SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549








FORM
      10-QSB





Quarterly
      Report of Small Business Issuers under Section 13 or 15(d) of the


Securities
      Exchange Act of 1934 for the quarterly period ended June 30, 2007





Commission
      File No. 333-45210





SYSTEMS
      MANAGEMENT SOLUTIONS, INC.


(Name
      of
      Small Business Issuer in Its Charter)







Nevada
            88-0460457(State
                or other jurisdiction of
            (IRS
                Employer Identification No.)incorporation)










4703
                Shavano Oak, Suite 104
            78249San
                Antonio, Texas(Address
                of Principal Executive Offices)
            (Zip
                Code)








Issuer's
      telephone number, including area code: (210) 541-9100











The
                issuer has (1) filed all reports required to be filed by Section
                13
                or
              15(d)
                of the Exchange Act during the past 12 months (or for such shorter
                periodthat
                the registrant was required to file such reports), and (2) been subject
                tosuch
                filing requirements for the past 90
                days.




Number
      of
      shares outstanding of each of the issuer's classes of common
      equity:





Class
            
            Outstanding
                as of August 06, 2007Common
                stock, $0.0001 par value
            
            20,690,386






The
      issuer
      is not using the Transitional Small Business Disclosure format.








TABLE
      OF
      CONTENTS




PagePART
                I. FINANCIAL INFORMATION
            1ITEM
                1. CONSOLIDATED FINANCIAL STATEMENTS
            1ITEM
                2. MANAGEMENT'S PLAN OF OPERATIONS
            7ITEM
                3. CONTROLS AND PROCEDURES
            8PART
                II - OTHER INFORMATION
            8ITEM
                1. LEGAL PROCEEDINGS
            8ITEM
                2. EXHIBITS AND REPORTS ON FORM 8-K
            9SIGNATURES
            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










PART
                  1. FINANCIAL INFORMATIONITEM
                  1. CONSOLIDATED FINANCIAL STATEMENTSSYSTEMS
                  MANAGEMENT SOLUTIONS, INC.CONSOLIDATED
                  BALANCE SHEETS(unaudited)June
                  30,
              
              December
                  31,2007
              
              2006ASSETSCurrent
                  AssetsCash
              
              $
              15,374
              
              $
              33,077Accounts
                  receivable
              
              
              80,790
              
              
              78,586Other
              
              
              12,376
              
              
              12,686Total
                  Current Assets
              
              
              108,540
              
              
              124,349Property
                  and equipment, net of accumulated depreciation of$210,199
                  &
                  $448,932
              
              
              4,816
              
              
              7,202Assets
                  held for sale, net of accumulated depreciation of$74,014 &
                  $74,014
              
              
              574,619
              
              
              574,619Deposits
              
              
              85,000
              
              
              255,000Total
                  Assets
              
              $
              772,975
              
              $
              961,170LIABILIITES
                  AND STOCKHOLDERS' DEFICITCurrent
                  LiabilitiesAccounts
                  payable
              
              $
              411,531
              
              $
              438,705Accounts
                  payable - related parties
              
              
              117,000
              
              
              81,000Accrued
                  interest and expense
              
              
              212,157
              
              
              191,635Accrued
                  interest and expense - related parties
              
              
              632,210
              
              
              517,036Deferred
                  liability
              
              
              70,000
              
              
              -Litigation
                  settlement liability
              
              
              90,000
              
              
              90,000Notes
                  payable - other
              
              
              610,000
              
              
              850,000Notes
                  payable - shareholder
              
              
              4,529,691
              
              
              4,058,477Total
                  Current liabilities
              
              
              6,672,589
              
              
              6,226,853Long-Term
                  LiabilitiesLitigation
                  settlement liability
              
              
              247,500
              
              
              292,500Total
                  Liabilities
              
              
              6,920,089
              
              
              6,519,353Commitments
                  and ContigenciesStockholders'
                  DeficitPreferred
                  stock, $.0001 par value, 5,000,000 shares authorized, noshares
                  issued and outstanding
              
              
              -
              
              
              -Series
                  A Cumulative Convertible Preferred Stock, $ .0001par
                  value, 60,000 shares authorized, no shares issuedand
                  outstanding
              
              
              -
              
              
              -Series
                  B Cumulative Convertible Preferred Stock, $ .0001par
                  value, 50,000 shares authorized, no shares issuedand
                  outstanding
              
