**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549





**FORM
      10-QSB**





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


**EXCHANGE
      ACT OF 1934**





For
      the
      quarterly period ended: April 30, 2008





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.)





321
                South Boston Ave. Suite 218, Tulsa, OK
            
            74103(Address
                of Principal Executive Offices)
            
            (Zip
                Code)





(918)
      645-3701


(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 May
      31, 2008, the issuer had 31,250,000 shares of common stock, $0.00001 par value,
      issued and outstanding and 20,046,000 shares of common stock, $0.00001 par
      value, subscribed but not yet issued.





Transitional
      Small Business Disclosure Format: Yes o No x
















**CHATSWORTH
      DATA SOLUTIONS, INC.**




INDEX
      TO
      FORM 10-QSB





PAGEPART
                I
            
            FINANCIAL
                INFORMATIONItem
                1.
            
            Condensed
                Consolidated Financial StatementsCondensed
                consolidated balance sheets as of April 30, 2008   (unaudited)
                and January 31, 2008
            
            2Co
                Condensed consolidated statements of operationsfor
                the three months ended April 30, 2008 and 2007–
                unaudited
            
            3Condensed
                consolidated statement of changes in stockholders'  equity for the
                three months ended April 30, 2008 – unaudited
            
            4Condensed
                consolidated statements of cash flows for the three   months
                ended April 30, 2008 and 2007 – unaudited
            
            5Notes
                to condensed consolidated financial statements -
                unaudited
            
            6Item
                2.
            
            Management's
                Discussion and Analysis or Plan of Operations
            
            12Item
                3.
            
            Controls
                and Procedures
            
            16PART
                II
            
            OTHER
                INFORMATION
            
            17Item
                1.
            
            Legal
                Proceedings
            
            17Item
                2.
            
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            
            17Item
                3.
            
            Defaults
                Upon Senior Securities
            
            18Item
                4.
            
            Submission
                of Matters to a Vote of Security Holders
            
            18Item
                5.
            
            Other
                Information
            
            18Item
                6.
            
            Exhibits
            
            18SIGNATURES




1


CHATSWORTH
      DATA SOLUTIONS, INC.





CONDENSED
      CONSOLIDATED BALANCE SHEETS




April 30,
              2008
              (Unaudited)
            
            January 31,
              2008**ASSETS**Current
                AssetsCash
            
            $
            218,098
            
            $
            72,329Accounts
                receivable, less allowance for doubtful accounts of $16,193 and
                $16,367
            
            
            855,613
            
            
            1,377,486Inventories
            
            
            1,628,556
            
            
            1,550,974Prepaid
                expenses
            
            
            33,631
            
            
            40,457Total
                current assets
            
            
            2,735,898
            
            
            3,041,246Property
                and equipment, net
            
            
            351,405
            
            
            377,061Goodwill
            
            
            3,926,643
            
            
            3,926,643Intangible
                assets, net
            
            
            1,390,880
            
            
            1,639,640Other
                assets
            
            
            42,325
            
            
            24,734Total
                assets
            
            $
            8,447,151
            
            $
            9,009,324**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                LiabilitiesAccounts
                payable
            
            $
            755,612
            
            $
            1,181,750Accrued
                liabilities
            
            
            323,755
            
            
            285,955Line
                of credit
            
            
            1,515,378
            
            
            1,797,593Current
                portion of notes payable
            
            
            1,500,000
            
            
            1,000,000Total
                current liabilities
            
            
            4,094,745
            
            
            4,265,298Notes
                payable, long term
            
            
            -
            
            
            500,000Note
                payable, registration payment penalty
            
            
            754,600
            
            
            -Accrued
                registration payment penalty
            
            
            -
            
            
            754,600Total
                liabilities
            
            
            4,849,345
            
            
            5,519,898Commitments
                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 at April 30, 2008 and January
                31,
                2008, respectively
            
            
            312
            
            
            312Common
                stock to be issued, 20,046,000 and 0 shares, respectively
            
            
            1,002,300
            
            
            -Additional
                paid-in capital
            
            
            7,062,552
            
            
            6,493,184Accumulated
                deficit
            
            
            (4,467,358
            )
            
            (3,004,070
            )Total
                stockholders' equity
            
            
            3,597,806
            
            
            3,489,426Total
                liabilities and stockholders' equity
            
            $
            8,447,151
            
            $
            9,009,324




The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.


2





CHATSWORTH
      DATA SOLUTIONS, INC.





CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS





Three Months Ended April 30,2008
            
            2007(unaudited)
            
            (unaudited)Net
                sales
            
            $
            1,364,734
            
            $
            2,218,753Cost
                of sales
            
            
            941,047
            
            
            1,493,328Gross
                profit
            
            
            423,687
            
            
            725,425Operating
                expenses:General
                and administrative
            
            
            1,525,910
            
            
            1,074,992Depreciation
            
            
            39,430
            
            
            26,195Amortization
                of intangible assets
            
            
            248,760
            
            
            248,760Loss
                from operations
            
            
            (1,390,413
            )
            
            (624,522
            )Other
                income (expense)Interest
                expense
            
            
            (73,124
            )
            
            (35,752
            )Interest
                income
            
            
            249
            
            
            2,893Other
                income (expense), net
            
            
            (72,875
            )
            
            (32,859
            )Loss
                before income taxes
            
            
            (1,463,288
            )
            
            (657,381
            )Income
                tax benefit
            
            
            -
            
            
            261,638Net
                loss
            
            $
            (1,463,288
            )
            $
            (395,743
            )Net
                loss per share - basic and diluted
            
            $
            (0.04
            )
            $
            (0.01
            )Weighted
                average shares outstanding
            
            
            37,556,607
            
            
            31,250,000





See
      accompanying notes to condensed consolidated financial statements


3


CHATSWORTH
      DATA SOLUTIONS, INC.





CONDENSED
      CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY





For
      the
      three months ended April 30, 2008


(unaudited)





Common Stock
            
            Common Stock to be IssuedNumber of
              Shares
            
            Amount
            
            Number of
              Shares
            
            Amount
            
            Additional
              Paid-in Capital
            
            Accumulated
              Deficit
            
            TotalBalance,
                February 1, 2008
            
            
            31,250,000
            
            $
            312
            
            
            -
            
            $
            -
            
            $
            6,493,184
            
            $
            (3,004,070
            )
            $
            3,489,426Sale
                of common stock
            
            
            
            
            
            
            
            
            20,046,000
            
            
            1,002,300
            
            
            -
            
            
            
            
            
            1,002,300Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (1,463,288
            )
            
            (1,463,288
            )Stock
                based employee compensation
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            522,990
            
            
            -
            
            
            522,990Fair
                value of vested options
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            46,378
            
            
            -
            
            
            46,378Balance,
                April 30, 2008
            
            
            31,250,000
            
            $
            312
            
            
            20,046,000
            
            $
            1,002,300
            
            $
            7,062,552
            
            $
            (4,467,358
            )
            $
            3,597,806





See
      accompanying notes to condensed consolidated financial statements


4


CHATSWORTH
      DATA SOLUTIONS, INC.





CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS





Three Months Ended April 30,2008
            
            2007(unaudited)
            
            (unaudited)**Cash
                Flows from Operating Activities**Net
                loss for the period
            
            $
            (1,463,288
            )
            $
            (395,743
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
                and amortization
            
            
            288,190
            
            
            274,955Stock
                based employee compensation
            
            
            522,990
            
            
            -Fair
                value of vested options
            
            
            46,378
            
            
            59,685Income
                tax benefit
            
            
            -
            
            
            (261,638
            )Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            521,873
            
            
            (343,272
            )Inventories
            
            
            (77,582
            )
            
            (67,859
            )Deposits
            
            
            (17,591
            )
            
            (2,738
            )Prepaid
                expenses
            
            
            6,826
            
            
            24,346Accounts
                payable
            
            
            (426,138
            )
            
            562,909Accrued
                liabilities
            
            
            37,800
            
            
            (164,900
            )Net
                cash used in operating activities
            
            
            (560,542
            )
            
            (314,255
            )**Cash
                Flows from Investing Activities**Purchase
                of property and equipment
            
            
            (13,774
            )
            
            (87,471
            )Net
                cash used in investing activities
            
            
            (13,774
            )
            
            (87,471
            )**Cash
                Flows from Financing Activities**Proceeds
                from common stock to be issued
            
            
            1,002,300
            
            
            -Net
                borrowings (repayments) on line of credit
            
            
            (282,215
            )
            
            200,000Net
                cash provided by financing activities
            
            
            720,085
            
            
            200,000Change
                in cash
            
            
            145,769
            
            
            (201,726
            )Cash
                and cash equivalents, beginning of period
            
            
            72,329
            
            
            341,676Cash
                and cash equivalents , end of period
            
            $
            218,098
            
            $
            139,950**Supplemental
                cash flow information**Cash
                paid for income taxes
            
            $
            -
            
            $
            -Cash
                paid for interest
            
            $
            41,287
            
            $
            34,294




See
      accompanying notes to condensed consolidated financial
      statements


5


CHATSWORTH
      DATA SOLUTIONS, INC.





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





As
      of
      April 30, 2008 and for the three months ended April 30, 2008 and 2007


(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.




*Liquidity
      and Capital Resources*





The
      Company had cash on hand of $218,098 at April 30, 2008 and $72,329 at January
      31, 2008. During the three months ended April 30, 2008, the Company incurred
      a
      net loss of $1,463,288 and used cash in operations of $560,542.





