SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, DC 20549

FORM 10-Q

|                                               |   |                                                    
|---------------------------------------------- | - | ---------------------------------------------------
|                                               | x | QUARTERLY
  REPORT PURSUANT TO SECTION 13 OR 15(d) 
|                                               |   | OF
  THE SECURITIES EXCHANGE ACT OF 1934           
|                                               |   |                                                    
|For
  the Quarterly Period Ended June 30, 2008
|                                              
|Or                                            
|                                              
|                                               | o | TRANSITION
  REPORT PURSUANT TO SECTION 13 OR 15(d)
|                                               |   | OF
  THE SECURITIES EXCHANGE ACT OF 1934           

For the Transition Period from __________ to __________

COMMISSION FILE NUMBER: 0-27615

FIRST TRANSACTION MANAGEMENT, INC.(Exact Name of Small Business Issuer as Specified in
its Charter)

|                                                               |  |                                 
|-------------------------------------------------------------- |  | --------------------------------
|DELAWARE                                                       |  | 52-2158936                      
|(State or
  Other JurisdictionIncorporation or
  Organization) |  | (IRS EmployerIdentification No.)

381 SE Crystal Creek Circle, Issaquah, WA
98027(Address of Principal Executive Offices)

(206) 355-1467(Issuers Telephone Number, Including Area Code)

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

YES x   NO o


Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated filer and smaller reporting company
in rule 12b-2 of the Exchange Act. (Check one):

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

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

YES x   NO o


Indicate the number of
shares outstanding of each of the issuers classes of common equity as of the
latest practicable date: As of July 15, 2008 the issuer had 7,983,704 shares of
common stock, par value $.01 per share, outstanding.

---



FIRST TRANSACTION MANAGEMENT, INC.

FORM 10-Q

For the quarterly period ended June 30, 2008

INDEX

|           |  |                                                                                                     |  |     
|---------- |  | --------------------------------------------------------------------------------------------------- |  | ----
|           |  |                                                                                                     |  | Page
|           |  |                                                                                                     |  |     
|PART I     |  | FINANCIAL INFORMATION                                                                               |  |     
|           |  |                                                                                                     |  |     
|Item 1     |  | Balance Sheets at December 31, 2007 and
  June 30, 2008 (unaudited at June 30, 2008)                |  | 2   
|           |  |                                                                                                     |  |     
|           |  | Statements of Operations for the three
  months ended June 30, 2008 and 2007 (unaudited)            |  | 3   
|           |  |                                                                                                     |  |     
|           |  | Statement of Changes in Stockholders
  Equity for the three months ended June 30, 2008 (unaudited) |  | 4   
|           |  |                                                                                                     |  |     
|           |  | Statements of Cash Flows for the three
  months ended June 30, 2008 and 2007 (unaudited)            |  | 5   
|           |  |                                                                                                     |  |     
|           |  | Notes to Consolidated Financial Statements                                                          |  | 6   
|           |  |                                                                                                     |  |     
|Item 2     |  | Managements Discussion and Analysis or
  Plan of Operation                                         |  | 12  
|           |  |                                                                                                     |  |     
|Item 3     |  | Quantitative and Qualitative Disclosures
  About Market Risk                                        |  | 16  
|           |  |                                                                                                     |  |     
|Item 4T    |  | Controls and Procedures                                                                             |  | 16  
|           |  |                                                                                                     |  |     
|PART II    |  | Other Information                                                                                   |  | 17  
|           |  |                                                                                                     |  |     
|Item 1     |  | Legal Proceedings                                                                                   |  | 17  
|           |  |                                                                                                     |  |     
|Item 2     |  | Unregistered Sales of Equity Securities and
  Use of Proceeds                                       |  | 17  
|           |  |                                                                                                     |  |     
|Item 3     |  | Defaults Upon Senior Securities                                                                     |  | 17  
|           |  |                                                                                                     |  |     
|Item 4     |  | Submission of Matters to a Vote of Security
  Holders                                               |  | 17  
|           |  |                                                                                                     |  |     
|Item 5     |  | Other Information                                                                                   |  | 17  
|           |  |                                                                                                     |  |     
|Item 6     |  | Exhibits and Reports on Form 8-K                                                                    |  | 17  
|           |  |                                                                                                     |  |     
|Signatures |  |                                                                                                     |  | 18  

1

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Item 1. Financial Statements

FIRST TRANSACTION MANAGEMENT, INC
(A Development Stage Company)FORM 10-QSBBalance Sheet(Unaudited)

