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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q







|x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------

For the quarterly period ended: March 31, 2008



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|- | ---------------------------------------------------------------

For the transition period from  to

COMMISSION FILE NUMBER: 000-28201





DYNAMIC RESPONSE GROUP,
INC.

(Exact name of Registrant as specified in charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|FLORIDA                                                        |  | 52-2369185                          
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification Number)

4770 Biscayne Boulevard, Suite 1400, Miami, FL, 33137

(Address of principal executive offices) (ZIP Code)

305-576-6889

(Registrants telephone no., including area code)





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x    No   ̈

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



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

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

The number of shares outstanding of each of the issuers classes of common equity, as of May 14, 2008 was 90,548,066 shares.









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Table of Contents



|                               |  |                                                                                |  |     
|------------------------------ |  | ------------------------------------------------------------------------------ |  | ----
|                               |  |                                                                                |  | Page
|                               | 
|Part I  Financial Information |  | 3                                                                             
|                               |  |                                                                               
|Item 1.                        |  | Financial Statements                                                           |  | 3   
|                               |  |                                                                               
|Item 2.                        |  | Managements Discussion & Analysis of Financial Condition or Plan of Operation |  | 14  
|                               |  |                                                                               
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk.                    |  | 16  
|                               |  |                                                                               
|Item 4T.                       |  | Controls and Procedures                                                        |  | 17  
|                               | 
|Part II  Other Information    |  | 17                                                                            
|                               |  |                                                                               
|Item 1.                        |  | Legal Proceedings                                                              |  | 17  
|                               |  |                                                                               
|Item 1A.                       |  | Risk Factors                                                                   |  | 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                                                                       |  | 17  



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PART I FINANCIAL INFORMATION

Item 1. Financial Statements

Index to Financial Statements



|                                           |  |     
|------------------------------------------ |  | ----
|                                           |  | Page
|Consolidated Balance Sheets                |  | 4   
|                                           | 
|Statements of Consolidated Operations      |  | 5   
|                                           | 
|Statements of Consolidated Cash Flows      |  | 6   
|                                           | 
|Notes to Consolidated Financial Statements |  | 7   



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Dynamic Response Group, Inc.

Consolidated Balance Sheets

March 31, 2007 and 2008 (Unaudited)



|                                                                                                                                                          |  |               |             |   |                  |   |             |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                                                          |  | March 31,2008 |             |   | December 31,2007 |  
|ASSETS                                                                                                                                                    |  |               |             |   |                  |   |             |  
|                                                                                                                                                          |  |              
|Current Assets:                                                                                                                                           |  |               |             |   |                  |   |             |  
|Cash                                                                                                                                                      |  | $             | 145,666     |   |                  | $ | 571,571     |  
|Accounts receivable, net                                                                                                                                  |  |               | 2,009,333   |   |                  |   | 1,656,618   |  
|Inventory, net                                                                                                                                            |  |               | 596,803     |   |                  |   | 566,899     |  
|Direct response advertising cost                                                                                                                          |  |               | 299,192     |   |                  |   | 186,463     |  
|Deferred tax asset                                                                                                                                        |  |               | 231,308     |   |                  |   |            |  
|Other current assets                                                                                                                                      |  |               | 13,610      |   |                  |   | 103,517     |  
|                                                                                                                                                          |  |               |             |   |                  |   |             |  
|Total current assets                                                                                                                                      |  |               | 3,295,911   |   |                  |   | 3,085,068   |  
|                                                                                                                                                          |  |              
|Office equipment-net                                                                                                                                      |  |               | 26,889      |   |                  |   | 29,835      |  
|Product prototype                                                                                                                                         |  |               | 10,500      |   |                  |   | 10,500      |  
|Intangible assets-trademark and patent                                                                                                                    |  |               | 1,415,150   |   |                  |   | 1,340,150   |  
|Restricted cash                                                                                                                                           |  |               | 10,000      |   |                  |   | 10,000      |  
|Other assets                                                                                                                                              |  |               | 24,188      |   |                  |   | 24,188      |  
|                                                                                                                                                          |  |               |             |   |                  |   |             |  
|Total assets                                                                                                                                              |  | $             | 4,782,639   |   |                  | $ | 4,499,741   |  
|                                                                                                                                                          |  |               |             |   |                  |   |             |  
|LIABILITIES AND SHAREHOLDERS DEFICIENCY                                                                                                                  |  |               |             |   |                  |   |             |  
|                                                                                                                                                          |  |              
|Current Liabilities:                                                                                                                                      |  |               |             |   |                  |   |             |  
|Accounts payable and accrued expenses                                                                                                                     |  | $             | 4,487,118   |   |                  | $ | 4,253,707   |  
|Due to related parties                                                                                                                                    |  |               | 248,676     |   |                  |   | 279,411     |  
|Convertible promissory notes                                                                                                                              |  |               | 2,166,858   |   |                  |   | 2,166,858   |  
|                                                                                                                                                          |  |               |             |   |                  |   |             |  
|Total current liabilities                                                                                                                                 |  |               | 6,902,652   |   |                  |   | 6,699,976   |  
|                                                                                                                                                          |  |              
|Commitments and contingencies                                                                                                                             |  |               |             |   |                  |   |             |  
|                                                                                                                                                          |  |              
|Shareholders Deficiency:                                                                                                                                 |  |               |             |   |                  |   |             |  
|Common stock; $.0001 par value, 100,000,000 shares authorized, 85,273,066 issued and outstanding as of March 31, 2008 and
December 31, 2007, respectively |  |               | 8,527       |   |                  |   | 8,527       |  
|Additional paid-in capital                                                                                                                                |  |               | 14,317,923  |   |                  |   | 14,317,923  |  
|Accumulated deficit                                                                                                                                       |  |               | (16,446,463 | ) |                  |   | (16,526,685 | )
|                                                                                                                                                          |  |               |             |   |                  |   |             |  
|Total shareholders deficiency                                                                                                                            |  |               | (2,120,013  | ) |                  |   | (2,200,235  | )
|                                                                                                                                                          |  |               |             |   |                  |   |             |  
|Total liabilities and shareholders deficiency                                                                                                            |  | $             | 4,782,639   |   |                  | $ | 4,499,741   |  
|                                                                                                                                                          |  |               |             |   |                  |   |             |  

