......................................................20

   Signature...............................................................20

<PAGE>


                     DISTRIBUTION MANAGEMENT SERVICES, INC.
                                  BALANCE SHEET
                                February 28, 2006
                                   (Unaudited)

                                     ASSETS

Current Assets:
  Cash                                                          $    75,639
  Loans receivable                                                    5,000
  Due from Bowen Land, LLC                                           42,154
  Prepaid assets                                                     34,619
                                                                -----------
                                                                    157,412

  Property and equipment, net of accumulated
   depreciation of $525                                                 975
  Equipment held for sale                                            70,000
  Land held for sale, net                                         3,449,032
  Prepaid interest                                                  517,538
                                                                -----------
    Total assets                                                $ 4,194,957
                                                                ===========
                      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
  Accounts payable and accrued expenses                         $   139,957
  Note payable                                                       47,000
  Debenture                                                          20,000
  Due to related party                                                8,000
  Other liability                                                   876,100
                                                                -----------
    Total current liabilities                                     1,091,057

Long-Term Liabilities
  Mortgage payable                                                4,475,000
                                                                -----------
    Total liabilities                                             5,566,057
                                                                -----------
Stockholders' Deficit:
  Common stock; $0.001 par value, 50,000,000 shares
   authorized, 9,167,328 issued and outstanding                       9,167
  Additional paid-in capital                                      1,703,492
  Subscription receivable                                            (3,600)
  Deferred compensation                                              (4,447)
  Accumulated deficit                                            (3,075,712)
                                                                -----------
  Total stockholders' deficit                                    (1,371,100)
                                                                -----------
    Total liabilities and stockholders' deficit                 $ 4,194,957
                                                                ===========

                  See Notes to Unaudited Financial Statements.


                                       3
<PAGE>

                     DISTRIBUTION MANAGEMENT SERVICES, INC.
                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                              For the                           For the
                                                     three-month periods ended          nine-month periods ended
                                                            February 28,                      February 28,
                                                    ----------------------------      ----------------------------
                                                       2006              2005             2006            2005
                                                    -----------      -----------      -----------      -----------
<S>                                                 <C>              <C>              <C>              <C>
NET REVENUES
    Real estate                                     $        --      $        --      $   805,000      $        --
    Other revenues                                           --               --            5,755               --
                                                    -----------      -----------      -----------      -----------
    Total net revenues                                       --               --          810,755               --

COST OF SALES
    Real estate                                              --               --          356,316               --
                                                    -----------      -----------      -----------      -----------
GROSS PROFIT                                                 --               --          454,439               --
                                                    -----------      -----------      -----------      -----------
Operating expenses:
  Selling, general, and administration expenses         198,361           38,819          710,854          175,502
  Impairment on assets                                       --               --          656,079               --
                                                    -----------      -----------      -----------      -----------
    Total operating expense                             198,361           38,819        1,366,933          175,502

Loss from operations                                   (198,361)         (38,819)        (912,494)        (175,502)

OTHER INCOME (EXPENSE):
Other income                                                 --              525           28,000            1,750
Interest expense                                       (214,709)            (925)        (577,254)          (2,226)
                                                    -----------      -----------      -----------      -----------
    Total Other Income (Expense)                       (214,709)            (400)        (549,254)            (476)

Loss from continuing operations                        (413,070)         (39,219)      (1,461,748)        (175,978)
                                                    -----------      -----------      -----------      -----------
Loss from discontinued operations                          (126)          15,269          (16,267)          (6,484)

Net loss                                            $  (413,196)     $   (23,950)     $(1,478,015)     $  (182,462)
                                                    ===========      ===========      ===========      ===========

Basic and diluted earnings (loss) per common
 share from discontinued operations                 $        --      $        --      $        --      $        --
                                                    ===========      ===========      ===========      ===========
Basic and diluted loss per common share
 from continuing operations                         $     (0.05)     $        --      $     (0.17)     $     (0.02)
                                                    ===========      ===========      ===========      ===========
Basic and diluted weighted average
shares outstanding                                    8,737,328        8,717,328        8,723,921        8,552,023
                                                    ===========      ===========      ===========      ===========
</TABLE>

                  See Notes to Unaudited Financial Statements.


                                       4
<PAGE>

                 DISTRIBUTION MANAGEMENT SERVICES, INC.
                        STATEMENTS OF CASH FLOWS
                              (Unaudited)

<TABLE>
<CAPTION>
                                                                        For the
                                                                nine-month periods ended
                                                                      February 28,
                                                              -----------      -----------
                                                                 2006             2005
                                                              -----------      -----------
<S>                                                           <C>              <C>
Cash flows from operating activities:
Loss from continuing operations                               $(1,461,748)     $  (175,978)
Adjustments to reconcile net loss to net cash
 provided by (used in) operating activities:
  Fair value of shares issued to investment advisor                    --           25,641
  Amortization of deferred compensation                             9,999           13,471
  Amortization of prepaid interest                                206,130               --
  Amortization of prepaid expenses                                 28,251               --
  Impairment loss on assets                                       656,079               --
  Stock based consulting fee                                       58,500               --
  Provision for doubtful account                                       --            6,000
  Forfeiture of officer's compensation                                 --           24,742
  Depreciation                                                        225              225
Changes in operating assets and liabilities:
  Due from Bowen Land, LLC                                        (42,154)              --
  Prepaid expenses                                                (53,290)              --
  Acquisition of land                                          (4,061,712)              --
  Land held for sale                                              375,836               --
  Other liabilities                                               782,499               --
  Accounts payable and accrued expenses                            95,289            2,225
                                                              -----------      -----------
                                                               (3,406,096)        (103,674)

  Loss from discontinued operations                               (16,267)          (6,484)
                                                              -----------      -----------
                                                                  (16,267)          (6,484)
                                                              -----------      -----------
Net cash provided by (used in) operating activities            (3,422,363)        (110,158)

Cash flows from investing activity:
  Principal repayments of note receivable                              --           25,000
  Loans receivable                                                 (5,000)              --
  Issuance of note receivable                                          --          (25,000)
                                                              -----------      -----------
Net cash used in investing activity                                (5,000)              --
                                                              -----------      -----------
Cash flows from financing activities:
  Repayments of due to related party                                   --          (14,475)
  Advances from related party                                       8,000           12,828
  Proceeds from issuance of note payable                               --           25,000
  Proceeds from issuance of mortgage payable                    3,700,000               --
  Principal repayments on mortgage                               (225,000)              --
                                                              -----------      -----------
Net cash provided by financing activities                       3,483,000           23,353
                                                              -----------      -----------
Net increase (decrease) in cash                                    55,637          (86,805)

Cash, beginning of period                                          20,002           87,181
                                                              -----------      -----------
Cash, end of period                                           $    75,639      $       376
                                                              ===========      ===========
Supplemental disclosures of cash flow information:
     Cash paid for taxes                                      $        --      $        --
                                                              ===========      ===========
     Cash paid for interest                                   $   276,743      $        --
                                                              ===========      ===========
Supplemental disclosures for non-cash financing activity:

Transfer of real estate in prepayment of interest on
mortgage payable                                              $   605,119      $        --
                                                              ===========      ===========
</TABLE>

              See Notes to Unaudited Financial Statements.