|                                                                                                       |  |               |            |                   |   |            |  
|------------------------------------------------------------------------------------------------------ |  | ------------- | ---------- | ----------------- | - | ---------- | -
|                                                                                                       |  | June 30, 2008 |            | December 31, 2007 |  
|                                                                                                       |  | Unaudited     |            | Audited           |  
|                                                                                                       |  |               |            |                   |  
|ASSETS                                                                                                 |  |               |            |                   |   |            |  
|Current Assets                                                                                         |  |               |            |                   |   |            |  
|Cash                                                                                                   |  | $             | 65,661     |                   | $ | 121,785    |  
|                                                                                                       |  |               |            |                   |   |            |  
|Total current assets                                                                                   |  |               | 65,661     |                   |   | 121,785    |  
|                                                                                                       |  |               |            |                   |   |            |  
|                                                                                                       |  |               |            |                   |   |            |  
|Long Term Assets                                                                                       |  |               |            |                   |   |            |  
|Intangible & other assets, net                                                                         |  |               |           |                   |   |           |  
|                                                                                                       |  |               |            |                   |   |            |  
|                                                                                                       |  |               |            |                   |   |            |  
|TOTAL ASSETS                                                                                           |  | $             | 65,661     |                   | $ | 121,785    |  
|                                                                                                       |  |               |            |                   |   |            |  
|                                                                                                       |  |               |            |                   |   |            |  
|LIABILITIES & EQUITY                                                                                   |  |               |            |                   |   |            |  
|Liabilities                                                                                            |  |               |            |                   |   |            |  
|Current Liabilities                                                                                    |  |               |            |                   |   |            |  
|Accounts payable & accrued expenses                                                                    |  | $             | 60,000     |                   | $ | 55,000     |  
|Interest payable                                                                                       |  |               | 273,628    |                   |   | 242,741    |  
|                                                                                                       |  |               |            |                   |   |            |  
|Total current liabilities                                                                              |  |               | 333,628    |                   |   | 297,741    |  
|                                                                                                       |  |               |            |                   |   |            |  
|                                                                                                       |  |               |            |                   |   |            |  
|Long Term Liabilities                                                                                  |  |               |            |                   |   |            |  
|Loan payable - stockholder                                                                             |  |               | 771,791    |                   |   | 773,541    |  
|                                                                                                       |  |               |            |                   |   |            |  
|Total liabilities                                                                                      |  |               | 1,105,419  |                   |   | 1,071,282  |  
|                                                                                                       |  |               |            |                   |   |            |  
|                                                                                                       |  |               |            |                   |   |            |  
|Equity                                                                                                 |  |               |            |                   |   |            |  
|Common stock; 15,000,000 shares authorized;
7,983,704 shares issued
  and outstanding, par value $0.01 |  |               | 79,837     |                   |   | 72,587     |  
|Additional paid in capital                                                                             |  |               | 1,314,020  |                   |   | 1,303,145  |  
|Deficit accumulated during the development
stage                                                       |  |               | (2,433,614 | )                 |   | (2,325,229 | )
|                                                                                                       |  |               |            |                   |   |            |  
|Total equity                                                                                           |  |               | (1,039,757 | )                 |   | (949,497   | )
|                                                                                                       |  |               |            |                   |   |            |  
|                                                                                                       |  |               |            |                   |   |            |  
|                                                                                                       |  |               |            |                   |   |            |  
|TOTAL LIABILITIES & EQUITY                                                                             |  | $             | 65,662     |                   | $ | 121,785    |  
|                                                                                                       |  |               |            |                   |   |            |  

See accompanying notes to the financial statements

2

---



FIRST TRANSACTION MANAGEMENT, INC
(A Development Stage Company)
FORM 10-QSBStatement of Operations 
(Unaudited)

|                                           |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|------------------------------------------ |  | -------------------------- | ---------- | ------------------------ | - | ---------- | - | --------- | ---------- | - | - | ---------- | -
|                                           |  | For the Three Months Ended |            | For the Six Months Ended |  
|                                           |  | June 30,                   |            | June 30,                 |  
|                                           |  | 2008                       |            | 2007                     |   | 2008       |   | 2007      |           
|                                           |  | Unaudited                  |            | Unaudited                |   | Unaudited  |   | Unaudited |           
|                                           |  |                            |            |                          |   |            |   |           |           
|INCOME                                     |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|Fees - consulting                          |  |                            |           |                          |   | 38,934     |   |           |           |   |   | 55,960     |  
|                                           |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|Total income                               |  |                            |           |                          |   | 38,934     |   |           |           |   |   | 55,960     |  
|                                           |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|                                           |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|EXPENSES                                   |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|Operating expense                          |  |                            | 33,174     |                          |   | 63,167     |   |           | 79,249     |   |   | 94,516     |  
|Depreciation & Amortization                |  |                            |           |                          |   | 716        |   |           |           |   |   | 1,432      |  
|                                           |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|Total expenses                             |  |                            | 33,174     |                          |   | 63,883     |   |           | 79,249     |   |   | 95,948     |  
|                                           |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|                                           |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|                                           |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|Net operating income                       |  |                            | (33,174    | )                        |   | (24,949    | ) |           | (79,249    | ) |   | (39,988    | )
|                                           |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|                                           |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|OTHER INCOME/(EXPENSE)                     |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|Gain on distribution of shares             |  | $                          | 1,750      |                          | $ |           |   | $         | 1,750      |   | $ |           |  
|Interest income                            |  |                            |           |                          |   | 16         |   |           |           |   |   | 16         |  
|Interest expense                           |  |                            | (15,415    | )                        |   | (15,471    | ) |           | (30,886    | ) |   | (30,942    | )
|                                           |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|                                           |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|Net other income/(expense)                 |  |                            | (13,665.39 | )                        |   | (15,455.00 | ) |           | (29,136.00 | ) |   | (30,926.00 | )
|                                           |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|                                           |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|Net income before taxes                    |  |                            | (46,839    | )                        |   | (40,404    | ) |           | (108,385   | ) |   | (70,914    | )
|Provision for income taxes                 |  |                            |           |                          |   |           |   |           |           |   |   |           |  
|                                           |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|NET INCOME (LOSS)                          |  | $                          | (46,839    | )                        | $ | (40,404    | ) | $         | (108,385   | ) | $ | (70,914    | )
|                                           |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|                                           |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |  |                            | 5,558,714  |                          |   | 5,519,543  |   |           | 5,558,714  |   |   | 5,519,543  |  
|                                           |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|                                           |  |                            |            |                          |   |            |   |           |            |   |   |            |  
|AVERAGE GAIN (LOSS) PER COMMON SHARE       |  | $                          | (0.01      | )                        | $ | (0.01      | ) | $         | (0.01      | ) | $ | (0.01      | )
|                                           |  |                            |            |                          |   |            |   |           |            |   |   |            |  

See accompanying notes to the financial statements

3

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FIRST TRANSACTION MANAGEMENT, INC
(A Development Stage Company)

