**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549





**FORM
      10-QSB/A**





**Amendment
      No. 1**





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


**EXCHANGE
      ACT OF 1934**





For
      the
      quarterly period ended: April 30, 2007





or





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


**EXCHANGE
      ACT OF 1934**





For
      the
      transition period from _____________ to ____________





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


**CHATSWORTH
      DATA SOLUTIONS, INC.**


**(** (Exact
      name of small business issuer as specified in its charter)





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)





(818)
      341-9200


(Issuer's
      telephone number including area code)





Check
      whether the issuer (1) has filed all reports required to be filed by Section
      13
      or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
      (or for such shorter period that the registrant was required to file such
      reports), and (2) has been subject to such filing requirements for the past
      90
      days.





Yes x No o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act)





Yes o No x





State
      the
      number of shares outstanding of each of the issuer's classes of common stock,
      as
      of the latest practicable date.





As
      of
      June 1, 2007, the issuer had 31,250,000 shares of common stock, $0.00001 par
      value, issued and outstanding:





Transitional
      Small Business Disclosure Format: Yes o No x










**CHATSWORTH
      DATA SOLUTIONS, INC.**


**INDEX
      TO FORM 10-QSB**





PAGEPART
                I
            
            FINANCIAL
                INFORMATION
            
            1Item
                1.
            
            Condensed
                Consolidated Financial Statements
            
            1Condensed
                consolidated balance sheets as of April 30, 2007   (unaudited)
                and January 31, 2007
            
            1Co
                Condensed consolidated statements of operationsfor
                the three   months ended April 30, 2007 (Successor) and for the
                three months   endedMarch
                31, 2006 (Predecessor) - unaudited
            
            2Condensed
                consolidated statement of changes in stockholders'   equity for
                the three months ended April 30, 2007 - unaudited
            
            3Condensed
                consolidated statements of cash flows for the three   months
                ended April 30, 2007 (Successor) and for the three months
                  ended March 31, 2006 (Predecessor) - unaudited
            
            4Notes
                to condensed consolidated financial statements - unaudited
            
            5Item
                2.
            
            Management's
                Discussion and Analysis or Plan of Operations
            
            15Item
                3.
            
            Controls
                and Procedures
            
            22PART
                II
            
            OTHER
                INFORMATION
            
            22Item
                1.
            
            Legal
                Proceedings
            
            22Item
                2.
            
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            
            22Item
                3.
            
            Defaults
                Upon Senior Securities
            
            22Item
                4.
            
            Submission
                of Matters to a Vote of Security Holders
            
            22Item
                5.
            
            Other
                Information
            
            22Item
                6.
            
            Exhibits
            
            22SIGNATURES
            
            23





**Explanatory
      Note**





This
      Amendment No. 1 to the Quarterly Report on Form 10-QSB for the quarterly period
      ended April 30, 2007 of Chatsworth Data Solutions, Inc. (the “Company”) amends
      the Company’s Form 10-QSB for such period filed with the Securities and Exchange
      Commission (the “SEC”) on June 13, 2007 (the “Original Filing”). The Company is
      filing this Amendment No. 1 to (i) amend Item 1 and Item 2 of Part I to add
      disclosure of the Company’s reasons for not recasting the 2006 interim period of
      its predecessor and (ii) to revise certain disclosure under Item 3 of Part
      I. No
      other information in the Original Filing has been amended or revised, and the
      Company has not updated disclosures contained herein to reflect any events
      that
      have occurred subsequent to the date of the Original Filing. In accordance
      with
      the rules of the SEC, the Company is including currently dated certificates
      as
      Exhibits 31.1, 31.2 and 32.1.


i





**Part
      I - FINANCIAL INFORMATION**





**ITEM
      1. FINANCIAL STATEMENTS**





CHATSWORTH
      DATA SOLUTIONS, INC.





CONDENSED
      CONSOLIDATED BALANCE SHEETS




April
      30,
      2007 (unaudited) and January 31, 2007




April
                30,
              2007
            
            January
                31,
              2007(Unaudited)**ASSETS**Current
                AssetsCash
            
            $
            139,950
            
            $
            341,676Accounts
                receivable, less allowance for doubtful accounts of $25,894 and
                $22,978
            
            
            991,058
            
            
            647,786Inventories
            
            
            1,140,067
            
            
            1,072,208Deferred
                tax assets, current
            
            
            501,310
            
            
            362,433Prepaid
                expenses
            
            
            56,239
            
            
            80,585Total
                current assets
            
            
            2,828,624
            
            
            2,504,688Property
                and equipment, net
            
            
            340,466
            
            
            279,190Goodwill
            
            
            3,926,643
            
            
            3,926,643Intangible
                assets, net
            
            
            2,385,920
            
            
            2,634,680Other
                assets
            
            
            44,409
            
            
            41,671Total
                assets
            
            $
            9,526,062
            
            $
            9,386,872**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                LiabilitiesAccounts
                payable
            
            $
            895,799
            
            $
            332,890Accrued
                liabilities
            
            
            594,614
            
            
            759,514Accrued
                registration payment penalty
            
            
            383,000
            
            
            383,000Borrowings
                under line of credit
            
            
            200,000
            
            
            -Current
                portion of notes payable
            
            
            1,000,000
            
            
            1,000,000Total
                current liabilities
            
            
            3,073,413
            
            
            2,475,404Notes
                payable, long term
            
            
            1,000,000
            
            
            1,000,000Deferred
                tax liability, long term
            
            
            791,227
            
            
            913,988Total
                liabilities
            
            
            4,864,640
            
            
            4,389,392Commitments
                and contingenciesStockholders'
                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
            
            
            312Additional
                paid-in capital
            
            
            6,338,249
            
            
            6,278,564Accumulated
                deficit
            
            
            (1,677,139
            )
            
            (1,281,396
            )Total
                stockholders' equity
            
            
            4,661,422
            
            
            4,997,480Total
                liabilities and stockholders' equity
            
            $
            9,526,062
            
            $
            9,386,872




See
      accompanying notes to condensed consolidated financial
      statements.


1


CHATSWORTH
      DATA SOLUTIONS, INC.





CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS





For
      the
      three months ended April 30, 2007 (Successor)


and
      the three
      months ended March 31, 2006 (Predecessor)


(unaudited)





Successor
            
            PredecessorFor
                the three months ended April 30, 2007
            
            For
                the three months ended March 31, 2006Net
                sales
            
            $
            2,218,753
            
            $
            1,515,896Cost
                of sales
            
            
            1,493,328
            
            
            1,181,196Gross
                profit
            
            
            725,425
            
            
            334,700Operating
                expenses:General
                and administrative
            
            
            1,074,992
            
            
            271,366Depreciation
            
            
            26,195
            
            
            4,329Amortization
                of intangible assets
            
            
            248,760
            
            
            -Income
                (loss) from operations
            
            
            (624,522
            )
            
            59,005Other
                income (expense)Interest
                expense
            
            
            (35,752
            )
            
            -Interest
                income
            
            
            2,893
            
            
            4,366Other
                income (expense), net
            
            
            (32,859
            )
            
            4,366Income
                (loss) before income taxes
            
            
            (657,381
            )
            
            63,371Income
                tax benefit
            
            
            261,638
            
            
            -Net
                income (loss)
            
            $
            (395,743
            )
            $
            63,371Net
                loss per share - basic and diluted
            
            $
            (0.01
            )Weighted
                average shares outstanding
            
            
            31,250,000





See
      accompanying notes to condensed consolidated financial statements


2


CHATSWORTH
      DATA SOLUTIONS, INC.





STATEMENT
      OF CHANGES IN STOCKHOLDERS' EQUITY





For
      the
      three months ended April 30, 2007


(unaudited)




Common
                Stock
            
            AdditionalNumber
                of Shares
            
            Amount
            
            Paid-inCapital
            
            Accumulated
                Deficit
            
            Total**Successor**Balance,
                February 1, 2007
            
            
            31,250,000
            
            $
            312
            
            $
            6,278,564
            
            $
            (1,281,396
            )
            $
            4,997,480Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (395,743
            )
            
            (395,743
            )Fair
                value of vested options
            
            
            -
            
            
            -
            
            
            59,685
            
            
            -
            
            
            59,685Balance,
                April 30, 2007
            
            
            31,250,000
            
            $
            312
            
            $
            6,338,249
            
            $
            (1,677,139
            )
            $
            4,661,422




See
      accompanying notes to condensed consolidated financial statements


3


CHATSWORTH
      DATA SOLUTIONS, INC.





CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS




For
      the
      three months ended April 30, 2007 (Successor)


and
      the
      three months ended March 31, 2006 (Predecessor)


(unaudited)





Successor
            
            PredecessorFor
                the three months ended April 30, 2007
            
            For
                the three months ended March 31, 2006**Cash
                Flows from Operating Activities**Net
                income (loss) for the period
            
            $
            (395,743
            )
            $
            63,371Adjustments
                to reconcile net income (loss) to net cash used in operating
                activities:Depreciation
                and amortization
            
            
            274,955
            
            
            4,329Fair
                value of vested options
            
            
            59,685Income
                tax benefit
            
            
            (261,638
            )Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            (343,272
            )
            
            (86,659
            )Inventories
            
            
            (67,859
            )
            
            (179,516
            )Deposits
            
            
            (2,738
            )
            
            -Prepaid
                expenses
            
            
            24,346
            
            
            (38,114
            )Accounts
                payable
            
            
            562,909
            
            
            (25,646
            )Accrued
                liabilities
            
            
            (164,900
            )
            
            1,926Income
                taxes payable
            
            
            -
            
            
            (46,025
            )Net
                cash used in operating activities
            
            
            (314,255
            )
            
            (306,334
            )**Cash
                Flows from Investing Activities**Purchase
                of property and equipment
            
            
            (87,471
            )
            
            (702
            )Net
                cash used in investing activities
            
            
            (87,471
            )
            
            (702
            )**Cash
                Flows from Financing Activities**Net
                borrowings on line of credit
            
            
            200,000
            
            
            -Net
                cash provided by financing activities
            
            
            200,000
            
            
            -Decrease
                in cash
            
            
            (201,726
            )
            
            (307,036
            )Cash
                and cash equivalents, beginning of period
            
            
            341,676
            
            
            859,460Cash
                and cash equivalents, end of period
            
            $
            139,950
            
            $
            552,424**Supplemental
                cash flow information**Cash
                paid for income taxes
            
            $
            -
            
            $
            -Cash
                paid for interest
            
            $
            34,294
            
            
            -




See
      accompanying notes to condensed consolidated financial
      statements


4


CHATSWORTH
      DATA SOLUTIONS, INC.





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





For
      the
      three months ended April 30, 2007 (Successor)


and
      the
      three months ended March 31, 2006 (Predecessor)


(unaudited)





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




*Description
      of business*





Chatsworth
      Data Solutions, Inc. (the Company), through its wholly owned subsidiary
      Chatsworth Data Corporation (CDC), manufactures equipment for optical readers
      and read heads, impact recorders and indicators, and cable test equipment.
      The
      Company's fiscal year-end is January 31.




On
      August
      7, 2006, the Company completed the acquisition of CDC for $7,246,531 including
      transaction costs. The acquisition was deemed effective August 1, 2006, and
      was
      accounted for as purchase in accordance with Statement of Financial Accounting
      Standards (SFAS) No. 141 *Business
      Combinations* .
      The
      assets acquired and liabilities assumed were recorded at their fair values
      at
      the date of acquisition.





*Basis
      of presentation*





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with generally accepted accounting principles in the
      United States of America for interim financial information and pursuant to
      the
      rules and regulations of the United States Securities and Exchange Commission
      (“SEC”). Accordingly, they do not include all of the information and footnotes
      required by generally accepted accounting principles for complete financial
      statements. In the opinion of management, all adjustments (consisting of normal
      recurring adjustments) considered necessary for a fair presentation have been
      included. These financial statements should be read in conjunction with the
      Company’s Annual Report on Form 10-KSB for the fiscal year ended
      January 31, 2007, filed with the SEC on May 16, 2007. The results of
      operations for interim periods are not necessarily indicative of the results
      expected for a full year or for any future period. Certain prior year’s amounts
      have been reclassified to conform to the current period presentation.





The
      following provides a description of the basis of presentation for all periods
      presented.