During
      the quarter ended April 30, 2008, the Company (or CDC), among other items,
      converted a registration payment obligation into a note payable, amended its
      notes payable and line of credit agreements to extend principal payments and
      maturity dates, and issued common stock for proceeds of $1,002,300 (from
      an
      authorized private placement of $1,500,000). Management believes these
      actions will, among other things, enhance the liquidity and capital resources
      of
      the Company.




On
        June
        20, 2008, the Company closed on an additional $500,000 of funding, evidenced
        by
        a private placement of securities in the amount of $280,000 and the issuance
        of
        the Company’s promissory note for $220,000.The note bears interest at a rate of
        12% per annum and matures on July 20, 2008, at which time the Company expects
        to
        repay the note with the proceeds of the $220,000 unsold allotment remaining
        under the $1,500,000 private placement previously authorized. Management
        believes that its existing cash balance at April 30, 2008, coupled with the
        additional $500,000 funding as well as the Company’s ability to borrow under its
        credit agreement, will be sufficient to meet its working capital, capital
        expenditure and investment requirements for the next 12 months. However,
        the
        Company may also require funds for other purposes, such as acquisitions of
        complementary businesses, and may seek to raise such additional funds through
        public and private financings or from other sources. There
        is
        no assurance that additional financing will be available at all or that,
        if
        available, such financing will be obtainable on terms favorable the Company
        or
        that any additional financing will not be dilutive


*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, 2008, filed with the SEC. 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.


6


*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.





*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. As
      of
      April 30, 2008, 20,046,000 of shares to be issued are considered as outstanding
      for purpose of this calculation.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. Incomputing basic and diluted earnings (loss) per share, the Company considers
      shares to be issued as outstanding from the date the shares were
      sold.




At
      April
      30, 2008 potentially dilutive securities entitling the holder thereof to acquire
      shares of common stock are summarized as follows:




Options
                to purchase common stock
            
            
            7,337,500Warrants
                to purchase common stock
            
            
            12,103,000





For
      the
      three months ended April 30, 2008, these options and warrants were not included
      in the computation of diluted loss per share as their effects are anti-dilutive.





*Stock
      Compensation Costs*





The
      Company periodically issues stock options and warrants to employees and
      non-employees in non-capital raising transactions for services and for financing
      costs. The Company adopted Statement of Financial Accounting Standards (SFAS)
      No. 123R effective February 1, 2006, and is using the modified prospective
      method in which compensation cost is recognized beginning with the effective
      date (a) based on the requirements of SFAS No. 123R for all share-based payments
      granted after the effective date and (b) based on the requirements of SFAS
      No.
      123R for all awards granted to employees prior to the effective date of SFAS
      No.
      123R that remained unvested on the effective date.





The
      Company accounts for stock option and warrant grants issued and vesting to
      non-employees in accordance with EITF No. 96-18: "Accounting for Equity
      Instruments that are Issued to Other Than Employees for Acquiring, or in
      Conjunction with Selling, Goods or Services” and EITF No. 00-18: “Accounting
      Recognition for Certain Transactions involving Equity Instruments Granted to
      Other Than Employees” whereas the value of the stock compensation is based upon
      the measurement date as determined at either a) the date at which a performance
      commitment is reached, or b) at the date at which the necessary performance
      to
      earn the equity instruments is complete.





*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 (See Note
      4).


7





*Financial
      Assets and Liabilities Measured at Fair Value*





Effective
      February 1, 2008, the Company adopted Statement of Financial Accounting
      Standards (SFAS) No. 157, Fair Value Measurements. This Statement defines
      fair value for certain financial and nonfinancial assets and liabilities that
      are recorded at fair value, establishes a framework for measuring fair value,
      and expands disclosures about fair value measurements. This guidance applies
      to
      other accounting pronouncements that require or permit fair value measurements.
      On February 12, 2008, the FASB finalized FASB Staff Position (FSP) No.
      157-2, Effective Date of FASB Statement No. 157. This Staff Position delays
      the effective date of SFAS No. 157 for nonfinancial assets and liabilities
      to fiscal years beginning after November 15, 2008 and interim periods within
      those fiscal years, except for those items that are recognized or disclosed
      at
      fair value in the financial statements on a recurring basis (at least annually).
      The adoption of SFAS No. 157 had no effect on the Company’s consolidated
      financial position or results of operations.





*Recent
      accounting pronouncements*





In
      December 2007, the FASB issued FASB Statement No. 141 (R), “Business
      Combinations” (FAS 141(R)), which establishes accounting principles and
      disclosure requirements for all transactions in which a company obtains control
      over another business. Statement 141 (R) applies prospectively to business
      combinations for which the acquisition date is on or after the beginning of
      the
      first annual reporting period beginning on or after December 15, 2008. Earlier
      adoption is prohibited.