The accompanying notes are an integral part of these financial statements.



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Dynamic Response Group, Inc.

Statements of Operations

For The Three Month Period Ended March 31, 2007 and 2008 (Unaudited)



|                                             |  |      |            |   |      |   |            |  
|-------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                             |  | 2008 |            |   | 2007 |  
|Gross revenues                               |  | $    | 10,007,985 |   |      | $ | 4,352,903  |  
|Sales returns and allowances                 |  |      | (1,985,684 | ) |      |   | (870,581   | )
|                                             |  |      |            |   |      |   |            |  
|Net revenues                                 |  |      | 8,022,301  |   |      |   | 3,482,322  |  
|                                             |  |     
|Cost of revenues                             |  |      | 1,990,851  |   |      |   | 950,403    |  
|                                             |  |      |            |   |      |   |            |  
|Gross profit                                 |  |      | 6,031,450  |   |      |   | 2,531,919  |  
|                                             |  |     
|Operating expenses:                          |  |      |            |   |      |   |            |  
|Selling expenses                             |  |      | 3,287,788  |   |      |   | 1,300,586  |  
|General and administrative                   |  |      | 2,517,676  |   |      |   | 1,064,116  |  
|Consulting fees                              |  |      | 106,836    |   |      |   |           |  
|Depreciation                                 |  |      | 2,946      |   |      |   |           |  
|Taxes                                        |  |      | 105,203    |   |      |   |           |  
|                                             |  |      |            |   |      |   |            |  
|Total operating expenses                     |  |      | 6,020,449  |   |      |   | 2,364,702  |  
|                                             |  |      |            |   |      |   |            |  
|Income from operations                       |  |      | 11,001     |   |      |   | 167,217    |  
|                                             |  |      |            |   |      |   |            |  
|Other income (expense):                      |  |      |            |   |      |   |            |  
|Other income                                 |  |      | 10,279     |   |      |   | 9,955      |  
|Interest expense                             |  |      | (72,366    | ) |      |   | (104,985   | )
|                                             |  |      |            |   |      |   |            |  
|                                             |  |      | (62,087    | ) |      |   | (95,030    | )
|                                             |  |     
|Income (loss) before benefit from income tax |  |      | (51,086    | ) |      |   | 72,187     |  
|                                             |  |     
|Benefit from income tax                      |  |      | 231,308    |   |      |   | 225,000    |  
|                                             |  |      |            |   |      |   |            |  
|Net income                                   |  | $    | 180,222    |   |      | $ | 297,187    |  
|                                             |  |      |            |   |      |   |            |  
|Weighted common shares outstanding:          |  |      |            |   |      |   |            |  
|Basic and diluted                            |  |      | 85,273,066 |   |      |   | 66,713,191 |  
|                                             |  |      |            |   |      |   |            |  
|Net income (loss) per common share           |  | $    | 0.00       |   |      | $ | 0.00       |  
|                                             |  |      |            |   |      |   |            |  

The accompanying notes are an integral part of these financial statements.



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Dynamic Response Group, Inc.

Statement of Cash Flows

(Unaudited)