Successor-Represents
      the consolidated financial position of the Company and its wholly owned
      subsidiary as of April 30, 2007, and the condensed consolidated results of
      operations and cash flows of the Company and
      its
      wholly owned subsidiary for
      the
      three months February 1, 2007 through April 30, 2007. Intercompany accounts
      and
      transactions have been eliminated in consolidation.





5




Predecessor-Represents
      the results of operations and cash flows of Chatsworth Data Corporation for
      the
      three months January 1, 2006 through March 31, 2006.




The
        Company’s year end is January 31. The Predecessor’s year end was December 31. As
        a result, this Form 10-QSB includes comparative financial statements for
        the
        three month period ended March 31, 2006, which is the period of the Predecessor
        that is most nearly comparable to the three month period ended April 30,
        2007 of
        the Successor. The business of the Predecessor and Successor is similar and
        there are no seasonal factors that affect the comparability of information
        presented. The Company did not recast the financial statements for the
        three-month period ended March 31, 2006, because the financial reporting
        process
        of the Predecessor in place at the time included certain procedures that
        were
        completed only on a quarterly basis for the quarter ended March 31, 2006.
        The
        Company reviewed the operations during the related periods and believes the
        results would be materially the same and not having the transitional amount
        does
        not affect the readers’ understanding of the operations or financial position of
        the Company. Consequently, to recast that period would have been impractical
        and
        would not have been cost-justified.




*Use
      of estimates*





The
      preparation of financial statements in conformity with U.S. generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities and disclosure of
      contingent assets and liabilities at the date of the financial statements and
      the reported amounts of revenues and expenses during the reporting period.
      Actual results could differ from those estimates.





*Revenue
      recognition*





The
      Company recognizes revenue when there is persuasive evidence that an arrangement
      exists, delivery of the product has occurred and title has passed, the selling
      price is both fixed and determinable, and collectibility is reasonably assured,
      all of which generally occurs upon shipment of the Company's product or delivery
      of the product to the destination specified by the customer.


*Inventory*





The
      Company uses a gross profit method to estimate cost of sales and inventory
      for
      interim periods based on historical results and other factors, such as sales
      mix
      and purchasing trends, affecting cost of sales during the reporting
      period.





*Goodwill
      and other intangible assets*





Goodwill
      and other intangible assets are related to the Company's acquisition of CDC
      in
      August 2006. Intangible assets with finite lives are amortized over their
      estimated useful lives, which are three years for customer relations and five
      years for propriety technology. In addition to amortization, intangible assets
      are tested at least annually for impairment.





*Major
      customers*





For
      the
      three months ended April 30, 2007 the Company had three customers which
      accounted for 20%, 13%, and 10%, respectively, of total sales. There were no
      other customers that accounted for over 10% of total sales. At April 30, 2007,
      one customer accounted for 45% of total accounts receivable. For the three
      months ended March 31, 2006, CDC had two customers which accounted for
      approximately 21% and 15%, respectively, of its total sales.





For
      the
      three months ended April 30, 2007, the Company had foreign revenue, comprised
      mostly of sales from Asia (17%) and Europe (16%), which accounted for
      approximately 34% of total sales. For the three months ended March 31, 2006,
      CDC
      had foreign revenue, comprised mostly of sales from Asia (15%), which accounted
      for approximately 16% of total sales.





6




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




Basic
      earnings (loss) per share are computed by dividing net income (loss) available
      to common shareholders (numerator) by the weighted average number of shares
      outstanding (denominator) during the period. Diluted earnings per share reflects
      the potential dilution that could occur if options or other securities or
      contracts entitling the holder to acquire shares of common stock were exercised
      or converted, resulting in the issuance of additional shares of common stock
      that would then share in earnings. However, diluted loss per share does not
      consider such dilution as its effect would be anti-dilutive.





At
      April
      30, 2007, potentially dilutive securities entitling the holder thereof to
      acquire shares of common stock are summarized as follows:





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





For
      the
      three months ended April 30, 2007, these options and warrants were not included
      in the computation of diluted loss per share as their effects are anti-dilutive.
      There were no options or warrants outstanding during the three months ended
      March 31, 2006. Earnings per share information of the Predecessor are not
      presented since it was privately owned and its capital structure is not relevant
      to current Company stockholders.





*Stock-based
      compensation*





In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards 123R, “Share-Based Payment” (“SFAS
      123R”). This statement requires that the cost resulting from all share-based
      payment transactions be recognized in the financial statements. This statement
      establishes fair value as the measurement objective in accounting for
      share-based payment arrangements and requires all entities to apply a fair-value
      based measurement method in accounting for share-based payment transactions
      with
      employees except for equity instruments held by employee share ownership plans.
      Effective February 1, 2006, the Company adopted the fair value recognition
      provisions of SFAS 123R, using the modified prospective method. Under this
      method, the provisions of SFAS 123R apply to all awards granted or modified
      after the date of adoption and all previously granted awards not yet vested
      as
      of the date of adoption. The Company had no share based payments prior to the
      adoption of SFAS No. 123R, and the initial adoption of this standard had no
      effect on the Company’s financial statements




Shares,
      warrants and options issued to non-employees for services are accounted for
      in
      accordance with SFAS 123(R) and Emerging Issues Task Force Issue No. 96-18
      (“EITF 96-18”), “Accounting for Equity Instruments that are Issued to Other Than
      Employees for Acquiring or In Conjunction with Selling Goods or Services”
whereby the fair value of such option and warrant grants is determined using
      the
      Black-Scholes Model at the earlier of the date at which the non-employee’s
      performance is completed or a performance commitment is reached.





7




*Registration
      payment arrangements*





The
      Company accounts for registration payment arrangements under Financial
      Accounting Standards board (FASB) Staff Position EITF 00-19-2, “Accounting for
      Registration Payment Arrangements” (FSP EITF 00-19-2). FSP EITF 00-19-2
      specifies that the contingent obligation to make future payments under a
      registration payment arrangement should be separately recognized and measured
      in
      accordance with SFAS No. 5, Accounting for Contingencies. FSP EITF 00-19-2
      was
      issued in December, 2006. Early adoption of FSP EITF 00-19-2 is permitted and
      the Company adopted FSP EITF 00-19-2 effective November 1, 2006. At January
      31,
      2007 and April 30, 2007, the Company had accrued an estimated penalty (see
      Note
      7).





