**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**FORM      10-QSB **

** **
**QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES **

**EXCHANGE      ACT OF 1934 **

**o      **
**TRANSITION      REPORT PURSUANT TO SECTION 13 0R 15(D) OF THE SECURITIES **

**EXCHANGE      ACT OF 1934 **

*Commission      File Number: *
**000-51308      **

**CHATSWORTH      DATA SOLUTIONS, INC. **

**(      **

| Nevada                                                                                       | **98-0427221**                                                  |
|----------------------------------------------------------------------------------------------|-----------------------------------------------------------------|
| (State                or Other jurisdiction of Incorporation                or organization) | (IRS                Employer Identification                No.) |

| 20710                Lassen Street Chatsworth CA        | 91311                     |
|---------------------------------------------------------|---------------------------|
| (Address                of Principal Executive Offices) | (Zip                Code) |

----

**CHATSWORTH      DATA SOLUTIONS, INC. **

|                   |   |                                                                                                                                                                                                                                                                                                  |   | PAGE   |
|------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|                   |   |                                                                                                                                                                                                                                                                                                  |   |   |
| PART                I  |   | FINANCIAL                INFORMATION                                                                                                                                                                                                                                                                  |   | 1      |
|                   |   |                                                                                                                                                                                                                                                                                                  |   |   |
| Item                1. |   | Condensed                Consolidated Financial Statements                                                                                                                                                                                                                                            |   | 1      |
|                   |   |                                                                                                                                                                                                                                                                                                  |   |   |
|                   |   | Condensed                consolidated balance sheets as of October 31, 2007 (unaudited) and                January                31, 2007                                                                                                                                                            |   | 1      |
|                   |   |                                                                                                                                                                                                                                                                                                  |   |   |
|                   |   | Condensed                consolidated statements of operations for                the three and nine months ended October 31, 2007 (Successor) and                for the                three and nine months ended October                31, 2006 (Combined Successor and Predecessor) - unaudited |   | 2      |
|                   |   |                                                                                                                                                                                                                                                                                                  |   |   |
|                   |   | Condensed                consolidated statement of changes in stockholders' equity for the                nine                months ended October 31, 2007 - unaudited                                                                                                                               |   | 3      |
|                   |   |                                                                                                                                                                                                                                                                                                  |   |   |
|                   |   | Condensed                consolidated statements of cash flows for the nine months ended October                31, 2007 (Successor) and for the nine months ended October 31, 2006                (Combined Successor and Predecessor) - unaudited                                                   |   | 4      |
|                   |   |                                                                                                                                                                                                                                                                                                  |   |   |
|                   |   | Notes                to condensed consolidated financial statements - unaudited                                                                                                                                                                                                                       |   | 5      |
|                   |   |                                                                                                                                                                                                                                                                                                  |   |   |
| Item                2. |   | Management's                Discussion and Analysis or Plan of Operations                                                                                                                                                                                                                             |   | 17     |
|                   |   |                                                                                                                                                                                                                                                                                                  |   |   |
| Item                3. |   | Controls                and Procedures                                                                                                                                                                                                                                                                |   | 22     |
|                   |   |                                                                                                                                                                                                                                                                                                  |   |   |
| PART                II |   | OTHER                INFORMATION                                                                                                                                                                                                                                                                      |   | 23     |
|                   |   |                                                                                                                                                                                                                                                                                                  |   |   |
| Item                1. |   | Legal                Proceedings                                                                                                                                                                                                                                                                      |   | 23     |
|                   |   |                                                                                                                                                                                                                                                                                                  |   |   |
| Item                2. |   | Unregistered                Sales of Equity Securities and Use of Proceeds                                                                                                                                                                                                                            |   | 23     |
|                   |   |                                                                                                                                                                                                                                                                                                  |   |   |
| Item                3. |   | Defaults                Upon Senior Securities                                                                                                                                                                                                                                                        |   | 23     |
|                   |   |                                                                                                                                                                                                                                                                                                  |   |   |
| Item                4. |   | Submission                of Matters to a Vote of Security Holders                                                                                                                                                                                                                                    |   | 23     |
|                   |   |                                                                                                                                                                                                                                                                                                  |   |   |
| Item                5. |   | Other                Information                                                                                                                                                                                                                                                                      |   | 23     |
|                   |   |                                                                                                                                                                                                                                                                                                  |   |   |
| Item                6. |   | Exhibits                                                                                                                                                                                                                                                                                              |   | 24     |
|                   |   |                                                                                                                                                                                                                                                                                                  |   |   |
|                   |   | SIGNATURES                                                                                                                                                                                                                                                                                            |   | 25     |

