|   | Nevada                                                |                                           | 88-0460457 |   |
|--------|-------------------------------------------------------|------------------------------------------------|------------|--------|
|   | (State or other jurisdiction              of          | (IRS Employer Identification              No.) |
|   | incorporation)                                        |                                           |       |   |
|   |                                                  |                                           |       |   |
|   | 4703 Shavano Oak, Suite 104                           |                                           |            |   |
|   | San Antonio, Texas                                    |                                           | 78249      |   |
|   | (Address of Principal Executive              Offices) | (Zip Code)                                     |       |

| Class                                     |   | Outstanding                as of May 14.                2007 |
|------------------------------------------------|--------|--------------------------------------------------------------|
|                                           |   |                                                         |
| Common                stock, $0.0001 par value |   | 20,690,386                                                   |

----

|                                                                                                                                                                              | Page   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                              |   |
| PART                  I. FINANCIAL INFORMATION                                                                                                                                    | 1      |
|                                                                                                                                                                              |   |   |
|                                                                                                                                                                              |   |   |
| ITEM                  1. CONSOLIDATED FINANCIAL STATEMENTS                                                                                                                        | 1      |
|                                                                                                                                                                              |   |   |
| ITEM                  2. MANAGEMENT'S PLAN OF OPERATIONS                                                                                                                          | 7      |
|                                                                                                                                                                              |   |   |
| ITEM                  3. CONTROLS AND PROCEDURES                                                                                                                                  | 8      |
|                                                                                                                                                                              |   |   |
| PART                  II - OTHER INFORMATION                                                                                                                                      | 8      |
|                                                                                                                                                                              |   |   |
| ITEM                  1. LEGAL PROCEEDINGS                                                                                                                                        | 8      |
|                                                                                                                                                                              |   |   |
| ITEM                  2. EXHIBITS AND REPORTS ON FORM 8-K                                                                                                                         | 9      |
|                                                                                                                                                                              |   |   |
| SIGNATURES                                                                                                                                                                        | 11     |
|                                                                                                                                                                              |   |
|                                                                                                                                                                              |   |   |
| CERTIFICATIONS                  (attached as exhibits)                                                                                                                            |   |
|                                                                                                                                                                              |   |
|                                                                                                                                                                              |   |   |
| EXHIBIT                  NO, 31.1 - CERTIFICATION PRESIDENT AND CHIEF EXECUTIVE                  OFFICER                                                                          |   |
|                                                                                                                                                                              |   |   |
| EXHIBIT                  NO. 31.2 - CERTIFICATION CHIEF FINANCIAL OFFICER                                                                                                         |   |
|                                                                                                                                                                              |   |   |
| EXHIBIT                  NO. 32.1 - CERTIFICATION PURSUANT TO SECTION 906 OF SARBANES OXLEY                  ACT -                  PRESIDENT AND CHIEF EXECUTIVE OFFICER         |   |
|                                                                                                                                                                              |   |   |
| EXHIBIT                  NO. 32.1 - CERTIFICATION PURSUANT TO SECTION 906 OF SARBANES OXLEY                  ACT -                  CHIEF FINANCIAL                  OFFICER |   |