|                                                                              |  |                               |          |   |      |   |          |  
|----------------------------------------------------------------------------- |  | ----------------------------- | -------- | - | ---- | - | -------- | -
|                                                                              |  | For the Three MonthsMarch 31, |         
|                                                                              |  | 2008                          |          |   | 2007 |  
|Cash flows from operating activities:                                         |  |                               |          |   |      |   |          |  
|Net income                                                                    |  | $                             | 180,222  |   |      | $ | 297,187  |  
|Adjustments to reconcile net income to net cash used in operating activities: |  |                               |          |   |      |   |          |  
|Depreciation                                                                  |  |                               | 2,946    |   |      |   |         |  
|Provision for returns                                                         |  |                               | 20,000   |   |      |   | 20,000   |  
|Provision for doubtful accounts                                               |  |                               | 223,000  |   |      |   | 100,000  |  
|Changes in operating assets and liabilities:                                  |  |                               |          |   |      |   |          |  
|Accounts receivable                                                           |  |                               | (575,715 | ) |      |   | 17,632   |  
|Inventory                                                                     |  |                               | (49,904  | ) |      |   | (182,661 | )
|Prepaid expenses and other asset                                              |  |                               | 89,908   |   |      |   | (2,213   | )
|Capitalized direct response advertising cost                                  |  |                               | (112,729 | ) |      |   |         |  
|Deferred taxes                                                                |  |                               | (231,308 | ) |      |   | (225,000 | )
|Other assets                                                                  |  |                               |         |   |      |   | (5,000   | )
|Accounts payable and accrued expenses                                         |  |                               | 133,411  |   |      |   | (412,294 | )
|Due to related party                                                          |  |                               | (30,735  | ) |      |   |         |  
|                                                                              |  |                               |          |   |      |   |          |  
|Net cash used in operating activities                                         |  |                               | (350,905 | ) |      |   | (392,349 | )
|                                                                              |  |                               |          |   |      |   |          |  
|Cash flows used in investing activity:                                        |  |                               |          |   |      |   |          |  
|Payments toward patent agreement                                              |  |                               | (75,000  | ) |      |   | (37,500  | )
|                                                                              |  |                               |          |   |      |   |          |  
|Net cash used in investing activity                                           |  |                               | (75,000  | ) |      |   | (37,500  | )
|                                                                              |  |                               |          |   |      |   |          |  
|Cash flows from financing activities:                                         |  |                               |          |   |      |   |          |  
|Repayment of loans payable                                                    |  |                               |         |   |      |   | (20,000  | )
|Proceeds from issuance of convertible promissory notes                        |  |                               |         |   |      |   | 300,983  |  
|Repayment of promissory note                                                  |  |                               |         |   |      |   | (52,500  | )
|Payments of financing fees                                                    |  |                               |         |   |      |   | (40,100  | )
|                                                                              |  |                               |          |   |      |   |          |  
|Net cash provided by financing activities                                     |  |                               |         |   |      |   | 188,383  |  
|                                                                              |  |                              
|Net decrease in cash                                                          |  |                               | (425,905 | ) |      |   | (241,466 | )
|                                                                              |  |                              
|Cash, beginning of year                                                       |  |                               | 571,571  |   |      |   | 364,121  |  
|                                                                              |  |                               |          |   |      |   |          |  
|Cash, end of year                                                             |  | $                             | 145,666  |   |      | $ | 122,655  |  
|                                                                              |  |                               |          |   |      |   |          |  
|Supplemental disclosures of cash flow information:                            |  |                               |          |   |      |   |          |  
|Cash paid for taxes                                                           |  | $                             | 72,366   |   |      | $ |         |  
|                                                                              |  |                               |          |   |      |   |          |  
|Cash paid for interest                                                        |  | $                             | 105,203  |   |      | $ | 104,985  |  
|                                                                              |  |                               |          |   |      |   |          |  

The accompanying notes are an integral part of these financial statements.



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DYNAMIC RESPONSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

NOTE 1 - NATURE OF BUSINESS

Dynamic Response Group, Inc., (the Company), is a leading innovative strategic marketing company engaged in the business of Electronic & Multi
Media Retailing, including print, radio, television and the internet and considers itself an emerging leader in the use of direct response transactional television programming, known as infomercials, to market consumer
products.

The accompanying interim unaudited financial information has been prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to
such rules and regulations. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company as of March 31, 2008 and the related operating
results and cash flows for the interim period presented have been made. The results of operations of such interim period are not necessarily indicative of the results of the full year. This financial information should be read in conjunction
with the Consolidated Financial Statements and Notes thereto included in the Companys Annual Report on Form 10-KSB for the year ended December 31, 2007.

NOTE 2 - BASIS OF PRESENTATION AND CONSOLIDATION

The accompanying condensed consolidated financial statements include the results of
operations of all subsidiaries over which the Company holds a 100% interest. The results of operations of these companies are accounted for using the consolidated method of accounting. All material inter-company accounts and transactions have been
eliminated.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

In preparing financial statements in conformity with accounting principles generally accepted in
the United States, management is required 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 and revenues and
expenses during the reporting period. Actual results will differ from those estimates. Significant estimates during the periods include the provision for doubtful accounts, provision for product returns, evaluation of obsolete inventory, and the
useful life of long-term assets, such as property, plant and equipment.

Fair value of financial instruments

The carrying amounts of financial instruments, including cash, accounts receivable, inventory, accounts payable and accrued expenses approximates fair value at
March 31, 2008 and December 31, 2007 due to the relatively short maturity of the instruments. The carrying value of long-term debt and convertible promissory notes approximates fair value at March 31, 2008 and December 31, 2007
based upon terms available for companies under similar arrangements.



