**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-QSB**







(Mark
      One)


[
                X
                ]
            QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934For
                the quarterly period ended March 31, 2007[
                ]
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACTFor
                the transition period from ________________ to
                _________________Commission
                file number 0-50742





**SIGN
                MEDIA SYSTEMS, INC**.
              _____________________________________________________________________________
              (Exact
                name of small business issuer as specified in its
                charter)FLORIDA
              ________________________________________________
              (State
                or other jurisdiction of incorporation or organization)
            02-0555904
              ____________________________
              (IRS
                Employer Identification No.)2100
                19thStreet, Sarasota FL 34234
              _____________________________________________________________________________
              (Address
                of principal executive offices)(941)
                330-0336
              _____________________________________________________________________________
              (Issuer's
                telephone number)_____________________________________________________________________________
              (Former
                name, former address and former fiscal year, if changed since last
                report)





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes [ X ] No [ ]





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







**APPLICABLE
      ONLY TO CORPORATE ISSUERS**




State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of the latest practicable date: 11,493,267 Common Shares no par value as
      of
      March 31, 2007





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






1




**PART
        I — FINANCIAL INFORMATION**
 
 **Item
        1. Financial Statements.**




**SIGN
        MEDIA SYSTEMS, INC.**
 
 **CONDENSED
        CONSOLIDATED FINANCIAL STATEMENTS**
 
 **FOR
        THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**
 **(UNAUDITED)**
    2




**SIGN
        MEDIA SYSTEMS, INC.**
  **INDEX
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
 
 
 
 Condensed
        Consolidated Balance Sheet at March 31, 2007
        (Unaudited)          
        4
 
 Condensed
        Consolidated Statements of Operations for the Three
 Months
        Ended March 31, 2007 and 2006
        (Unaudited)                                          
        5
 
 Condensed
        Consolidated Statements of Cash Flows for the
 Three
        Months Ended March 31, 2007 and 2006
        (Unaudited)                               
        6
 
 Notes
        to
        the Condensed Consolidated Financial Statements
 (Unaudited)                                                                                                           
        7 - 22






3




SIGN
      MEDIA SYSTEMS, IN.C


CONDENSED
      CONSOLIDATED BALANCE SHEET
      (UNAUDITED)


MARCH
      31, 2007




**ASSETS****2007****CURRENT
                  ASSETS**Cash
                  and cash equivalents
              
              $
              12,724Accounts
                  receivable, net
              
              
              393,835**Total
                  current assets**
              
              
              406,559**PROPERTY
                  AND EQUIPMENT - Net**
              
              
              88,585**OTHER
                  ASSETS**Due
                  from related parties
              
              
              620,491**Total
                  other assets**
              
              
              620,491**TOTAL
                  ASSETS**
              
              $
              1,115,635**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****CURRENT
                  LIABILITIES**Current
                  portion of long-term debt
              
              $
              9,699Accounts
                  payable and accrued expenses
              
              
              167,481Due
                  to related parties
              
              
              18,844Income
                  tax payable
              
              
              45,007**Total
                  current liabilities**
              
              
              241,031**TOTAL
                  LIABILITIES**
              
              
              241,031**STOCKHOLDERS'
                  EQUITY**Common
                  stock, no par value, 100,000,000 shares authorized at11,493,267
                  shares issued and outstanding at March 31, 2007
              
              
              1,394,900Additional
                  paid-in capital
              
              
              671,700Accumulated
                  deficit
              
              
              (1,191,996
              )**Total
                  stockholders' equity**
              
              
              874,604**TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY**
              
              $
              1,115,635








4




SIGN
        MEDIA SYSTEMS, IN.C
 CONDENSED
        CONSOLIDATED STATEMENTS OF
        OPERATIONS
 FOR
        THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006
        (UNAUDITED)





**THREE
                  MONTHS ENDED**
              
              **THREE
                  MONTHS ENDED****March
                  31,**
              
              **March
                  31,****2007**
              
              **2006****REVENUE**Truck
                  side Advertising
              
              $
              -
              
              $
              -Graphics
                  and Imaging
              
              
              176
              
              
              1,476Truck
                  side Mounting Systems
              
              
              16,083
              
              
              300,77616,259
              
              
              302,252**COST
                  OF GOODS SOLD**
              
              
              18,697
              
              
              9,351**GROSS
                  PROFIT (LOSS)**
              
              
              (2,438
              )
              
              292,901**OPERATING
                  EXPENSES**Professional
                  fees and administrative payroll
              
              
              1,228,293
              
              
              79,383General
                  and administrative expenses
              
              
              45,534
              
              
              40,551Depreciation
              
              
              10,166
              
              
              9,0001,283,993
              
              
              128,934**NET
                  INCOME (LOSS) BEFORE OTHER INCOME (EXPENSE)**
              
              
              (1,286,431
              )
              
              163,967**OTHER
                  INCOME (EXPENSE)**Impairment
                  of inventory
              
              
              (7,462
              )
              
              -Interest
                  income and other
              
              
              8,110
              
              
              10,704Interest
                  expense
              
              
              (72
              )
              
              (267
              )576
              
              
              10,437**NET
                  INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES**
              
              
              (1,285,855
              )
              
              174,404Provision
                  for income taxes
              
              
              -
              
              
              (5,600
              )**NET
                  INCOME (LOSS) APPLICABLE TO COMMON SHARES**
              
              $
              (1,285,855
              )
              $
              168,804**NET
                  INCOME (LOSS) PER BASIC AND DILUTED SHARES**
              
              $
              (0.12
              )
              $
              0.02**WEIGHTED
                  AVERAGE NUMBER OF COMMON****SHARES
                  OUTSTANDING**
              