----

|                                                                                                                              |   |  March                    31, |        | December                    31, |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|-------------|---------------------------------|--------|
|                                                                                                                              |   |  2007                         |        | 2006                            |   |
|                                                                                                                              |   |                          |        |                            |   |
| ASSETS                                                                                                                            |   |                          |        |                            |   |
| Current                    Assets                                                                                                 |   |                          |        |                            |   |
| Cash                                                                                                                              |   | $                                  | 21,025      |                            | $      | 33,077 |   |
| Accounts                    receivable                                                                                            |   |                               | 79,788      |                            |   | 78,586 |   |
| Other                                                                                                                             |   |                               | 11,162      |                            |   | 12,686 |   |
|                                                                                                                              |   |                               |             |                            |   |  |   |
| Total                    Current Assets                                                                                           |   |                               | 111,975     |                            |   | 124,349 |   |
|                                                                                                                              |   |                               |        |                            |   |   |   |
| Property                      and equipment, net of accumulated depreciation of $208,412 &                      $448,932 |   |                               | 6,603       |                            |   | 7,202 |   |
| Assets                      held for sale, net of accumulated depreciation of $89,693 & $                      74,014         |   |                               | 558,941     |                            |   | 574,619 |   |
| Deposits                                                                                                                          |   |                               | 85,000      |                            |   | 255,000 |   |
| Total                    Assets                                                                                                   |   | $                                  | 762,519     |                            | $      | 961,170 |   |
|                                                                                                                              |   |                               |        |                            |   |   |   |
| LIABILIITES                    AND STOCKHOLDERS' DEFICIT                                                                          |   |                               |        |                            |   |   |   |
| Current                    Liabilities                                                                                            |   |                               |        |                            |   |   |   |
| Accounts                    payable                                                                                               |   | $                                  | 447,768     |                            | $      | 438,705 |   |
| Accounts                    payable - related parties                                                                             |   |                               | 99,000      |                            |   | 81,000 |   |
| Accrued                    interest and expense                                                                                   |   |                               | 204,770     |                            |   | 191,635 |   |
| Accrued                    interest and expense - related parties                                                                 |   |                               | 573,442     |                            |   | 517,036 |   |
| Deferred                    liability                                                                                             |   |                               | 70,000      |                            |   | - |   |
| Litigation                    settlement liability                                                                                |   |                               | 90,000      |                            |   | 90,000 |   |
| Notes                    payable - other                                                                                          |   |                               | 610,000     |                            |   | 850,000 |   |
| Notes                    payable - shareholder                                                                                    |   |                               | 4,302,796   |                            |   | 4,058,477 |   |
|                                                                                                                              |   |                               |             |                            |   |  |   |
| Total                    Current liabilities                                                                                      |   |                               | 6,397,776   |                            |   | 6,226,853 |   |
|                                                                                                                              |   |                               |        |                            |   |   |   |
| Long-Term                    Liabilities                                                                                          |   |                               |        |                            |   |   |   |
| Litigation                    settlement liability                                                                                |   |                               | 270,000     |                            |   | 292,500 |   |
|                                                                                                                              |   |                               |        |                            |   |   |   |
| Total                    Liabilities                                                                                              |   |                               | 6,667,776   |                            |   | 6,519,353 |   |
|                                                                                                                              |   |                               |        |                            |   |   |   |
| Commitments                    and Contigencies                                                                                   |   |                               |        |                            |   |   |   |
|                                                                                                                              |   |                               |        |                            |   |   |   |
| Stockholders'                    Deficit                                                                                          |   |                               |        |                            |   |   |   |
| Preferred                    stock, $.0001 par value, 5,000,000 shares authorized, no                                             |   |                               |        |                            |   |   |   |
| shares                    issued and outstanding                                                                                  |   |                               | -           |                            |   | - |   |
| Common                    stock, $.0001 par value, 100,000,000 shares authorized,                                                 |   |                               |        |                            |   |   |   |
| 20,690,386                    shares issued and outstanding                                                                       |   |                               | 2,069       |                            |   | 2,069 |   |
| Additional                    paid-in capital                                                                                     |   |                               | 19,649,549  |                            |   | 19,602,968 |   |
| Accumulated                    deficit                                                                                            |   |                               | (25,556,875 | )                               |   | (25,163,220 | ) |
|                                                                                                                              |   |                               |             |                            |   |  |   |
| Total                    Stockholders' Deficit                                                                                    |   |                               | (5,905,257  | )                               |   | (5,558,183 | ) |
|                                                                                                                              |   |                               |        |                            |   |   |   |
| Total                    Liabilities and Stockholders' Deficit                                                                    |   | $                                  | 762,519     |                            | $      | 961,170 |   |

----

| SYSTEMS                  MANAGEMENT SOLUTIONS, INC.         |
|-------------------------------------------------------------|
| CONSOLIDATED                  STATEMENTS OF OPERATIONS      |
| Three                  Months Ended March 31, 2007 and 2006 |
| (unaudited)                                                 |