----

**Part      I - FINANCIAL INFORMATION**

**ITEM      1. FINANCIAL STATEMENTS**

|                                                                                                                                              |   | October                31,2007 |       | January                31,2007 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|------------|--------------------------------|--------|
|                                                                                                                                              |   | (Unaudited)                    |       |                           |   |
| **ASSETS**                                                                                                                                        |   |                           |       |                           |   |
| Current                Assets                                                                                                                     |   |                           |       |                           |   |
| Cash                                                                                                                                              |   | $                              | 178,666    |                           | $      | 341,676 |   |
| Accounts                receivable, less allowance for doubtful accounts of $20,735 and                $22,978                                    |   |                           | 794,661    |                           |   | 647,786 |   |
| Inventories                                                                                                                                       |   |                           | 1,950,343  |                           |   | 1,072,208 |   |
| Deferred                tax assets, current                                                                                                       |   |                           | -          |                           |   | 362,433 |   |
| Prepaid                expenses                                                                                                                   |   |                           | 74,140     |                           |   | 80,585 |   |
|                                                                                                                                              |   |                           |       |                           |   |   |   |
| Total                current assets                                                                                                               |   |                           | 2,997,810  |                           |   | 2,504,688 |   |
|                                                                                                                                              |   |                           |       |                           |   |   |   |
| Property                and equipment, net                                                                                                        |   |                           | 405,321    |                           |   | 279,190 |   |
| Goodwill                                                                                                                                          |   |                           | 3,926,643  |                           |   | 3,926,643 |   |
| Intangible                assets, net                                                                                                             |   |                           | 1,888,400  |                           |   | 2,634,680 |   |
| Deferred                tax assets, long term                                                                                                     |   |                           | 745,210    |                           |   | - |   |
| Other                assets                                                                                                                       |   |                           | 24,734     |                           |   | 41,671 |   |
|                                                                                                                                              |   |                           |       |                           |   |   |   |
| Total                assets                                                                                                                       |   | $                              | 9,988,118  |                           | $      | 9,386,872 |   |
|                                                                                                                                              |   |                           |       |                           |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**                                                                                           |   |                           |       |                           |   |   |   |
| Current                Liabilities                                                                                                                |   |                           |       |                           |   |   |   |
| Accounts                payable                                                                                                                   |   | $                              | 1,170,228  |                           | $      | 332,890 |   |
| Accrued                liabilities                                                                                                                |   |                           | 357,091    |                           |   | 759,514 |   |
| Accrued                registration payment penalty                                                                                               |   |                           | 720,000    |                           |   | 383,000 |   |
| Borrowings                under line of credit                                                                                                    |   |                           | 1,577,593  |                           |   | - |   |
| Current                portion of notes payable                                                                                                   |   |                           | 1,750,000  |                           |   | 1,000,000 |   |
|                                                                                                                                              |   |                           |       |                           |   |   |   |
| Total                current liabilities                                                                                                          |   |                           | 5,574,912  |                           |   | 2,475,404 |   |
|                                                                                                                                              |   |                           |       |                           |   |   |   |
| Notes                payable, long term                                                                                                           |   |                           | -          |                           |   | 1,000,000 |   |
| Deferred                tax liability, long term                                                                                                  |   |                           | 745,210    |                           |   | 913,988 |   |
|                                                                                                                                              |   |                           |       |                           |   |   |   |
| Total                liabilities                                                                                                                  |   |                           | 6,320,122  |                           |   | 4,389,392 |   |
|                                                                                                                                              |   |                           |       |                           |   |   |   |
| Commitments                and contingencies                                                                                                      |   |                           |       |                           |   |   |   |
|                                                                                                                                              |   |                           |       |                           |   |   |   |
| Stockholders'                Equity:                                                                                                              |   |                           |       |                           |   |   |   |
| Preferred stock,                par value $0.00001 per share, 5,000,000 shares authorized, none                issued and outstanding   |   |                           | -          |                           |   | - |   |
| Common                stock, par value $0.00001 per share, 100,000,000 shares authorized,                31,250,000 shares issued and outstanding |   |                           | 312        |                           |   | 312 |   |
| Additional                paid-in capital                                                                                                         |   |                           | 6,460,739  |                           |   | 6,278,564 |   |
| Accumulated                deficit                                                                                                                |   |                           | (2,793,055 | )                              |   | (1,281,396 | ) |
|                                                                                                                                              |   |                           |       |                           |   |   |   |
| Total                stockholders' equity                                                                                                         |   |                           | 3,667,996  |                           |   | 4,997,480 |   |
|                                                                                                                                              |   |                           |       |                           |   |   |   |
| Total                liabilities and stockholders' equity                                                                                         |   | $                              | 9,988,118  |                           | $      | 9,386,872 |   |