                                       5
<PAGE>

                     DISTRIBUTION MANAGEMENT SERVICES, INC.
                   NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
                                February 28, 2006

NOTE 1 - NATURE OF OPERATIONS, BASIS OF PRESENTATION, AND DISCONTINUED
OPERATIONS

Distribution Management Services, Inc. (the Company) was incorporated in the
State of Florida on January 25, 1995. The Company was initially organized for
the purpose of operating a transfer station for recycling of construction and
demolition materials in Miami, Florida. In April 2003, the Company entered into
a contract to sell its recycling center. The closing of this transaction
occurred on July 25, 2003.

Between May and October 2005, the Company acquired 264 single-family residential
building sites located in Central Florida for the total sum of $4,752,000. The
Company financed this acquisition by securing a mortgage on the property of
approximately $4.7 million. The Company intends to orderly dispose of such
sites.

Loss from discontinued operations for the nine months ended February 28, 2006
included expenses of $16,267.

Loss from discontinued operations for the nine months ended February 28, 2005
included expenses of approximately $22,000.

The accompanying unaudited financial statements for the period ended February
28, 2006 have been prepared in accordance with generally accepted accounting
principles for interim financial information and with instructions to Form
10-QSB. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles as would be included in
audited financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The results of operations for the nine month
period ended February 28, 2006 are not indicative of the results to be expected
for the year ended May 31, 2006.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GOING CONCERN

The accompanying financial statements have been prepared on a going concern
basis. The Company has an accumulated deficit of approximately $3.1 million and
net loss of $1,478,015 for the nine months ended February 28, 2006. Although the
Company had revenues and therefore generated cash from operations, the majority
of the revenues are derived from one customer whom the Company had entered into
a contract of sale. However, on April 28, 2006, this customer notified the
Company of default under the contract and is therefore terminating the contract
(see Note 9). There could be no assurances that the Company will continue to
recognize similar revenues in the future. The Company's ability to continue as a
going concern is dependent upon its ability to obtain the necessary financing to
meet its obligations and repay its liabilities arising from normal business
operations when they come due, to fund possible future acquisitions, and to
generate profitable operations in the future. Management plans to continue to
provide for its capital requirements by issuing additional equity securities and
debt. The outcome of these matters cannot be predicted at this time and there
are no assurances that if achieved, the Company will have sufficient funds to
execute its business plan or generate positive operating results.

CONCENTRATION OF CREDIT RISKS

The Company is subject to concentrations of credit risk primarily from cash. The
Company's cash and cash equivalents accounts are held at financial institutions
and are insured by the Federal Deposit Insurance Corporation ("FDIC") up to
$100,000. During the nine-month period ended February 28, 2006, the Company had
exceeded Federally insured limits. However, when and if it reaches bank balances
exceeding the FDIC insurance limit and to reduce its risk associated with the
failure of such financial institutions, the Company periodically evaluates the
credit quality of the financial institutions in which it holds deposits.


                                       6
<PAGE>

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED

REVENUE CONCENTRATION

For the nine months ended February 28, 2006, one customer accounted for 99% of
the Company's revenues.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of cash, accounts payable and accrued expenses, note payable,
and convertible debenture approximate their fair value due to their short-term
maturities.

LAND RESERVE

The Company recorded a land reserve calculated at cost of $566,079 on certain
disputed parcels of lots which the Company claims as being fraudulently conveyed
to third parties that participated during the closing and financing of the
acquisition of the land held for sale. Accordingly, during the nine months ended
February 28, 2006, the Company recorded an impairment on land held for sale of
$566,079.

PREPAID INTEREST

Prepaid interest reflects the cost of parcels of lots conveyed to the Mortgagor
and certain third parties that participated during the closing and financing of
the acquisition of certain parcels of lots located in Central Florida. The
prepaid interest is being amortized over the term of the respective mortgages
obtained from the acquisition of such parcels of lots. In connection with the
purchase of lots in May and July 2005, the Company recorded a prepaid interest
of approximately $728,000 to be amortized over 24 months. During the nine months
ended February 28, 2006, amortization of prepaid interest amounted to $206,130
and recorded as interest expense in the accompanying statement of operations. On
February 28, 2006, prepaid interest amounted to $517,538.

LAND HELD FOR SALE

Land held for sale at February 28, 2006 is recorded at cost, which consist of
$4,700,000 mortgage and an initial deposit made by a general contractor of
approximately $451,000 adjusted for certain closing costs, prepaid homeowner's
association (HOA) fees and prepaid interest. In May 2005, the Company purchased
52 parcel of lots valued at $934,354 after closing cost of $55,961 and prepaid
interest and HOA of $121,842 and $10,949, respectively. Between July and October
2005, the Company purchased 208 parcel of lots valued at $3,456,592 after
closing cost of $314,634 and prepaid interest and HOA of $605,119 and 24,053,
respectively. During the nine months ended February 28, 2006, the Company sold a
total of 19 parcels of lots, however, the Company only received cash settlements
on 18 of these parcels of lots. Accordingly, the Company recorded the sale of 18
parcels of lots valued at $356,316 and wrote off the value of 1 lot at cost of
approximately $19,500 for non collection. On February 28, 2006, land held for
sale net of land reserve of $566,079 amounted to $3,449,032.

INCOME TAXES

Income taxes are accounted for in accordance with SFAS No. 109, Accounting for
Income Taxes. SFAS No. 109 requires the recognition of deferred tax assets and
liabilities to reflect the future tax consequences of events that have been
recognized in the Company's financial statements or tax returns. Measurement of
the deferred items is based on enacted tax laws. In the event the future
consequences of differences between financial reporting bases and tax bases of
the Company's assets and liabilities result in a deferred tax asset, SFAS No.
109 requires an evaluation of the probability of being able to realize the
future benefits indicated by such assets. A valuation allowance related to a
deferred tax asset is recorded when it is more likely than not that some or the
entire deferred tax asset will not be realized.