In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements, an amendment of ARB No. 51”. SFAS No. 160
      establishes accounting and reporting standards that require that the ownership
      interests in subsidiaries held by parties other than the parent be clearly
      identified, labeled, and presented in the consolidated statement of financial
      position within equity, but separate from the parent’s equity; the amount of
      consolidated net income attributable to the parent and to the noncontrolling
      interest be clearly identified and presented on the face of the consolidated
      statement of income; and changes in a parent’s ownership interest while the
      parent retains its controlling financial interest in its subsidiary be accounted
      for consistently. SFAS No. 160 also requires that any retained noncontrolling
      equity investment in the former subsidiary be initially measured at fair value
      when a subsidiary is deconsolidated. SFAS No. 160 also sets forth the disclosure
      requirements to identify and distinguish between the interests of the parent
      and
      the interests of the noncontrolling owners. SFAS No. 160 applies to all entities
      that prepare consolidated financial statements, except not-for-profit
      organizations, but will affect only those entities that have an outstanding
      noncontrolling interest in one or more subsidiaries or that deconsolidate a
      subsidiary. SFAS No. 160 is effective for fiscal years, and interim periods
      within those fiscal years, beginning on or after December 15, 2008. Earlier
      adoption is prohibited. SFAS No. 160 must be applied prospectively as of the
      beginning of the fiscal year in which it is initially applied, except for the
      presentation and disclosure requirements. The presentation and disclosure
      requirements are applied retrospectively for all periods presented.





In
      March
      2008, the FASB issued SFAS No. 161, *Disclosures
      about Derivative Instruments and Hedging Activities—an amendment of FASB
      Statement No. 133* (“SFAS No. 161”), to improve financial reporting of derivative
      instruments and hedging activities by requiring enhanced disclosures to enable
      investors to better understand their effects on an entity’s financial position,
      financial performance and cash flows. SFAS No. 161 applies to fiscal
      years and interim periods beginning after November 15, 2008.





The
      Company does not believe that the adoption of the above recent pronouncements
      will have a material effect on the Company’s consolidated results of operations,
      financial position, or cash flows.


8





**NOTE
      2 – 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 (see Note 7).
      The
      notes were amended July 31, 2007 and March 19, 2008. Under the terms of the
      notes, as amended, interest was payable quarterly at 6.54% per annum until
      April
      1, 2008, at which time interest increased to 9.54% per annum. Principal of
      $500,000 is due October 31, 2008; $500,000 is due on January 31, 2009; and
      $500,000 is due April 30, 2009.





Included
      in the $1,500,000 notes payable is a promissory note of $615,384 issued to
      an
      individual who serves as a director of the Company, of which payments of $76,923
      each were paid August 6, 2007 and December 31, 2007. Of the $461,538 note
      balance, $153,846 is due October 31, 2008, $153,846 is due January 31, 2009
      and
      $153,846 is due on April 30, 2009.





**NOTE
      3 – LINE OF CREDIT**





On
      April
      3, 2008, the Company entered into a second amendment to its revolving credit
      agreement dated December 31, 2006. Pursuant to the second amendment, which
      was
      effective as of February 29, 2008, the term of the revolving credit agreement
      was extended to February 28, 2009, when all amounts outstanding are due and
      payable. At April 30, 2008, outstanding borrowings under this agreement were
      $1,515,378, which was in excess of its borrowing base by $63,115.All
      advances bear interest at prime plus 2% (7% at April 30, 2008) and are payable
      monthly in arrears. The revolving credit agreement, as amended, provides for
      a
      standby fee of 1% of the unused portion of the facility.





**NOTE
      4 – NOTES PAYABLE, REGISTRATION PAYMENT PENALTY**





On
      April
      3, 2008, the Company reached an agreement with investors holding certain
      registration rights under an August 2006 Investor Rights Agreement, whereby
      the
      Company was obligated to file a registration statement covering the investors’
shares and to have such registration statement declared effective by the
      Securities and Exchange Commission within a specified period of time. Failure
      to
      meet its obligations under the Investor Rights Agreement resulted in the Company
      incurring monetary penalties to the investors. With the execution of the Penalty
      Settlement Agreement on April 3, 2008, the parties to the Investor Rights
      Agreement agreed to cease any further accrual of the late registration penalties
      under such agreement, and the Company issued promissory notes to the investors
      in the aggregate amount of $754,600, reflecting the total accrued late
      registration penalties through February 29, 2008. The notes bear interest at
      12%
      per annum and mature March 10, 2010. If the Adjusted Share Price of the
      Company’s common stock is equal to or greater than $.25 for a period of five (5)
      consecutive trading days the Company has the option of paying any or all of
      the
      accrued interest on the notes payable in its common stock. The agreement
      relieves the Company of any further obligation to register the investors’ shares
      that were the subject of a pending registration statement on Form
      SB-2.