              
              -
              
              
              -Common
                  stock, $.0001 par value, 100,000,000 shares authorized,20,690,386
                  shares issued and outstanding
              
              
              2,069
              
              
              2,069Additional
                  paid-in capital
              
              
              19,701,315
              
              
              19,602,968Accumulated
                  deficit
              
              
              (25,850,498
              )
              
              (25,163,220
              )Total
                  Stockholders' Deficit
              
              
              (6,147,114
              )
              
              (5,558,183
              )Total
                  Liabilities and Stockholders' Deficit
              
              $
              772,975
              
              $
              961,170





**Page
          1**




SYSTEMS
                  MANAGEMENT SOLUTIONS, INC.CONSOLIDATED
                  STATEMENTS OF OPERATIONSThree
                  and Six Months Ended June 30, 2007 and 2006(unaudited)Three
                  Months Ended
              
              Six
                  Months Ended2007
              
              2006
              
              2007
              
              2006Revenue
              
              $
              180,327
              
              $
              1,968,500
              
              $
              342,543
              
              $
              2,844,753Cost
                  of sales
              
              
              28,468
              
              
              1,611,254
              
              
              38,961
              
              
              2,392,262Gross
                  margin
              
              
              151,859
              
              
              357,246
              
              
              303,582
              
              
              452,491General
                  and administrative
              
              
              318,861
              
              
              425,059
              
              
              715,072
              
              
              857,851Depreciation
              
              
              (13,892
              )
              
              15,243
              
              
              3,728
              
              
              27,406Amortization
              
              
              -
              
              
              17,750
              
              
              -
              
              
              29,583(Gain)/Loss
                  on disposal of equipment
              
              
              (2,200
              )
              
              7,083
              
              
              (3,216
              )
              
              10,178Total
                  operating expenses
              
              
              302,769
              
              
              465,135
              
              
              715,584
              
              
              925,018Net
                  Operating Loss
              
              
              (150,910
              )
              
              (107,889
              )
              
              (412,002
              )
              
              (472,527
              )Interest
                  expense
              
              
              (142,713
              )
              
              (112,451
              )
              
              (275,276
              )
              
              (217,420
              )NET
                  LOSS
              
              $
              (293,623
              )
              $
              (220,340
              )
              $
              (687,278
              )
              $
              (689,947
              )Basic
                  and diluted loss per share
              
              $
              (0.01
              )
              $
              (0.01
              )
              $
              (0.03
              )
              $
              (0.03
              )Weighted
                  average shares outstanding
              
              
              20,690,386
              
              
              20,690,386
              
              
              20,690,386
              
              
              20,681,822








**Page
          2**




SYSTEMS
                  MANAGEMENT SOLUTIONS, INC.CONSOLIDATED
                  STATEMENTS OF CASH FLOWSSix
                  Months Ended June 30, 2007 and 2006(unaudited)2007
              
              2006Cash
                  Flows From Operating ActivitiesNet
                  loss
              
              $
              (687,278
              )
              $
              (689,947
              )Adjustments
                  to reconcile net loss to net cash used inoperating
                  activities:Imputed
                  Interest
              
              
              98,347
              
              
              79,365Depreciation
              
              
              3,728
              
              
              27,406Amortization
              
              
              -
              
              
              29,583(Gain)/Loss
                  on disposal of equipment
              
              
              (3,216
              )
              
              10,178Changes
                  in:Accounts
                  receivable
              
              
              (2,203
              )
              
              (87,984
              )Accounts
                  receivable - related parties
              
              
              -
              
              
              (33,389
              )Inventory
              
              
              -
              
              
              (111,596
              )Other
                  current assets
              
              
              310
              
              
              (280,613
              )Accounts
                  payable
              
              
              (27,175
              )
              
              505,789Accounts
                  payable - related parties
              
              
              36,000
              
              
              (9,000
              )Accrued
                  expenses
              
              
              20,522
              
              
              (139,849
              )Accrued
                  expenses - related parties
              
              
              115,174
              
              
              124,022Litigation
                  settlement
              
              
              (45,000
              )
              
              (42,500
              )Net
                  Cash Used in Operating Activities
              
              
              (490,791
              )
              
              (618,535
              )Cash
                  Flows From Investing ActivitiesPurchase
                  of fixed assets
              
              
              (1,726
              )
              