STATEMENTS OF STOCKHOLDERS EQUITY
For the Six Months Ended June 30, 2008
(Unaudited)

|                               |  |                       |                |                   |              |              |            |                   |            |                       |   |           |  |   |            |   |   |            |  
|------------------------------ |  | --------------------- | -------------- | ----------------- | ------------ | ------------ | ---------- | ----------------- | ---------- | --------------------- | - | --------- |  | - | ---------- | - | - | ---------- | -
|                               |  |                       |                |                   | Common Stock |              |            |                   |            | Deficit
  Accumulated |   |           |  |  
|                               |  |                       |                |                   |              |              | Additional |                   | During the |                       |   |           | 
|                               |  | Date of
  Transaction |                | Number  of Shares |              | Par 
  Value |            | Paid-in
  Capital |            | Development
  Stage   |   | Total     | 
|                               |  |                       |                |                   |              |              |            |                   |            |                       |   |           | 
|Balance,
  December 31, 2007   |  |                       |                |                   |              | 7,258,704    |            | $                 | 72,587     |                       | $ | 1,303,145 |  | $ | (2,325,229 | ) | $ | (949,497   | )
|Issuance of
  restricted stock |  |                       | April 21, 2008 |                   |              | 725,000      |            |                   | 7,250      |                       |   | 10,875    |  |   |           |   |   | 18,125     |  
|Net
  income/(loss) for 2008   |  |                       |                |                   |              |             |            |                   |           |                       |   |          |  |   | (108,385   | ) |   | (108,385   | )
|                               |  |                       |                |                   |              |              |            |                   |            |                       |   |           |  |   |            |   |   |            |  
|Balance June
  30, 2008        |  |                       |                |                   |              | 7,983,704    |            | $                 | 79,837     |                       | $ | 1,314,020 |  | $ | (2,433,614 | ) | $ | (1,039,757 | )
|                               |  |                       |                |                   |              |              |            |                   |            |                       |   |           |  |   |            |   |   |            |  

See accompanying notes to financial statements.

4

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FIRST TRANSACTION MANAGEMENT, INC
(A Development Stage Company) 
FORM 10-QSBStatements of Cash Flows

(Unaudited)

|                                                         |  |                                     |          |      |   |         |  
|-------------------------------------------------------- |  | ----------------------------------- | -------- | ---- | - | ------- | -
|                                                         |  | For the Six Months Ended
  June 30, |         
|                                                         |  | 2008                                |          | 2007 |  
|                                                         |  |                                     |          |      |  
|CASH FLOWS FROM OPERATING ACTIVITIES                     |  |                                     |          |      |   |         |  
|Net income/(loss)                                        |  | $                                   | (108,385 | )    | $ | (70,914 | )
|                                                         |  |                                     |          |      |  
|Adjustments to reconcile net loss to net
  cash flows    |  |                                     |          |      |   |         |  
|from operations:                                         |  |                                     |          |      |   |         |  
|Depreciation/amortization                                |  |                                     |         |      |   |        |  
|Non-cash reduction of Shareholder Loan                   |  |                                     | (1,750   | )    |   |        |  
|Change in other operating assets and
  liabilities:      |  |                                     |          |      |   |         |  
|Accounts payable and accrued expenses                    |  |                                     | 5,000    |      |   | 25,000  |  
|Interest payable                                         |  |                                     | 30,886   |      |   | 30,942  |  
|                                                         |  |                                     |          |      |   |         |  
|Net cash flows used in operating activities              |  |                                     | (74,249  | )    |   | (14,972 | )
|                                                         |  |                                     |          |      |   |         |  
|                                                         |  |                                     |          |      |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES                     |  |                                     |          |      |   |         |  
|Common stock                                             |  |                                     | 7,250    |      |   |        |  
|Paid in capital                                          |  |                                     | 10,875   |      |   |        |  
|                                                         |  |                                     |          |      |   |         |  
|Net cash flows from financing activities                 |  |                                     | 18,125   |      |   |        |  
|                                                         |  |                                     |          |      |   |         |  
|                                                         |  |                                     |          |      |   |         |  
|Net increase (decrease) in cash                          |  |                                     | (56,124  | )    |   | (14,972 | )
|                                                         |  |                                     |          |      |   |         |  
|Cash and cash equivalents, beginning of
  period         |  |                                     | 121,785  |      |   | 10,319  |  
|                                                         |  |                                     |          |      |   |         |  
|                                                         |  |                                     |          |      |   |         |  
|Cash and cash equivalents, end of period                 |  | $                                   | 65,661   |      | $ | (4,653  | )
|                                                         |  |                                     |          |      |   |         |  
|                                                         |  |                                     |          |      |   |         |  
|Supplemental Disclosure                                  |  |                                     |          |      |   |         |  
|Interest                                                 |  | $                                   |         |      | $ |        |  
|                                                         |  |                                     |          |      |   |         |  
|                                                         |  |                                     |          |      |   |         |  
|NONCASH INVESTING AND FINANCING ACTIVITIES               |  |                                     |          |      |   |         |  
|Principal paid on stockholder note with
  stock issuance |  |                                     | (1,750   | )    |   |        |  
|                                                         |  |                                     |          |      |   |         |  

See
accompanying notes to the financial statements

5

---



FIRST
TRANSACTION MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS
June 30, 2008

|       |                                           
|------ | ------------------------------------------
|NOTE 1 | ORGANIZATION
  AND DESCRIPTION OF BUSINESS

First Transaction
Management, Inc. (the Company), a development stage company, was incorporated
in the State of Delaware on March 25, 1999 as Creative Products International,
Inc. The Company was a subsidiary of another corporation until December 23,
1999, when it was spun-off. In 2002, the Company elected to change its name to
First Transaction Management, Inc. to more directly reflect its business
interests in web based promotion and transaction processing management
services. Effective, December 31, 2004, the Company discontinued its business
efforts and is currently seeking new economic opportunities, including a merger
transaction.

|       |                                             
|------ | --------------------------------------------
|NOTE 2 | SUMMARY
  OF SIGNIFICANT ACCOUNTING POLICIES

Cash

The Company considers all
highly liquid debt instruments purchased with maturity of three months or less
to be cash equivalents. Cash balances regularly fall under the federally
insured limit covered by the Federal Deposit Insurance Corporation (FDIC) as of
June 30, 2008.