----

|                                                                 |   | Successor                                                  |       | Successor                                                  |   | Successor                                                 |   | Combined                Successor and Predecessor                                    |       |
|----------------------------------------------------------------------|--------|------------------------------------------------------------|------------|------------------------------------------------------------|--------|-----------------------------------------------------------|--------|--------------------------------------------------------------------------------------|------------|
|                                                                 |   | For                the three months ended October 31, 2007 |       | For                the three months ended October 31, 2006 |   | For                the nine months ended October 31, 2007 |   | For                the nine months ended October 31, 2006(see                Note 1) |       |
|                                                                 |   |                                                       |       |                                                       |   |                                                      |   |                                                                                 |       |
| Net                sales                                             |   | $                                                          | 2,175,163  |                                                       | $      | 2,814,620                                                 |   | $                                                                                    | 6,536,237  |   | $ | 7,455,625 |   |
| Cost                of sales                                         |   |                                                       | 1,458,903  |                                                       |   | 1,575,718                                                 |   |                                                                                 | 4,173,837  |   |   | 5,069,551 |   |
| Gross                profit                                          |   |                                                       | 716,260    |                                                       |   | 1,238,902                                                 |   |                                                                                 | 2,362,400  |   |   | 2,386,074 |   |
|                                                                 |   |                                                       |       |                                                       |   |                                                      |   |                                                                                 |       |   |   |   |   |
| Operating                expenses:                                   |   |                                                       |       |                                                       |   |                                                      |   |                                                                                 |       |   |   |   |   |
| General                and administrative                            |   |                                                       | 917,286    |                                                       |   | 1,682,367                                                 |   |                                                                                 | 3,106,920  |   |   | 2,105,395 |   |
| Depreciation                                                         |   |                                                       | 36,730     |                                                       |   | 3,579                                                     |   |                                                                                 | 94,398     |   |   | 15,883 |   |
| Amortization                of intangible assets                     |   |                                                       | 248,760    |                                                       |   | 248,760                                                   |   |                                                                                 | 746,280    |   |   | 248,760 |   |
|                                                                 |   |                                                       |       |                                                       |   |                                                      |   |                                                                                 |       |   |   |   |   |
| Income                (loss) from operations                         |   |                                                       | (486,516   | )                                                          |   | (695,804                                                  | )      |                                                                                 | (1,585,198 | ) |   | 16,036 |   |
|                                                                 |   |                                                       |       |                                                       |   |                                                      |   |                                                                                 |       |   |   |   |   |
| Other                income (expense):                               |   |                                                       |       |                                                       |   |                                                      |   |                                                                                 |       |   |   |   |   |
| Interest                expense                                      |   |                                                       | (61,928    | )                                                          |   | (33,316                                                   | )      |                                                                                 | (143,859   | ) |   | (33,316 | ) |
| Interest                income                                       |   |                                                       | 17         |                                                       |   | 8,067                                                     |   |                                                                                 | 2,844      |   |   | 18,031 |   |
| Registration                penalty                                  |   |                                                       | (227,000   | )                                                          |   |                                                      |   |                                                                                 | (337,000   | ) |   | - |   |
| Other                income (expense), net                           |   |                                                       | (288,911   | )                                                          |   | (25,249                                                   | )      |                                                                                 | (478,015   | ) |   | (15,285 | ) |
|                                                                 |   |                                                       |       |                                                       |   |                                                      |   |                                                                                 |       |   |   |   |   |
| Income                (loss) before income taxes                     |   |                                                       | (775,427   | )                                                          |   | (721,053                                                  | )      |                                                                                 | (2,063,213 | ) |   | 751 |   |
| Income                tax (benefit) expense                          |   |                                                       | (39,017    | )                                                          |   | (366,754)                                                 | )      |                                                                                 | (551,554   | ) |   | (347,590 | ) |
|                                                                 |   |                                                       |       |                                                       |   |                                                      |   |                                                                                 |       |   |   |   |   |
| Net                income (loss)                                     |   | $                                                          | (736,410   | )                                                          | $      | (354,299                                                  | )      | $                                                                                    | (1,511,659 | ) | $ | 348,341 |   |
|                                                                 |   |                                                       |       |                                                       |   |                                                      |   |                                                                                 |       |   |   |   |   |
| Net                loss per share - basic and diluted                |   | $                                                          | (0.02      | )                                                          | $      | (0.01                                                     | )      | $                                                                                    | (0.05      | ) |   |   |   |
|                                                                 |   |                                                       |       |                                                       |   |                                                      |   |                                                                                 |       |   |   |   |   |
| Weighted                average shares outstanding-basic and diluted |   |                                                       | 31,250,000 |                                                       |   | 31,250,000                                                |   |                                                                                 | 31,250,000 |   |   |   |   |

----

|                                        |   | Common                Stock     |       |   |   |                                      |   |                               |      |
|---------------------------------------------|--------|---------------------------------|------------|--------|--------|-------------------------------------------|--------|------------------------------------|-----------|
|                                        |   | Number                of Shares |       | Amount |   | Additional                Paid-in Capital |   | Accumulated                Deficit |      | Total |   |
| **Successor**                               |   |                            |       |   |   |                                      |   |                               |      |   |   |
| Balance,                February 1, 2007    |   |                            | 31,250,000 |   | $      | 312                                       |   | $                                  | 6,278,564 |   | $ | (1,281,396 | ) | $ | 4,997,480 |   |
|                                        |   |                            |       |   |   |                                      |   |                               |      |   |   |   |   |   |   |   |
| Net                loss                     |   |                            | -          |   |   | -                                         |   |                               | -         |   |   | (1,511,659 | ) |   | (1,511,659 | ) |
|                                        |   |                            |       |   |   |                                      |   |                               |      |   |   |   |   |   |   |   |
| Fair                value of vested options |   |                            | -          |   |   | -                                         |   |                               | 182,175   |   |   | - |   |   | 182,175 |   |
|                                        |   |                            |       |   |   |                                      |   |                               |      |   |   |   |   |   |   |   |
| Balance,                October 31, 2007    |   |                            | 31,250,000 |   | $      | 312                                       |   | $                                  | 6,460,739 |   | $ | (2,753,055 | ) | $ | 3,667,996 |   |