                                       7
<PAGE>

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED

SEGMENT REPORTING

The Company's chief operating decision-maker evaluates the performance of the
Company based upon revenues and expenses by functional areas as disclosed in the
Company's statements of operations.

BASIC AND DILUTED LOSS PER SHARE

Basic loss per share is calculated by dividing income available to stockholders
by the weighted-average number of common shares outstanding during each period.
Diluted loss per share is computed using the weighted average number of common
and dilutive common share equivalents outstanding during the period. There are
no outstanding shares issuable pursuant to common shares equivalents at February
28, 2006.

USE OF ESTIMATES

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States 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 periods. Significant estimates made by management include, but are not
limited to, the useful life of property and equipment and whether the value
attributed to the movie scripts is impaired. Actual results will differ from
these estimates.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company reviews long-lived assets for impairment whenever circumstances and
situations change such that there is an indication that the carrying amounts may
not be recovered. In such circumstances, the Company will estimate the future
cash flows expected to result from the use of the asset and its eventual
disposition. Future cash flows are the future cash inflows expected to be
generated by an asset less the future outflows expected to be necessary to
obtain those inflows. If the sum of the expected future cash flows (undiscounted
and without interest charges) is less than the carrying amount of the asset, the
Company will recognize an impairment loss to adjust to the fair value of the
asset. During the nine months ended February 28, 2006, the Company recognized a
loss on impairment in connection with the movie rights of $90,000 and land held
for sale of $566,079.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include all highly liquid investments with maturities
of three months or less when purchased.

RECENT ACCOUNTING PRONOUNCEMENTS

In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of
Financial Assets, an amendment of FASB Statement No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities".
This statement requires all separately recognized servicing assets and servicing
liabilities be initially measured at fair value, if practicable, and permits for
subsequent measurement using either fair value measurement with changes in fair
value reflected in earnings or the amortization and impairment requirements of
Statement No. 140. The subsequent measurement of separately recognized servicing
assets and servicing liabilities at fair value eliminates the necessity for
entities that manage the risks inherent in servicing assets and servicing
liabilities with derivatives to qualify for hedge accounting treatment and
eliminates the characterization of declines in fair value as impairments or
direct write-downs. SFAS No. 156 is effective for an entity's first fiscal year
beginning after September 15, 2006. The adoption of this statement is not
expected to have a significant effect on the Company's future reported financial
position or results of operations.


                                       8
<PAGE>

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation (FIN) No. 48, "Accounting for Uncertainty in Income Taxes-an
interpretation of FASB Statement No. 109." This interpretation provides guidance
for recognizing and measuring uncertain tax positions, as defined in SFAS No.
109, "Accounting for Income Taxes." FIN No. 48 prescribes a threshold condition
that a tax position must meet for any of the benefit of an uncertain tax
position to be recognized in the financial statements. Guidance is also provided
regarding de-recognition, classification, and disclosure of uncertain tax
positions. FIN No. 48 is effective for fiscal years beginning after December 15,
2006. The Company does not expect that this interpretation will have a material
impact on its financial position, results of operations, or cash flows.

In September 2006, the FASB issued Statement of Financial Accounting Standards
No. 157, "Fair Value Measurements" ("FAS 157"). This Statement defines fair
value as used in numerous accounting pronouncements, establishes a framework for
measuring fair value in generally accepted accounting principles and expands
disclosure related to the use of fair value measures in financial statements.
The Statement is to be effective for the Company's financial statements issued
in 2008; however, earlier application is encouraged. The Company is currently
evaluating the timing of adoption and the impact that adoption might have on its
financial position or results of operations.

In December 2006, FASB Staff Position No. EITF 00-19-2, "Accounting for
Registration Payment Arrangements," was issued. The FSP specifies that the
contingent obligation to make future payments or otherwise transfer
consideration under a registration payment arrangement, whether issued as a
separate agreement or included as a provision of a financial instrument or other
agreement, should be separately recognized and measured in accordance with SFAS
No. 5, "Accounting for Contingencies." The Company believes that its current
accounting is consistent with the FSP.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities, Including an Amendment of FASB
Statement No. 115", under which entities will now be permitted to measure many
financial instruments and certain other assets and liabilities at fair value on
an instrument-by-instrument basis. This Statement is effective as of the
beginning of an entity's first fiscal year that begins after November 15, 2007.
Early adoption is permitted as of the beginning of a fiscal year that begins on
or before November 15, 2007, provided the entity also elects to apply the
provisions of SFAS 157. The Company is currently assessing the impact, if any,
the adoption of SFAS 159 will have on its financial statements.

Other accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies that do not require adoption until a future date
are not expected to have a material impact on the financial statements upon
adoption.

PROPRIETY INTEREST IN MOVIE RIGHTS

In May 2003, the Company acquired the rights to two (2) movie scripts which are
recorded at the trading value of the shares issued in consideration thereof. The
scripts were acquired from two individuals who had contracted with the Company
to produce the film, including the use of certain equipment to produce these
films. In February 2004, these individuals resigned from the Board of Directors.
Based on management's analysis, it was determined during the nine months ended
February 28, 2006, that the movie rights were deemed impaired. The Company
recognized a loss on impairment attributable to the movie rights of $90,000 for
the nine months ended February 28, 2006.

PROPERTY AND EQUIPMENT AND EQUIPMENT HELD FOR SALE

Pursuant to a settlement agreement with Delta Dade Recycling Corp. ("DD"), the
Company received certain equipment with a carrying value of $70,000, which is
included in its equipment held for sale at February 28, 2006. The Company
intends to dispose or lease the property and equipment.


                                       9
<PAGE>

NOTE 3 - DUE FROM BOWEN LAND, LLC

Between July and October 2005, the Company purchased 210 single-family
residential building sites located in Central Florida from Bowen Land, LLC
("Bowen"). However, only 208 of the title of these lots were transferred to the
Company. Accordingly, the Company has recorded a receivable from Bowen of
$42,154 at February 28, 2006 until the title of the 2 remaining lots are
transferred under the name of the Company.

NOTE 4 - RELATED PARTY TRANSACTIONS

The Company is leasing its office space from a company owned by our chief
executive officer for a cost of approximately $19,000 and $14,000 during the
nine-month periods ended February 28, 2006 and 2005, respectively.