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DYNAMIC RESPONSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

Revenue recognition

The Company recognizes
product revenue, net of estimated sales discounts, returns and allowances, in accordance with Staff Accounting Bulletin (SAB) No. 104, "Revenue Recognition in Financial Statements" which established that revenue can be recognized when
persuasive evidence of an arrangement exists, the product has been shipped, all significant contractual obligations have been satisfied, the fee is fixed or determinable and collection is reasonably assured. In addition, the Company recognizes
product revenue in accordance with Statement of Financial Accounting Standard (SFAS) No. 48 Revenue Recognition When Right of Return Exists. This statement requires that in order to recognize revenue at the point of sale when the buyer
has a return privilege, the amount of future returns must be reasonably estimable by the seller company.

Cash and cash equivalents

The Company considers all highly liquid debt securities purchased with original or remaining maturities of three months or less to be cash equivalents. The carrying value
of cash equivalents approximates fair value.

Restricted cash

In accordance with Accounting Review Board (ARB) No. 43, Chapter 3A Current Assets and Current Liabilities, cash which is restricted as to withdrawal is considered a noncurrent asset. Restricted cash consists of a reserve
for credit card processing of approximately $10,000, which the Company holds in a separate escrow account as required by its third party inventory fulfillment center.

Accounts receivable

Accounts receivable are reported at net realizable value. The Company has established an
allowance for doubtful accounts based upon factors pertaining to the credit risk of specific customers, historical trends, and other information. Delinquent accounts are written-off when it is determined that the amounts are uncollectible. As of
March 31, 2008 and December 31, 2007, the provision for doubtful accounts was approximately $223,000 and $100,000, respectively.

Inventories

The Companys inventory consists of finished goods. Inventories are stated at the lower of cost or market, with cost being determined by the
first-in, first-out (FIFO) method. The Company writes down its inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about
future demand and market conditions. The Company writes down inventory during the period in which such products are considered no longer effective. For the three months ended March 31, 2008 and 2007, the Company has written down $0 and $0,
respectively.



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DYNAMIC RESPONSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

Property and equipment

Property and equipment are
stated at cost less accumulated depreciation and amortization. Depreciation is recorded on the straight-line basis over the estimated useful lives of the assets, which range from three to ten years. Normal maintenance and repairs of property and
equipment are expensed as incurred while renewals, betterments and major repairs that materially extend the useful life of property and equipment are capitalized. Upon retirement or disposition of property and equipment, the asset and related
accumulated depreciation or amortization is removed from the accounts and any resulting gain or loss is charged to operations.

Intangible assets

The Company accounts for intangible assets in accordance with SFAS 142 Goodwill and Other Intangible Assets. Generally, intangible assets with
indefinite lives, and goodwill, are no longer amortized; they are carried at lower of cost or market and subject to annual impairment evaluation, or interim impairment evaluation if an interim triggering event occurs, using a new fair market value
method. Intangible assets with finite lives are amortized over those lives, with no stipulated maximum, and an impairment test is performed only when a triggering event occurs. Such assets are amortized on a straight-line basis over the estimated
useful life of the asset.

Intangible assets consist of license payments made in accordance with an agreement to purchase the formula and patent used in
the Companys primary product. The Company considers the patent to have an indefinite life.

Income taxes

The Company uses the liability method for income taxes as required by SFAS No. 109 Accounting for Income Taxes. Under this method, deferred tax assets
and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates and laws that will be in effect when the differences
are expected to reverse. Valuation allowances are established when it is more likely than not that the deferred tax assets will not be realized.

Provision for Returns

In the normal course of business, the Company does not provide stock-balancing or price protection rights to its
distributors; however, on a non-recurring basis, the Company has accepted product returns. The Company estimates its provision for product returns to amount to approximately $20,000 for the three months ended March 31, 2008 and 2007. Management
establishes provisions for estimated returns concurrently with the recognition of revenue. The provisions are established based upon consideration of a variety of factors, including, among other things, recent and historical return rates for both
specific distributors and projected economic conditions.



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DYNAMIC RESPONSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

Shipping and handling costs

Shipping and handling
costs are included in cost of revenues in accordance with guidance established by the Emerging Issues Task Force (EITF) No. 00-10, Accounting for Shipping and Handling Costs. EITF 00-10 permits companies to adopt a policy of including
shipping and handling costs in cost of sales or other income statement line items.

Advertising

Advertising costs are expensed as incurred, except for direct response advertising. Direct response advertising consists primarily of costs associated with eliciting
sales to customers, principally the direct response television advertising, and the e-commerce catalog mailings. In accordance with the American Institute of Certified Public Accountants Statement of Position (SOP) 93-7, Reporting on
Advertising Costs, these capitalized direct response advertising costs are amortized over the period during which the future benefits are expected to be received, generally six to twelve months.

The Company incurred advertising expenses of $2,909,888 and $1,995,828 during 2008 and 2007, respectively. The Company capitalized direct response advertising costs of
approximately $112,729 during the three months ended March 31, 2008. The balance of deferred advertising costs as of March 31, 2008 is $299,192.

Income (loss) per share

The Company presents basic income (loss) per share and diluted earnings per share in accordance with the provisions
of SFAS No. 128 Earnings per Share.

Under SFAS 128, basic net loss per share is computed by dividing the net loss for the year by the
weighted average number of common shares outstanding during the year. Diluted net loss per share is computed by dividing the net loss for the year by the weighted average number of common shares and common share equivalents outstanding during the
year.