              
              11,079,934
              
              
              8,460,000






5




SIGN
          MEDIA SYSTEMS, IN.C
 CONDENSED
          CONSOLIDATED STATEMENTS OF CASH FLOWS
          (UNAUDITED)
 FOR
          THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006





**2007**
              
              **2006****CASH
                  FLOWS FROM OPERATING ACTIVITIES:**Net
                  income (loss)
              
              $
              (1,285,855
              )
              $
              168,804**Adjustments
                  to reconcile net income (loss)****to
                  net cash (used in) operating activities:**Depreciation
              
              
              10,166
              
              
              9,000Issuance
                  of common stock for consulting services
              
              
              1,075,000
              
              
              -Issuance
                  of common stock for compensation
              
              
              90,000
              
              
              -**Changes
                  in assets and liabilities:**(Increase)
                  in accounts receivable
              
              
              -
              
              
              (700,632
              )Decrease
                  in inventory
              
              
              7,462
              
              
              7,536Increase
                  in accounts payable and accrued expenses
              
              
              20,086
              
              
              18,156Increase
                  in deferred revenue
              
              
              -
              
              
              400,000**Total
                  adjustments**
              
              
              1,202,714
              
              
              (265,940
              )**Net
                  cash (used in) operating activities**
              
              
              (83,141
              )
              
              (97,136
              )**CASH
                  FLOWS FROM INVESTING ACTIVITIES:**Acquisition
                  of property and equipment
              
              
              (3,280
              )
              
              (1,772
              )(
                  Increase) in receivable - related party
              
              
              (204,360
              )
              
              (10,300
              )Proceeds
                  from related parties
              
              
              -
              
              
              120,498**Net
                  cash provided by (used in) investing activities**
              
              
              (207,640
              )
              
              108,426**CASH
                  FLOWS FROM FINANCING ACTIVITIES:**Payments
                  on long-term debt
              
              
              (2,289
              )
              
              (4,605
              )Proceeds
                  (payments) from/to debt-related party
              
              
              1,667
              
              
              (5,834
              )**Net
                  cash (used in) financing activities**
              
              
              (622
              )
              
              (10,439
              )**NET
                  INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS**
              
              
              (291,403
              )
              
              851**CASH
                  AND CASH EQUIVALENTS - BEGINNING OF PERIOD**
              
              
              304,127
              
              
              2,252**CASH
                  AND CASH EQUIVALENTS - END OF PERIOD**
              
              $
              12,724
              
              $
              3,103**SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:**Cash
                  paid during the year for interest
              
              $
              73
              
              $
              267**SUPPLEMENTAL
                  DISCLOSURE OF NON-CASH INFORMATION:**Issuance
                  of common stock for consulting
              
              $
              1,075,000
              
              $
              -Issuance
                  of common stock for compensation
              
              $
              90,000
              
              $
              -








6




**SIGN
        MEDIA SYSTEMS, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**
 **MARCH
        31, 2007 AND 2006**






**NOTE
        1-**  **ORGANIZATION
        AND BASIS OF PRESENTATION**
  
 The
        condensed consolidated unaudited interim financial statements included herein
        have been prepared, without audit, pursuant to the rules and regulations
        of the
        Securities and Exchange Commission. The condensed consolidated unaudited
        financial statements and notes are presented as permitted on Form 10-QSB
        and do
        not contain information included in the Company’s annual condensed consolidated
        unaudited statements and notes. Certain information and footnote disclosures
        normally included in the 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, although
        the
        Company believes that the disclosures are adequate to make the information
        presented not misleading. It is suggested that these condensed consolidated
        unaudited financial statements be read in conjunction with the December 31,
        2006
        audited consolidated financial statements and the accompanying notes thereto.
        While management believes the procedures followed in preparing these condensed
        consolidated unaudited financial statements are reasonable, the accuracy
        of the
        amounts are in some respects dependent upon the facts that will exist, and
        procedures that will be accomplished by the Company later in the
        year.
 
 These
        condensed consolidated unaudited financial statements reflect all adjustments,
        including normal recurring adjustments which, in the opinion of management,
        are
        necessary to present fairly the consolidated operations and cash flows for
        the
        periods presented.
 
 The
        Company was incorporated on January 28, 2002 as a Florida corporation. Upon
        incorporation, an officer of the Company contributed $5,000 and received
        1,000
        shares of common stock of the Company. Effective January 1, 2003, the Company
        issued 7,959,000 shares of common stock in exchange of $55,702 of net assets
        of
        Go! Agency, LLC, a Florida limited liability company (“Go Agency”), a company
        formed on June 20, 2000, as E Signs Plus.com, LLC, a Florida limited liability
        company. In this exchange, the Company assumed some debt of Go Agency and
        the
        exchange qualified as a tax-free exchange under IRC Section 351. The net
        assets
        received were valued at historical cost. The net assets of Go Agency that
        were
        exchanged for the shares of stock were as follows:
   7






**NOTE
        1-**  **ORGANIZATION
        AND BASIS OF PRESENTATION (CONTINUED)**
  
 Accounts
        receivable $ 30,668
 Fixed
        assets, net of
        depreciation 112,214
 Other
        assets 85,264
 Accounts
        payable (29,242)
 Notes
        payable (27,338)
 Other
        payables (115,864)
 
 Total $ 55,702
 
 Go
        Agency
        was formed to pursue third party truck side advertising. The principal of
        Go
        Agency invested approximately $857,000 in Go Agency pursuing this business.
        It
        became apparent that a more advanced truck side mounting system would be
        required and that third party truck side advertising alone would not sustain
        an
        ongoing profitable business. Go Agency determined to develop a technologically
        advanced mounting system and focused on a different business plan. Go Agency
        pre-exchange transaction was a company under common control of the major
        shareholder of SMS. Post-exchange transactions have not differed. Go Agency
        still continues to operate and is still under common control.
 