The CEO of the Company, from time to time, provides advances to the Company for
operating expenses. At February 28, 2006, the Company had a net payable to the
CEO of the Company amounting to $8,000. These advances are short-term in nature
and non-interest bearing.

NOTE 5 - OTHER LIABILITY

In connection with an assignment agreement entered in December 2004, a general
contractor has advanced in total of $451,100 to the Company in return of a 50%
return on the sale of the land held for sale owned by the Company. The Company
has recognized this assignment as a liability until it fulfills its obligation
of compensating the general contractor for the value of its advance.

During July 2005, the Company received proceeds of approximately $110,000 from
the closing of sale of 2 parcels of lots which were owned and originally
conveyed to certain third parties during the closing of the acquisition of the
land held for sale located in Central Florida (see note 2-prepaid interest).
Accordingly, the Company recorded a liability of $110,000 for the period ended
February 28, 2006.

During October 2005, the Company received proceeds of approximately $315,000
from the closing of sale of 9 parcels of lots which were owned and originally
conveyed to the Mortgagor and certain third parties during the closing of the
acquisition of the land held for sale located in Florida (see note 2-prepaid
interest). Accordingly, the Company recorded a liability of $315,000.

NOTE 6 - DEBENTURE AND NOTE PAYABLE

The terms of the debenture and note payable outstanding at February 28, 2006 is
as follows:

$20,000 debenture to an unrelated party, bearing interest at 6% per annum,
payable at the Company's option at any time or convertible through April 2002 at
the holders' option in 100,000 shares of the Company's common stock. The
convertible debenture is payable on demand and is unsecured. The debenture is no
longer convertible. On February 28, 2006, accrued interest in connection with
this debenture amounted to $6,900 and is included in accrued expenses.

$47,000 note payable to an unrelated party, bearing interest at 10%, through
February 2005 and 18% thereafter, payable in February 2005, secured by the
Company's equipment for sale and certain real estate property located in Central
Florida which is owned by an affiliate controlled by the Company's chief
executive officer. While the note is past due, the note holder has not notified
the Company of its default. On February 28, 2006, accrued interest in connection
with this note payable amounted to $8,130 and is included in accrued expenses.


                                       10
<PAGE>

NOTE 7 - MORTGAGE PAYABLE

The Company partly secured the financing of the land held for sale it acquired
in May 2005 with a mortgage of $1,000,000, bearing interest at 12% per annum.
The Company will pay regular monthly payments of all accrued unpaid interest due
beginning June 1, 2005. The entire unpaid principal and accrued interest are
payable on June 1, 2008. This mortgage may be partially prepaid or in full upon
payment of a prepayment fee of 3% of the amount of the principal prepaid. This
mortgage is secured by certain real estates owned by the Company located in
Central Florida. Additionally, the Company shall pay for the release of an
individual lot of $25,000 toward the principal amount plus a $500 release fee
upon sale of such lots. The Company intends to orderly dispose of such sites.

During July 2005, the Company secured the acquisition of single-family
residential building sites located in Central Florida secured by a mortgage of
$3.7 million bearing interest at 12% per annum. The Company will pay regular
monthly payments of all accrued unpaid interest due beginning September 1, 2005.
The entire unpaid principal and accrued interest are payable on August 1, 2007.
This mortgage may be partially prepaid or in full upon payment of a prepayment
fee of 5% of the amount of the principal prepaid plus an exit fee of 2% of the
original balance of the mortgage. This mortgage is secured by certain real
estates owned by the Company located in Central Florida. Additionally, the
Company shall pay for the release of an individual lot of $25,000 toward the
principal amount upon sale of such lots. The Company intends to orderly dispose
of such sites.

During the nine months ended February 28, 2006, the Company paid a total of
$225,000 towards the principal balances of these mortgages for the release of
sold lots. As of February 28, 2006, the total balance of these mortgages payable
was $4,475,000. On February 28, 2006, accrued interest and interest expense in
connection with these mortgages payable amounted to approximately $96,000 and
$368,000, respectively.

During the nine months ended February 28, 2006, the Company sold a total of 19
parcels of lots located in Central Florida for approximately $805,000 and is
included in revenues in the accompanying statements of operations.

NOTE 8 - STOCKHOLDERS' DEFICIT

In February 2006, the Company issued 450,000 restricted shares of common stock
for consulting advisory services. The Company valued these common shares at the
fair market value on the date of grant at $0.13 per share or $58,500. In
connection with the issuance of these shares, the Company recorded consulting
expense of $58,500.

NOTE 9 - COMMITMENT AND CONTINGENCIES

LITIGATIONS

The purchaser of the recycling center claims that the Company and its chief
executive officer owe them approximately $25,000 pursuant to the sale agreement.
The Company counterclaims the recovery of the recycling center or the receipt of
the balance due under the initial sale contract of $450,000. The Company has
provided for a full valuation on the receivable of $450,000 due from the
purchaser. Management cannot predict the outcome of such litigation at this time
but it believes that it will not have a significant impact on its financial
statements.

A lawsuit instituted on October 3, 2005 by Newgate Atlantic Holdings, Inc.
against us for specific preference of the sale of two lots located in Polk
County, Florida for $25,000. The lawsuit is pending in the Circuit Court of the
10th Judicial Circuit in and for Polk County, Florida. The Company asserts that
the lots were not specified timely by the purchaser, and accordingly, the
Company is not obligated to sell such lots at the specified price. Should an
adverse judgment be entered against the Company, it would recognize a loss of
approximately $10,000. The Company believes that this lawsuit is without merit
and that it will not result in losses material to it.


                                       11
<PAGE>

NOTE 9 - COMMITMENT AND CONTINGENCIES (CONTINUED)

A lawsuit instituted by Quality Affordable Construction, LLC, Southwest
Management Affiliates, Inc. and Karen Thomas Christensen Trust against us, on
July 6, 2005 in the Circuit Court of the 10th Judicial Circuit in and for Polk
County, Florida for the repayment of its $85,000 initial deposit on certain lots
located in Polk County, Florida. The initial deposit is included in the other
liability in the accompanying financial statement. Management contends that this
amount is not immediately due but will be repaid as a percentage of the return
on the sale of the land held for sale. On August 22, 2006, the Company was
released from further action and has been dismissed from this lawsuit with
prejudice.