Use of accounting estimates in preparation of financial
statements

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

Property, plant & equipment

Property and equipment,
including computer equipment, are recorded at cost and are depreciated over the
estimated useful lives. Expenditures for routine maintenance and repairs are
charged to expenses as incurred. Trademarks and copyrights are recorded at cost
and are amortized over their legal lives or their estimated useful lives,
whichever is shorter, using the straight-line method. They are reviewed
annually to assess recoverability; impairment will be recognized in results of
operations when intangible assets are deemed unrecoverable.

Capitalization of software

FASB EITF Issue No. 00-2, Accounting
for Web Site Development Costs, states that the identification of
software needed for a company shall be expensed as incurred. Such software
includes web applications needed for the websites functionalities, and those
required for development purposes. However, if the company chooses to acquire
or develop software, AICPA Statement of Position 98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use, allows
capitalization. The method of software capitalization depends on the intended
use. Costs incurred in the purchasing or development of software can be
capitalized unless they are used in research and development and do not have
alternative future uses or represent a pilot project. Costs of acquired or
developing for general web site operations require capitalization of external
direct costs of materials and services used in the acquisition or development.
Costs of acquired or developed software for the integration of distributed
applications into web applications are capitalized. During the period from 2002
to 2007, the Company capitalized certain costs in accordance with the
aforementioned standards.

6

---



Amortization is recorded
using the straight-line method over the estimated useful lives of the assets
that do not exceed ten years. The Company periodically reviews intangible
assets to assess recoverability. Impairment will be recognized in results of
operations when intangible assets are deemed unrecoverable.

Research and development

Research and development
costs are expensed during the period incurred.

Revenue recognition

The Company recognizes
revenue at the time of service or as contractual terms are satisfied.

Earnings per share

Basic earnings per share are
computed by dividing income available to common shareholders by the weighted
average number of common shares outstanding in the period. Diluted earnings per
share takes into consideration common shares outstanding (computed under basic
earnings per share) and potentially dilutive common shares; however, there are
no dilutive securities.

The weighted average number
of shares outstanding for the quarter ended June 30, 2008 is 5,558,714.

Stock based compensation

The Company adopted a
stock-based compensation plan in 1999. The plan provides for options to be
granted to officers, directors and employees to acquire a maximum of 1,000,000
shares of the Companys stock. Compensation cost for stock options was measured
as the excess, if any, of the value of the Companys stock at the date of the
grant over the amount an employee is required to pay for the stock. During
2001, the Companys Board of Directors approved the organization of another
stock option plan for technology and web related employees and consultants. A
maximum of 750,000 shares of the Companys common stock was available for
issuance under the plan. No stock options were issued under this plan. As of
June 30, 2008, all stock options issued to former employees, consultants and
directors have expired.

7

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The following is a summary
of stock option plan activity from inception to June 30, 2008:

|                                 |  |                       |  |                                     |   |      | 
|-------------------------------- |  | --------------------- |  | ----------------------------------- | - | ---- | 
|                                 |  | Number
  of
  Options |  | Weighted
  Average
  Exercise Price |  
|                                 |  |                       |  |                                     |  
|                                 |  |                       |  |                                     |   |      | 
|Outstanding at December 31, 1999 |  | 19,000                |  |                                     | $ | .30  | 
|Granted during 2000              |  | 395,000               |  |                                     | $ | 1.05 | 
|Exercised during 2000            |  | 0                     |  |                                     |   |      | 
|Forfeited during 2000            |  | 55,000                |  |                                     |   |      | 
|                                 |  |                       |  |                                     |   |      | 
|Outstanding at December 31, 2000 |  | 469,000               |  |                                     | $ | .95  | 
|Granted during 2001              |  | 210,000               |  |                                     | $ | 1.51 | 
|Exercised during 2001            |  | 0                     |  |                                     |   |      | 
|Forfeited during 2001            |  | 110,000               |  |                                     |   |      | 
|                                 |  |                       |  |                                     |   |      | 
|Outstanding at December 31, 2001 |  | 569,000               |  |                                     | $ | 1.21 | 
|Granted during 2002              |  | 25,000                |  |                                     | $ | 1.50 | 
|Exercised during 2002            |  | 0                     |  |                                     |   |      | 
|Forfeited during 2002            |  | 49,000                |  |                                     |   |      | 
|                                 |  |                       |  |                                     |   |      | 
|Outstanding at December 31, 2002 |  | 545,000               |  |                                     | $ | 1.20 | 
|Granted during 2003              |  | 0                     |  |                                     |   |      | 
|Exercised during 2003            |  | 0                     |  |                                     |   |      | 
|Forfeited during 2003            |  | 0                     |  |                                     |   |      | 
|                                 |  |                       |  |                                     |   |      | 
|Outstanding at December 31, 2003 |  | 545,000               |  |                                     | $ | 1.20 | 
|Granted during 2004              |  | 0                     |  |                                     |   |      | 
|Exercised during 2004            |  | 0                     |  |                                     |   |      | 
|Forfeited during 2004            |  | 15,000                |  |                                     |   |      | 
|                                 |  |                       |  |                                     |   |      | 
|Outstanding at December 31, 2004 |  | 530,000               |  |                                     | $ | 1.23 | 
|Granted during 2005              |  | 0                     |  |                                     |   |      | 
|Exercised during 2005            |  | 0                     |  |                                     |   |      | 
|Forfeited during 2005            |  | 320,000               |  |                                     |   |      | 
|                                 |  |                       |  |                                     |   |      | 
|Outstanding at December 31, 2005 |  | 210,000               |  |                                     | $ | 1.51 | 
|Granted during 2006              |  | 0                     |  |                                     |   |      | 
|Exercised during 2006            |  | 0                     |  |                                     |   |      | 
|Forfeited during 2006            |  | 210,000               |  |                                     |   |      | 
|                                 |  |                       |  |                                     |   |      | 
|Outstanding at December 31, 2006 |  | 0                     |  |                                     |   |      | 
|                                 |  |                       |  |                                     |   |      | 
|Outstanding at December 31, 2007 |  | 0                     |  |                                     |   |      | 
|                                 |  |                       |  |                                     |   |      | 
|Outstanding at June 30, 2008     |  | 0                     |  |                                     |   |      | 