|                                                  |   | 2007   |                           | 2006   |   |
|-------------------------------------------------------|--------|--------|--------------------------------|--------|--------|
|                                                  |   |   |                           |   |   |
| Revenue                                               |   | $      | 162,216                        |   | $      | 876,253 |   |
|                                                  |   |   |                           |   |   |   |   |
| Cost                  of sales                        |   |   | 10,492                         |   |   | 781,008 |   |
|                                                  |   |   |                                |   |   |  |   |
| Gross                  margin                         |   |   | 151,724                        |   |   | 95,245 |   |
|                                                  |   |   |                           |   |   |   |   |
| General                  and administrative           |   |   | 396,213                        |   |   | 432,792 |   |
| Depreciation                                          |   |   | 17,620                         |   |   | 12,163 |   |
| Amortization                                          |   |   | -                              |   |   | 11,833 |   |
| (Gain)/Loss                  on disposal of equipment |   |   | (1,016                         | )      |   | 3,095 |   |
|                                                  |   |   |       |   |   |      |   |
|                                                  |   |   |                                |   |   |  |   |
| Total                  operating expenses             |   |   | 412,817                        |   |   | 459,883 |   |
|                                                  |   |   |            |   |   |      |   |
| Net                  Operating Loss                   |   |   | (261,093                       | )      |   | (364,638 | ) |
|                                                  |   |   |                           |   |   |   |   |
|                                                  |   |   |                           |   |   |   |   |
| Interest                  expense                     |   |   | (132,562                       | )      |   | (104,969 | ) |
|                                                  |   |   |            |   |   |      |   |
| NET                  LOSS                             |   | $      | (393,655                       | )      | $      | (469,607 | ) |
|                                                  |   |   |                           |   |   |   |   |
|                                                  |   |   |                           |   |   |   |   |
|                                                  |   |   |                           |   |   |   |   |
| Basic                  and diluted loss per share     |   | $      | (0.02                          | )      | $      | (0.02 | ) |
|                                                  |   |   |                           |   |   |   |   |
| Weighted                  average shares outstanding  |   |   | 20,690,386                     |   |   | 20,673,164 |   |

----

| SYSTEMS                  MANAGEMENT SOLUTIONS, INC.         |
|-------------------------------------------------------------|
| CONSOLIDATED                  STATEMENTS OF CASH FLOWS      |
| Three                  Months Ended March 31, 2007 and 2006 |
| (unaudited)                                                 |

|                                                                                                          |   | 2007   |                           | 2006   |   |
|---------------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------|--------|--------|
| Cash                  Flows From Operating Activities                                                         |   |   |                           |   |   |
| Net                  loss                                                                                     |   | $      | (393,655                       | )      | $      | (469,607 | ) |
|                                                                                                          |   |   |                           |   |   |   |   |
| Adjustments                  to reconcile net loss to net cash used in operating                  activities: |   |   |                           |   |   |   |   |
| Imputed                  Interest                                                                             |   |   | 46,581                         |   |   | 37,570 |   |
| Depreciation                                                                                                  |   |   | 17,620                         |   |   | 12,163 |   |
| Amortization                                                                                                  |   |   | -                              |   |   | 11,833 |   |
| (Gain)/Loss                  on disposal of equipment                                                         |   |   | (1,016                         | )      |   | 3,095 |   |
| Changes                  in:                                                                                  |   |   |                           |   |   |   |   |
| Accounts                  receivable                                                                          |   |   | (1,202                         | )      |   | (73,376 | ) |
| Accounts                  receivable - related parties                                                        |   |   | -                              |   |   | (24,566 | ) |
| Inventory                                                                                                     |   |   | -                              |   |   | (13,399 | ) |
| Other                  current assets                                                                         |   |   | 1,524                          |   |   | (276,573 | ) |
| Accounts                  payable                                                                             |   |   | 9,063                          |   |   | 154,980 |   |
| Accounts                  payable - related parties                                                           |   |   | 18,000                         |   |   | 18,000 |   |
| Accrued                  expenses                                                                             |   |   | 13,134                         |   |   | (49,742 | ) |
| Accrued                  expenses - related parties                                                           |   |   | 56,406                         |   |   | 60,809 |   |
| Litigation                  settlement                                                                        |   |   | (22,500                        | )      |   | (20,000 | ) |
|                                                                                                          |   |   |       |   |   |      |   |
| Net                  Cash Used in Operating Activities                                                        |   |   | (256,045                       | )      |   | (628,813 | ) |
|                                                                                                          |   |   |                           |   |   |   |   |
|                                                                                                          |   |   |                           |   |   |   |   |
| Cash                  Flows From Investing Activities                                                         |   |   |                           |   |   |   |   |
| Purchase                  of fixed assets                                                                     |   |   | (1,726                         | )      |   | (99,558 | ) |
| Proceeds                  from sale of equipment                                                              |   |   | 1,400                          |   |   | 4,500 |   |
|                                                                                                          |   |   |            |   |   |      |   |
| Net                  Cash Used in Investing Activities                                                        |   |   | (326                           | )      |   | (95,058 | ) |