 Go
        Agency
        and the Company developed a new and unique truck side mounting system, which
        utilizes a proprietary cam lever technology, which allows an advertising
        image
        to be stretched tight as a drum. Following the exchange, the Company had
        7,960,000 shares of common stock issued and outstanding. The Company has
        developed and filed an application for a patent on its mounting systems.
        The cam
        lever technology is considered an intangible asset and has not been recorded
        as
        an asset on the Company’s consolidated balance sheet. This asset was not
        recorded due to the fact that there was no historic recorded value on the
        books
        of Go Agency for this asset.
 
 On
        November 17, 2003, the Company entered into a merger agreement by and among
        American Power House, Inc., a Delaware corporation and its wholly owned
        subsidiary, Sign Media Systems Acquisition Company, Inc., a Florida corporation
        and Sign Media Systems, Inc. Pursuant to the merger agreement, Sign Media
        Systems merged with Sign Media Systems Acquisition Company with Sign Media
        Systems being the surviving corporation. The merger was completed on December
        8,
        2003, with the filing of Articles of Merger with the State of Florida at
        which
        time Sign Media Systems Acquisition ceased to exist and Sign Media Systems
        became the surviving corporation. American Powerhouse was not actively engaged
        in any business at the time of the merger.
   8





**NOTE
        1-**  **ORGANIZATION
        AND BASIS OF PRESENTATION (CONTINUED)**
  However,
        sometime prior to the merger, American Power House had acquired certain
        technology for the manufacture of a water machine in the form of a water
        cooler
        that manufactures water from ambient air. Prior to the merger, American
        Power House granted a license to Sign Media Systems Acquisition to use that
        technology and to manufacture and sell the water machines. The acquisition
        of
        this license was the business purpose of the merger. As consideration for
        the
        merger, Sign Media Systems issued 300,000 shares of its common stock to American
        Power House, 100,000 shares in the year ending December 31, 2003, and 200,000
        shares in the year ending December 31, 2004. The 300,000 shares of stock
        were
        valued at $1.50 per share based on recent private sales of Sign Media Systems
        common stock. At the time of the merger the Company was in negotiations with
        independent dealers in Central America who sold United States products in
        Central and South America and who had expressed a desire to market this product
        in that territory. Ultimately, the Company was unable to come to a satisfactory
        agreement with these dealers for the sale of this product. Accordingly, the
        Company is not currently engaged in the business of manufacturing and sale
        of
        this product. The Company will not become engaged in the business of
        manufacturing and selling this product until it can identify and come to
        a
        satisfactory agreement with an independent dealer or dealers in that territory
        for the sale of this product. The Company cannot currently predict when or
        if it
        will identify and come to a satisfactory agreement with an independent dealer
        or
        dealers in this territory for the sale of this product. Due to these problems
        with the Company’s plans for marketing and distribution of the water machine
        subsequent to the merger, the license has no carrying or book value for the
        years ended December 31, 2006 and 2005 in the Company’s consolidated financial
        statements for December 31, 2006 and 2005. There were no other material costs
        of
        the merger. There was and is no relationship between American Powerhouse
        and
        either Sign Media Systems or GO! AGENCY. The Company recorded this license
        as an
        intangible asset for $150,000 for the 100,000 shares of stock issued in 2003
        and
        subsequently impaired the entire amount. The Company issued the remaining
        200,000 shares in 2004, and recorded a liability for stock to be issued at
        $300,000. There is a $450,000 charge against income reflected in the
        consolidated statements of income for the year ended December 31, 2003.




9




**NOTE
        2-**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES**
 
 **Principles
        of Consolidation**
 
 The
        condensed consolidated unaudited financial statements include the accounts
        of
        the Company and its wholly owned subsidiary. All significant intercompany
        accounts and transactions have been eliminated in consolidation.
 
 **Use
        of Estimates**
 
 The
        preparation of condensed consolidated unaudited financial statements in
        conformity with accounting principles generally accepted in the United States
        of
        America requires management to make estimates and assumptions that affect
        the
        reported amounts of assets and liabilities and disclosures of contingent
        assets
        and liabilities at the date of the financial statements and the reported
        amounts
        of revenues and expenses during the reporting period. Actual results could
        differ from those estimates.
 
 **Revenue
        and Cost Recognition**
 
 Currently,
        the Company has three primary sources of revenue:
 
 (1)
              The
                  sale and installation of their mounting
                  system;
 (2)
              The
                  printing of advertising images to be inserted on trucks utilizing
                  the
                  Company’s mounting systems; and
 (3)
              Third
                  party advertising.
 
 The
        Company’s revenue recognition policy for these sources of revenue is as follows.
        The Company relies on Staff Accounting Bulletin Topic 13, in determining
        when
        recognition of revenue occurs. There are four criteria that the Company must
        meet when determining when revenue is realized or realizable and earned.
        The
        Company has persuasive evidence of an arrangement existing; delivery has
        occurred or services rendered; the price is fixed or determinable; and
        collectibility is reasonably assured. The Company recognizes revenue from
        the
        sale of its mounting systems and images when it completes the work and either
        ships or installs the products. The Company recognizes revenue from third
        party
        advertising. only when it has the contractual right to receive such revenue.
        The
        Company does retain a liability to maintain systems and images that are
        installed for purposes of third party advertising. However, any damage caused
        by
        the operator of the truck is the responsibility of the lessor of the space
        and
        is not the Company’s liability. To date the Company has experienced no cost for
        maintaining these leased systems. All deposits are non-refundable.




10








**NOTE
        2-**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
 
 **Revenue
        and Cost Recognition (continued)**
 
 
 In
        addition, the Company offers manufacturer’s warranties. These warranties are
        provided by the Company and not sold. Therefore, no income is derived from
        the
        warranty itself.
 
 Cost
        is
        recorded on the accrual basis as well, when the services are incurred rather
        than when payment is made.
 