              (184,267
              )Proceeds
                  from sale of equipment
              
              
              3,600
              
              
              19,500Net
                  Cash Provided by Investing Activities
              
              
              1,874
              
              
              (164,767
              )
  **Page
            3**
 SYSTEMS
                  MANAGEMENT SOLUTIONS, INC.CONSOLIDATED
                  STATEMENTS OF CASH FLOWS - CONTINUEDSix
                  Months Ended June 30, 2007 and 2006(unaudited)2007
              
              2006Cash
                  Flows From Financing ActivitiesProceeds
                  from notes payable - shareholder
              
              
              471,214
              
              
              309,500Proceeds
                  from notes payable - other
              
              
              -
              
              
              500,000Net
                  Cash Provided by Financing Activities
              
              
              471,214
              
              
              809,500Net
                  change in cash
              
              
              (17,703
              )
              
              26,198Cash
                  at beginning of period
              
              
              33,077
              
              
              98,468Cash
                  at end of period
              
              $
              15,374
              
              $
              124,666Supplemental
                  disclosures:Income
                  Tax Paid
              
              $
              -
              
              $
              -Interest
                  Paid
              
              
              31,947
              
              
              603Non-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


**Page
          4**


SYSTEMS
      MANAGEMENT SOLUTIONS, INC.


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


(unaudited)








NOTE
      1 -
      BASIS OF PRESENTATION





The
      accompanying unaudited interim financial statements of Systems Management
      Solutions, Inc. (“SMS”) have been prepared in accordance with accounting
      principles generally accepted in the United States of America and the rules
      of
      the Securities and Exchange Commission ("SEC"), and should be read in
      conjunction with the audited financial statements and notes thereto contained
      in
      SMS's financial statements filed with the SEC on Form 10-KSB for the year ended
      December 31, 2006. In the opinion of management, all adjustments, consisting
      of
      normal recurring adjustments, necessary for a fair presentation of financial
      position and the results of operations for the interim periods presented have
      been reflected herein. The results of operations for interim periods are not
      necessarily indicative of the results to be expected for the full year. Notes
      to
      the financial statements which would substantially duplicate the disclosure
      contained in the audited financial statements for the most recent fiscal year
      2006 as reported in Form 10-KSB have been omitted.








NOTE
      2 -
      GOING CONCERN





SMS
      incurred a net loss of $293,623 and $687,278 for the three and six months ended
      June 30, 2007 and has a working capital deficit of $6,564,049 as of June 30,
      2007. These conditions create an uncertainty as to SMS’ ability to continue as a
      going concern. Management is trying to raise additional capital through sales
      of
      common stock and assets. The financial statements do not include any adjustments
      that might be necessary if SMS is unable to continue as a going
      concern.








NOTE
      3 -
      INVENTORY





In
      October 2006, SMS Envirofuels, Inc. (“SMSE”) entered into a tolling arrangement
      in which the customer provides the raw materials and SMSE converts it to
      Biodiesel. The customer is invoiced only for the act of conversion. This
      arrangement ceased in December 2006. During the second quarter, the customer
      took possession of all inventory the customer purchased and was storing at
      the
      SMSE facility in Poteet. As of June 30, 2007, SMSE has ownership rights to
      the
      inventory located on its premises. However due to its age, SMSE has recorded
      no
      inventory value.








NOTE
      4 -
      ASSETS HELD FOR SALE





In
      an
      effort to secure additional capital for operations, the Company began actively
      seeking a purchaser for the assets located at its subsidiary’s, SMSE, production
      plant located in Poteet, Texas. On October 5, 2006, SMSE received a letter
      of
      intent (“LOI”) from Earth Biofuels, Inc. (“EBOF”) for the acquisition of these
      assets. The terms of the LOI created a tiered consideration payment based on
      SMSE’s ability to meet two levels of production; the minimum consideration was
      $2.7 million and the maximum was $4.7 million. EBOF did not meet the terms
      of
      the LOI and it expired with no sale transaction occurring. The Company will
      continue to pursue buyers for these assets.





The
      assets held for sale have a net book value at June 30, 2007 of $574,619 with
      no
      corresponding liabilities. Based on the LOI referenced above and communications
      with new interested purchasers, the Company believes that the fair value of
      this
      facility’s assets exceeds its net book value.