----

|                                                       |   | 2007   |               |  2006   |   |
|------------------------------------------------------------|--------|--------|--------------------|--------------|--------|
| Cash                  Flows From Financing Activities      |   |   |               |    |   |
| Proceeds                  from notes payable - shareholder |   |   | 244,319            |         |   | 212,000 |   |
| Proceeds                    from notes payable - other     |   |   | -                  |         |   | 500,000 |   |
|                                                       |   |   |     |         |   |       |   |
| Net                  Cash Provided by Financing Activities |   |   | 244,319            |         |   | 712,000 |   |
|                                                       |   |   |               |         |   |   |   |
| Net                  change in cash                        |   |   | (12,052            | )            |   | (11,871 | ) |
| Cash                  at beginning of period               |   |   | 33,077             |         |   | 98,468 |   |
|                                                       |   |   |               |         |   |   |   |
| Cash                  at end of period                     |   | $      | 21,025             |         | $      | 86,597 |   |

| Supplemental                    disclosures:                                             |   |   |    |   |   |
|------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|
| Income                    Tax Paid                                                       |   | $      | -       |   | $      | - |   |
| Interest                    Paid                                                         |   |   | 31,947  |   |   | 603 |   |
|                                                                                     |   |   |    |   |   |   |   |
| Non-cash                    operating and financing activities:                          |   |   |    |   |   |   |   |
|  Transfer                    of deposit rights for partial release of notes payable |   |   | 170,000 |   |   | - |   |
|  Common                    Stock issued as loan discount for Note Payable           |   |   | -       |   |   | 5,500 |   |

----

----

|                                              |               | Software                  Sales,         |               |               |         |                       |               |         |               |
|---------------------------------------------------|--------------------|------------------------------------------|--------------------|--------------------|--------------|----------------------------|--------------------|--------------|--------------------|
|                                              |               | Programming,                  Data       |               | Alternative        |         |                       |               |         |               |
|                               |               | Capturing                  & Storage |               | Fuels              |         | All                  Other |               | Total        |               |
| 3                  Months Ended March 31, 2007    |          |                                |          |     |    |                  |          |    |               |
| Revenues                  from external customers |               | $                                        | 152,016            |               | $            | 10,200                     |               | $            | -                  |   | $ | 162,216 |   |
| Intersegment                  revenues            |               |                                     | -                  |               |         | -                          |               |         | -                  |   |   | - |   |
| Profit                  from Operations           |               |                                     | (60,189            | )                  |         | (79,438                    | )                  |         | (121,466           | ) |   | (261,092 | ) |
| Identifiable                  assets              |               |                                     | 6,603              |               |         | 558,941                    |               |         | -                  |   |   | 565,544 |   |
| Capital                  Expenditures             |               |                                     | 1,726              |               |         | -                          |               |         | -                  |   |   | 1,726 |   |
| Depreciation                                      |               |                                     | 1,941              |               |         | 15,679                     |               |         | -                  |   |   | 17,620 |   |
|                          |     |                                     |     |     |         |             |     |         |     |     |   |      |   |
| 3                  Months Ended March 31, 2006    |          |                                     |          |     |         |                  |     |         |          |    |   |    |   |
| Revenues                  from external customers |               | $                                        | 57,377             |               | $            | 818,876                    |               | $            | -                  |   | $ | 876,253 |   |
| Intersegment                  revenues            |               |                                     | -                  |               |         | -                          |               |         | -                  |   |   | - |   |
| Profit                  from Operations           |               |                                     | (241,144           | )                  |         | (94,048                    | )                  |         | (29,446            | ) |   | (364,638 | ) |
| Identifiable                  assets              |               |                                     | 11,871             |               |         | 490,489                    |               |         | -                  |   |   | 502,360 |   |
| Capital                  Expenditures             |               |                                     | -                  |               |         | 99,558                     |               |         | 25,500             |   |   | 125,058 |   |
| Depreciation                                      |               |                                     | 3,146              |               |         | 9,017                      |               |         | -                  |   |   | 12,163 |   |