These options and the
warrants discussed in Note 4 were not included in the computation of earnings
per share because they are anti-dilutive.

8

---



Income taxes

Income taxes are accounted
for using the asset and liability approach, which requires recognition of
deferred tax liabilities and assets for the expected future tax consequences of
events that have been included in the financial statements or tax returns.
Deferred income taxes will be provided for the temporary differences between
the financial reporting basis and the tax basis of the Companys assets and
liabilities. A valuation allowance will be recognized for deferred tax assets
not likely to be realized. Deferred taxes are to be measured by the provisions
of currently enacted tax laws. There were no material temporary differences at
June 30, 2008.

Comprehensive income

The Company had no elements
of comprehensive income for the period ended June 30, 2008. Further, there are
no other new financial accounting standards that would have an effect on these
financial statements.

|       |                    
|------ | -------------------
|NOTE 3 | CAPITAL
  STRUCTURE

At June 30, 2008, the
Company had 7,983,704 shares of common stock, par value $.01 per share, issued
and outstanding, 64% of which were held by the Companys CEO and the remainder
by approximately 130 other parties. This includes shares issued to consulting
firms and legal service providers. Common shares are voting and dividends are
paid at the discretion of the Board of Directors. The Company has never paid a
dividend on its common stock, and it is the present policy of the Company not
to pay cash dividends on the common stock.

Effective June 26, 2008, a
shareholder owning at least a majority of the outstanding shares of the
Companys common stock approved an amendment to the Companys certificate of
incorporation to effectuate up to a 1:25 reverse split of the outstanding
shares of common stock and to increase the number of authorized shares of
capital stock to 150 million, of which 125 million shares would be classified
as common stock and 25 million shares would be classified as preferred stock. Such
amendment will not become effective until filed with the Secretary of State of
Delaware which is expected to occur on or about August 1, 2008.

The Company has authorized
1,000,000 shares of preferred stock at a par value of $.01 per share. No
preferred shares have been issued as of June 30, 2008.

In connection with the
Company and efforts to find a strategic partner, the Company issued 725,000
shares of restricted stock to consultants, valued at $.025 per share. (See Note
6.)

|       |         
|------ | --------
|NOTE 4 | WARRANTS

Pursuant to a private
placement, the Company issued, in the aggregate, warrants to purchase 375,000
shares of the Companys common stock at $1.50 per share. The warrants expire on
January 23, 2013. No warrants have been exercised from the date of grant. The
Companys CEO received warrants to purchase 100,000 shares pursuant to an
investment in the private placement.

|       |                                 
|------ | --------------------------------
|NOTE 5 | WRITE OFF
  OF INTANGIBLE ASSETS

From inception to June 30,
2008, the Company wrote off an aggregate $146,983 of intangible assets related
to its web based promotion, distribution and transaction processing services.

9

---



|       |                
|------ | ---------------
|NOTE 6 | GOING
  CONCERN

As shown in the financial
statements, the Company incurred a net loss since inception of $2,433,614. This
result raises concerns about the Companys ability to continue as a going
concern. The Companys ability to continue as a going concern is contingent
upon its ability to achieve positive cash flow from operating and financing
activities. There is no assurance that the Company will be successful in its
efforts to significantly improve its financial and operating condition, attract
new investors or develop the strategic partnerships necessary to meet the
Companys business and financial objectives.

On April 21, 2008, the Company
entered into a consulting agreement in which the Company agreed to issue
375,000 shares of restricted common stock for services provided to the Company
in connection with becoming current in its required governmental filings and
related matters. The shares were valued at $.025 per share. The Company entered
into a second agreement with the consulting firm to provide due diligence
services on any potential merger candidate. In consideration of services to be
rendered, the consulting firm will receive $60,000 at the closing of a merger
transaction or, if in lieu thereof, the Company effects a change of control
transaction during the term of the consulting agreement, the consulting firm
will receive $60,000 at the closing of the change of control transaction.

On April 21, 2008, in
consideration for legal services, the Company also agreed to issue 350,000
shares of restricted common stock to the Companys legal counsel. These shares
were valued at $.025 per share.

|       |               
|------ | --------------
|NOTE 7 | INCOME
  TAXES

There was no provision for
federal, or state and local income taxes as the Company has sustained losses.
As of December 31, 2007, the Company had accumulated approximately $2 million
of net operating loss carry forwards for federal income tax purposes, which
begin to expire in 2019.

Deferred income taxes
reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. The difference between the tax loss carry
forward and the Companys financial statement losses is due to differences in
amortization rates on intangible assets and certain accrued expenses which are
deductible for income tax purposes only when paid.

In assessing the
realizability of deferred tax assets, management considers whether it is more
likely than not that some portion or all of the deferred tax assets will be
realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the period in which the net
operating loss carry forwards can be utilized. Since the Company is in the
development stage and it is uncertain when the Company will begin generating
future taxable income, the Company has provided a full valuation allowance for
deferred tax assets at June 30, 2008.