----

|                                                                                                               |   | Successor                                                 |       | CombinedSuccessor                & Predecessor (see                Note 1) |   |
|--------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|------------|--------------------------------------------------------------------------------|--------|
|                                                                                                               |   | For                the nine months ended October 31, 2007 |       | For                the nine months ended October 31, 2006                      |   |
| **Cash                Flows from Operating Activities**                                                            |   |                                                      |       |                                                                           |   |
| Net                income (loss) for the period                                                                    |   | $                                                         | (1,511,659 | )                                                                              | $      | 348,341 |   |
| Adjustments                to reconcile net income (loss) to net cash used in operating                activities: |   |                                                      |       |                                                                           |   |   |   |
| Depreciation                expense                                                                                |   |                                                      | 57,667     |                                                                           |   | 15,883 |   |
| Amortization                of intangibles                                                                         |   |                                                      | 746,280    |                                                                           |   | 248,760 |   |
| Issuance                of common stock for services                                                               |   |                                                      | -          |                                                                           |   | 480,000 |   |
| Fair                value of vested options                                                                        |   |                                                      | 182,175    |                                                                           |   | 308,268 |   |
| Income                tax benefit                                                                                  |   |                                                      | (551,554   | )                                                                              |   | (366,754 | ) |
| Changes                in operating assets and liabilities:                                                        |   |                                                      |       |                                                                           |   |   |   |
| Accounts                receivable                                                                                 |   |                                                      | (146,876   | )                                                                              |   | (36,217 | ) |
| Inventories                                                                                                        |   |                                                      | (878,135   | )                                                                              |   | 199,880 |   |
| Other                assets                                                                                        |   |                                                      | 16,937     |                                                                           |   | - |   |
| Prepaid                expenses                                                                                    |   |                                                      | 6,445      |                                                                           |   | 4,787 |   |
| Accounts                payable                                                                                    |   |                                                      | 837,338    |                                                                           |   | 29,153 |   |
| Accrued                liabilities                                                                                 |   |                                                      | (402,423   | )                                                                              |   | 301,668 |   |
| Accrued                registration payment penalty                                                           |   |                                                      | 337,000    |                                                                           |   | - |   |
|                                                                                                               |   |                                                      |       |                                                                           |   |   |   |
| Net                cash flow (used in) provided by operations                                                      |   |                                                      | (1,306,805 | )                                                                              |   | 1,533,769 |   |
| **Cash                Flows from Investing Activities**                                                            |   |                                                      |       |                                                                           |   |   |   |
| Purchase                of property and equipment                                                                  |   |                                                      | (183,798   | )                                                                              |   | (85,107 | ) |
| Acquisitions,                net of acquired cash                                                                  |   |                                                      | -          |                                                                           |   | (4,030,761 | ) |
|                                                                                                               |   |                                                      |       |                                                                           |   |   |   |
| Net                cash used in financing activities                                                     |   |                                                      | (183,798   | )                                                                              |   | (3,945,654 | ) |
|                                                                                                               |   |                                                      |       |                                                                           |   |   |   |
| **Cash                Flows from Financing Activities**                                                            |   |                                                      |       |                                                                           |   |   |   |
| Proceeds                from line of credit                                                                        |   |                                                      | 1,577,593  |                                                                           |   | - |   |
| Principal                payments on notes payable                                                                 |   |                                                      | (250,000   | )                                                                              |   | - |   |
| Distributions                to shareholders                                                                       |   |                                                      |       |                                                                           |   | (1,300,000 | ) |
| Proceeds                from issuance of stock                                                                     |   |                                                      | -          |                                                                           |   | 4,765,172 |   |
| Net                cash provided by financing activities                                                           |   |                                                      | 1,327,593  |                                                                           | $      | 3,465,172 |   |
|                                                                                                               |   |                                                      |       |                                                                           |   |   |   |
| Decrease                in cash                                                                                    |   |                                                      | (163,010   | )                                                                              |   |   |   |
| Cash                and cash equivalents, beginning of period                                                      |   |                                                      | 341,676    |                                                                           |   |   |   |
| Cash                and cash equivalents , end of period                                                           |   | $                                                         | 178,666    |                                                                           |   |   |   |
|                                                                                                               |   |                                                      |       |                                                                           |   |   |   |
| **Supplemental                cash flow information**                                                              |   |                                                      |       |                                                                           |   |   |   |
| Cash                paid for income taxes                                                                          |   | $                                                         | -          |                                                                           | $      | - |   |
| Cash                paid for interest                                                                              |   |                                                      | -          |                                                                           |   | - |   |
| **Supplemental                Non-Cash Investing and Financing Activities**                                        |   |                                                      |       |                                                                           |   |   |   |
| Common                stock issued at fair value for acquisition                                                   |   | $                                                         | -          |                                                                           | $      | 60,000 |   |
| Common                stock issued at fair value for services related to                acquisition                |   | $                                                         | -          |                                                                           | $      | 480,000 |   |
| Warrant                issued at fair value for services related to acquisition                                    |   | $                                                         | -          |                                                                           | $      | 37,080 |   |
| Notes                payable issued for acquisition                                                                |   | $                                                         | -          |                                                                           | $      | 2,000,000 |   |