**NOTE
      5 – COMMON STOCK PURCHASE AGREEMENT**





On
      April
      2, 2008, the Company closed on $1,002,300 of subscriptions raised under a Common
      Stock Purchase Agreement (“SPA”) by and among the Company and a group of
      investors (collectively, the “Investors”). Terms of the SPA provided for a
      minimum of 20,000,000 shares and a maximum of 30,000,000 shares to be sold
      under
      the SPA, at a price of $.05 per share. On April 2, 2008, the Company held its
      initial closing of the common stock offering, and issued 20,046,000 shares
      of
      its common stock at a price of $.05 per share for a total consideration of
      $1,002,300. Ten million shares were purchased by Vision Opportunity Master
      Fund,
      Ltd. (“Vision”) and 10,046,000 shares were purchased by officers, directors,
      management and employees of the Company or its wholly owned subsidiary,
      Chatsworth Data Corporation, as well as existing shareholders of the Company.


9





The
      purchase price of the stock under the SPA of $0.05 was below the trading price
      of the stock by $0.065. Therefore, compensation expense of $522,990 was
      recognized for the 8,046,000 shares of stock issued to officers, directors
      and
      employees of the Company.





The
      securities were offered and sold by the Company pursuant to exemptions from
      registration set forth in section 4(2) of the Securities Act of 1933, as
      amended.





The
      common stock purchased by Investors other than Vision is subject to a Lock-up
      Agreement, which provides that the Investor may not sell the common stock
      purchased by him for a period of twelve (12) months following the closing.
      Thereafter, the Investor may sell no more than 1/12 of the shares in any one
      month for a period of 24 months.





The
      funds
      received by the Company were immediately transferred to Chatsworth Data
      Corporation for use in its operations.





**NOTE
      6 – STOCK OPTIONS AND WARRANTS**


*Stock
        Options*


On
      September 14, 2006, the Company adopted the 2006 Equity Incentive Plan (the
      Plan) for its officers, directors and consultants. Subject to adjustments,
      options to purchase no more than 10,000,000 shares of common stock may be issued
      in the aggregate under the Plan. The options may not be granted for a term
      in
      excess of ten years.





At
      April
      30, 2008, options outstanding are as follows:





Shares
            
            Average
              Exercise PriceBalance
                at February 1, 2008
            
            
            7,437,500
            
            $
            0.33Granted
            
            
            -
            
            
            -Exercised
            
            
            -
            
            
            -Cancelled
            
            
            (100,000
            )
            
            0.65Balance
                at April 30, 2008
            
            
            7,337,500
            
            $
            0.30





Additional
      information regarding options outstanding as of April 30, 2008 is as follows:




Options Outstanding
            
            Options ExercisableWeightedAverageNumber of
            
            Remaining
            
            Weighted
            
            
            
            AverageRange of
            
            Shares Under
            
            Contractual
            
            Average
            
            Shares Under
            
            WeightedExercise Price
            
            Options
            
            life (years)
            
            Exercise Price
            
            Options
            
            Exercise Price$0.08-$0.65
            
            
            7,337,500
            
            
            5.50
            
            $
            0.30
            
            
            5,270,417
            
            $
            0.30





The
      aggregate intrinsic value of the 7,337,500 options outstanding and 5,270,417
      options exercisable as of April 30, 2008 was $5,600 and $3,700, 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,
      2008.


10


A
      summary
      of the status of nonvested shares as of April 30, 2008 are as
      follows:




SharesNonvested
                at February 1, 2008
            
            
            2,411,805Granted
            
            
            -Cancelled
            
            
            (51,389
            )Vested
            
            
            (293,333
            )Nonvested
                at January 31, 2008
            
            
            2,067,083





For
      the
      three months ended April 30, 2008 and 2007, the Company recognized $46,378
      and
      $59,695, respectively, of compensation expense related to the fair value of
      vested options, which has been reflected as compensation cost in the
      accompanying consolidated statement of operations.





The
      total
      deferred compensation expense for the outstanding value of unvested stock
      options was $261,061 as of April 30, 2008, which will be recognized over a
      weighted average period of 22 months.


*Warrants*
 
 At
        April
        30, 2008, warrants outstanding were as follows:
 
 Number
                  of Shares under Warrants
              
              Weighted
                  Average Exercise PriceWarrants
                  outstanding at February 1, 2008
              
              
              12,103,000
              
              $
              0.30Warrants
                  granted
              
              
              -
              
              
              -Warrants
                  expired
              
              
              -
              
              
              -Warrants
                  outstanding at April 30, 2008
              
              
              12,103,000
              
              $
              0.30
 
 The
        following summarizes information about warrants outstanding at April 30,
        2008:
 
 Warrants
        Outstanding and Exercisable
 
 Number
                  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
      7 – RELATED PARTY TRANSACTIONS**





On
      August
      1, 2006, the Company entered into consulting agreements with two individuals
      to
      serve as the chairman of the board of directors and the Company’s chief
      financial officer. During the three months ended April 30, 2008 and 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 for the three
      months ended April 30, 2007.