 Costs
        of
        goods sold are separated by components consistent with the revenue categories.
        Mounting systems, printing and advertising costs include purchases made,
        and
        payroll costs attributable to those components. Payroll costs are included
        for
        sales, engineering and warehouse personnel in cost of goods sold. Cost of
        overhead is de minimus. The Company’s inventory consists of finished goods, and
        unassembled parts that comprise the framework for the mounting system placed
        on
        trucks for their advertising. All of these costs are included in costs of
        goods
        sold for the three months ended March 31, 2007 and 2006.
 
 **Warranties**
 
 The
        Company offers manufacturers warranties that cover all manufacturer defects.
        The
        Company accrues warranty costs based on historical experience and management’s
        estimates. The Company has not experienced any losses in the past two years
        with
        respect to the warranties, therefore has not accrued any liability for the
        three
        months ended March 31, 2007 and 2006. The following table represents the
        Company’s losses in the past two years with respect to warranties.
   11






**NOTE
        2-**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES**
 **(CONTINUED)**
 
 **Warranties
        (continued)**
 
 **Balance**
              
              **Charged**
              
              
              
              **Balance****at
                  Beginning**
              
              **to
                  Costs and**
              
              
              
              **at
                  End of****of
                  Period**
              
              **Expenses**
              
              **Deductions**
              
              **Period**Three
                  Months ended March 31, 2007
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -Three
                  Months ended March 31, 2006
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -
  **Provision
        for Bad Debt**
 
 Under
        SOP
        01-6 "Accounting for Certain Entities (including Entities with Trade
        Receivables) That Lend to or Finance the Activities of Others” the Company has
        intent and belief that all amounts in accounts receivable are collectible.
        The
        Company extends unsecured credit to its customers in the ordinary course
        of
        business but mitigates the associated credit risk by performing credit checks
        and actively pursuing past due accounts over 90 days.
 
 Management's
        policy is to vigorously attempt to collect its receivables monthly. The Company
        estimated the amount of the allowance necessary based on a review of the
        aged
        receivables from the major customer. Management additionally instituted a
        policy
        for recording the recovery of the allowance if any in the period where it
        is
        recovered.
  Bad
        debt
        expense for the three months ended March 31, 2007 and 2006 was $-0- and $-0-,
        respectively.
   12








**NOTE
        2-**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
 
 **Cash
        and Cash Equivalents**
 
 The
        Company considers all highly liquid debt instruments and other short-term
        investments with an initial maturity of three months or less to be cash
        equivalents.
 
 The
        Company maintains cash and cash equivalent balances at several financial
        institutions that are insured by the Federal Deposit Insurance Corporation
        up to
        $100,000.
 
 **Accounts
        Receivable**
 
 Accounts
        receivable are presented at face value, net of the allowance for doubtful
        accounts. The allowance for doubtful accounts is established through provisions
        charged against income and is maintained at a level believed adequate by
        management to absorb estimated bad debts based on current economic conditions.
 
 **Property
        and Equipment**
 
 Property
        and equipment are stated at cost. Depreciation is computed primarily using
        the
        straight-line method over the estimated useful life of the assets.
 
 Furniture
        and fixtures 5
        years
 Equipment 5
        years
 Trucks                             
        3 years
 
 **Advertising**
 
 Costs
        of
        advertising and marketing are expensed as incurred. Advertising and marketing
        costs were $-0- and $-0- for the three months ended March 31, 2007 and 2006,
        respectively.
   13






**NOTE
        2-**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
 
 **Fair
        Value of Financial Instruments**
 
 The
        carrying amount reported in the balance sheets for cash and cash equivalents,
        accounts receivable, accounts payable and accrued expenses approximate fair
        value because of the immediate or short-term maturity of these financial
        instruments.
 
 **Income
        Taxes**
 
 The
        provision for income taxes includes the tax effects of transactions reported
        in
        the financial statements. Deferred taxes would be recognized for differences
        between the basis for assets and liabilities for financial statement and
        income
        tax purposes. The major difference relates to the net operating loss carry
        forwards generated by sustaining deficits.
 
 **Income
        or Loss per Share of Common Stock**
 
 Historical
        net (loss) per common share is computed using the weighted-average number
        of
        common shares outstanding. Diluted earnings per share (EPS) include additional
        dilution from common stock equivalents, such as stock issuable pursuant to
        the
        exercise of stock options and warrants. Common stock equivalents are not
        included in the computation of diluted earnings per share when the Company
        reports a loss because to do so would be antidilutive for the periods
        presented.
 
 The
        following is a reconciliation of the computation for basic and diluted
        EPS:




**March
                  31,****2007**
              
              **2006**Net
                  income (loss)
              
              $
              (1,285,855
              )
              $
              168,804Weighted-average
                  common shares outstandingBasic
              
              
              11,079,934
              
              
              8,460,000Weighted-average
                  common stock equivalentsStock
                  options
              
              
              -
              
              
              -Warrants
              
              
              -
              
              
              -Weighted-average
                  common shares outstandingDiluted
              
              
              11,079,934
              
              
              8,460,000








14






**NOTE
        2-**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
 
 **Stock-Based
        Compensation**
 
 Employee
        stock awards under the Company's compensation plans are accounted for in
        accordance with Accounting Principles Board Opinion No. 25 (“APB 25”),
“ *Accounting
        for Stock Issued to Employees* ”,
        and
        related interpretations. The Company provides the disclosure requirements
        of
        Statement of Financial Accounting Standards No. 123, “ *Accounting
        for Stock-Based Compensation* ”
        (“SFAS
        123”), and related interpretations. Stock-based awards to non-employees are
        accounted for under the provisions of SFAS 123 and has adopted the enhanced
        disclosure provisions of SFAS No. 148 “Accounting for Stock-Based Compensation-
        Transition and Disclosure, an amendment of SFAS No. 123”.
 