See      accompanying notes to condensed consolidated financial      statements

----

**NOTE      1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES**

*Description      of business*

*Business      Combinations*

*Basis      of presentation*

----

|                                             |   | Successor                                                                                                                  |      | Predecessor                                                                                                       |   | Combined                Successor and Predecessor                                       |   |
|--------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------|-----------|-------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------|--------|
|                                             |   | For                  the period August                  1, 2006 through                  October                  31, 2006 |      | For                the period February                1, 2006 through                July                31, 2006 |   | For                the nine months                ended October                31, 2006 |   |
|                                             |   |                                                                                                                       |      |                                                                                                              |   |                                                                                    |   |
| Net                sales                         |   | $                                                                                                                          | 2,814,620 |                                                                                                              | $      | 4,641,005                                                                               |   | $ | 7,455,625 |   |
| Cost                of sales                     |   |                                                                                                                       | 1,575,718 |                                                                                                              |   | 3,493,833                                                                               |   |   | 5,069,551 |   |
| Gross                profit                      |   |                                                                                                                       | 1,238,902 |                                                                                                              |   | 1,147,172                                                                               |   |   | 2,386,074 |   |
|                                             |   |                                                                                                                       |      |                                                                                                              |   |                                                                                    |   |   |   |   |
| Operating                expenses:               |   |                                                                                                                       |      |                                                                                                              |   |                                                                                    |   |   |   |   |
| General                and administrative        |   |                                                                                                                       | 1,682,367 |                                                                                                              |   | 423,028                                                                                 |   |   | 2,105,395 |   |
| Depreciation                                     |   |                                                                                                                       | 3,579     |                                                                                                              |   | 12,304                                                                                  |   |   | 15,883 |   |
| Amortization                of intangible assets |   |                                                                                                                       | 248,760   |                                                                                                              |   | -                                                                                       |   |   | 248,760 |   |
|                                             |   |                                                                                                                       |      |                                                                                                              |   |                                                                                    |   |   |   |   |
| Income                (loss) from operations     |   |                                                                                                                       | (695,804  | )                                                                                                                 |   | 711,840                                                                                 |   |   | 16,036 |   |
|                                             |   |                                                                                                                       |      |                                                                                                              |   |                                                                                    |   |   |   |   |
| Other                income (expense):           |   |                                                                                                                       |      |                                                                                                              |   |                                                                                    |   |   |   |   |
| Interest                expense                  |   |                                                                                                                       | (33,316   | )                                                                                                                 |   | -                                                                                       |   |   | (33,316 | ) |
| Interest                income                   |   |                                                                                                                       | 8,067     |                                                                                                              |   | 9,964                                                                                   |   |   | 18,031 |   |
| Other                income (expense), net       |   |                                                                                                                       | (25,249   | )                                                                                                                 |   | 9,964                                                                                   |   |   | (15,285 | ) |
|                                             |   |                                                                                                                       |      |                                                                                                              |   |                                                                                    |   |   |   |   |
| Income                (loss) before income taxes |   |                                                                                                                       | (721,053  | )                                                                                                                 |   | 721,804                                                                                 |   |   | 751 |   |
| Income                tax (benefit) expense      |   |                                                                                                                       | (366,754  | )                                                                                                                 |   | 19,164                                                                                  |   |   | (347,590 | ) |
|                                             |   |                                                                                                                       |      |                                                                                                              |   |                                                                                    |   |   |   |   |
| Net                income (loss)                 |   | $                                                                                                                          | (354,299  | )                                                                                                                 | $      | 702,640                                                                                 |   | $ | 348,341 |   |