**Page
          5**


NOTE
      5 -
      NOTES PAYABLE TO OTHERS





On
      February 3, 2006, SMS borrowed $500,000 from an independent lender. The security
      pledged for this note is equipment recently purchased plus the deposit placed
      on
      equipment currently being prepared for delivery in the
      future. The interest is 10% and the note matured on August 1, 2006. The interest
      rate on the unpaid balance is 18%. The Company is in default on this note.
      On
      February 8, 2007, an agreement to transfer deposit rights and partial release
      of
      promissory note was signed by the Company and the independent note holder.
      In
      the agreement, the Company has transferred the rights to the deposit placed
      by
      the Company on 4 pieces of equipment that were to be used by its subsidiary
      SMSE, a value of $170,000, in exchange for a release and discharge of $240,000
      of the promissory note. In addition, the Company has the right to further
      release of $15,000 for any future transfer to note holder of the rights in
      the
      deposits of 2 additional pieces of equipment, a value of $85,000. Interest
      expense for the six months ended June 30, 2007 and 2006, is $34,967 and $20,274
      respectively. Amortization expense for the same periods is $0 and $29,583,
      respectively. At June 30, 2007, the deferred liability is $70,000 and the
      principal balance on the note is $260,000 with interest accrued of
      $100,276.





On
      October 5, 2006, SMSE received a LOI, from EBOF, for the purchase of assets
      associated with its production facility in Poteet (See Note 4). The initial
      terms of the LOI enabled SMSE to sign a promissory note with EBOF for a line
      of
      credit not to exceed $788,000. The expiration date of this note was February
      2,
      2007. SMSE is in default on this note. The terms of the LOI were not met by
      the
      purchaser and the LOI expired with no sale. The interest rate on the unpaid
      balance is 18%. Interest expense for the six months ended June 30, 2007 and
      2006, is $26,484 and $0, respectively. At June 30, 2007, the principal balance
      on the note is $350,000 and interest accrued is $26,484.








NOTE
      6 -
      NOTES PAYABLE TO SHAREHOLDERS





SMS
      and
      its subsidiaries have various promissory notes and advance agreements with
      its
      majority shareholder. The promissory notes bear a 10% interest rate. The
      advances bear no interest, however imputed interest at 10% is added as a
      contribution to capital each period. During the six months ended June 30, 2007,
      SMS and its subsidiaries received proceeds of $471,214 from the shareholder
      under these agreements. Interest expense for the six months ended June 30,
      2007
      and 2006, is $213,521 and $181,849, respectively. At June 30, 2007, the
      principal balances on the above instruments are $4,529,691 and the accrued
      interest balances at June 30, 2007 are $632,210.








NOTE
      7-
      EQUITY





On
      February 1, 2006, SMS issued 50,000 shares of common stock to an independent
      lender as additional incentive to make the $500,000 loan described in Note
      5.




**Page
          6**


NOTE
      8 -
      OPERATING SEGMENTS AND RELATED REPORTING




Software
                  Sales,Programming,
                  Data
              
              AlternativeCapturing
                  & Storage
              
              Fuels
              
              All
                  Other
              
              Total6
                  Months Ended June 30, 2007Revenues
                  from external customers
              
              $
              332,343
              
              $
              10,200
              
              $
              -
              
              $
              342,543Intersegment
                  revenues
              
              
              -
              
              
              -
              
              
              -
              
              
              -Profit
                  from Operations
              
              
              (18,345
              )
              
              (148,890
              )
              
              (244,767
              )
              
              (412,002
              )Identifiable
                  assets
              
              
              4,816
              
              
              574,619
              
              
              -
              
              
              579,435Capital
                  Expenditures
              
              
              1,726
              
              
              -
              
              
              -
              
              
              1,726Depreciation
              
              
              3,728
              
              
              -
              
              
              -
              
              
              3,7286
                  Months Ended June 30, 2006Revenues
                  from external customers
              
              $
              165,550
              
              $
              2,679,203
              
              $
              -
              
              $
              2,844,753Intersegment
                  revenues
              
              
              -
              
              
              -
              
              
              -
              
              
              -Profit
                  from Operations
              
              
              (358,387
              )
              
              45,222
              
              
              (159,362
              )
              
              (472,527
              )Identifiable
                  assets
              
              
              9,478
              
              
              540,265
              
              
              -
              
              
              549,743Capital
                  Expenditures
              
              
              -
              
              
              184,267
              
              
              -
              
              
              184,267Depreciation
              
              
              5,540
              
              
              21,866
              
              
              -
              
              
              27,406








NOTE
      9 -
      RELATED PARTY





In
      July
      2007, Texian Land and Cattle, a related party to the Company, filed for Chapter
      11 bankruptcy protection. The Company cannot be certain of any effects this
      may
      have on its subsidiary’s SMSE production facility lease agreement with Texian.