*Adoption
      of New Accounting Policy*





Effective
      February 1, 2007, the Company adopted Financial Accounting Standards Board
      Interpretation No. 48, “Accounting for Uncertainty in Income Taxes (“FIN
      48”) —an interpretation of FASB Statement No. 109, Accounting for Income Taxes.”
The Interpretation addresses the determination of whether tax benefits claimed
      or expected to be claimed on a tax return should be recorded in the financial
      statements. Under FIN 48, we may recognize the tax benefit from an uncertain
      tax
      position only if it is more likely than not that the tax position will be
      sustained on examination by the taxing authorities, based on the technical
      merits of the position. The tax benefits recognized in the financial statements
      from such a position should be measured based on the largest benefit that has
      a
      greater than fifty percent likelihood of being realized upon ultimate
      settlement. FIN 48 also provides guidance on derecognition, classification,
      interest and penalties on income taxes, accounting in interim periods and
      requires increased disclosures. At the date of adoption, and as of April 30,
      2007, the Company does not have a liability for unrecognized tax
      benefits.




The
      Company files income tax returns in the U.S. federal jurisdiction and the state
      of California. The Company is subject to U.S. federal or state income tax
      examinations by tax authorities. During the periods open to examination, the
      Company has net operating loss and tax credit carry forwards for U.S.
      federal and state tax purposes that have attributes from closed periods. Since
      these NOLs and tax credit carry forwards may be utilized
      in future periods, they remain subject to examination.




The
      Company’s policy is to record interest and penalties on uncertain tax provisions
      as income tax expense. As of April 30, 2007, the Company has no accrued interest
      or penalties related to uncertain tax positions.




*Recent
      accounting pronouncements*





In
      September 2006, the FASB issued SFAS No. 157, *Fair
      Value Measurements* .
      SFAS
      No. 157 defines fair value, establishes a framework for measuring fair value
      in
      U.S. generally accepted accounting principles and expands disclosures about
      fair
      value measurements. SFAS No. 157 is effective for fiscal years beginning after
      November 15, 2007 and interim periods within those fiscal years. The Company
      is
      currently evaluating the effect that the adoption of SFAS No. 157 will have
      on
      its financial position and results of operations.





8




In
      February 2007, the FASB issued SFAS 159 *The
      Fair Value Option for Financial Assets and Financial
      Liabilities* .
      SFAS
      159 permits the measurement of certain financial instruments at fair value.
      Entities may choose to measure eligible items at fair value at specified
      election dates, reporting unrealized gains and losses on such items at each
      subsequent reporting period. SFAS 159 is effective for fiscal years beginning
      after November 15, 2007. The Company has not evaluated the potential impact
      of
      the fair value option.




**NOTE
      2 - INVENTORIES**





Inventories
      consist of the following:





April
                30, 2007Raw
                materials
            
            $
            1,004,326Work
                in process
            
            
            113,791Finished
                goods
            
            
            36,950Inventory
                reserve
            
            
            (15,000
            )$
            1,140,067





**NOTE
      3 - GOODWILL AND OTHER INTANGIBLE ASSETS**





As
      a
      result of the acquisition of CDC, intangible assets having finite lives consist
      of the following:





April
                30, 2007Customer
                Relations
            
            $
            2,764,500Propriety
                Technology
            
            
            367,7003,132,200Less
                accumulated amortization
            
            
            (746,280
            )$
            2,385,920





Amortization
      of intangible assets was $248,760 for the three months ended April 30, 2007.
      There was no amortization for the three months ended March 31, 2006.





Amortization
      expense is estimated to be for the twelve months ended April 30:





2008
            
            $
            995,0402009
            
            
            995,0402010
            
            
            303,9152011
            
            
            73,5402012
            
            
            18,385





9





**NOTE
      4 - NOTES PAYABLE**





Notes
      payable consist of seven unsecured notes that are payable to the predecessor
      shareholders of CDC in connection with the acquisition of CDC. Interest is
      at
      6.54% per annum; $1,000,000 is due August 6, 2007, and $1,000,000 is due
      August 6, 2008. Included in the notes payable is a promissory note of
      $615,384 issued to an individual who serves as a director of the Company of
      which $307,692 is due on August 6, 2007 and $307,692 is due on August 6, 2008.





April
                30, 2007Total
                notes payable
            
            $
            2,000,000Less
                current portion
            
            
            (1,000,000
            )Long-term
                portion
            
            $
            1,000,000





**NOTE
      5 - LINE OF CREDIT**





On
      December 1, 2006, CDC entered into a revolving credit agreement with a financial
      institution. The credit agreement provides for borrowings of up to $3 million
      or
      the maximum available based on specific percentages of accounts receivable
      and
      inventory, as determined by the financial institution, whichever
      is less. At April 30, 2007, $200,000 had been advanced and $789,482 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 April 30, 2007) plus a margin initially set at 0.50%. The credit agreement
      expires on November 30, 2007, and 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, which commenced
      with the quarter ended April 30, 2007, 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 is in compliance with all covenants as of April 30, 2007. The Company has
      guaranteed the obligations of CDC under the credit agreement.




**NOTE
      6 - INCOME TAXES**




The
      components of the condensed consolidated income tax benefit are as
      follow:





April
                30, 2007Federal:Current
            
            $
            -Deferred
            
            
            223,510State:Current
            
            
            -Deferred
            
            
            38,128Total
            
            $
            261,638





10




Significant
      components of the Company's deferred income tax liability at April 30,
      2007:





April
                30, 2007Deferred
                tax assets:Net
                operating loss carry forward
            
            $
            396,669Deferred
                taxes due to change from Sub S to C corporation
            
            
            80,000Inventory
            
            
            24,641Share-based
                compensation
            
            
            159,160Total
                deferred tax assets
            
            
            660,470Deferred
                tax liability:Intangible
                assets
            
            
            (950,387
            )Net
                deferred income tax liability
            
            $
            (289,917
            )





The
      deferred tax is presented on the accompanying balance sheet as $501,310 deferred
      tax assets, current, and $791,227 deferred tax liability, long
      term.