----

|                                                                                                               |   | Successor                                                  |       | Predecessor                                                         |   | Combined                Successor and Predecessor         |   |
|--------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------|------------|---------------------------------------------------------------------|--------|-----------------------------------------------------------|--------|
|                                                                                                               |   | For                the three months ended October 31, 2006 |       | For                the period February 1, 2006 through July 31,2006 |   | For                the nine months ended October 31, 2006 |   |
| **Cash                flows from Operating Activities**                                                            |   |                                                       |       |                                                                |   |                                                      |   |
| Net                income (loss) for the period                                                                    |   | $                                                          | (354,299   | )                                                                   | $      | 702,640                                                   |   | $ | 348,341 |   |
| Adjustments                to reconcile net income (loss) to net cash used in operating                activities: |   |                                                       |       |                                                                |   |                                                      |   |   |   |   |
| Depreciation                                                                                                       |   |                                                       | 3,578      |                                                                |   | 12,304                                                    |   |   | 15,883 |   |
| Amortization                of intangible                                                                          |   |                                                       | 248,760    |                                                                |   | -                                                         |   |   | 248,760 |   |
| Issuance                of common stock for services                                                               |   |                                                       | 480,000    |                                                                |   | -                                                         |   |   | 480,000 |   |
| Fair                value of vested options                                                                        |   |                                                       | 308,268    |                                                                |   | -                                                         |   |   | 308,268 |   |
| Income                tax benefit                                                                                  |   |                                                       | (366,754   | )                                                                   |   | -                                                         |   |   | (366,754 | ) |
| Change                in operating assets and liabilities, net of acquisition                                      |   |                                                       |       |                                                                |   |                                                      |   |   |   |   |
| Accounts                receivable                                                                                 |   |                                                       | 585,532    |                                                                |   | (621,749                                                  | )      |   | (36,217 | ) |
| Inventories                                                                                                        |   |                                                       | 311,864    |                                                                |   | (111,984                                                  | )      |   | 199,880 |   |
| Prepaid                expenses                                                                                    |   |                                                       | (19,507    | )                                                                   |   | 24,294                                                    |   |   | 4,787 |   |
| Accounts                payable                                                                                    |   |                                                       | (328,127   | )                                                                   |   | 357,281                                                   |   |   | 29,153 |   |
| Accrued                liabilities                                                                                 |   |                                                       | (287,172   | )                                                                   |   | 588,840                                                   |   |   | 301,668 |   |
| Net                cash provided by (used in) operating activities                                                 |   |                                                       | 582,143    |                                                                |   | 951,626                                                   |   |   | 1,533,769 |   |
|                                                                                                               |   |                                                       |       |                                                                |   |                                                      |   |   |   |   |
| **Cash                Flows from Investing Activities**                                                            |   |                                                       |       |                                                                |   |                                                      |   |   |   |   |
| Purchase                of property and equipment                                                                  |   |                                                       | (83,390    | )                                                                   |   | (1,717                                                    | )      |   | (85,107 | ) |
| Acquisitions,                net of acquired cash                                                                  |   |                                                       | (4,030,761 | )                                                                   |   | -                                                         |   |   | (4,030,761 | ) |
| Net                cash provided by financing activitie**s**                                                       |   |                                                       | (4,114,151 | )                                                                   |   | (1,717                                                    | )      |   | (4,115,868 | ) |
|                                                                                                               |   |                                                       |       |                                                                |   |                                                      |   |   |   |   |
| **Cash                flows from financing activities**                                                            |   |                                                       |       |                                                                |   |                                                      |   |   |   |   |
| Proceeds                from issuance of common stock                                                              |   |                                                       | 4,765,172  |                                                                |   |                                                      |   |   | 4,765,172 |   |
| Distributions                to shareholders                                                                       |   |                                                       | -          |                                                                |   | (1,300,000                                                | )      |   | (1,300,000 | ) |
| Net                cash provided by financing activities                                                           |   |                                                       | 4,765,172  |                                                                |   | (1,300,000                                                | )      |   | 3,465,172 |   |
|                                                                                                               |   |                                                       |       |                                                                |   |                                                      |   |   |   |   |
| Increase                in cash                                                                                    |   |                                                       | 1,233,164  |                                                                |   | (350,091                                                  | )      |   |   |   |
| Cash                and cash equivalents, beginning of period                                                      |   |                                                       | -          |                                                                |   | 788,781                                                   |   |   |   |   |
| Cash                and cash equivalents , end of period                                                           |   | $                                                          | 1,233,164  |                                                                | $      | 438,690                                                   |   |   |   |   |
|                                                                                                               |   |                                                       |       |                                                                |   |                                                      |   |   |   |   |
| **Supplemental                cash flow information**                                                              |   |                                                       |       |                                                                |   |                                                      |   |   |   |   |
| Cash                paid for income taxes                                                                          |   | $                                                          | -          |                                                                | $      | -                                                         |   |   |   |   |
| Cash                paid for interest                                                                              |   |                                                       | -          |                                                                |   | -                                                         |   |   |   |   |
| **Supplemental                Non-Cash Investing and Financing Activities**                                        |   |                                                       |       |                                                                |   |                                                      |   |   |   |   |
| Common                stock issued at fair value for acquisition                                                   |   | $                                                          | 60,000     |                                                                | $      | -                                                         |   | $ | 60,000 |   |
| Common                stock issued at fair value for services related to                acquisition                |   | $                                                          | 480,000    |                                                                | $      | -                                                         |   | $ | 480,000 |   |
| Warrant                issued at fair value for services related to acquisition                                    |   | $                                                          | 37,080     |                                                                | $      | -                                                         |   | $ | 37,080 |   |
| Notes                payable issued for acquisition                                                                |   | $                                                          | 2,000,000  |                                                                | $      | -                                                         |   | $ | 2,000,000 |   |

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*Use      of estimates*

*Revenue      recognition*

*Goodwill      and other intangible assets*

*Major      customers*

----

*Basic      and diluted net income (loss) per share*

|                                             |   | 2007   |       |
|--------------------------------------------------|--------|--------|------------|
|                                             |   |   |       |
| Options                to purchase common stock  |   |   | 6,200,000  |   |
| Warrants                to purchase common stock |   |   | 12,103,000 |   |

*Stock-based      compensation*

*Share-Based      Payment*

*Accounting      for Equity Instruments that are issued to other than Employees for Acquiring      or      in Conjunction with Selling Goods or Services*

*Registration      payment arrangements*

----

*Recent      accounting pronouncements *

*Fair      Value Measurements*

*The      Fair Value Option for Financial Assets and Financial      Liabilities*

**NOTE      2 - INVENTORIES **

|                                    |   | October                31, 2007 |      | January                31, 2007 |   |
|-----------------------------------------|--------|---------------------------------|-----------|---------------------------------|--------|
|                                    |   | (unaudited)                     |      |                            |   |
|                                    |   |                            |      |                            |   |
| Raw                materials            |   | $                               | 1,512,213 |                            | $      | 604,470 |   |
| Work                in process          |   |                            | 210,919   |                            |   | 273,303 |   |
| Finished                goods           |   |                            | 242,211   |                            |   | 194,435 |   |
| Reserve                for obsolescence |   |                            | (15,000   | )                               |   | - |   |
|                                    |   | $                               | 1,950,343 |                            | $      | 1,072,208 |   |

**NOTE      3 - NOTES PAYABLE**

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|                                |   | October                31, |       | January                31, |   |
|-------------------------------------|--------|----------------------------|------------|----------------------------|--------|
|                                |   | 2007                       |       | 2007                       |   |
|                                |   | (unaudited)                |       |                       |   |
|                                |   |                       |       |                       |   |
| Total                notes payable  |   | $                          | 1,750,000  |                       | $      | 2,000,000 |   |
| Less                current portion |   |                       | (1,750,000 | )                          |   | (1,000,000 | ) |
| Long-term                portion    |   | $                          | -          |                       | $      | 1,000,000 |   |