----

----

| (a) | Under                the supervision and with the participation of our management, including                our principal executive officer and principal financial officer,                we                conducted an evaluation of the design and operation of our disclosure                controls and procedures, as such term is defined under Rules 13a-14(c)                and                15d-14(c) promulgated                under the Securities Exchange Act of 1934, as amended (the "Exchange                Act"), within 90 days of the filing date of this report. Based on                that                evaluation, our principal executive officer and our principal financial                officer concluded that the design and operation of our disclosure                controls                and procedures were effective as of the end of the period covered                by this                report in timely alerting them to material information required to                be                included in SMS's periodic reports and filed with the SEC                 under                the Securities Exchange Act of 1934, as amended. The design of any                system                of controls is based in part upon certain assumptions about the likelihood                of future events, and there can be no assurance that any design will                succeed in achieving its stated goals under all potential future                conditions, regardless of how                remote. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |
|--------|--------|
| (b) | In addition, there were no significant changes in              our              internal control over financial reporting identified in connection              with the evaluation that occurred during the last fiscal quarter that              have              materially affected or that are reasonably likely to materially affect              our              internal control over financial              reporting. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | (a) | Exhibits |
|--|-----|----------|

|   | 31.1                Rule 13a-14(a)/15d-14(a) Certification of Principal Executive                Officer |
|--------|----------------------------------------------------------------------------------------------------------|
|   | 31.2 Rule 13a-14(a)/15d-14(a) Certification              of              Principal Financial Officer |
|--------|------------------------------------------------------------------------------------------------------|
|   | 32.1 Section 1350 Certification of              Principal              Executive Officer |
|--------|------------------------------------------------------------------------------------------|
|   | 32.2 Section 1350 Certification of              Principal              Financial Officer |
|--------|------------------------------------------------------------------------------------------|

|  | (b) | Reports                on Form 8-K: |
|--|-----|-------------------------------------|

|   | 1. | On                August 20, 2004, SMS filed a Current Report on Form 8-K announcing                the                change of SMS's name to Systems Management Solutions,                Inc. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | On                February 8, 2005, the Board of Directors of SMS voted to change its                fiscal                year end from June 30 to December 31. SMS last changed its fiscal                year to                correspond to the fiscal year of a subsidiary that has since discontinued                operations. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | On                March 22, 2005, the Board of Directors of SMS voted to reduce the                number                of shares outstanding of SMS’s $0.0001 par value common stock by reverse                split to exchange one (1) new share for each two and one half (21⁄2) old                shares. Any fractional shares created by this reverse split were                truncated                to the nearest whole share and no cash was paid for any such fractional                share. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 4. | On                April 6, 2005, the Registrant established a wholly owned subsidiary                named                SMSN Merger Sub, Inc., a Texas corporation which such corporation                then                entered into an Agreement and Plan of Merger between itself, SMS                Envirofuels, Inc., a Texas corporation, and the Registrant. Under                the                terms of such Plan of Merger, SMS Envirofuels, Inc. was merged into                SMSN                Merger Sub, Inc., the name of SMSN Merger Sub, Inc. was changed to                SMS                Envirofuels, Inc., and the shares of SMS Envirofuels, Inc. were exchanged                for 1,444,444 shares of the $0.0001 common stock of registrant. SMS                Envirofuels, Inc. has developed a plant to produce bio-diesel from                soybean                oil and markets such bio-diesel to distributors and retailers. The                Registrant plans to continue this business with the operating assets                of                SMS Envirofuels, Inc. and to expand the production and marketing                of the                bio-diesel product. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5. | On                August 19, SMS filed the results of the audit of the Years Ended                December                31, 2003 and 2004 and the review of the Quarter Ended March 31, 2005                for                SMS Envirofuels, Inc. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6. | On                February 20, 2006, SMS filed Item 4.02 Non-Reliance on Previously                Issued                Financial Statements or a Related Audit Report or Completed Interim                Review                on Form 8-K, as a result of the restatement of the financial statements                for the Year Ending December 31,                2002 |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | SYSTEMS                MANAGEMENT SOLUTIONS,                INC.,                 |
|--------|-----------------------------------------------------------------------------------|
|   | a                Nevada corporation                                               |
|   |                                                                              |
|   | By:                /s/ Jim Karlak _____________________________________           |
|   | James                Karlak, President and Chief Executive                Officer |
|   |                                                                              |
|   | By:                /s/ Morris Kunofsky________________________________            |
|   | Morris                Kunofsky, Chief Financial                Officer            |

----