NOTE
      10 -
      RECLASSIFICATION





Certain
      accounts from prior periods have been reclassified to conform to current period
      presentations.







ITEM
      2.
      MANAGEMENT'S PLAN OF OPERATIONS





The
      following discussion and analysis should be read in connection with SMS's
      consolidated financial statements and related notes thereto, included elsewhere
      in this report.








**Overview**





SMS
      is
      comprised of two wholly owned subsidiaries, Aspect Business Solutions, Inc.
      (“ASPECT) and SMS Envirofuels, Inc. (“SMSE”).





ASPECT
      provides custom programming, support and Microsoft systems products to its
      customers. ASPECT is a Microsoft Certified Partner which enables it to remarket
      a specific line of software developed by Microsoft Corporation. During the
      first
      two quarters, approximately 60% of ASPECT’s revenue was generated from one
      customer who has contracted with ASPECT to upgrade the Microsoft software.
      The
      customer has both domestic and international locations. ASPECT expects this
      upgrade contract to continue the remainder of this year and carry into 2008.
      Maintenance and software sales still continue to be strong on all ASPECT’s
      remaining clients. ASPECT continuously seeks out new industries and customers
      that would be benefit from the Microsoft software.





**Page
          7**


SMS
      Envirofuels began processing biodiesel in April 2005. Since then, the
      manufacturing facility has experienced a steady demand for its product and
      has
      continued to perfect its process to achieve both consistency and efficiency.
      During 2006, SMSE was able to maintain its sales prices and levels of production
      and as a result was able to complete an expansion of its production
      capabilities. This has attracted potential buyers and in late 2006, the Company
      placed the assets located at SMSE’s production facility located in Poteet,
      Texas, up for sale. On October 5, 2006, SMSE, the Company’s subsidiary, received
      a letter of intent (“LOI”) from Earth Biofuels, Inc. (“EBOF”) for the
      acquisition of these assets. One of terms of the LOI created a tolling
      arrangement in which EBOF would provide the soybean oil and methanol in
      sufficient quantities to operate the plant at the levels stated in the LOI.
      SMSE
      relied on this agreement and began production in accordance with the LOI.
      However, due to the inconsistent and insufficient levels of soybean oil
      purchased by EBOF for SMSE, the production goal levels, as outlined in the
      LOI,
      were not attained. EBOF ceased communication with SMSE in early December 2006
      and the plant ceased the production of biodiesel.








**Results
      of Operation**




The
      Company incurred a net loss of $293,623 and $687,278 for the three months and
      six months ended June 30, 2007, respectively and had a working capital deficit
      of $6,564,049, as of June 30, 2007. These conditions create an uncertainty
      as to
      SMS’s ability to continue as a going concern. SMS has seen improvement in the
      operating results of ASPECT. However, it is not yet determined when SMS
      Envirofuels will resume production or be sold.





Cash
      used
      by operating and provided by investing activities was $490,791 and $1,874,
      respectively, for the six month period ending June 30, 2007. The funds to cover
      these uses of cash were received against the note payable and advance agreement
      the company maintains from its majority shareholder (see Note 6).





SMS
      continues to rely on loans and advances principally from its major stockholder,
      United Managers Group, Inc., to fund operating shortfalls and does not foresee
      a
      change in this situation in the immediate future. There can be no assurance
      that
      SMS will continue to have such loans and advances available. SMS will not be
      able to continue operations without them. SMS is pursuing alternate sources
      of
      financing. This is reflected in the Letter of Intent received in October as
      discussed in Note 4 and Note 5 above. It remains the central focus of SMS to
      pursue profitable projects and expand its presence in the biodiesel
      industry.





**First
      and Second Quarter 2007 Compared to First and Second Quarter
      2006**




***Total
      Revenue and Gross Profit*** .
      The
      comparative statements of operations for the three and six month periods ending
      June 30, 2007 and 2006, reflects a decrease in revenue and cost of sales due
      to
      the lack of production and sales of biodiesel by the Company’s subsidiary,.
      However, ASPECT increased its revenue by $167,000 or 101% during the six month
      period ending June 30, 2007, due to securing larger contracts for installations
      and customizations.