Reconciliation
      of the effective income tax rate to the U.S. statutory rate for the six-month
      period ended April 30, 2007 is as follows:





Tax
                expense at the U.S. statutory income tax rate
            
            
            34.0
            %State
                tax net of federal tax benefit
            
            
            5.8
            %Effective
                income tax benefit rate
            
            
            39.8
            %




**NOTE
      7 - CAPITAL STOCK**




*Common
      Stock*





In
      August
      2006, the Company completed a private placement financing consisting of
      22,000,000 units at a price of $0.25 per unit for total cash proceeds of
      $5,500,000 ($4,790,172 net of financing costs). Each unit consisted of one
      share
      of common stock valued at $0.24 per share and one-half of one share purchase
      warrant valued at $0.01. A total of 22,000,000 shares of common stock and
      11,000,000 warrants were issued. Each full warrant is exercisable into one
      share
      of common stock at a purchase price of $0.30 per share on or before July 31,
      2011 (see Note 8). The Company entered into an investor rights agreement with
      the investors in the private placement which provides for penalties if the
      Company fails to file a registration statement with respect to the shares of
      common stock sold and the shares of common stock underlying the warrants as
      soon
      as possible following the closing of the private placement. In addition, the
      registration statement must be declared effective by the SEC within a specified
      period of time after the filing and must be kept effective thereafter for a
      specified period of time. The registration rights agreement requires the payment
      of liquidated damages to the investors of approximately $1,833 per day (which
      represents approximately 1% per month of the total proceeds of $5,500,000)
      until
      the Registration Statement is declared effective, payable at the option of
      the
      Company in either cash or the Company's common stock. The Company failed to
      meet
      these requirements. Accordingly, the Company had accrued an estimate of $383,000
      as of January 31, 2007 and April 30, 2007, for these potential penalties until
      the expected effectiveness of the registration statement.





11




**NOTE
      8 - STOCK OPTIONS AND WARRANTS**





*Stock
      Options*





On
      February 21, 2007, the Company entered into an employment agreement with an
      individual. As part of the agreement, the Company granted options to purchase
      100,000 shares of common stock at $0.40 per share. The options vest one year
      from the date of grant with respect to 50% of the shares of common stock and
      the
      remaining options vest over the following three years and expire February 20,
      2012. The options were valued at $38,223, the fair value of the stock options
      on
      the date granted determined using a Black-Scholes pricing model. The Company
      recognized $3,185 of compensation expense from the date the options were granted
      through April 30, 2007 related to the fair value of the vested options.





On
      March
      16, 2007, the Company granted options to an employee to purchase 50,000 shares
      of common stock at $0.40 per share. The options vest one year from the date
      of
      grant with respect to 50% of the shares of common stock and the remaining
      options vest over the following three years and expire March 15, 2012. The
      options were valued at $10,675, the fair value of the stock options on the
      date
      granted determined using a Black-Scholes pricing model. The Company recognized
      $445 of compensation expense from the date the options were granted through
      April 30, 2007 related to the fair value of the vested options.





On
      February 21, 2007, the Company agreed with an individual to provide consulting
      services. As part of the agreement the Company granted the individual options
      to
      purchase 250,000 shares of common stock at $0.50 per share. The options vest
      equally over a twelve month period and expire on February 20, 2012. 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 three months ended April 30, 2007
      we
      recorded $10,239 of compensation expense related to non-employee stock
      options.





The
      fair
      value of grants issued in the three months ended April 30, 2007 were determined
      using a Black-Scholes option pricing model with the following assumptions:
      4.65%
      average risk-free interest rate; 50% expected volatility; five to six year
      expected term, and 0% dividend yield.





12




At
      April
      30, 2007, options outstanding are as follows:




Shares
            
            Average
                Exercise PriceBalance
                at February 1, 2007
            
            
            5,600,000
            
            $
            .39Granted
            
            
            400,000
            
            
            .46Exercised
            
            
            -
            
            
            -Cancelled
            
            
            -
            
            
            -Balance
                at April 30, 2007
            
            
            6,000,000
            
            $
            .39





Additional
      information regarding options outstanding as of April 30, 2007 is as
      follows:




Options
                Outstanding
            
            Options
                ExercisableWeightedAverageNumber
                of
            
            Remaining
            
            WeightedRange
                of
            
            Shares
                Under
            
            Contractual
            
            Average
            
            Shares
                Under
            
            WeightedExercise
                Price
            
            Options
            
            life
                (years)
            
            Exercise
                Price
            
            Options
            
            Exercise
                Price$.30-$.65
            
            
            6,000,000
            
            
            6.68
            
            $
            0.39
            
            
            3,687,083
            
            $
            0.37





The
      aggregate intrinsic value of the 6,000,000 options outstanding and 3,687,083
      options exercisable as of April 30, 2007 was $815,000 and $571,875,
      respectively. The aggregate intrinsic value for the options is calculated as
      the
      difference between the price of the underlying awards and quoted price of the
      Company's common shares for the options that were in-the-money as of April
      30,
      2007.





A
      summary
      of the status of nonvested shares as of April 30, 2007 are as
      follows:




SharesNonvested
                at February 1, 2007
            
            
            2,245,833Granted
            
            
            400,000Vested
            
            
            (332,916
            )Nonvested
                at April 30, 2007
            
            
            2,312,917





The
      total
      value of options issued and vesting over the three months ended April 30, 2007,
      was $59,685 and has been reflected as compensation cost in the accompanying
      statement of operations.





The
      total
      future compensation expense for the outstanding value of unvested stock options
      was $416,772 as of April 30, 2007, which will be recognized over a weighted
      average period of 33 months.





*Warrants*





At
      April
      30, 2007, warrants outstanding were as follows:




Number
                of   Shares under Warrants
            
            Weighted
                Average Exercise PriceWarrants
                outstanding at February 1, 2007
            
            
            12,103,000
            
            $
            0.30Warrants
                granted
            
            
            -
            
            
            -Warrants
                expired
            
            
            -
            
            
            -Warrants
                outstanding at April 30, 2007
            
            
            12,103,000
            
            $
            0.30




13




The
      following table summarizes information about warrants outstanding at April
      30,
      2007:





Warrants
                Outstanding and ExercisableNumber
                of Shares Under Warrants
            
            Exercise
                Price
            
            Expiration
                Date
            
            Weighted
                  Average   Exercise Price11,000,000
            
            $
            0.30
            
            
            July
                31, 2011
            
            $
            0.301,000,000
            
            $
            0.30
            
            
            July
                31, 2011
            
            $
            0.30103,000
            
            $
            0.01
            
            
            July
                31, 2011
            
            $
            0.0112,103,000
            
            $
            0.01-$0.30
            
            
            
            
            $
            0.30





**NOTE
      9 - RELATED PARTY TRANSACTIONS**





On
      August
      1, 2006, the Company entered into consulting agreements with two individuals
      to
      serve as chairman of the board of directors and the Company’s chief financial
      officer. During the three months ended April 30, 2007, the Company paid each
      individual $24,000. In addition, the Company paid a firm in which one of the
      consultants is a partner $5,411 for services.