COMMITMENT

On November 2, 2005, the Company entered into a contract for sale and purchase
of lots (the "Contract") with KB Homes Orlando, LLC ("KB'). Whereby the Company
agrees to sell and convey certain lots located in Polk County, Florida and KB
agrees to purchase such lots at a purchase price of $35,000 per lot. Pursuant to
this contract, if the Company or KB fails to perform any covenants and agreement
set forth in this contract and such failure continues for a period of 10 days
after notice, this contract shall terminate and become null and void. Upon
default of the Company, any earnest money deposit paid by KB shall be returned
on demand. Upon default of KB, any earnest money deposit shall serve as
consideration for the execution of this contract and in full settlement of
liquidated damages due to buyer's default. On April 28, 2006, KB notified the
Company of default under this contract and is therefore terminating the
contract. KB has also demanded the return of the earnest money deposits on lots
not previously acquired by KB. Currently, the Company has recorded a total
liability of $425,000 from deposits received from KB for the 11 lots not
acquired by KB (see Note 5).

NOTE 10 - SUBSEQUENT EVENTS

In June 2006, in connection with a 1 year consulting agreement, the Company
issued 1,000,000 restricted shares of common stock for investor relation
services. The Company valued these common shares at the fair market value on the
date of grant at $0.20 per share or $200,000. In connection with the issuance of
these shares, the Company recorded deferred consulting expense of $200,000 to be
amortized over the service period.

In June 2006, the Company acquired certain lots located in Okeechobee County,
Florida valued at $150,000 after closing cost.

On September 27, 2006, the Company entered into a Contract for Sale and Purchase
of Lots with Poinciana Development Group, LLC ("Buyer") for the sale by the
Company of 175 single family development lots located in Polk County, Florida.
The closing is subject to a 21 day due diligence period granted to Buyer which
may be extended an additional 14 days. Closing is also subject to closing
conditions and termination rights. The Company terminated its agreement with the
buyer in October 2006 due to non performance of certain closing conditions.

In November 2006, the Company issued 400,000 restricted shares of common stock
for consulting advisory and business development services. The Company valued
these common shares at the fair market value on the date of grant at $0.16 per
share or $64,000. In connection with the issuance of these shares, the Company
recorded consulting expense of $64,000.

On October 23, 2006, the Company entered into a Stock Purchase Agreement (the
"Agreement") with Military Air Parts, Inc. ("MAP") and principal stockholders of
MAP, Messrs. Brown and Green. The Company would acquire all of the outstanding
common stock of MAP in exchange for 500,000 shares of the Company's common
stock. In connection with this agreement, the 500,000 shares shall be equally
issued among two principal stockholders of MAP. Following the effective date of
the Agreement, the Company agreed to provide MAP with a capital accommodation in
principal in the amount of $5 million. The accommodation will be phased-in, in
due course, and will begin by the Company's contribution of $250,000, or any
lesser part thereof, to become payable to MAP within a reasonable period of time
following the effective date of this Agreement. MAP will be required


                                       12
<PAGE>

NOTE 10 - SUBSEQUENT EVENTS (CONTINUED)

to pay the Company 10% of the capital investment annually, in arrears, as
consideration for the Company's investment in MAP as defined in the agreement.
Additionally, MAP will employ two additional persons, each of whom shall be
included on MAP's payroll. The first individual is the Company's CEO, Leo
Greenfield, and the second person, as yet unidentified, shall be a person
selected by Mr. Greenfield. Both individuals' annual compensation shall be equal
to the preexisting compensation of Messrs. Brown and Green. The Company's CEO
shall be entitled to one automobile and the annual maintenance and fuel
expenses. Under this agreement, the Company's board of directors shall nominate
and appoint Mr. Green to serve as a member Board of Directors, subject to the
approval of the Company's shareholders. Subsequent to the acquisition, the
Company shall change its name to "Military Air Parts, International".
Immediately following the effective date of the MAP Agreement, the Company
advanced MAP the sum of approximately $197,000 to further its development.

On March 30, 2007, in connection with the Stock Purchase Agreement executed in
October 2006, the Company has terminated and withdrew from the transaction due
to misrepresentations regarding financial aspects of MAP by the other parties.
The Company has notified the other parties of termination and has demanded the
return of investment of $197,000.

In December 2006, the Company issued a note payable amounting to $200,000 to an
unrelated party. The note payable bears 13% interest per annum and matures on
February 1, 2010. The Company will pay interest only for the first 23 months
beginning February 1, 2007 and afterwards, the monthly payments will consist of
principal and interest. This note is secured by certain properties located in
Okeechobee County, Florida.

On January 5, 2007, the Company received a letter of notice from the Securities
and Exchange Commission ("SEC") for non compliance with the reporting
requirements to file periodic and current reports. The Company may be subject,
without further notice, to an administrative proceeding to revoke its
registration. The Company is attempting to file and bring the Company's periodic
reports into current status.

In connection with a Capital Investment Agreement (the "Agreement") entered into
on May 22, 2007 between Apogee Ventures, LLC ("Apogee") and an affiliated
company which President is the CEO of the Company. Apogee intends to provide
funding and capital investment for the purposes of the construction and sales of
the certain parcel of lots owned by the Company located in Central Florida (Polk
County). Based on the agreement, Apogee will receive 20% ownership interest in
the construction project and/or ownership interest in the affiliated company.

In April 2007, the Company issued a 1 year note payable amounting to $60,000 to
an unrelated party. The note payable bears 12% interest per annum. This note
payable together with their accrued interest shall be due and payable on April
30, 2008. This note is secured by certain properties located in Polk County,
Florida.


                                       13
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

INTRODUCTION

The following discussion of our financial condition and results of our
operations should be read in conjunction with the Financial Statements and Notes
thereto. This document contains certain forward-looking statements including,
among others, anticipated trends in our financial condition and results of
operations and our business strategy. These forward-looking statements are based
largely on our current expectations and are subject to a number of risks and
uncertainties. Actual results could differ materially from these forward-looking
statements. Important factors to consider in evaluating such forward-looking
statements include (i) changes in external factors or in our internal budgeting
process which might impact trends in our results of operations; (ii)
unanticipated working capital or other cash requirements; (iii) changes in our
business strategy or an inability to execute our strategy due to unanticipated
changes in the industries in which we operate; and (iv) various competitive
market factors that may prevent us from competing successfully in the
marketplace.