**NOTE      4 - LINE OF CREDIT**

whichever      is less. At October 31, 2007, $1,577,593 had been advanced and $75,063, was      available to CDC under the credit agreement. The outstanding advances under      the      credit agreement bear interest at an annual rate equal to the prime rate (8.25      %      at October 31, 2007) plus a margin initially set at 0.50%. The credit agreement      is secured by all the personal property of CDC, including its equipment,      accounts receivable and inventory. There are certain covenants and restrictions      placed on CDC under the credit agreement, including, but not limited to,      quarterly financial covenants specifying a funded debt to EBITDA (as defined)      ratio, a minimum fixed-charge (as defined) coverage ratio, and restrictions      or      limitations on issuance of additional debt, mergers, leases, guaranties,      transactions with affiliates, or change in control. CDC determined it was not      in      compliance with all covenants as of October 31, 2007. Effective November 30,      2007, the line of credit agreement was amended. The amended line of credit      matures February 28, 2008, and the covenants and calculation of borrowing base      was modified and CDC expects to be in compliance with the modified covenants      in      the future. The Company has guaranteed the obligations of CDC under the credit      agreement. 

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**NOTE 5      - CAPITAL STOCK**

*Common      Stock*

**NOTE 6      - STOCK OPTIONS AND WARRANTS**

*Stock      Options*

      The fair      value of these option grants is estimated on the date of grant using the      Black-Scholes option-pricing model and is remeasured at each reporting date      based on market price until vested. For the nine months ended October 31, 2007      the Company recorded $26,065 of compensation expense related to non-employee      stock options.

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|                                       |   |  Shares |      | Average                Exercise Price |   |
|--------------------------------------------|--------|--------------|-----------|---------------------------------------|--------|
|                                       |   |         |      |                                  |   |
| Balance                at February 1, 2007 |   |         | 5,600,000 |                                  | $      | .39 |   |
| Granted                                    |   |         | 600,000   |                                  |   | .43 |   |
| Exercised                                  |   |         | -         |                                  |   | - |   |
| Cancelled                                  |   |         | -         |                                  |   | - |   |
|                                       |   |         |      |                                  |   |   |   |
| Balance                at October 31, 2007 |   |         | 6,200,000 |                                  | $      | .39 |   |

| Options                Outstanding |   | Options                Exercisable |      |
|------------------------------------|--------|------------------------------------|-----------|
|                               |   |                               |      | Weighted |   |   |   |   |   |   |   |
|                               |   |                               |      | Average |   |   |   |   |   |   |   |
|                               |   | Number                of           |      | Remaining |   | Weighted |   |   |   |   |   |
| Range                of            |   | Shares                Under        |      | Contractual |   | Average |   | Shares                Under |   | Weighted |   |
| Exercise                Price      |   | Options                            |      |  life                (years) |   |  Exercise                Price |   | Options |   | Exercise                Price |   |
|                               |   |                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $.30-$.65                          |   |                               | 6,200,000 |   |   | 6.13 |   | $ | 0.39 |   |   | 4,446,667 |   | $ | 0.30 |   |

|                                         |   | Shares |       |
|----------------------------------------------|--------|--------|------------|
|                                         |   |   |       |
| Nonvested                at February 1, 2007 |   |   | 2,245,833  |   |
| Granted                                      |   |   | 600,000    |   |
| Vested                                       |   |   | (1,092,500 | ) |
| Nonvested                at October 31, 2007 |   |   | 1,753,333  |   |

----

*Warrants*

At      October 31, 2007, warrants outstanding were as follows:

|                                                    |   | Number                of   Shares under Warrants |       | Weighted                Average Exercise Price |   |
|---------------------------------------------------------|--------|-------------------------------------------------------|------------|------------------------------------------------|--------|
|                                                    |   |                                                  |       |                                           |   |
| Warrants                outstanding at February 1, 2007 |   |                                                  | 12,103,000 |                                           | $      | 0.30 |   |
| Warrants                granted                         |   |                                                  | -          |                                           |   | - |   |
| Warrants                expired                         |   |                                                  | -          |                                           |   | - |   |
|                                                    |   |                                                  |       |                                           |   |   |   |
| Warrants                outstanding at October 31, 2007 |   |                                                  | 12,103,000 |                                           | $      | 0.30 |   |

Warrants      Outstanding and Exercisable

| Number                of Shares Under Warrants |   | Exercise                Price |       | Expiration                Date |   | Weighted                  Average   Exercise Price |   |
|------------------------------------------------|--------|-------------------------------|------------|--------------------------------|--------|--------------------------------------------------------------|--------|
|                                           |   |                          |       |                           |   |                                                         |   |
| 11,000,000                                     |   | $                             | 0.30       |                           |   | July                31, 2011                                 |   | $ | 0.30 |   |
| 1,000,000                                      |   | $                             | 0.30       |                           |   | July                31, 2011                                 |   | $ | 0.30 |   |
| 103,000                                        |   | $                             | 0.01       |                           |   | July                31, 2011                                 |   | $ | 0.01 |   |
|                                           |   |                          |       |                           |   |                                                         |   |   |  |   |
| 12,103,000                                     |   | $                             | 0.01-$0.30 |                           |   |                                                         |   | $ | 0.30 |   |