 The
        Company measures compensation expense for its employee stock-based compensation
        using the intrinsic-value method. Under the intrinsic-value method of accounting
        for stock-based compensation, when the exercise price of options granted
        to
        employees is less than the estimated fair value of the underlying stock on
        the
        date of grant, deferred compensation is recognized and is amortized to
        compensation expense over the applicable vesting period. In each of the periods
        presented, the vesting period was the period in which the options were granted.
        All options were expensed to compensation in the period granted rather than
        the
        exercise date.
 
 The
        Company measures compensation expense for its non-employee stock-based
        compensation under the Financial Accounting Standards Board (FASB) Emerging
        Issues Task Force (EITF) Issue No. 96-18, “ *Accounting
        for Equity Instruments that are Issued to Other Than Employees for Acquiring,
        or
        in Conjunction with Selling, Goods or Services* ”.
 
 The
        fair
        value of the option issued is used to measure the transaction, as this is
        more
        reliable than the fair value of the services received. The fair value is
        measured at the value of the Company’s common stock on the date that the
        commitment for performance by the counterparty has been reached or the
        counterparty’s performance is complete. The fair value of the equity instrument
        is charged directly to compensation expense and additional paid-in
        capital.
   15






**NOTE
        2-**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
  **Share
          Based Payments**
 
 In
          December 2004, the FASB issued Financial Accounting Standards No. 123 (revised
          2004)(FAS 123R), “Share Based Payment”, FASB 123R replaces FAS No. 123,
“Accounting for Stock Based Compensation”, and supercedes APB Opinion No. 25,
“Accounting for Stock Issued To Employees.” FAS 123R requires compensation
          expense, measured as the fair value at the grant date, released to share-based
          payment transactions to be recognized in the financial statements over
          the
          period that an employee provides service in exchange for the award. The
          company
          intends to adopt FAS 123R using the “modified prospective” transition method as
          defined in FAS 123R. Under the modified prospective method, companies are
          required to record compensation cost prospectively for the unvested portion,
          as
          of the date of adoption, of previously issued and outstanding awards over
          the
          remaining vesting period of such awards. FAS 123R is effective January
          1, 2006.
          The adoption of this standard did not have a material impact on financial
          position, results of operations or cash flows.
 
 **RECENT
          ACCOUNTING PRONOUNCEMENTS**
 
 In
          May
          2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections.”
          SFAS No. 154 replaces Accounting Principles Board (“APB”) Opinion No. 20,
“Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim
          Financial Statements.” SFAS No. 154 requires retrospective application to prior
          periods’ financial statements of voluntary changes in accounting principle
          unless it is impracticable. APB No. 20 previously required that most voluntary
          changes in accounting principle be recognized by including the cumulative
          effect
          of changing to the new accounting principle in net income in the period
          of the
          change. SFAS No. 154 is effective for accounting changes and corrections
          of
          errors made in fiscal years beginning after December 15, 2005. The adoption
          of
          SFAS No. 154 did not have material impact on the Company’s financial position,
          results of operations, or cash flow.
 
 In
          February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
          Financial Instruments, an amendment of FASB Statements No. 133 and 140.” SFAS
          No. 155 resolves issues addressed in SFAS No. 133 Implementation Issue
          No. D1,
“Application of Statement 133 to Beneficial Interests in Securitized Financial
          Assets,” and permits fair value remeasurement for any hybrid financial
          instrument that contains an embedded derivative that otherwise would require
          bifurcation, clarifies which interest-only strips and principal-only strips
          are
          not subject to the requirements of SFAS No. 133, establishes a requirement
          to
          evaluate interests in securitized financial assets to identify interests
          that
          are freestanding derivatives or that are hybrid financial instruments that
          contain embedded derivative requiring bifurcation, claries that concentrations
          of credit risk in the form of subordination are not embedded derivatives
          and
          amends SFAS No.
          140
          to eliminate the prohibition on a qualifying special-purpose entity from
          holding
          a derivative financial instrument that pertains to a beneficial interest
          other
          than another derivative financial instrument. SFAS No. 155 is effective
          for all
          financial instruments acquired or issued after the beginning of the first
          fiscal
          year that begins after September 15, 2006. The adoption of FAS 155 did
          not have
          a material impact on the Company’s financial position, results of operations, or
          cash flows.
   16




**NOTE
        2-**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
  **RECENT
          ACCOUNTING PRONOUNCEMENTS: continued**


In
        March
        2006, the FASB issued SGAS No. 156, “Accounting for Servicing of Financial
        Assets, an amendment of FASB Statement No. 140.” SFAS No. 156 requires an entity
        to recognize a servicing asset or liability each time it undertakes on
        obligation to service a financial asset by entering into a servicing contract
        under a transfer of the servicer’s financial assets that meets the requirements
        for sale accounting, a transfer of the servicer’s financial assets to a
        qualified special purpose entity in a guaranteed mortgage securitization
        in
        which the transferor retains all of the resulting securities and classifies
        them
        as either available-for-sale or trading securities in accordance with SFAS
        No.
        115, “Accounting for Certain Investments in Debt and Equity Securities” and an
        acquisition or assumption of obligation to service a financial asset that
        does
        not relate to financial assets of the servicer or its consolidated affiliates.
        Additionally, SFAS No. 156 requires all separately recognized servicing assets
        and servicing liabilities to be initially measured at fair value, permits
        an
        entity to choose either the use of an amortization or fair value method for
        subsequent measurements, permits at initial adoption a one-time reclassification
        of available-for-sale securities to trading securities by entities with
        recognized servicing rights and requires separate presentation of servicing
        assets and liabilities subsequently measured at fair value and additional
        disclosures for all separately recognized servicing assets and liabilities.
        SFAS
        No. 156 is effective for transactions entered into after the beginning of
        the
        first fiscal year that begins after September 15, 2006. The adoption of FAS
        156
        did not have a material impact on the Company’s financial position or results of
        operations.
 