***General
      and Administrative costs.*** The
      general and administrative costs have decreased by 26% and 17%, respectively,
      when comparing 2007 to 2006 for the three and six month period ending June
      30.
      Approximately, 50% of the reduction is attributed to lower plant maintenance
      due
      to ceased operations. The remainder is a combination of less dollars spent
      on
      sales/marketing and office rent. Aspect has been able to reduce its sales and
      marketing costs by 100% and rely on the Microsoft network and word of mouth
      for
      new customers. Aspect negotiated out of its $22,800 per month office lease
      and
      moved out in mid-March 2007. The new space is $2,310 per month resulting in
      a
      $20,490 reduction in monthly expenses.





**Page
          8**


ITEM
      3.
      CONTROLS AND PROCEDURES





|(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.








PART
      II -
      OTHER INFORMATION





ITEM
      1.
      LEGAL PROCEEDINGS




In
      early
      2005, the landlord for the offices occupied by YCO Holdings, Inc. and its
      subsidiaries filed suit in the 295 th District
      Court of Harris County, Texas Cause No. 2005-04423 captioned WKB Value Partners,
      LP vs. Systems Management Solutions, Inc., alleging that SMS was obligated
      on
      the lease even though no authorized officer of SMS had signed the same. This
      lawsuit was dismissed in February, 2006 pursuant to a Comprehensive Settlement
      Agreement which required SMS to make payments to WKB Value Partners, LP in
      the
      amount of $470,000. The payment schedule called for $20,000 initial payment,
      followed by monthly payments of $7,500 for 60 months. The final payment will
      be
      due in March 2011. The balance due at June 30, 2007 is $337,500.





In
      December of 2006, Cargill Incorporated (“Cargill”), a Delaware corporation,
      filed suit in the Judicial District Court of Bexar County, Texas Cause No.
      2006-CI-19096, against subsidiary SMS Envirofuels, Inc., and certain related
      and
      unrelated companies and individuals, claiming non payment for amounts due
      Cargill by SMSE. The SMSE payable to Cargill as of October 5, 2006 is
      $608,387, which included $528,387 for material received and $80,000 for the
      hedge loss incurred by cancellation of the open physical contracts. On that
      same
      date, SMSE entered into an agreement to sell certain assets located at its
      production plant in Poteet, Texas. The purchaser, Earth Biofuels, Inc. (“EBOF”),
      as part of the agreement, expressly agreed to assume this debt to Cargill and
      provide additional working capital to SMSE. In return, SMSE signed a promissory
      note to EBOF for a line of credit not to exceed $788,000. Cargill agreed to
      this
      arrangement with EBOF but reserved the right to pursue any and all claims
      against SMSE upon failure of EBOF to adhere to the terms outlined in the
      agreement between EBOF and Cargill. EBOF subsequently made partial payments
      totaling $250,000 to Cargill, leaving a balance of $358,387. As of this filing,
      the purchase of the certain assets by EBOF has not occurred and there is not
      an
      expectation that a sale will occur in the future. There have been no other
      payments on this payable. The liability to Cargill remains at $358,387. EBOF
      remains liable to Cargill for this, however Cargill has chosen to include SMSE
      in its lawsuit.





**Page
          9**


In
      June
      of 2007, Earthbiofuels, Inc (“EBOF”), posted in the Atascosa County Public Deed
      Records, a Notice of Substitute Trustee’s Foreclosure Sale on the property
      located at 8275 FM 476 West, Poteet, Texas in effort to collect on the
      promissory note made by SMS Envirofuels, Inc. (“SMSE”) as part of the agreement
      entered into in October 2006 (see Note 5). SMSE is currently in default on
      this
      promissory note. The promissory note was secured by this property which is
      owned
      by Texian Land and Cattle (“Texian”), a related party to the Company, and leased
      to SMSE. In July of 2007, as previously discussed in (Note 9), Texian filed
      for
      Chapter 11 bankruptcy protection.








ITEM
      2.
      EXHIBITS AND REPORTS ON FORM 8-K





(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 (2 1⁄2) 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
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




**Page
          10**


SIGNATURES





In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly authorized.





Dated:
      August 06, 2007




SYSTEMS
                  MANAGEMENT SOLUTIONS, INC.,a
                  Nevada corporation
  By:
                  /s/ Jim KarlakJames
                  Karlak, President and Chief Executive OfficerBy:
                  /s/ Morris KunofskyMorris
                  Kunofsky, Chief Financial
                  Officer


**Page
          11**