PLAN OF OPERATIONS

In July 2003, we discontinued our operations associated with the recycling
center we acquired in 1999. Accordingly, all transactions associated with the
recycling center have been accounted for as discontinued operations in fiscal
2004.

During May and July 2005, we have acquired certain real estate property located
in Orlando, Florida. We have sold certain lots and intend to orderly dispose of
the remaining lots at an appreciated value.

We also hold certain rights in two movie scripts which we seek to develop in
motion pictures. During the nine months ended February 28, 2006, we have
determined that the movie rights are deemed impaired and accordingly recognized
an impairment loss attributable to the movie rights of $90,000.

CRITICAL ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States 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 periods. Significant estimates made by management include, but are not
limited to, the useful life of property and equipment, the valuation of land
reserve and whether the value attributed to the movie scripts is impaired.
Actual results will differ from these estimates.


                                       14
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (CONTINUED)

RESULTS OF OPERATIONS

NINE MONTHS ENDED FEBRUARY 28, 2006 COMPARED THE NINE MONTHS ENDED FEBRUARY 28,
2005

The following table provides an overview of certain key factors of our results
of operations for the nine months ended February 28, 2006 as compared to the
nine months ended February 28, 2005:

<TABLE>
<CAPTION>
                                                                                  $               %
                                               2006             2005            Change         Change
                                           ------------     ------------     ------------     -------
<S>                                        <C>              <C>              <C>                 <C>
Net Revenues                               $   810,755      $        --      $   810,755         100%
Cost of sales                                  356,316               --          356,316         100%
Operating Expenses:
   Selling, General and administrative         710,854          175,502          535,352         305%
   Impairment on assets                        656,079               --          656,079         100%
Total other income (expense)                  (549,254)            (476)        (548,778)     115289%
Loss from continuing operations             (1,461,748)        (175,978)      (1,285,770)        731%
Loss from discontinued operations              (16,267)          (6,484)          (9,783)        151%
Net loss                                   $(1,478,015)     $  (182,462)     $(1,295,553)        710%
</TABLE>

REVENUES

For the nine months ended February 28, 2006, we reported revenues of $810,755 as
compared to revenues of $0 for the prior nine months ended February 28, 2005, an
increase of $810,755. The increase is primarily due to sales of 19 single-family
residential building sites located in Central Florida for approximately $805,000
which accounted for approximately 99% of our total revenue. We did not have
comparable revenues or similar transactions for the nine months ended February
28, 2005 since we had acquired the single-family residential building sites
during May and July 2005. Although we recognized revenues and therefore
generated cash from operations, the majority of the revenues are derived from
one customer. There could be no assurances that we will continue to recognize
similar revenues in the future.

COST OF SALES

Our cost of sales consists of the cost of 19 parcels of lots located in Central
Florida sold during the nine months ended February 28, 2006. For the nine months
ended February 28, 2006, cost of sales was $356,316, or approximately 44% of
revenues, compared to $0, for the nine months ended February 28, 2005. We did
not have comparable cost of sales or similar transactions for the nine months
ended February 28, 2005 since we had acquired the single-family residential
building sites during May and July 2005.

TOTAL OPERATING EXPENSES

Selling, general and administrative expense. For the nine months ended February
28, 2006, selling, general and administrative expenses were $710,854 as compared
to $175,502 for the nine months ended February 28, 2005, an increase of $535,352
or approximately 305%. For the nine months ended February 28, 2006 and 2005,
general and administrative expenses consisted of the following:

                                    2006         2005
                                  --------     --------
Salaries and related taxes        $113,643     $ 37,000
Professional fees                   79,480       24,143
Rent                                18,685       14,020
Consulting fees                    236,637       39,112
Closing cost and release fees       66,700           --
Other operating expenses           195,709       61,227
                                  --------     --------
     Total                        $710,854     $175,502
                                  ========     ========


                                       15
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (CONTINUED)

         o        For the nine months ended February 28, 2006, salaries and
                  related taxes increased to $113,643 as compared to $37,000 for
                  the nine months ended February 28, 2005, an increase of
                  $76,643 or 207%. The increase was attributable to an increase
                  in executive salaries for the nine months ended February 28,
                  2006.
         o        For the nine months ended February 28, 2006, professional fees
                  amounted to $79,480 as compared to $24,143 for the nine months
                  ended February 28, 2005, an increase of $55,337 or 229%. The
                  increase was primarily attributable to an increase in
                  accounting fees.
         o        For the nine months ended February 28, 2006, rent expense
                  amounted to $18,685 as compared to $14,020 for the nine months
                  ended February 28, 2005, an increase of $4,665 or 33% due to
                  an increase in common area maintenance expenses.
         o        For the nine months ended February 28, 2006, consulting
                  expense amounted to $236,637 as compared to $39,112 for the
                  nine months ended February 28, 2005, an increase of $197,525.
                  The increase was attributable to an increase in business
                  development expense and an increase in investor relations
                  expense during the nine months ended February 28, 2006 offset
                  by the fair value of 512,820 unregistered shares wrongly
                  issued to Cornell in connection with the equity line of credit
                  amounted to approximately $25,000 during the nine months ended
                  February 28, 2005.
         o        For the nine months ended February 28, 2006, closing cost and
                  release fees amounted to $66,700 as compared to $0 for the
                  nine months ended February 28, 2005, an increase of $66,700.
                  The increase was attributable to sales of 19 single-family
                  residential building sites located in Central Florida.
         o        For the nine months ended February 28, 2006, other operating
                  expenses amounted to $195,709 as compared to $61,227 for the
                  nine months ended February 28, 2005, an increase of $134,482
                  or 220%. The increase was primarily attributable to an
                  increase in operations.

Impairment on assets. For the nine months ended February 28, 2006, impairment on
assets was $656,079 as compared to $0 for the nine months ended February 28,
2005, an increase of $656,079. The increase was primarily attributable to the
land reserve recorded at cost of $566,079 on certain disputed parcels of lots
which we claim as being fraudulently conveyed to third parties that participated
during the closing and financing of the acquisition of the land held for sale.
The increase was also attributable to increase loss on impairment attributable
to the movie rights of $90,000 for the nine months ended February 28, 2006.

OTHER INCOME (EXPENSE)

For the nine months ended February 28, 2006, total other expense was $549,254 as
compared to $476 for the nine months ended February 28, 2005, an increase of
$548,778. The increase was primarily attributable to the mortgage payable that
financed the acquisition of the land held for sale with an annual interest rate
of 12% and incurred interest expense for the nine months ended February 28, 2006
of approximately $368,000 as well as the amortization of prepaid interest for
the nine months ended February 28, 2006 of approximately $206,000.