Deferred tax assets as of
June 30, 2008:

|                                    |  |   |           |  
|----------------------------------- |  | - | --------- | -
|Net operating loss carry
  forwards |  | $ | 2,160,349 |  
|                                    |  |   |           |  
|Total deferred tax asset            |  |   | 627,434   |  
|Valuation allowance                 |  |   | (627,434  | )
|                                    |  |   |           |  
|Net deferred tax asset              |  | $ |          |  
|                                    |  |   |           |  

10

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|        |                             
|------- | ----------------------------
|NOTE 10 | RELATED
  PARTY TRANSACTIONS

It is the policy of the
Company with respect to insider transactions that all transactions between the
Company, its officers, directors, principal stockholders and their affiliates
be on terms no less favorable to the Company than could be obtained from
unrelated third parties in arms-length transactions, and that all such
transactions shall be approved by a majority of the disinterested members of
the Board of Directors. The Company believes the transactions described above
complied with such policy.

Loans Payable to Shareholders

On July 12, 2000, the
Company entered into a loan agreement with an officer and director, which
provided for the repayment of the outstanding balance plus accrued simple
interest at eight percent per annum on the loan balance. The note and
accompanying security agreement provides a first lien over all the Companys
assets, including equipment, intellectual property and liquid assets. The note
holder is entitled to convert some or all of the outstanding obligation, plus
accrued but unpaid interest, into shares of the Companys common stock at the
rate of $.08 per share. From inception through June 30, 2008, the lender
advanced $1,248,541 of which $475,000 of this amount has been converted into
common stock equity.

On May 27, 2008,  the
Company distributed 200 shares of stock it held in China Bio Energy Holding
Group Co., Inc., an unaffiliated company, to such officer and director. The
total value of these shares on the date of distribution was $1,750 and was
applied against the outstanding principal balance of the note payable to
such officer and director. The
outstanding principal balance of the note payable is $771,791.

Warrants

As of June 30, 2008,
warrants to purchase a total of 270,000 shares have been provided to the
officer and director, pursuant to the loan agreement terms. All lender warrants
have expired.

11

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

The following discussion and analysis
of our financial condition and results of operations should be read in conjunction with
our financial statements and notes thereto and other financial information included
elsewhere in this report.

NOTE ON FORWARD LOOKING
STATEMENTS

This quarterly report on Form 10-QSB
includes and incorporates by reference forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934 with respect to our financial condition, results of
operations, plans, objectives, future performance and business, which are usually
identified by the use of words such as will, may,
anticipates, believes, estimates, expects,
projects, plans, predicts, continues,
intends, should, would or similar expressions. We
intend for these forward looking statements to be covered by the safe harbor provisions
for forward looking statements contained in the Private Securities Litigation Reform Act
of 1995, and are including this statement for purposes of complying with these safe harbor
provisions.

These forward-looking statements
reflect our current views and expectations about our plans, strategies and prospects,
which are based on the information currently available and on current assumptions.

We cannot give any guarantee that
these plans, intentions or expectations will be achieved. Investors are cautioned that
all-forward-looking statements involve risks and uncertainties, and actual results may
differ materially from those discussed in the forward-looking statements as a result of
various factors, including those Risk Factors set forth in our Form 10-KSB for the fiscal
year ended December 31, 2007. You should read this quarterly report and the documents that
we incorporate by reference in this quarterly report completely and with the understanding
that our actual future results may be materially different from what we expect. We may not
update these forward-looking statements, even though our situation may change in the
future. We qualify all of our forward-looking statements by these cautionary statements.

Overview

First Transaction Management, Inc.
(the Company), a development stage company, was incorporated in the State of
Delaware on March 25, 1999 to develop certain consumer products and web based promotion
and transaction processing management services. Effective December 31, 2004, the Company
discontinued its business efforts related to web based promotion management services and
is currently seeking new economic opportunities, including a merger transaction. From 2002
to present, the Company generated ancillary revenues from general business consulting
services to support its nominal operations. These consulting services have been unrelated
to the Companys prior e commerce interests. The Company does not have any
contractual commitments to provide business management consulting services to any
customer. In addition, the Company has devoted its efforts to seek other economic
opportunities, including but not limited to, the possibility of acquiring a new line of
business through a business combination. There is no assurance that the Company will be
able to secure additional customers for its ancillary consulting services to generate
interim working capital to support the Companys efforts to identify new economic
opportunities for the Company.

12

---



Critical Accounting
Policies and Estimates

Managements discussion and
analysis of the Companys financial condition and results of operations are based on
its financial statements, which have been prepared in accordance with accounting
principles generally accepted in the U.S. The preparation of these financial statements
requires the Company to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements, as well as the revenues and expenses during the reporting
periods. The Company evaluates its estimates and judgments on an ongoing basis. The
Company bases its estimates on historical experience and on various other factors it
believes are reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying value of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates under
different assumptions or conditions.

Recovery of long-lived assets (other
than goodwill)

In accordance with Statement of
Financial Accounting Standards (SFAS) No.144, Accounting for the Impairment or
Disposal of Long-Lived Assets, the Company reviews these types of assets for
impairment whenever events or circumstances indicate that carrying amount may not be
recoverable over the remaining life of the assets or assets group. In order to determine
if the asset or asset group is recoverable, the Company determines if the expected future
cash flows directly related to the asset or asset group are less than the carrying amount
of the asset or asset group. If so, the Company then determines if the carrying amount of
the asset or asset group exceeds its fair value. The Company determines fair value using
estimated discounted cash flows.