Concentration of credit risks

The Company is
subject to concentrations of credit risk primarily from cash and cash equivalents and accounts receivable. The Company maintains accounts with financial institutions, which at times exceeds the insured Federal Deposit Insurance Corporation limit of
$100,000. The Company minimizes its credit risks associated with cash by periodically evaluating the credit quality of its primary financial institutions. The Companys accounts receivables are due from the individuals in which it markets its
products. The Company does not require collateral to secure its accounts receivables. No customers accounted for more than 10% of its net accounts receivables.



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DYNAMIC RESPONSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

Stock compensation expense

The Company accounts
for stock compensation expense under Financial Accounting Standard Board (FASB) Staff Position (FSP) FAS 123(R)-5, which was issued on October 10, 2006. The FSP provides that instruments that were originally issued as employee compensation and then
modified, and that modification is made to the terms of the instrument solely to reflect an equity restructuring that occurs when the holders are no longer employees, then no change in the recognition or the measurement (due to a change in
classification) of those instruments will result if both of the following conditions are met: (a). There is no increase in fair value of the award (or the ratio of intrinsic value to the exercise price of the award is preserved, that is, the holder
is made whole), or the antidilution provision is not added to the terms of the award in contemplation of an equity restructuring; and (b). All holders of the same class of equity instruments (for example, stock options) are treated in the same
manner.

New accounting pronouncements

Disclosure
about Derivative Instruments and Hedging Activities

In March 2008, the FASB issued SFAS No. 161, Disclosure about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133, (SFAS 161). This statement requires that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation.
The Company is required to adopt SFAS 161 on January 1, 2009. The Company is currently evaluating the potential impact of SFAS No. 161 on the Companys consolidated financial statements.

Determination of the Useful Life of Intangible Assets

In April 2008,
the FASB issued FSP FAS 142-3, Determination of the Useful Life of Intangible Assets,, which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of intangible
assets under FASB 142 Goodwill and Other Intangible Assets. The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of the expected cash flows used to
measure the fair value of the asset under FASB 141 (revised 2007) Business Combinations and other U.S. generally accepted accounting principles. The Company is currently evaluating the potential impact of FSP FAS 142-3 on its
consolidated financial statements.

Reclassifications

Certain amounts in prior year consolidated financial statements have been reclassified for comparative purposes to conform to the presentation in the current year condensed consolidated financial statements.

NOTE 4 - ACCOUNTS RECEIVABLE

Accounts receivable consist of trade
receivables due from individuals. The balance at March 31, 2008 and December 31, 2007 is $2,009,333 and $1,656,618, respectively, which are shown net of allowances for doubtful accounts and product returns of approximately $223,000 and
$100,000.



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##### Table of Contents

DYNAMIC RESPONSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

NOTE 5 - INVENTORIES

Inventories at
March 31, 2008 and December 31, 2007 consist of the following:



|               |  |      |         |   |      |   |         |  
|-------------- |  | ---- | ------- | - | ---- | - | ------- | -
|               |  | 2008 |         |   | 2007 |  
|Finished goods |  | $    | 616,803 |   |      | $ | 637,535 |  
|Reserves       |  |      | (20,000 | ) |      |   | (70,636 | )
|               |  |      |         |   |      |   |         |  
|Inventory, net |  | $    | 596,803 |   |      | $ | 566,899 |  
|               |  |      |         |   |      |   |         |  

NOTE 6- CONVERTIBLE NOTES

The total convertible notes as of March 31, 2008 and December 31, 2007 was $2,166,858. The convertible notes bear interest at 15% per annum. The convertible notes are can be converted at the rate of
$1.00 per share. The convertible notes are unsecured and mature at the end of 2007 and in early 2008. Expiration terms for the convertible notes have been extended and will mature during 2009 or 2010.

NOTE 7  INCOME TAXES

The benefit from income taxes from
continued operations for the three months ended March 31, 2008 and 2007 consists of the following:



|                                                 |  |      |          |   |      |   |          |  
|------------------------------------------------ |  | ---- | -------- | - | ---- | - | -------- | -
|                                                 |  | 2008 |          |   | 2007 |  
|Current:                                         |  |      |          |   |      |   |          |  
|Federal                                          |  | $    |         |   |      | $ |         |  
|State                                            |  |      |         |   |      |   |         |  
|Deferred:                                        |  |      |          |   |      |   |          |  
|Federal                                          |  |      | (251,542 | ) |      |   | (225,000 | )
|State                                            |  |      |         |   |      |   |         |  
|Benefit from the decrease in valuation allowance |  |      | 20,434   |   |      |   |         |  
|                                                 |  |      |          |   |      |   |          |  
|Benefit for income taxes, net                    |  | $    | (231,308 | ) |      | $ | (225,000 | )
|                                                 |  |      |          |   |      |   |          |  