A
      member
      of the Company’s board of directors was a shareholder and executive manager of
      CDC before he sold his stock in CDC to the Company. On August 7, 2006, the
      Company issued a note payable totaling $615,384 to the individual in conjunction
      with the acquisition of CDC. At April 30, 2007, the balance of the note was
      $461,538. During the three months ended April 30, 2008 and 2007, the Company
      accrued $8,581 and $9,924, respectively, of interest on this note to the current
      board member.


11





**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, Inc. was incorporated in the State of Nevada as Aderra Mines
      Limited 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, the Company purchased all of the outstanding
      shares of Chatsworth Data Corporation (CDC), a manufacturer of optical readers
      and read heads, scanners, impact recorders and indicators. The acquisition
      was
      accounted for as a purchase in accordance with Statement of Financial Accounting
      Standards No. 141 *Business
      Combinations* .
      In
      November, 2006, the Company changed its name from Aderra Mines Limited to
      Chatsworth Data Solutions, Inc. to reflect the acquisition and operation of
      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 CDC 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 100,000 readers and 110,000 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. CDC 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.





**Results
      of operations –For the
      three months ended April 30, 2008, compared to the three months ended April
      30,
      2007.**





Sales
      revenue totaled $1,364,734 for the three months ended April 30, 2008 and
      $2,218,753 for the three months ended April 30, 2007. Following is a table
      indicating the sales for the respective periods.


12





Sales-three
                months ended
            
            April 30., 2008
            
            April 30, 2007(unaudited)
            
            (unaudited)Gaming
            
            $
            463,496
            
            $
            832,307Education
            
            
            486
            
            
            4,999Voting
            
            
            33,290
            
            
            468,832Medical
            
            
            11,820
            
            
            81,595Others
            
            
            2,489
            
            
            43,123Total
                Optical Mark Readers
            
            
            511,581
            
            
            1,430,856Impact
                recorders/indicators
            
            
            853,153
            
            
            787,897Cable
                Testing
            
            
            -
            
            
            -Total
            
            $
            1,364,734
            
            $
            2,218,753





Sales
      of
      Optical Mark Readers declined in all vertical markets served by the Company.
      The
      Company believes that the reduced sales in the voting market is a result of
      customers delaying updating current voting systems and delaying the purchase
      of
      new voting systems until after the fall 2008 elections. The Company believes
      that the reduced sales in the gaming market are a result of a decline in
      purchases of new equipment which is evident in the overall gaming market. The
      Company has developed a new scanner product which it believes will enable it
      to
      increase its sales in all of the vertical markets during the remaining quarters
      of the current fiscal year.





Cost
      of
      sales totaled $941,047 for the three months ended April 30, 2008 and $1,493,328
      for the three months ended April 30, 2007. Gross margin percentage was 31.2%
      for
      the three months ended April 30, 2008, and 32.7% for the three months ended
      April 30, 2007. Although sales were down from the same period a year ago, the
      change in the mix of sales (increased Impact recorders/indicators as a
      percentage of total sales) resulted in the gross margin percentage remaining
      approximately the same. Impact recorders/indicators have a greater gross margin
      percentage that the margin on Optical Mark Readers.





General
      and administrative (G&A) expenses totaled $1,525,910 for the three months
      ended April 30, 2008 and $1,074,992 for the three months ended April 30, 2007.
      Included in G&A for this quarter were accounting and legal fees totaling
      $71,096 incurred in connection with the audit of the Company and the filing
      of
      our annual and quarterly reports. Accounting and legal fees totaled $151,223
      in
      the three months ended April 30, 2007 and included the cost of filing our
      registration statement with the Securities and Exchange Commission. For the
      three months ended April 30, 2008, our share based compensation included
      $522,990 as the cost related to the issuance of our common stock as more fully
      described in Footnote 5 to our Financial Statements included elsewhere herein.
      In accordance with FASB 123(R), the Company recorded compensation expense of
      $46,378 for the three month period ended April 30, 2008 compared to $59,865
      for
      the three month period ended April 30, 2007 related to vested stock options.





The
      Company did not record an income tax expense or benefit for the three months
      ended April 30, 2008. However, it recorded a net tax benefit of $261,638 for
      the
      three months ended April 30, 2007.


13





The
      net
      loss for the three months ended April 30, 2008 was $(1,463,288) compared to
      net
      loss of $(395,743) for the three months ended April 30, 2007.