Revenue Recognition

The Company maintains its financial
records on the accrual basis of accounting. There was no revenue generated from the
Companys development stage promotion management services. Since December 31, 2002,
the Company has generated nominal revenues from various consulting services. These
services are primarily billed on a project completion basis and revenues are reported when
all goods and services have been performed or delivered, the amounts are readily
determinable and collection is reasonably assured. The Company does not have any
contractual commitments to provide any additional business management consulting services
to any customer.

Income Taxes

Assessment of the appropriate amount
and classification of income taxes is dependent on several factors, including estimates of
the timing and probability of realization of deferred income taxes and the timing of
income tax payments. This process requires the Company to estimate its actual current tax
exposure together with an assessment of temporary differences resulting from differing
treatment of items, such as depreciation on property, plant and equipment, for tax and
accounting purposes. These differences may result in deferred tax assets and liabilities,
which are included within our balance sheet. Since the Company has a net operating losses
carry forward of approximately $2.1 million at December 31, 2007, a valuation allowance is
provided on deferred tax assets if it is determined that it is more likely than not the
asset will not be realized, because the ultimate realization of any deferred tax assets
will be dependent on future taxable income.

13

---



Results of Operations

Comparison of the Three Month
Fiscal Period Ended June 30, 2007 to the Three Month Fiscal Period Ended June
30, 2008

Revenues from consulting
services in the fiscal quarter ended June 30, 2007 (the 2007 Second Quarter)
were $38,934, as compared to $0 in the fiscal quarter ended June 30, 2008 (the
2008 Second Quarter), a 100% decrease. This decrease is attributable to lack
of consulting client service activity in the 2008 Second Quarter. Total
operating expenses before depreciation and amortization decreased from $63,167
for the 2007 Second Quarter to $33,174 for the 2008 Second Quarter,
representing a 48% decrease. The primary reason for such decrease in operating
expenses is the lack of consulting service activity. Depreciation and
amortization decreased from $716 in the 2007 Second Quarter to $0 in the 2008
Second Quarter, representing a 100% decrease. This reduction reflects the reduction
in depreciable assets. The Companys operating loss increased from $24,949 in
the 2007 Second Quarter to $33,174 in the 2008 Second Quarter representing a
33% increase. This increase in operating loss is primarily attributable to
reduced consulting service activity as an offset to the Companys operating
expenses. Accrued interest expense associated with loan advances provided to
the Company by its controlling shareholder and sole director and officer during
2000 to 2002 for the 2007 Second Quarter was $15,471 and $15,415 in the 2008
Second Quarter. The Company generated a one time gain of $1,750 on the
distribution of shares held in another public company during the 2008 Second
Quarter.

As a result of the
foregoing, the Company generated a net loss of $40,404 for the 2007 Second
Quarter, as compared to a net loss of $46,839 for the 2008 Second Quarter,
representing a 16% increase in loss. The weighted net loss per share for the
2007 Second Quarter and for the 2008 Second Quarter was $.01.

As the Companys current
focus and that for the next 12 months is on effecting a business combination,
the Company does not believe that quarter to quarter and year to year
comparisons of its historical results of operations are meaningful in
predicting the Companys future financial performance. All of the Companys
revenues in the 2007 Second Quarter were generated from providing ancillary
consulting services. The Company does not have any contractual commitments to
provide such services in the future and no assurance can be given that the
Company will obtain any such contracts. Even if the Company is able to procure
such contracts, the timing of procurement, the length of the services and the
completion date of such services are generally beyond the Companys control.
Accordingly, it is anticipated that the Companys results of operations will
fluctuate from quarter to quarter and from fiscal year to fiscal year.

Comparison of the Six Month Period
Ended June 30, 2007 to the Six Month Period Ended June 30, 2008

Revenues from consulting
services in the six month period ended June 30, 2007 (the 2007 Period) were
$55,960, as compared to $0 in the six month period ended June 30, 2008 (the
2008 Period), representing an 100% decrease. This decrease is attributed to
the lack of consulting client service activity in the 2008 Period. Total
operating expenses before depreciation and amortization decreased from $94,516
for the 2007 Period to $79,249 for the 2008 Period representing a 16% decrease.
The primary reason for the decrease in operating expenses is the reduction of
customer-related expenses. Depreciation and amortization decreased from $1,432
in the 2007 Period to $0 in the 2008 Period, representing a 100% decrease. The
Companys operating loss increased from $39,988 in the 2007 Period to $79,249,
representing a 98% increase. This increase is attributable to the lack of
consulting customer activity to offset operating expenses. Accrued interest
expense associated with loan advances provided to the Company by its controlling
shareholder and current sole director and officer during 2000 to 2002 for the
2007 Period was $30,942 and $30,886 in the 2008 period. The Company generated a
one time gain of $1,750 on the distribution of shares held in another public
company during the 2008 Second Quarter. The Company earned $16 in interest
income during the 2007 Period.

14

---



As a result of the
foregoing, the Company generated a net loss of $70,914 for the 2007 Period, as
compared to a net loss of $108,385 for the 2008 Period, representing a 53%
increase. The weighted net loss per share for the 2007 Period and the 2008
Period was $.01.

The Companys current focus
and that for the next 12 months is on effecting a business combination. The
Company does not believe that quarter to quarter and year to year comparisons
of its historical results of operations are meaningful in predicting the
Companys future financial performance. The Company does not have any
contractual commitments to provide such services in the future and is not actively
soliciting such contracts. Accordingly, it is anticipated that the Companys
will continue to generate losses and its results of operations will fluctuate
from quarter to quarter and from fiscal year to fiscal year.