**NOTE 7      - RELATED PARTY TRANSACTIONS**

----

**NOTE      8 - SUBSEQUENT EVENT**

----

**ITEM      2. Management’s Discussion and Analysis or Plan of Operation**

**Company      Overview**

**Acquisition**

*Business      Combinations*

----

| Purchase                price                                                                           |   |   |      |
|---------------------------------------------------------------------------------------------------------|--------|--------|-----------|
| Cash                consideration                                                                       |   | $      | 4,000,000 |   |
| Notes                payable issued                                                                     |   |   | 2,000,000 |   |
| Value                of 250,000 shares issued at close                                                  |   |   | 60,000    |   |
| Obligation                for tax reimbursement                                                         |   |   | 200,000   |   |
| Cash                paid for services related to acquisition                                            |   |   | 469,451   |   |
| Fair                value of 2,000,000 shares issued for servicesrelated                to acquisition  |   |   | 480,000   |   |
| Fair                value of 103,000 warrants issued for services related                to acquisition |   |   | 37,080    |   |
| Total                                                                                                   |   | $      | 7,246,531 |   |

| Purchase                price allocation                  |   |   |       |   |
|-----------------------------------------------------------|--------|--------|------------|--------|
| Current                assets, including cash of $438,690 |   | $      | 2,748,534  |   |
| Property                and equipment                     |   |   | 74,694     |   |
| Intangible                assets                          |   |   | 3,132,200  |   |
| Goodwill                                                  |   |   | 3,926,643  |   |
| Current                liabilities                   |   |   | (1,387,985 | )      |
| Deferred                tax liability                     |   |   | (1,247,555 | )      |
| Total                purchase price                       |   | $      | 7,246,531  |   |

**Results      of operations - For the three and nine months ended October 31, 2007 (Successor)      compared to the three and nine months ended October      31, 2006**

----

|                                       |   |                            |      |                           |   |
|--------------------------------------------|--------|---------------------------------|-----------|--------------------------------|--------|
|                                       |   | Successor                       |      | Successor                      |   |
| Sales-three                months ended    |   | October                31, 2007 |      | October                31 2006 |   |
|                                       |   |                            |      |                           |   |
| Gaming                                     |   | $                               | 322,929   |                           | $      | 491,434 |   |
| Education                                  |   |                            | 989,670   |                           |   | 5,930 |   |
| Voting                                     |   |                            | 637       |                           |   | 1,576,258 |   |
| Medical                                    |   |                            | 52,791    |                           |   | 48,564 |   |
| Others                                     |   |                            | 72,193    |                           |   | 25,617 |   |
| Total                Optical Mark Readers  |   |                            | 1,438,220 |                           |   | 2,147,803 |   |
|                                       |   |                            |      |                           |   |   |   |
| Impact                recorders/indicators |   |                            | 736,943   |                           |   | 666,817 |   |
| Cable                Testing               |   |                            | -         |                           |   | - |   |
|                                       |   |                            |      |                           |   |   |   |
| Total                                      |   | $                               | 2,175,163 |                           | $      | 2,814,620 |   |

**Liquidity      and Capital Resources**

----

----

**Critical      Accounting Policies**

**Revenue      recognition**

**Intangible      assets **

**Stock-based      compensation**

*Share-Based      Payment*

----

*Accounting      for Equity Instruments that are issued to other than Employees for Acquiring      or      in Conjunction with Selling Goods or Services*

**Recent      accounting pronouncements  **

*Fair      Value Measurements*

*The      Fair Value Option for Financial Assets and Financial Liabilities*

**ITEM      3. CONTROLS AND PROCEDURES **

----

**PART      II - OTHER INFORMATION**

**ITEM      1. LEGAL PROCEEDINGS **

.

**ITEM      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

**ITEM      3. DEFAULTS UPON SENIOR SECURITIES**

**ITEM      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS **

       

**ITEM      5. OTHER INFORMATION **

----

**ITEM      6. EXHIBITS**

----

**SIGNATURES      **

|                                    |                                              | **CHATSWORTH                DATA SOLUTIONS, INC.** |
|-----------------------------------------|---------------------------------------------------|----------------------------------------------------|
|                                    |                                              |                                               |
|                                    |                                              |
| Date:                September 19, 2007 |                                                   | /s/                Sidney L. Anderson              |
|                                    | Sidney                L. Anderson                 |
|                                    | Chief                Executive Officer, President |

----

**INDEX      TO EXHIBITS.**

| **Exhibit****Number** |   | **Description**                                                                                                                                                                                                                           |
|-----------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |   |                                                                                                                                                                                                                                           |
| 31.1                  |   | Rule                13a-14(a)/15d-14(a) Certification by the Chief Executive                Officer.                                                                                                                                           |
|                  |   |                                                                                                                                                                                                                                           |
| 31.2                  |   | Rule                13a-14(a)/15d-14(a)                Certification by the Chief Financial Officer.                                                                                                                                           |
|                  |   |                                                                                                                                                                                                                                           |
| 32.1                  |   | Certification                by the Chief Executive Officer and Chief Financial Officer pursuant                to 18                U.S.C. Section 1350, as adopted pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002. |

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