**Liquidity
      and Capital Resources**





As
      of
      April 30, 2008, the Company had cash on hand of $218,098 compared to $72,329
      as
      of January 31, 2008. The Company used $560,542 of cash in operating activities
      for the three months ended April 30, 2008 compared to $314,255 for the three
      months ended April 30, 2007. On
      April
      2, 2008, the Company closed on $1,002,300 of an authorized $1,500,000 private
      placement of securities. The Company advanced these funds to its
      subsidiary, CDC, for use in its day to day operations. During the quarter ended
      April 30, 2008, they Company converted a registration payment obligation into
      a
      note payable that matures on March 10, 2010 and bears interest at 12% per annum
      payable at maturity. The agreement relieves the Company of any obligation to
      register the investors’ shares that were the subject of a pending registration
      statement.








As
      of
      April 30, 2008, CDC had borrowed $1,515,378 under its $3 million revolving
      line
      of credit. The line of credit matured February 28, 2008 and on April 3, 2008,
      the Company negotiated an extension of the line of credit to February 28, 2009
      and obtained a waiver of default for non-compliance with all existing financial
      covenants as of January 31, 2008. Effective February 29, 2008, the interest
      rate
      under the line of credit increased to prime plus 2% (7% as of April 30, 2008).
      The increase in rate will result in approximately $36,000 of additional annual
      interest expense based on the current amount of borrowings.  As of April
      30, 2008, the Company had exceeded its borrowing base under
      this agreement by
      $63,115. The
      Company utilized the proceeds of an additional $500,000 of funding that it
      closed on June 20, 2008 to pay down its borrowings under the credit agreement
      and come back into compliance with its borrowing base limitations thereunder.
      The additional funding was evidenced by a private placement of securities in
      the
      amount of $280.000 and the issuance of the Company’s promissory note for
      $220,000. The note bears interest at a rate of 12% per annum and matures on
      July
      20, 2008, at which time the Company expects to repay the note with the proceeds
      of the $220,000 unsold allotment remaining under the $1,500,000 private
      placement previously authorized.





As
      of
      April 30, 2008, notes payable totaled $1,500,000. On March 31, 2008, a second
      amendment to the notes payable was made. The maturity schedule was amended
      so
      principal of $500,000 is due October 31, 2008; principal of $500,000 is due
      on
      January 31, 2009; and principal of $500,000 is due April 30, 2009. In addition,
      starting April 1, 2008, the interest rate of the outstanding promissory notes
      will increase to 9.54% from 6.54% at January 31, 2008. No other terms of the
      notes were modified. The increase in rate will result in approximately $45,000
      of additional annual interest expense based on the current amount of the notes
      payable.


Management
        believes that its existing cash balance at April 30, 2008, coupled with the
        additional $500,000 funding as well as the Company’s ability to borrow under its
        credit agreement, will be sufficient to meet its working capital, capital
        expenditure and investment requirements for the next 12 months. However,
        the
        Company may also require funds for other purposes, such as acquisitions of
        complementary businesses, and may seek to raise such additional funds through
        public and private financings or from other sources. There is no assurance
        that
        additional financing will be available at all or that, if available, such
        financing will be obtainable on terms favorable the Company or that any
        additional financing will not be dilutive


14





**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.





**Intangible
      assets**





Intangible
      assets and goodwill are related to the Company's acquisition of CDC in August
      2007. 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.





Goodwill
      represents the excess of the cost of the acquired entity over the net of amounts
      assigned to assets acquired and liabilities assumed, and is not amortized.
      The
      Company tests goodwill for impairment at least annually by using a two-step
      process. In the first step, the fair value of the reporting unit, estimated
      using a discounted cash flows approach, is compared with the carrying amount
      of
      the reporting unit, including goodwill. If the carrying amount of the reporting
      unit exceeds its fair value, goodwill is considered impaired and a second step
      is performed to measure the amount of impairment loss, if any. There was no
      impairment loss recognized in 2006 and 2007 to date.





**Stock-based
      compensation**





The
      Company estimates the fair value of stock options using a Black-Scholes option
      pricing model, consistent with the provisions of SFAS No. 123 (revised
      2004), *Share-Based
      Payment* (SFAS
      123(R). SFAS 123(R) requires all share-based payments to employees, including
      stock option grants, to be recognized in the income statement based on their
      fair values. The standard applies to newly granted awards and previously granted
      awards that are not fully vested on the date of adoption. The Company adopted
      SFAS 123(R) using the modified prospective method, which requires that
      compensation expense for the portion of awards for which the requisite service
      has not yet been rendered and that are outstanding as of the adoption date
      be
      recorded over the remaining service period. Prior to the adoption of SFAS
      No. 123(R) on February 1, 2006, the Company had no share-based payments.
      Accordingly, no prior periods have been restated, the impact of SFAS 123(R)
      is
      not presented, and no pro forma amounts are presented for 2005 had the Company
      recognized stock-based compensation in accordance with SFAS No. 123.