Four
      individuals were the shareholders and executive managers of the CDC before
      they
      sold their stock to the Company. During the three months ended March 31, 2006,
      CDC paid salaries of $159,510 to the four individuals. Effective August 1,
      2006,
      one of the individuals was appointed to the Company’s board of directors. On
      August 7, 2006, the Company issued notes payable totaling $2,000,000 to these
      individuals or their heirs in conjunction with the acquisition of CDC, including
      $615,384 to the current board member. For the three months ended April 30,
      2007,
      the Company accrued $32,252 of interest on these notes, including $9,924 to
      the
      current board member.





14




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





This
      section of this report includes a number of forward- looking statements that
      reflect our current views with respect to future events and financial
      performance. Forward-looking statements are often identified by words like:
      believe, expect, estimate, anticipate, intend, project and similar expressions,
      or words which, by their nature, refer to future events. You should not place
      undue certainty on these forward-looking statements, which apply only as of
      the
      date of this report. These forward-looking states are subject to certain risks
      and uncertainties that could cause actual results to differ materially from
      historical results or out predictions.





**Company
      Overview**




Chatsworth
      Data Solutions (formerly Adera Mines Limited) was incorporated in the State
      of
      Nevada on December 30, 2003 and until August 2006 was an exploration stage
      corporation. An exploration stage corporation is one engaged in the search
      for
      mineral deposits (reserves) which are not in either the development or
      production stage. In August 2006, we purchased all of the outstanding shares
      of
      an operating data transfer business, Chatsworth Data Corporation
      (“CDC”).




Prior
      to
      August 2006, CDC was privately owned. It was acquired from Republic Corporation
      in 1971 by five Republic managers, four of whom managed the Company until the
      sale. CDC's corporate headquarters are in Chatsworth, California, thirty miles
      northwest of downtown Los Angeles. Its primary business has been the development
      and manufacture of optical mark readers. Over one hundred thousand readers
      and
      one hundred ten thousand optic head assemblies have been sold worldwide by
      CDC.
      The optical mark readers have been traditionally sold into four vertical market
      sectors: education, gaming and lottery, health care, and vote tabulation. The
      corporation also manufactures impact recording devices and cable testers. CDC
      prides itself on customer service; its engineering and design staff is able
      to
      understand client's technical problems and offer ready solutions to those
      problems. A customer hotline was installed over fifteen years ago to enable
      field problems to be handled quickly, efficiently and effectively. New products
      are designed and brought to market quickly in response to customer
      demand.





**Acquisition**





On
      August
      7, 2006, the Company acquired 100 percent of the common stock of Chatsworth
      Data
      Corporation (CDC). The acquisition was effective August 1, 2006. CDC
      manufactures equipment for optical readers and read heads, impact recorders
      and
      indicators, and cable test equipment. The acquisition was accounted for as
      a
      purchase in accordance with Statement of Financial Accounting Standards No.
      141
“Business Combinations.” As such, the results of CDC’s operations have been
      included in the consolidated financial statements since August 1, 2006.


15


The
      components of the purchase price and the allocation of the purchase price are
      as
      follows:





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




Purchase
                price allocationCurrent
                assets, including cash of $438,690
            
            $
            2,748,534Property
                and equipment
            
            
            74,694Intangible
                assets
            
            
            3,132,200Goodwill
            
            
            3,926,643Current
                liabilities
            
            
            (1,387,932
            )Deferred
                tax liability
            
            
            (1,247,555
            )Total
                purchase price
            
            $
            7,246,531




Of
      the
      $3,132,200 of acquired intangible assets, $2,764,500 was assigned to customer
      relations with an estimated life of 3 years and $367,700 was assigned to
      proprietary technology with an estimated life of 5 years.


16


**Results
      of operations - For the Three Months Ended April 30, 2007 (Successor) compared
      to the three months ended March 31, 2006 (Predecessor)**





The
      Company’s year end is January 31. The Predecessor’s year end was December 31. As
      a result, this Form 10-QSB includes comparative financial statements for the
      three month period ended March 31, 2006, which is the period of the Predecessor
      that is most nearly comparable to the three month period ended April 30, 2007
      of
      the Successor. The business of the Predecessor and Successor is similar and
      there are no seasonal factors that affect the comparability of information
      presented. The Company did not recast the financial statements for the
      three-month period ended March 31, 2006, because the financial reporting process
      of the Predecessor in place at the time included certain procedures that were
      completed only on a quarterly basis for the quarter ended March 31, 2006. The
      Company reviewed the operations during the related periods and believes the
      results would be materially the same and not having the transitional amount
      does
      not affect the readers’ understanding of the operations or financial position of
      the Company. Consequently, to recast that period would have been impractical
      and
      would not have been cost-justified.





Net
      sales
      revenue totaled $2,218,753 for the three months ended April 30, 2007, compared
      to $1,515,896 for the three months ended March 31, 2006. Net sales for the
      three
      months ended March 31, 2006 were attributable to CDC (Predecessor) prior to
      its
      acquisition by the Company on August 7, 2006. The following table sets forth
      net
      sales revenue by vertical market for the respective periods indicated below
      for
      the Successor and Predecessor.