Liquidity, Capital Resources and Going Concern

From inception of the
Company through 2002, the Company has been primarily funded through loans
provided by our controlling shareholder and current sole officer and director,
equity investments by her, a nominal private placement and the initial capitalization
provided at the time of spin off from its then parent in 1999. From 2003 to
present, the Company has maintained nominal operations through the cash flows
provided by limited engagement consulting activities. The Company intends to
find a new business opportunity or business combination for the Company. The
Company may also issue additional common or preferred shares to raise
additional funds to finance new business acquisitions or to pay for
professional services or other costs associated with such acquisitions. There
is no assurance, however, that additional working capital or financing from
these sources can be obtained on acceptable terms or that a business
combination can be completed.

The Company had $65,661 in
cash and cash equivalents at June 30, 2008 and $121,785 at December 31, 2007.
The Company had current liabilities of $60,000 in accrued professional fees and
$273,628 in accrued interest payable at June 30, 2008; $55,000 in accrued
professional fees and $242,741 in accrued interest payable at December 31,
2007. The Company had total assets of $65,661 at June 30, 2008 and $121,785 at
December 31, 2007. Long-term liabilities related to a loan to the Company from
its controlling shareholder and current sole officer and director was $771,791
at June 30, 2008 and $773,541 at December 31, 2007. This loan continues to
accrue interest at the rate of 8% per annum. Total liabilities at June 30, 2008
were $1,105,419 and $1,071,282 at December 31, 2007.

Management believes that the
Companys existing financial resources and anticipated revenues from ancillary
consulting services will not be sufficient to fund operations for the
foreseeable future. Therefore, the Company will have to seek additional loans
or raise additional capital. No assurances can be given that the Company will
be able to obtain such loans or raise additional capital. If the Company is
unable to do so, it may have to curtail its operations or defer any combination
with another entity.

15

---



At June 30, 2008, the
Company had a stockholders deficiency of $2,433,614 and a working capital
deficit of $267,967. At December 31, 2007, the Company had a stockholders
deficiency of $2,325,229 and a working capital deficit of $175,956.Further, the Company has a history of
generating net income losses. These conditions indicate that the Company may be
unable to continue as a going concern. Its ability to do so is dependent on its
finding economic opportunities that will achieve profitable operations,
obtaining necessary financing and finding a suitable candidate for a business
combination. No adjustments have been provided in the Companys financial
statements that might result form the outcome of this uncertainty. Our auditors
have referred to the substantial doubt about our ability to continue as a going
concern.

Item 3.      Quantitative and Qualitative Disclosures
About Market Risk

A
smaller reporting company is not required to provide the information required
by this Item.

Item 4T. 
Controls and Procedures

Disclosure Controls and Procedures

Disclosure
controls and procedures are designed with the objective of ensuring that
information required to be disclosed in our reports filed under the Securities
Exchange Act of 1934, as amended (the Exchange Act), such as this quarterly
report, is recorded, processed, summarized and reported within the time periods
specified in the SECs rules and forms. Disclosure controls are also designed
with the objective of ensuring that such information is accumulated and
communicated to our management, including the Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. Internal controls are procedures that are designed with the
objective of providing reasonable assurance that (1) our transactions are
properly authorized, recorded and reported; and (2) our assets are safeguarded
against unauthorized or improper use, to permit the preparation of our
consolidated financial statements in conformity with United States generally
accepted accounting principles.

As of the end
of the period covered by this quarterly report, we carried out an evaluation of
the effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)). Based upon
that evaluation, our Chief Executive and Chief Financial Officer concluded
that, as of the end of the period covered by this quarterly report on Form
10-Q, our disclosure controls and procedures were adequate. There have been no
changes in our internal controls over financial reporting during the quarter
ended June 30, 2008.

Limitations on the Effectiveness of Control
Systems

Our management
does not expect that our disclosure controls and procedures or our internal
control over financial reporting will necessarily prevent all fraud or error. 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 that there are
resource constraints and the benefits of controls must be considered relative
to their costs. Due to the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, have been detected.

16

---



PART II
OTHER INFORMATION

Item 1.  
Legal Proceedings

None

Item 2. 
Unregistered Sales of Equity Securities

During
the period covered by this report there were no sales of equity securities that
were not registered under the Securities Act except as previously included in a
Current Report on Form 8-K.

Item 3. 
Defaults Upon Senior Securities

None

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

Sections
228(a) and (c) of the Delaware General Corporation Law provide that any action
that may be taken at a special meeting of shareholders may be taken by written
consent of shareholders holding at least a majority of a companys shares
entitled to vote on such action. On June 26, 2008, we received a written
consent approving an amendment to our certificate of incorporation, as amended,
to effect a reverse split of up to 1:25 of our outstanding shares of common
stock and to increase the number of authorized shares of capital stock to
150,000,000, of which 125,000,000 would be classified as common stock and
25,000,000 would be classified as preferred stock. A shareholder owning and
having the right to vote 5,255,947 shares of our outstanding common stock which
constituted approximately 64% of our total issued and outstanding common stock
executed such consent thereby approving such matters. Notice of such action was
sent to shareholders on or about July 10, 2008.

Item 5. 
Other Information

None

Item 6.  
Exhibits and Reports on Form 8-K

(a)
Exhibits

31.1
Certification of the Chief Executive and the Chief Financial Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002

32.1
Certification of the Chief Executive and the Chief Financial Officer pursuant
to 18 U.S.C. Section 1350

(b)
Reports on Form 8-K

1.
On April 22, 2008, Registrant filed a Current Report on Form 8-K regarding the
entry into a material definitive agreement, the creation of a direct financial
obligation or an obligation under an off-balance sheet arrangement, and the
unregistered sale of equity securities.

17

---



SIGNATURES

In accordance with 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, duly
authorized.

FIRST TRANSACTION
MANAGEMENT, INC.

|    |                                            | 
|--- | ------------------------------------------ | 
|By: | /s/ Susan Schreter                         | 
|    |                                            | 
|    | Susan Schreter, Chief
  Executive Officer, | 
|    | Chief Financial Officer
  and President    | 

Dated: July 23, 2008

18

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