The
      Company accounts for options and warrants granted to non-employees under SFAS
      No. 123(R) and Emerging Issues Task Force Issue No. 96-18, *Accounting
      for Equity Instruments that are issued to other than Employees for Acquiring
      or
      in Conjunction with Selling Goods or Services* .
      The
      Company measures the fair value of such options using the Black-Scholes option
      pricing model at each financial reporting date.


15





**Recent
      accounting pronouncements**





In
      December 2007, the FASB issued FASB Statement No. 141 (R), “Business
      Combinations” (FAS 141(R)), which establishes accounting principles and
      disclosure requirements for all transactions in which a company obtains control
      over another business. Statement 141 (R) applies prospectively to business
      combinations for which the acquisition date is on or after the beginning of
      the
      first annual reporting period beginning on or after December 15, 2008. Earlier
      adoption is prohibited.




In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements, an amendment of ARB No. 51”. SFAS No. 160
      establishes accounting and reporting standards that require that the ownership
      interests in subsidiaries held by parties other than the parent be clearly
      identified, labeled, and presented in the consolidated statement of financial
      position within equity, but separate from the parent’s equity; the amount of
      consolidated net income attributable to the parent and to the noncontrolling
      interest be clearly identified and presented on the face of the consolidated
      statement of income; and changes in a parent’s ownership interest while the
      parent retains its controlling financial interest in its subsidiary be accounted
      for consistently. SFAS No. 160 also requires that any retained noncontrolling
      equity investment in the former subsidiary be initially measured at fair value
      when a subsidiary is deconsolidated. SFAS No. 160 also sets forth the disclosure
      requirements to identify and distinguish between the interests of the parent
      and
      the interests of the noncontrolling owners. SFAS No. 160 applies to all entities
      that prepare consolidated financial statements, except not-for-profit
      organizations, but will affect only those entities that have an outstanding
      noncontrolling interest in one or more subsidiaries or that deconsolidate a
      subsidiary. SFAS No. 160 is effective for fiscal years, and interim periods
      within those fiscal years, beginning on or after December 15, 2008. Earlier
      adoption is prohibited. SFAS No. 160 must be applied prospectively as of the
      beginning of the fiscal year in which it is initially applied, except for the
      presentation and disclosure requirements. The presentation and disclosure
      requirements are applied retrospectively for all periods presented.


In
        March
        2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments
        and
        Hedging Activities-an amendment of FASB Statement No. 133 (“SFAS No. 161”), to
        improve financial reporting of derivative instruments and hedging activities
        by
        requiring enhanced disclosures to enable investors to better understand their
        effects on an entity’s financial position, financial performance and cash flows.
        SFAS No. 161 applies to fiscal years and interim periods beginning after
        November 15, 2008.




The
      Company does not believe that the adoption of the above recent pronouncements
      will have a material effect on the Company’s consolidated results of operations,
      financial position, or cash flows.





**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 our disclosure controls and procedures are 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.


16





(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**





On
      April
      2, 2008, the Company closed on $1,002,300 of subscriptions raised under a Common
      Stock Purchase Agreement (“SPA”) by and among the Company and a group of
      investors (collectively the” Investors”). Terms of the SPA provided for a
      minimum of 20,000,000 shares and a maximum of 30,000,000 shares to be sold
      under
      the SPA, at a price of $.05 per share. On April 2, 2008, the Company held its
      initial closing of the common stock offering, and issued 20,046,000 shares
      of
      its common stock at a price of $.05 per share for a total consideration of
      $1,002,300. Ten million shares were purchased by Vision Opportunity Master
      Fund,
      Ltd. (“Vision”) and 10,046,000 shares were purchased by officers, directors,
      management and employees of the Company or its wholly owned subsidiary,
      Chatsworth Data Corporation, as well as existing shareholders of the Company.





The
      purchase price of the stock under the SPA of $0.05 was below the trading price
      of the stock by $0.065. Therefore, compensation expense of $522,990 was
      recognized for the 8,046,000 shares of stock issued to officers, directors
      and
      employees of the Company.





The
      securities were offered and sold by the Company pursuant to exemptions from
      registration set forth in section 4(2) of the Securities Act of 1933, as
      amended.





The
      common stock purchased by Investors other than Vision is subject to a Lock-up
      Agreement, which provides that the Investor may not sell the common stock
      purchased by him for a period of twelve (12) months following the closing.
      Thereafter, the Investor may sell no more than 1/12 of the shares in any one
      month for a period of 24 months.





The
      funds
      received by the Company were immediately transferred to Chatsworth Data
      Corporation for use in its operations.


17





**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.


18





**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:
                June 23, 2008
            /s/
                Sidney L. AndersonSidney
                L. Anderson
              Chief Executive Officer, President




19





**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
            
            Certifications
                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.




20