Successor
            
            PredecessorThree
                months endedApril
                30, 2007
            
            March
                31, 2006Gaming
            
            $
            832,307
            
            $
            682,883Education
            
            
            4,999
            
            
            -Voting
            
            
            468,832
            
            
            224,592Medical
            
            
            81,595
            
            
            68,207Others
            
            
            43,123
            
            
            4,903Total
                optical mark readers
            
            
            1,430,856
            
            
            980,585Impact
                recorders/indicators
            
            
            787,897
            
            
            440,423Cable
                Testing
            
            
            -
            
            
            94,888Total
            
            $
            2,218,753
            
            $
            1,515,896





17




Cost
      of
      sales totaled $1,493,328 for the three months ended April 30, 2007, compared
      to
      $1,181,196 for the three months ended March 31, 2006. The cost of sales for
      the
      three months ended March 31, 2006 pertained to the revenues generated by the
      Predecessor from the acquisition of CDC. Gross margin percentage was 33% for
      the
      three months ended April 30, 2007, compared to 22% for the three months ended
      March 31, 2006. The increased gross margin percentage was in part due to an
      increase in the volume of business which allowed the Company to spread its
      indirect manufacturing overhead over a larger volume of sales.





General
      and administrative (G&A) expenses totaled $1,078,392 for the three months
      ended April 30, 2007, as compared to $271,366 for the three months ended March
      31, 2006. Included in G&A for this quarter were accounting and legal fees
      totaling $151,233 incurred in connection with the audit of the Company and
      the
      registration of our common stock with the Securities and Exchange Commission.
      During this quarter, we also spent increased amounts on advertising and public
      relations, increasing from $0 in the March 31, 2006 quarter to $23,448 in the
      quarter ended April 30, 2007. We also increased the amount spent for insurance
      from $19,253 to $45,992. Our contribution to our 401(k) plan increased from
      $0
      in the March 31, 2006 quarter to $12,423 in the quarter ended April 30, 2007.
      Travel increased from $0 in the quarter ended March 31, 2006 to $74,420 in
      the
      quarter ended April 30, 2007. Our expense for consulting and outside services
      increased from $31,186 to $236,941 as a result of the cost of trade shows,
      expenses of attending a conference of one our resellers held in Cairo, the
      expenses of updating our product materials and marketing and sales materials.
      Finally, in accordance with FASB 123(R), the Company recorded compensation
      expense of $59,685 related to stock options.





The
      Company recorded a deferred tax benefit of $261,638 for the three months ended
      April 30, 2007. Our effective tax rate was estimated to be 40%.





The
      net
      loss for the three months ended April 30, 2007 was $359,743 compared to net
      income of $63,371 for the three months ended March 31, 2006 attributable to
      our
      Predecessor.





**Liquidity
      and Capital Resources**





As
      shown
      in the financial statements for the three months ended April 30, 2007, the
      Company had cash of $139,950 compared to $341,676 as of January 31, 2007. The
      Company used $314,254 of cash in operating activities for the three months
      ended
      April 30, 2007 compared to $306,334 of cash used in operating activities for
      the
      three months ended March 31, 2006. We
      expect
      to fund our operations and capital expenditures from internally generated funds
      and from the use of our revolving credit line. We believe that our cash flow
      from operations and available credit line will be sufficient to meet our working
      capital, capital expenditure and investment requirements for at least the next
      12 months. We may require additional funds for other purposes, such as
      acquisitions of complementary businesses, and may seek to raise such additional
      funds through public and private equity financings or from other sources.
      However, we cannot assure you that additional financing will be available at
      all
      or that, if available, such financing will be obtainable on terms favorable
      to
      us or that any additional financing will not be dilutive.





18




At
      April
      30, 2007, $200,000 was owed under CDC's revolving credit agreement with a
      financial institution. Under this credit agreement, CDC may borrow the lesser
      of
      $3 million or its borrowing base, which is based on specific percentages of
      accounts receivable and inventory, as determined by the financial institution.
      The outstanding advances under the credit agreement bear interest of an annual
      rate equal to the prime rate (8.25% at April 30, 2007) plus a margin initially
      set at 0.50%. Interest is payable in arrears on a monthly basis. The credit
      agreement expires on November 30, 2007, and is secured by all the personal
      property of CDC, including its equipment, accounts receivable and inventory.
      The
      Company has guaranteed the obligations of CDC under the credit
      agreement.





The
      credit agreement, among other things, restricts CDC's ability to (i) incur
      additional indebtedness, (ii) create or incur liens, (iii) enter into or assume
      certain leases, (iv) guarantee the indebtedness of any other person, (v) enter
      into any merger, consolidation or similar transaction or sell all or
      substantially all of its assets, or (vi) incur any ownership change. The credit
      agreement also required CDC to maintain a minimum Fixed Charge Coverage Ratio
      and limits CDC's maximum ratio of Funded Debt to EBITDA, each as defined in
      the
      credit agreement. At April 30, 2007, CDC has determined that it was in
      compliance with all the covenants of the credit agreement.





We
      owe
      $2,000,000 million to the CDC sellers; $1,000,000 million is payable August
      6,
      2007 (one year from the closing of the CDC purchase) and $1,000,000 million
      is
      payable August 6, 2008 (two years from the closing). Interest is payable
      quarterly. Interest accrued for this quarter was $32,969. We believe cash flow
      from operations and available credit line will be sufficient to repay the
      note.





On
      August
      17, 2005, Chatsworth Data Corp. entered into a property leasing arrangement
      to lease approximately 14,500 square feet from an unrelated third party. The
      lease calls for minimum lease payments of $10,296 per month through August
      31,
      2007, and $10,605 per month thereafter until it expires in August 2008.





On
      March
      13, 2007, the Company entered an arrangement to lease approximately 1,270 square
      feet of office space from an unrelated third party beginning May 1, 2007. The
      lease expires April 30, 2010. Both
      leases are classified as operating leases.





The future
      minimum non-cancelable rental payments under all operating leases are as
      follows:




2008
            
            $
            165,3832009
            
            
            81,7812010
            
            
            39,1032011
            
            
            4,4022012
            
            
            -Thereafter
            
            
            -





19




**Critical
      Accounting Policies**




**Revenue
      recognition**





The
      Company recognizes revenue when there is persuasive evidence that an arrangement
      exists, delivery of the product has occurred and title has passed, the selling
      price is both fixed and determinable, and collectibility is reasonably assured,
      all of which generally occurs upon shipment of the Company’s product or delivery
      of the product to the destination specified by the customer.





**Inventory**





The
      Company uses a gross profit method to estimate cost of sales and inventory
      for
      interim periods based on historical results and other factors, such as sales
      mix
      and purchasing trends, affecting cost of sales during the reporting
      period.