LOSS FROM CONTINUING OPERATIONS

Our loss from continuing operations was $1,461,748 for the nine months ended
February 28, 2006 compared to $175,978 for the nine months ended February 28,
2005.

LOSS FROM DISCONTINUED OPERATIONS

We account for our operations related to the recycling center as discontinued
operations. Gain (loss) from discontinued operations for the three-month period
ended February 28, 2006 included expenses of approximately $16,000 and $22,000
associated with the recovery of the recycling center.


                                       16
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (CONTINUED)

NET LOSS

Our net loss was $1,478,015 for the nine months ended February 28, 2006 compared
to $182,462 for the nine months ended February 28, 2005.

LIQUIDITY AND CAPITAL RESOURCES

As of February 28, 2006, the Company had cash on hand of $75,639.

Net cash provided by operating activities was $3,422,363 for the nine months
ended February 28, 2006 as compared to net cash used in operating activities of
$110,158 for the nine months ended February 28, 2005. For the nine months ended
February 28, 2006, we used cash to fund our net loss of $1,478,015 ($1,461,748
from continuing operations and $16,267 from discontinued operations) offset by
non-cash items such as stock-based compensation of $9,999, depreciation expense
of $225, amortization of prepaid expenses and interest of $234,381, loss on
impairment of movie rights of $90,000, impairment on assets of $566,079
attributable to the land reserve and as well as changes in assets and
liabilities of $2,903,532. For the nine months ended February 28, 2005, we used
cash to fund our net loss of $182,462 ($175,978 from continuing operations and
$6,484 from discontinued operations) offset by non-cash items such as
stock-based compensation of $13,471, stock based consulting of $25,641,
provision for doubtful account of $6,000, forfeiture of officer's compensation
of $24,742 and as well as other non-cash items such as changes in assets and
liabilities of $2,225.

Net cash used in investing activities for the nine months ended February 28,
2006 was $5,000 as compared to net cash used in investing activities of $0 for
the nine months ended February 28, 2005. During the nine months ended February
28, 2006, we had issuance of loans receivable amounted to $5,000. During the
nine months ended February 28, 2005, we issued a note receivable amounting to
$25,000 and received gross proceeds of $25,000 for repayment of note receivable.

Net cash provided by financing activities for the nine months ended February 28,
2006 was $3,483,000 as compared to $23,353 for the nine months ended February
28, 2005, an increase of $3,459,647. For the nine months ended February 28,
2006, net cash provided by financing activities related to proceeds received
from the issuance of mortgage of $3,700,000 and proceeds received from related
party advances of $8,000, offset by repayments on mortgage payable of $225,000.
For the nine months ended February 28, 2005, net cash provided by financing
activities related to proceeds from issuance of note payable of $25,000 and
proceeds received from related party advances of $12,828, offset by repayment of
due to related party of $14,475.

Although we recognized revenues and therefore generated cash from operations,
the majority of the revenues are derived from one customer whom we had entered
into a contract of sale. However, on April 28, 2006, this customer notified us
of default under the contract and is therefore terminating the contract. There
could be no assurances that we will continue to recognize similar revenues in
the future.

We own the rights to two movie scripts. We intend to finance the production
costs estimated at $3,000,000 for the first of these films from the proceeds of
a private offering of restricted equity securities. If we are unable to raise
the requisite funding, this could have a material adverse impact on the
Company's planned business and its financial condition and prevent the
production of any of the films. During the nine months ended February 28, 2006,
we have determined that the movie rights are deemed impaired and accordingly
recognized an impairment loss attributable to the movie rights of $90,000.

From time to time, the Company may evaluate potential acquisitions involving
complementary businesses, services, products or technologies. The Company's
future capital requirements will depend on many factors, including acquisitions,
if any, growth of the Company's customer base, economic conditions and other
factors including the results of future operations. Any such acquisition would
require additional funding, through the sale of Company securities and/or other
financing sources. There can be no assurances that such financing will be
available to the Company.


                                       17
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (CONTINUED)

There are no present plans to hire any additional personnel in connection with
the Company's planned film production. However, if operations are expanded
through growth or acquisitions, the Company expects to hire personnel to meet
these needs and may enter into full-time employment agreements with its
president or others to oversee its operations. The number of employees which may
be hired will be determined by the expansion of the Company's present business
or into other business ventures. The number of employees actually hired will be
based on the Company's ability to support the increased cost through cash flow
generated by such business.

IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of
Financial Assets, an amendment of FASB Statement No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities".
This statement requires all separately recognized servicing assets and servicing
liabilities be initially measured at fair value, if practicable, and permits for
subsequent measurement using either fair value measurement with changes in fair
value reflected in earnings or the amortization and impairment requirements of
Statement No. 140. The subsequent measurement of separately recognized servicing
assets and servicing liabilities at fair value eliminates the necessity for
entities that manage the risks inherent in servicing assets and servicing
liabilities with derivatives to qualify for hedge accounting treatment and
eliminates the characterization of declines in fair value as impairments or
direct write-downs. SFAS No. 156 is effective for an entity's first fiscal year
beginning after September 15, 2006. The adoption of this statement is not
expected to have a significant effect on the Company's future reported financial
position or results of operations.

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation (FIN) No. 48, "Accounting for Uncertainty in Income Taxes-an
interpretation of FASB Statement No. 109." This interpretation provides guidance
for recognizing and measuring uncertain tax positions, as defined in SFAS No.
109, "Accounting for Income Taxes." FIN No. 48 prescribes a threshold condition
that a tax position must meet for any of the benefit of an uncertain tax
position to be recognized in the financial statements. Guidance is also provided
regarding de-recognition, classification, and disclosure of uncertain tax
positions. FIN No. 48 is effective for fiscal years beginning after December 15,
2006. The Company does not expect that this interpretation will have a material
impact on its financial position, results of operations, or cash flows.

In September 2006, the FASB issued Statement of Financial Accounting Standards
No. 157, "Fair Value Measurements" ("FAS 157"). This Statement defines fair
value as used in numerous accounting pronouncements, establishes a framework for
measuring fair value in generally accepted accounting principles and expands
disclosure related to the use of fair value measures in financial statements.
The Statement is to be effective for the Company's financial statements issued
in 2008; however, earlier application is encouraged. The Company is currently
evaluating the timing of adoption and the impact that adoption might have on its
financial position or results of operations.