The difference between income tax expense computed by applying the federal statutory corporate tax rate and actual
income tax expense is as follows:



|                                  |  |       |   
|--------------------------------- |  | ----- | --
|Statutory federal income tax rate |  | 35.0  | % 
|Decrease in valuation allowance   |  | (81.0 | )%
|State income taxes                |  | 5.5   | % 
|Other                             |  |      | % 
|Valuation allowance               |  | (40.5 | )%
|                                  |  |       |   
|Effective tax rate                |  | (0.0  | )%
|                                  |  |       |   



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##### Table of Contents

DYNAMIC RESPONSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

Deferred income taxes result from temporary differences in the recognition of income and expenses for financial reporting purposes and for tax
purposes. The tax effect of these temporary differences representing deferred tax assets and liabilities result principally from the following:



|                                 |  |      |           
|-------------------------------- |  | ---- | ----------
|                                 |  | 2008
|Net operating loss-carryforwards |  | $    | 16,577,771
|expiring between 2019-2028       |  |      |          
|Depreciation and amortization    |  |      |          
|Other                            |  |      |          
|                                 |  |      |           
|Deferred income tax asset        |  | $    | 16,577,771
|                                 |  |      |           

The net deferred tax assets and liabilities are comprised of the following:



|                              |  |      |            |  
|----------------------------- |  | ---- | ---------- | -
|                              |  | 2008 |           
|Deferred tax assets:          |  | $    |           |  
|Current                       |  |      |           |  
|Non-current                   |  |      | 6,631,108  |  
|Less: valuation allowance     |  |      | (6,400,000 | )
|                              |  |      |            |  
|Net deferred income tax asset |  | $    | 231,108    |  
|                              |  |      |            |  

NOTE 8- COMMITMENTS AND CONTINGENCIES

The Company is subject to claims and lawsuits in the ordinary course of business. In the opinion of management, the Company is adequately covered by insurance. If not insured, management believes such matters will
not, in the aggregate, have a material adverse impact upon the Companys financial position, results of operations, or cash flows.



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##### Table of Contents

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Statements in this Form 10-Q
Quarterly Report may be forward-looking statements. Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to
our future activities or other future events or conditions. These statements are based on our current expectations, estimates and projections about our business based, in part, on assumptions made by our management. These assumptions are not
guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements due
to numerous factors, including those risks discussed in this Form 10-Q Quarterly Report, under Managements Discussion and Analysis of Financial Condition and Results of Operations and in other documents which we file with the U.S.
Securities and Exchange Commission.

In addition, such statements could be affected by risks and uncertainties related to our financial condition, factors
that affect our industry, market and customer acceptance, changes in technology, fluctuations in our quarterly results, our ability to continue and manage our growth, liquidity and other capital resource issues, competition, fulfillment of
contractual obligations by other parties and general economic conditions. Any forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update any forward-looking statement to reflect
events or circumstances after the date of this Form 10-Q Quarterly Report, except as required by law. Operating results for the quarter ended March 31, 2008 are not necessarily indicative of the results that can be expected for the year ended
December 31, 2008.

SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES.

We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States, which requires us to make judgments, estimates and assumptions that affect the amounts
reported in the consolidated financial statements and accompanying notes. Note 3 to the consolidated financial statements in this Form 10-Q summarizes the significant accounting policies and methods used in the preparation of our consolidated
financial statements.

We believe the following to be critical accounting policies whose application has a material impact on our financial presentation,
and involve a higher degree of complexity, as they require us to make judgments and estimates about matters that are inherently uncertain.

Our significant
accounting policies include:

Allowances for Doubtful Accounts and Product ReturnsWe maintain allowances for doubtful accounts for estimated losses
resulting from the inability of our customers to make required payments. We make estimates of the collectibility of our accounts receivable by analyzing historical bad debts, specific customer creditworthiness, and current economic trends. If the
financial condition of our customers were to deteriorate such that their ability to make payments to us was impaired, additional allowances could be required. We record allowances for product returns to be received in future periods at the time we
recognize the original sale. We base the amounts of the returns allowances upon historical experience and future expectations.

InventoryInventory
consists primarily of finished goods held for sale and is stated at the lower of cost (first-in, first-out method) or market. We identify the inventory items to be written down for obsolescence based on the items current sales status and
condition. We write down discontinued or slow moving inventories based on an estimate of the markdown to retail price needed to sell through our current stock level of the inventories.

Goodwill and Other IntangiblesGoodwill represents the excess of the purchase consideration over the estimated fair value of assets acquired less liabilities assumed in a business acquisition. Our other
intangibles mainly consist of customer and marketing related assets. We no longer amortize goodwill, but instead we review it for impairment annually or more frequently if impairment indicators arise, on a reporting unit level. We compare the
estimated fair value of a reporting unit with its carrying amount, including goodwill. If the estimated fair value of a reporting unit exceeds its carrying amount, we consider the goodwill of the reporting unit not impaired. If the carrying amount
of a reporting unit exceeds its estimated fair value, we perform the goodwill impairment test to measure the amount of impairment loss. The annual process of evaluating the potential impairment of goodwill is highly subjective and requires
significant judgment at many points during the analysis. Application of alternative assumptions and definitions could yield significantly different results.