**Intangible
      assets**





Intangible
      assets and goodwill are related to the Company's acquisition of CDC in August
      2006. Intangible
      assets with finite lives are amortized over their estimated useful lives, which
      are three years for customer relations and five years for propriety technology.
      In addition to amortization, intangible assets are tested at least annually
      for
      impairment.





**Stock-based
      compensation**





*Stock-based
      compensation*





In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards 123R, “Share-Based Payment” (“SFAS
      123R”). This statement requires that the cost resulting from all share-based
      payment transactions be recognized in the financial statements. This statement
      establishes fair value as the measurement objective in accounting for
      share-based payment arrangements and requires all entities to apply a fair-value
      based measurement method in accounting for share-based payment transactions
      with
      employees except for equity instruments held by employee share ownership plans.
      Effective February 1, 2006, the Company adopted the fair value recognition
      provisions of SFAS 123R, using the modified prospective method. Under this
      method, the provisions of SFAS 123R apply to all awards granted or modified
      after the date of adoption and all previously granted awards not yet vested
      as
      of the date of adoption. The Company had no share based payments prior to the
      adoption of SFAS No. 123R, and the initial adoption of this standard had no
      effect on the Company’s financial statements




Shares,
      warrants and options issued to non-employees for services are accounted for
      in
      accordance with SFAS 123(R) and Emerging Issues Task Force Issue No. 96-18
      (“EITF 96-18”), “Accounting for Equity Instruments that are Issued to Other Than
      Employees for Acquiring or In Conjunction with Selling Goods or Services”
whereby the fair value of such option and warrant grants is determined using
      the
      Black-Scholes Model at the earlier of the date at which the non-employee’s
      performance is completed or a performance commitment is reached.





20




**Adoption
      of New Accounting Policy**





Effective
      February 1, 2007, the Company adopted Financial Accounting Standards Board
      Interpretation No. 48, “Accounting for Uncertainty in Income Taxes (“FIN
      48”) —an interpretation of FASB Statement No. 109, Accounting for Income Taxes.”
The Interpretation addresses the determination of whether tax benefits claimed
      or expected to be claimed on a tax return should be recorded in the financial
      statements. Under FIN 48, we may recognize the tax benefit from an uncertain
      tax
      position only if it is more likely than not that the tax position will be
      sustained on examination by the taxing authorities, based on the technical
      merits of the position. The tax benefits recognized in the financial statements
      from such a position should be measured based on the largest benefit that has
      a
      greater than fifty percent likelihood of being realized upon ultimate
      settlement. FIN 48 also provides guidance on derecognition, classification,
      interest and penalties on income taxes, accounting in interim periods and
      requires increased disclosures. At the date of adoption, and as of April 30,
      2007, the Company does not have a liability for unrecognized tax
      benefits.




The
      Company files income tax returns in the U.S. federal jurisdiction and the state
      of California. The Company is subject to U.S. federal or state income tax
      examinations by tax authorities. During the periods open to examination, the
      Company has net operating loss and tax credit carry forwards for U.S.
      federal and state tax purposes that have attributes from closed periods. Since
      these NOLs and tax credit carry forwards may be utilized
      in future periods, they remain subject to examination.




The
      Company’s policy is to record interest and penalties on uncertain tax provisions
      as income tax expense. As of April 30, 2007, the Company has no accrued interest
      or penalties related to uncertain tax positions.





**Recent
      accounting pronouncements**





In
      September 2006, the Financial Accounting Standard Board (“FASB”) issued SFAS No.
      157, “Fair Value Measurements.”  SFAS No. 157 defines fair value,
      establishes a framework for measuring fair value in U.S. generally accepted
      accounting principles and expands disclosures about fair value measurements.
       SFAS No. 157 is effective for fiscal years beginning after November 15,
      2007 and interim periods within those fiscal years. The Company is currently
      evaluating the effect that the adoption of SFAS No. 157 will have on its
      financial position and results of operations.





In
      February 2007, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 159, *The
      Fair Value Option for Financial Assets and Financial Liabilities* (SFAS
      159). SFAS 159 permits entities to choose to measure many financial instruments
      and certain other items at fair value, and establishes presentation and
      disclosure requirements designed to facilitate comparisons between entities
      that
      choose different measurement attributes for similar types of assets and
      liabilities. SFAS 159 is effective for fiscal years beginning after November
      15,
      2007. The Company does not expect the adoption of SFAS 159 to have a material
      effect on its financial statements and related disclosures.





21




**ITEM
      3. CONTROLS AND PROCEDURES**





(a)
      Evaluation of disclosure controls and procedures. As of the end of the period
      covered by this report, we carried out an evaluation, under the supervision
      and
      with the participation of our management, including our Chief Executive Officer
      and Chief Financial Officer, of the effectiveness of the design and operation
      of
      our disclosure controls and procedures, as defined in Rules 13a-15(e) and
      15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon
      that
      evaluation, our Chief Executive Officer and Chief Financial Officer concluded
      that, as of April 30, 2007, our disclosure controls and procedures were
      effective to
      ensure
      that information required to be disclosed by us in reports that we file or
      submit under the Exchange Act is recorded, processed, summarized and reported
      within the time periods specified in SEC rules and forms.





(b)
      Changes in internal controls over financial reporting. There was no change
      in
      our internal control over financial reporting during our most recent fiscal
      quarter that has materially affected, or is reasonably likely to materially
      affect, our internal control over financial reporting.





**PART
      II - OTHER INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS**





Not
      applicable .





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





Not
      applicable.





**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**





Not
      applicable.


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





Not
      applicable





**ITEM
      5. OTHER INFORMATION**





Not
      Applicable





**ITEM
      6. EXHIBITS**





(a)
      Exhibits





The
      exhibits listed in the Exhibit Index are filed as a part of this report.





22




**SIGNATURES**





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





**CHATSWORTH
                DATA SOLUTIONS, INC.**Date:
                October 23, 2007
            
            /s/
                J. Stewart Asbury IIIJ.
                Stewart Asbury III
              Chief
                Executive Officer, President




23


**INDEX
      TO EXHIBITS.**





**Exhibit****Number**
            
            **Description**31.1
            
            Rule
                13a-14(a)/15d-14(a) Certification by the Chief Executive
                Officer.31.2
            
            Rule13a-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.