In December 2006, FASB Staff Position No. EITF 00-19-2, "Accounting for
Registration Payment Arrangements," was issued. The FSP specifies that the
contingent obligation to make future payments or otherwise transfer
consideration under a registration payment arrangement, whether issued as a
separate agreement or included as a provision of a financial instrument or other
agreement, should be separately recognized and measured in accordance with SFAS
No. 5, "Accounting for Contingencies." The Company believes that its current
accounting is consistent with the FSP.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities, Including an Amendment of FASB
Statement No. 115", under which entities will now be permitted to measure many
financial instruments and certain other assets and liabilities at fair value on
an instrument-by-instrument basis. This Statement is effective as of the
beginning of an entity's first fiscal year that begins after November 15, 2007.
Early adoption is permitted as of the beginning of a fiscal year that begins on
or before November 15, 2007, provided the entity also elects to apply the
provisions of SFAS 157. The Company is currently assessing the impact, if any,
the adoption of SFAS 159 will have on its financial statements.

Other accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies that do not require adoption until a future date
are not expected to have a material impact on the consolidated financial
statements upon adoption.


                                       18
<PAGE>

ITEM 3. CONTROLS AND PROCEDURES

We maintain "disclosure controls and procedures," as such term is defined in
Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"),
that are designed to ensure that information required to be disclosed in our
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission rules and
forms, and that such information is accumulated and communicated to our
management, including our Chief Executive Officer as appropriate, to allow
timely decisions regarding required disclosure. We conducted an evaluation (the
"Evaluation"), under the supervision and with the participation of our Chief
Executive Officer ("CEO"), of the effectiveness of the design and operation of
our disclosure controls and procedures ("Disclosure Controls") as of the end of
the period covered by this report pursuant to Rule 13a-15 of the Exchange Act.
Based on this Evaluation, our CEO concluded that our Disclosure Controls were
effective as of the end of the period covered by this report.

We have also evaluated our internal controls for financial reporting, and there
have been no significant changes in our internal controls or in other factors
that could significantly affect those controls subsequent to the date of their
last evaluation.

Our management, including our CEO, does not expect that our Disclosure Controls
and internal controls will prevent all errors and all fraud. A control system,
no matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. Further,
the design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within the Company have been detected. These inherent
limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of a simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management or board override
of the control. The design of any system of controls also is based in part upon
certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions; over time, controls may become inadequate because
of changes in conditions, or the degree of compliance with the policies or
procedures may deteriorate. Because of the inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and
not be detected. CEO Certifications Appearing immediately following the
signatures section of this report there are Certifications of the CEO. The
Certifications are required in accordance with Section 302 of the Sarbanes-Oxley
Act of 2002 (the Section 302 Certifications). This Item of this report, which
you are currently reading is the information concerning the Evaluation referred
to in the Section 302 Certifications and this information should be read in
conjunction with the Section 302 Certifications for a more complete
understanding of the topics presented.


                                       19
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Distribution Management Services, Inc., a Florida Corporation and Leo Greenfield
vs. City First Mortgage, a Florida Corporation; Eric Stein, ESQ; Eric Stein, PA,
a Professional Association; Eric P. Stein Trustee of the Poinciana Trust
Agreement U/A/D May 6, 2005; MSJ Investors, LLC, a Florida Limited Liability
Company; Howard Podolsky; BJJS Investment, LLC; Scheck Alpha, LP; Gary M. Mars
Revocable Trust; Ariella V. Mars; Quality Affordable Constructions, LLC, a
Florida Limited Liability Company; Southwest Management Affiliates, Inc., a
Nevada Corporation; and Karen Thomas Christensen Trust - Cases No. 05-14663 CA
22, 05-24653 CA 22 and 06-16126 CA 11 (now 22), Miami-Dade County, Florida.
================================================================================

         We filed a complaint against Defendant City First Mortgage, Howard
Podolsky, Eric Stein and MSJ Investors for violation of the Florida Criminal
Usury Statute by exceeding 45% interest per annum by transferring certain parcel
of lots to themselves and the fraudulent conveyance of additional lots during
the closing and acquisition of certain land in Polk County, Florida through a
mortgage that we have obtained from City First Mortgage. Additionally, we filed
a complaint against City First Mortgage for breach of contract for failure and
refusal to conform to the provisions of the mortgage. We also filed a complaint
against City First Mortgage, Eric Stein, Eric Stein, PA, Stein Trustee, MSJ
Investor, Howard Podolsky, BJJS Investment, Scheck Alpha, Gary Mars Revocable
Trust and Ariella Mars for conspiracy to defraud us from the wrongful conveyance
of certain parcel of lots in Polk County, Florida. We plan to vigorously
continue to endeavor our position to seek damages that was caused by these
violations.

         We filed a complaint against Quality Affordable Constructions, LLC, a
Florida Limited Liability Company; Southwest Management Affiliates, Inc., a
Nevada Corporation; and Karen Thomas Christensen Trust for wrongful filing of a
Notice of Lis Pendens and was recorded on the Polk County lots in June 2005. On
August 22, 2006, we were released from further action and have been dismissed
from this lawsuit with prejudice.

Distribution Management Services, Inc., a Florida Corporation and Leo Greenfield
vs. GERALD J. HOULIHAN, THOMAS J. NORTHCUTT and KAYELYNNE NORTHCUTT- Florida Bar
No. 186866 Miami-Dade County, Florida.
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         The Company filed a complaint for wrongfully and maliciously use of the
legal processes of the Court to garnish and freeze our bank accounts on or about
December 19, 2005 against the defendants. The Court, upon Motion made by us
dissolved the wrongful Writ of Garnishment and ordered that our bank accounts be
released from the Writ of Garnishment. We plan to vigorously continue to
endeavor our position to seek damages that was caused by this violation.

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

        None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        None

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

        None

ITEM 5. OTHER INFORMATION

        None

ITEM 6. EXHIBITS

31.1    Rule 13a-14(a)/15d-14(a) certification of CEO
31.2    Rule 13a-14(a)/15d-14(a) certificate of principal accounting officer
32.1    Section 1350 certification of CEO and principal accounting officer


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<PAGE>

                                   SIGNATURES

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

                                      Distribution Management Services, Inc.

                                      By: /s/ Leo Greenfield
                                          ------------------------------------
                                          Leo Greenfield,
                                          CEO, Principal Executive Officer and
                                          Principal Accounting Officer

July 27, 2007