 In
        June
        2006, the FASB issued Interpretation No. 48, “Accounting of Uncertainty in
        Income Taxes” (FIN48), which clarifies the accounting for uncertainty in income
        taxes recognized in an enterprise’s financial statements in accordance with SFAS
        No. 109, “Accounting for Income Taxes.” FIN 48 establishes a recognition
        threshold and measurement attribute for the financial statement recognition
        and
        measurement of a tax position taken or expected to be taken in a tax return.
        This interpretation also provides guidance on derecognition, classification,
        interest and penalties, accounting in interim periods, disclosure, and
        transition. FIN 48 is effective
        for fiscal years beginning after December 15, 2006. The adoption of this
        interpretation did not have a material impact on the Company’s financial
        position, results of operations or cash flows.
   17




**NOTE
        2-**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
  **RECENT
          ACCOUNTING PRONOUNCEMENTS: continued**
  The
          standard clarifies that for items that are not actively traded, such as
          certain
          kinds or derivatives, fair value should reflect the price in a transaction
          with
          a market participant, including an adjustment for risk, not just the company’s
          mark-to-model value. SFAS No. 157 also requires expanded disclosure of
          the
          effect on earnings for items measured using unobservable data. SFAS No.
          157 is
          effective for financial statements issued for fiscal years beginning after
          November 15, 2007, and interim periods within those fiscal years. The Company
          is
          currently evaluating the impact of this statement on its financial statements
          and expects to adopt SFAS No. 157 on December 31, 2007. 
 In
            September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
            Benefit Pension and Other Postretirement Plans- -An Amendment of FASB
            Statements
            No 87,88,106 and 132R.” This standard requires an employer to: (a) recognize in
            its statement of financial position an asset for a plan’s over funded status or
            a liability for a plan’s under funded status; (b) measure a plan’s assets and
            its obligations that determine its funded status as of the end of the
            employer’s
            fiscal year (with limited exceptions); and (c) recognize changes in the
            funded
            status of a defined benefit postretirement plan in the year in which
            the changes
            occur. Those changes will be reported in comprehensive income. The requirement
            to recognize the funded status of a benefit plan and the disclosure requirements
            are effective as of the end of the fiscal year ending after December
            15, 2006.
            The requirements to measure plan assets and benefit obligations as of
            the date
            of the employer’s fiscal year-end statement of financial position is effective
            for fiscal years ending after December 15, 2008, The Company is evaluating
            the
            impact of this statement on its financial statements and believes that
            such
            impact will not be material.


18






**NOTE
        3-**  **ACCOUNTS
        RECEIVABLE**
 
 Accounts
        receivable consists of the following at March 31, 2007:




**2007**Accounts
                  receivable
              
              $
              393,835The
                  Accounts receivable is due from a major customerand
                  payment is anticipated before September 30, 2007.






**NOTE
        4-**  **PROPERTY
        AND EQUIPMENT**
 
 Property
        and equipment consists of the following at March 31, 2007:
  **2007**Equipment
                
                $
                128,745Furniture
                    and Fixtures
                
                
                112,022Transportation
                    Equipment
                
                
                24,621265,388Less:
                    Accumulated Depreciation
                
                
                (176,803
                )Net
                    Book Value
                
                $
                88,585






Depreciation
        expense for the three months ended March 31, 2007 and 2006 was $10,166 and
        $9,000, respectively.
 
 **NOTE
        5 -**  **COMMITMENTS
        AND CONTINGENCIES**
 
 The
        Company entered into a lease agreement on November 1, 2002 with Hawkeye Real
        Estate, LLC, a related entity, to lease warehouse and office space. The rent
        is
        anticipated to be $30,000 per annum. The lease expires in November of
        2007.
 
 Rent
        expense for the three months ending March 31, 2007 and 2006 was $7,500 and
        $7,500 respectively.








19






**NOTE
        6-**  **RELATED
        PARTY TRANSACTIONS**
 
 On
        January 28, 2002, Sign Media Systems, Inc. was formed as a Florida Corporation
        but did not begin business operations until April 2002. Most of the revenue
        that
        Sign Media Systems, Inc. earned was contract work with Go! Agency, LLC, a
        Florida limited liability company, a related party. Sign Media Systems, Inc.
        would contract Go! Agency, LLC to handle and complete jobs. There was no
        additional revenue or expense added from one entity to the other.
 
 On
        January 3, 2003, the Company entered into a loan agreement with Olympus Leasing
        Company, a related party, and in connection therewith executed a promissory
        note
        with a future advance clause in favor of Olympus Leasing, whereby Olympus
        Leasing agreed to loan the Company up to a maximum of $1,000,000 for a period
        of
        three years, with interest accruing on the unpaid balance at 18% per annum,
        payable interest only monthly, with the entire unpaid balance due and payable
        in
        full on January 3, 2006. As of March 31, 2007 and 2006, there was $0 and
        $0 due
        to Olympus, respectively. A new loan agreement is being negotiated.
 
 On
        June
        28, 2005, the Company loaned $1,200,000 to Olympus Leasing Company, a related
        party. At June 28, 2005, Antonio F. Uccello, III, was, and is now the President,
        Chairman, a minority owner of the issued and outstanding shares of stock
        of
        Olympus Leasing and reports to its board of directors. Antonio F. Uccello,
        III,
        was and is one of the Company’s officers and directors and an indirect
        shareholder of Sign Media Systems, Inc. The loan is for a period of five
        years
        with interest accruing on the unpaid balance at 5.3% per annum payable annually,
        with the entire principle and unpaid interest due and payable in full on
        June
        28, 2010.
 