Stock Based Compensation We record stock base compensation under Statement of Financial Accounting Standards No. 123 (SFAS 123), Accounting for Stock-Based Compensation, which provides for the use of a fair
value based method of accounting for stock-based compensation. However, we record the compensation cost for stock options granted to employees using the intrinsic value method of accounting as prescribed by Accounting Principles Board Opinion
No. 25 ("APB 25"), "Accounting for Stock Issued to Employees", which only requires charges to compensation expense for the excess, if any, of the fair value of the underlying stock at the date a stock option is granted (or at an appropriate
subsequent measurement date) over the amount the employee must pay to acquire the stock. We have elected to account for employee stock options using the intrinsic value method under APB 25, however, under SFAS 123 we are required to provide pro
forma disclosures of net loss as if a fair value based method of accounting had been applied.



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##### Table of Contents

Overview and Outlook

Our
business sells directly to consumers, both domestically and abroad. During the first quarter of 2008 we generated gross revenues of $10 million, up from $4.3 million during the same period in 2007, reflecting a 130% increase. This increase reflects
our continued product penetration of Riddex Plus, Legends of Soul and The Official NASCAR Club.

We believe our growth is and will continue
to be driven by new innovative products, delivered to the consumer via broadcast, catalog, Internet, retailers, and international licensing. We have increased our focus on our content creation and regional distribution, which strategically provides
increased branding opportunities, significantly higher operating contribution and greater mainstream penetration. We plan to invest in our businesses over the next two years to better capitalize on strong relationships with our loyal consumer
audience and growing broadband. This will allow us to focus on better leveraging our sales.

We believe a number of factors are important to our long-term
success, including building our brands, increasing international growth by expanding into new markets primarily through license arrangements, extending our product lines into wellness/exercise and cookware products, and enhancing our multimedia
platform through new media opportunities, initiatives and acquisitions.

RESULTS OF OPERATIONS

The following table sets forth certain financial data as a percentage of revenues for the periods indicated:



|                                      |  |                                        |   |  |       |   
|------------------------------------- |  | -------------------------------------- | - |  | ----- | --
|                                      |  | Three months ended March 31(unaudited) |  
|                                      |  | 2008                                   |   |  | 2007  |   
|Net revenue                           |  | 100.0                                  | % |  | 100.0 | % 
|Cost of goods sold                    |  | 19.8                                   | % |  | 21.8  | % 
|                                      |  |                                        |   |  |       |   
|Gross profit                          |  | 60.2                                   | % |  | 58.1  | % 
|                                      |  |                                        |   |  |       |   
|Expenses:                             |  |                                        |   |  |       |   
|Selling and operating                 |  | 32.9                                   | % |  | 29.9  | % 
|Corporate, general and administration |  | 25.2                                   | % |  | 24.4  | % 
|                                      |  |                                        |   |  |       |   
|Total expenses                        |  | 60.1                                   | % |  | 54.3  | % 
|                                      |  |                                        |   |  |       |   
|Net Income                            |  | 1.8                                    | % |  | 6.8   | % 
|Other income (expense), net           |  | .1                                     | % |  | .22   | % 
|                                      |  |                                        |   |  |       |   
|Net loss per common share             |  | (0.00                                  | ) |  | (0.00 | )%
|                                      |  |                                        |   |  |       |   

Three Months Ended March 31, 2007 Compared to Three Months Ended March 31, 2008

Net revenue. Net revenue increased $4.5 million, or 43.4%, to $10 million during the first quarter of 2008 from $4.3 million during the same
period of 2007. During the quarter, we increased our media spending into regional markets for our product offerings. This increase primarily reflects the continued success of our direct response marketing revenues.

Gross profit. Gross profit increased $3.49 million, or 41.9%, to $6.03 million during the first quarter of 2008 from $2.5 million during 2007. As a percentage of
net revenue, gross profit increased slightly to 75.2% during this period from 72.7% during the same period of 2007.

Selling and operating expenses.
Selling and operating expenses increased $1.98 million, to $3.28 million during the first quarter of 2008 from $1.3 million during the same period of 2007, resulting primarily from increased spending in media, which has a direct correlation to
revenue.



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##### Table of Contents

Corporate, general and administration expenses. Corporate, general and administration expenses increased $1.4
million, to $2.5 million during the first quarter of 2008 from $1.06 million during the same period of 2007, primarily due to our planned investments to support the increased revenue base. Further in previous years the Company had failed to
make appropriate tax payments and those additional costs are currently being offset against current earnings as the Company has entered into a negotiated amnesty program to catch up back sales taxes.

Net income. Net income decreased $116,000, to $180,222 during the first quarter of 2008 from $297,187 during the same period of 2007. Earnings per share
stayed even at 0.00. The decrease in net income is primarily due to the planned costs of infrastructure development and media expenses referenced above.

LIQUIDITY AND CAPITAL RESOURCES

Our capital needs arise from working capital required to fund operations, capital expenditures related to the
development of our Internet platforms and new products, expansions and improvements to our infrastructure, and future growth. These capital requirements depend on numerous factors, including the rate of market acceptance of our product offerings,
the ability to expand our customer base, the cost of ongoing upgrades to our product offerings, the level of expenditures for sales and marketing, the level of investment in distribution systems and facilities and other factors. The timing and
amount of these capital requirements are variable and we cannot accurately predict them. Additionally, we will continue to pursue opportunities to expand our suite of products, evaluate possible investments in businesses, products and technologies,
and increase our sales and marketing programs and the branding of product promotions as needed.