 There
        is
        no prepayment penalty. The purpose of the loan was to obtain a higher interest
        rate than is currently available at traditional banking institutions. Olympus
        Leasing’s primary business is making secured loans to chiropractic physicians
        throughout the United States for the purchase of chiropractic adjustment
        tables.
        The loans are generally for less than $3,000 each and are secured by a first
        lien on each chiropractic adjustment table. The chiropractic physician
        personally guarantees each loan. The rate of return on the Olympus Leasing
        loans
        is between 15% and 25% per annum. To date, Olympus Leasing has suffered no
        loss
        from any loan to a chiropractic physician for the purchase of a chiropractic
        adjustment table. There is an excellent market for the re-sale of tables,
        which
        may be the subject of a foreclosure. Olympus Leasing currently has in excess
        of
        $1,000,000 in outstanding finance receivables from chiropractic physicians
        secured by a first lien on each chiropractic adjustment table.
    20




**NOTE
        6-**  **RELATED
        PARTY TRANSACTIONS (CONTINUED)**
 
 Since
        the
        making of the loan by the Company to Olympus Leasing, Olympus Leasing has
        made
        payments to the Company of $941,772 pursuant to the note. The remaining balance
        that was due from related party on the balance sheet was $620,491 on March
        31
        2007.
 
 The
        Company has made another loan to Olympus Leasing Company in the amount of
        $300,000 on January 3, 2007. The terms of the loan are being formalized.
        We
        anticipated it would be repaid on June 28, 2010 (Balloon). The interest rate
        is
        anticipated to be 5.3% per annum.
 
 
 **NOTE
        7-**  **SHORT-TERM
        DEBT**
 
 Short-term
        debt consists of an installment note with GMAC Finance. Balance due
 On
        March
        31, 2007 was $9,699.
  **NOTE
        8-**  **INCOME
        TAXES**
 
 There
        was
        no provision for income taxes during the three months ended March 31, 2007.
        For
        the three months ended March 31, 2006 there was a $5,600 provision.
 
 In
        conformity with SFAS No. 109, deferred tax assets and liabilities are classified
        based on the financial reporting classification of the related assets and
        liabilities, which give rise to temporary book/tax differences. Deferred
        taxes
        were immaterial at March 31, 2007.
 
 **NOTE
        9-**  **CONCENTRATION
        OF CREDIT RISK**
 
 A
        material part of the Company’s business has been dependent upon one key
        customer. During the three months ended March 31, 2007 there were no sales
        to
        this customer.
 
 Approximately
        99% of the Company’s accounts receivable at March 31, 2007 are due from one
        customer.
 
 
 **NOTE
        10-**  **STOCKHOLDERS’
        EQUITY**
 
 As
        of
        March 31, 2007 and 2006, there were 100,000,000 shares of the Company’s, no par
        value common stock authorized.




21




**NOTE
        10-**  **STOCKHOLDERS’
        EQUITY (CONTINUED)**
 
 As
        of
        March 31, 2007 and 2006, there were 11,493,267 and 8,460,000 shares of the
        Company’s, no par value common stock issued and outstanding,
        respectively.
 
 The
        following is a list of the common stock transaction during the three months
        ended March 31, 2007:
 
 On
        January 10, 2007, the Company issued 150,000 shares of its common stock at
        a
        fair market value of $75,000, for services provided to the Company.
 
 On
        January 12, 2007, the Company issued 2,000,000 shares of its common stock
        at a
        fair market value of $1,000,000, for consulting services provided to the
        Company.
 
 On
        February 8, 2007, the Company issued 300,000 shares of its common stock at
        a
        fair market value of $90,000, as additional compensation for an employee’s past
        services to the Company.
 
 There
        were no options or warrants granted during the period beginning on January
        28,
        2002 (Inception) ending March 31, 2007.
   22







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




THE
        FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS
        OF THE
        COMPANY SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND NOTES
        THERETO INCLUDED ELSEWHERE IN THIS REPORT.
 
 THIS
        DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
        UNCERTAINTIES, AND THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM
        THOSE
        ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
        INCLUDING, BUT NOT LIMITED TO COMPETITION AND OVERALL MARKET AND ECONOMIC
        CONDITIONS.
 
 RESULTS
        OF CONTINUING OPERATIONS
 
 The
        Following table sets forth certain of our summary selected unaudited operating
        and financial data. The following table should be read in conjunction with
        all
        other financial information and analysis presented herein.
 
 Three
        Months Ended
 March
        31
 
 2007
              
              2006Revenue-Sales,
                  net
              
              $
              16,259
              
              $
              302,252Cost
                  of Goods Sold
              
              
              18,697
              
              
              9,351Gross
                  profit (LOSS)
              
              
              (2,438
              )
              
              292,901Total
                  Operating Expenses
              
              
              1,283,993
              
              
              128,934Net
                  Income (Loss) BeforeOther
                  Income (Expense)
              
              
              (1,286,431
              )
              
              163,967Total
                  Other Income(Expense)
              
              
              576
              
              
              10,437Net
                  Income (Loss)BeforeProvision
                  For IncomeTaxes
              
              
              (1,285,885
              )
              
              174,404Provision
                  For IncomeTaxes
              
              
              (0
              )
              
              (5,600
              )Net
                  Income (Loss)Applicable
                  To CommonShares
              
              $
              (1,285,885
              )
              $
              168,804Net
                  Income (Loss) PerBasic
                  And Diluted Shares
              
              $
              (0.12
              )
              $
              0.02Weighted
                  AverageNumber
                  of CommonShares
                  Outstanding
              
              
              11,079,934
              
              
              8,460,000


23





**Item
        2. Management's Discussion and Analysis or Plan of Operation.
        (Continued)**
  For
          the
          three months ended March 31, 2007, the Company had Total Revenue-Sales,
          net of
          $16,259, Cost of Goods Sold of $18,697, Gross loss of $2,438, Total Operating
          Expenses of $1,283,993, Net loss Before Other Income of $1,286,431, Total
          Other
          Income of $576, Net Loss Before Provision For Income Taxes of $1,285,885,
          a
          Provision For Income Taxes of $(0), Net Loss Applicable To Common Shares
          of
          $1,285,855 and Net Loss Per Basic and Diluted Shares of $0.12 based on
          11,079,934 Weighted Average Number Of Common Shares Outstanding.
 