Cash Flows

The following table summarizes our primary sources (uses) of cash during the periods presented:



|                                                     |  |                          |          |   |                          |   |          |  
|---------------------------------------------------- |  | ------------------------ | -------- | - | ------------------------ | - | -------- | -
|                                                     |  | March 31,2008(unaudited) |          |   | March 31,2007(unaudited) |  
|Net cash provided by (used in):                      |  |                          |          |   |                          |   |          |  
|Operating activities                                 |  | $                        | (350,905 | ) |                          | $ | (392,349 | )
|Investing activities                                 |  |                          | (75,000  | ) |                          |   | (37,5000 | )
|Financing activities                                 |  |                          | 0        |   |                          |   | (88,383  | )
|                                                     |  |                          |          |   |                          |   |          |  
|Net (decrease) increase in cash and cash equivalents |  | $                        | (425,905 | ) |                          | $ | (241,466 | )
|                                                     |  |                          |          |   |                          |   |          |  
|Cash at the beginning of the period                  |  |                          | $571,571 |   |                          | $ | 122,655  |  
|                                                     |  |                         
|Cash at the end of the period:                       |  |                          | $145,666 |   |                          | $ | 122,655  |  

We believe our available cash, cash expected to be generated from operations, and borrowing capabilities should be
sufficient to fund our operations on both a short-term and long-term basis. However, our projected cash needs may change as a result of acquisitions, product development, unforeseen operational difficulties or other factors.

In the normal course of our business, we investigate, evaluate and discuss acquisition, joint venture, strategic relationship and other business combination
opportunities for new products. For any future investment, acquisition or joint venture opportunities, we may consider using then-available liquidity, issuing equity securities or incurring additional indebtedness.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable to smaller reporting companies.



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##### Table of Contents

Item 4T. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 13a-15(e). This evaluation was done under the supervision and with the participation of our principal executive officer and principal financial officer. Based upon that evaluation, our principal executive
officer and principal financial officer concluded that our disclosure controls and procedures are not effective in gathering, analyzing and disclosing information needed to satisfy our disclosure obligations under the Exchange Act. Our limited
staffing has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and proper procedures within our internal control system. We will use our best efforts to implement necessary policies and
procedures within the Company to provide adequate disclosure controls and procedures.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the period covered by this report that have materially affected, or
are reasonably likely to affect, our internal control over financial reporting.

PART II  OTHER INFORMATION

Item 1. Legal Proceedings

The registrant is not engaged in any legal proceedings at the date of this report.

Item 1A. Risk Factors.

Not applicable to smaller report company.

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

We have not sold any equity securities during the
period covered by this report that were not registered pursuant to the Securities Act of 1933, nor have we purchased any of our equity securities during such period.

Item 3. Defaults Upon Senior Securities.

We are not in default nor have we been in default upon our senior securities.

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

We did not submit any matters to a vote of our security
holders during the period covered by this report.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits.



|     |  |                                                                                                 
|---- |  | ------------------------------------------------------------------------------------------------
|31.1 |  | Certification of Chief Executive Officer Pursuant to Section 302 of the SarbanesOxley Act.     
|     | 
|31.2 |  | Certification of Principal Accounting Officer Pursuant to Section 302 of the SarbanesOxley Act.
|     | 
|32.1 |  | Certification of Chief Executive Officer Pursuant to Section 906 of the SarbanesOxley Act.     
|     | 
|32.2 |  | Certification of Principal Accounting Officer Pursuant to Section 906 of the SarbanesOxley Act.



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##### Table of Contents

SIGNATURES

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



|                   |  |                                           |  |                                                         
|------------------ |  | ----------------------------------------- |  | --------------------------------------------------------
|                   |  | Dynamic Response Group, Inc. (Registrant)
|                   |  |                                          
|Date: May 15, 2008 |  | By:                                       |  | /s/ Melissa K. Rice                                     
|                   |  |                                           |  | Melissa K. Rice President & Principal Executive
Officer 
|                   |  |                                          
|Date: May 15, 2008 |  | By:                                       |  | /s/ Melissa K. Rice                                     
|                   |  |                                           |  | Melissa K. Rice Principal Financial & Accounting
Officer



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##### Table of Contents

Exhibit Index



|            |  |                                                                                                 
|----------- |  | ------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                     
|31.1        |  | Certification of Chief Executive Officer Pursuant to Section 302 of the SarbanesOxley Act.     
|            | 
|31.2        |  | Certification of Principal Accounting Officer Pursuant to Section 302 of the SarbanesOxley Act.
|            | 
|32.1        |  | Certification of Chief Executive Officer Pursuant to Section 906 of the SarbanesOxley Act.     
|            | 
|32.2        |  | Certification of Principal Accounting Officer Pursuant to Section 906 of the SarbanesOxley Act.



19