 For
          the
          three months ended March 31, 2006, the Company had Total Revenue-Sales,
          net of
          $302,252, Cost of Goods Sold of $9,351, Gross profit of $292,901, Total
          Operating Expenses of $128,934, Net Income Before Other Income of $163,967,
          Total Other Income of $10,437, Net Income Before Provision For Income Taxes
          of
          $174,404, a Provision For Income Taxes of $(5,600), Net Income Applicable
          To
          Common Shares of $168,804 and Net Income Per Basic and Diluted Shares of
          $0.02
          based on 8,460,000 Weighted Average Number Of Common Shares
          Outstanding
 
 Revenue
          decreased $285,993 from the same period last year. Cost of goods increased
          $9,346 from the same period last year. Total operating expenses increased
          $1,155,059 from the same period last year. Net Income (Loss) Before other
          Income
          (Expense) decreased $1,450,398 from the same period last year. Total Other
          Income (Expense) decreased $9,861 from the same period last year. Net Income
          (Loss) Before Provision For Income Taxes decreased $1,460,259 from the
          same
          period last year. The Provision For Income Taxes decreased $5,600 from
          the same
          period last year. Net Income (Loss) Applicable To Common Shares decreased
          $1,454,659 from the same period last year. Net Income (Loss) Per Basic
          And
          Diluted Shares decreased $0.14 from the same period last year.
 
 MANAGEMENT’S
          DISCUSSION
 
 The
          Company attributes the decreases in Revenue-Sales, net, Gross Profit, Net
          Income
          Before Other Income, Net Income Before Provision For Income tax, Net Income
          Applicable to Common Shares and Net Income Per Basic And Diluted Shares
          primarily to decreased sales by one key customer and a large amount of
          stock
          issued for services.
 
 The
          Company attributes the increase in Cost Of Goods Sold to the higher aluminum
          prices.
 
 The
          Company attributes the increase in Total Operating Expenses due to the
          issuance
          of stock certificates for services.
 
 The
          Company attributes the decrease in Total Other Income to the impairment
          of
          inventory.
   24




**Item
        2. Management's Discussion and Analysis or Plan of Operation.
        (Continued)**
  The
          Company attributes the decrease in the Provision For Income Taxes to net
          loss
          incurred during the period.
 
 The
          Company will require significant capital to implement both its short term
          and
          long-term business strategies . However,
          there can be no assurance that such additional capital will be available
          or, if
          available, that the terms will be favorable to the Company. The absence
          of
          significant additional capital whether raised through a public or private
          offering or through other means, including either private debt or equity
          financings, will have a material adverse effect on the Company’s operations and
          prospects.
 
 The
          Company’s operations have consumed and will continue to consume substantial
          amounts of capital, which, up until now, have been largely financed internally
          through cash flows, from loans from related parties, and private investors.
          The
          Company expects capital and operating expenditures to increase. Although
          the
          Company believes that it will be able to attract additional capital through
          private investors and as a result thereof its cash reserves and cash flows
          from
          operations will be adequate to fund its operations through the end of calendar
          year 2007, there can be no assurance that such sources will, in fact, be
          adequate or that additional funds will not be required either during or
          after
          such period. No assurance can be given that any additional financing will
          be
          available or that, if available, it will be available on terms favorable
          to the
          Company. If adequate funds are not available to satisfy either short or
          long-term capital requirements, the Company may be required to limit its
          operations significantly or discontinue its operations. The Company’s capital
          requirements are dependent upon many factors including, but not limited
          to, the
          rate at which it develops and introduces its products and services, the
          market
          acceptance and competitive position of such products and services, the
          level of
          promotion and advertising required to market such products and services
          and
          attain a competitive position in the marketplace, and the response of
          competitors to its products and services.
 
 **PART
          II — OTHER INFORMATION**
 
 **Item
          1. Legal Proceedings.**
 
 There
          are
          no pending or threatened legal proceedings against the Company or any of
          its
          subsidiaries.
 
 **Item
          2. Changes in Securities.**
 
 NONE
 
 **Item
          3. Defaults Upon Senior Securities**
 
 NONE
 
 **Item
          4. Submission of Matters to a Vote of Security Holders.**
 
 NONE
 
 **Item
          5. Other Information.**
 
 NONE
 25




**Item
        6. Exhibits and Reports on Form 8-K.**




**INDEX
        TO EXHIBITS.**
 
 **Exhibit
        Number**
 
 31.1
              Certification
                  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                  302 of
                  the
 Sarbanes-Oxley
        Act of 2002.
 31.2
              Certification
                  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                  302 of
                  the
 Sarbanes-Oxley
        Act of 2002.
 32.1
              Certification
                  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                  906 of
                  the
 Sarbanes-Oxley
        Act of 2002.
 32.2
              Certification
                  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                  906 of
                  the
 Sarbanes-Oxley
        Act of 2002.
 
 The
        Company filed no Forms 8K for the quarter ended March 31, 2007.
  
   **SIGNATURES**
  In
        accordance with the requirements of the Exchange Act, the registrant caused
        this
        report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 SIGN
                  MEDIA SYSTEMS, INC.
                (Registrant)Date:May
                  21, 2007
              /s/Antonio
                  F. Uccello, III
                Antonio
                  F. Uccello, III
                Chief
                  Executive Officer
                Chairman
                  of the Board