**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**FORM      10-QSB **

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

**EXCHANGE      ACT OF 1934 **

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

**EXCHANGE      ACT OF 1934 **

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

**CHATSWORTH      DATA SOLUTIONS, INC. **

**(      **

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

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

----

**CHATSWORTH      DATA SOLUTIONS, INC. **

|                   |   |                                                                                                                                                                                                                                                                   |   | PAGE   |
|------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|                   |   |                                                                                                                                                                                                                                                                   |   |   |
| PART                I  |   | FINANCIAL                INFORMATION                                                                                                                                                                                                                                   |   | 1      |
|                   |   |                                                                                                                                                                                                                                                                   |   |   |
| Item                1. |   | Condensed                Consolidated Financial Statements                                                                                                                                                                                                             |   | 1      |
|                   |   |                                                                                                                                                                                                                                                                   |   |   |
|                   |   | Condensed                consolidated balance sheets as of July 31, 2007 (unaudited) and January                31, 2007                                                                                                                                               |   | 1      |
|                   |   |                                                                                                                                                                                                                                                                   |   |   |
|                   |   | Condensed                consolidated statements of operations for                the three and six months ended July 31, 2007 (Successor) and for                the three                and six months ended June                30, 2006 (Predecessor) - unaudited |   | 2      |
|                   |   |                                                                                                                                                                                                                                                                   |   |   |
|                   |   | Condensed                consolidated statement of changes in stockholders'   equity for                the six months ended July 31, 2007 - unaudited                                                                                                       |   | 3      |
|                   |   |                                                                                                                                                                                                                                                                   |   |   |
|                   |   | Condensed                consolidated statements of cash flows for the six months ended July                31,                2007 (Successor) and for the six months ended June 30, 2006 (Predecessor)                - unaudited                                    |   | 4      |
|                   |   |                                                                                                                                                                                                                                                                   |   |   |
|                   |   | Notes                to condensed consolidated financial statements - unaudited                                                                                                                                                                                        |   | 5      |
|                   |   |                                                                                                                                                                                                                                                                   |   |   |
| Item                2. |   | Management's                Discussion and Analysis or Plan of Operations                                                                                                                                                                                              |   | 14     |
|                   |   |                                                                                                                                                                                                                                                                   |   |   |
| Item                3. |   | Controls                and Procedures                                                                                                                                                                                                                                 |   | 19     |
|                   |   |                                                                                                                                                                                                                                                                   |   |   |
| PART                II |   | OTHER                INFORMATION                                                                                                                                                                                                                                       |   | 21     |
|                   |   |                                                                                                                                                                                                                                                                   |   |   |
| Item                1. |   | Legal                Proceedings                                                                                                                                                                                                                                       |   | 21     |
|                   |   |                                                                                                                                                                                                                                                                   |   |   |
| Item                2. |   | Unregistered                Sales of Equity Securities and Use of Proceeds                                                                                                                                                                                             |   | 21     |
|                   |   |                                                                                                                                                                                                                                                                   |   |   |
| Item                3. |   | Defaults                Upon Senior Securities                                                                                                                                                                                                                         |   | 21     |
|                   |   |                                                                                                                                                                                                                                                                   |   |   |
| Item                4. |   | Submission                of Matters to a Vote of Security Holders                                                                                                                                                                                                     |   | 21     |
|                   |   |                                                                                                                                                                                                                                                                   |   |   |
| Item                5. |   | Other                Information                                                                                                                                                                                                                                       |   | 21     |
|                   |   |                                                                                                                                                                                                                                                                   |   |   |
| Item                6. |   | Exhibits                                                                                                                                                                                                                                                               |   | 21     |
|                   |   |                                                                                                                                                                                                                                                                   |   |   |
|                   |   | SIGNATURES                                                                                                                                                                                                                                                             |   | 22     |

----

**Part      I - FINANCIAL INFORMATION**

**ITEM      1. FINANCIAL STATEMENTS**

|                                                                                                                                                  |   | July                  31,2007 |       | January                  31,2007 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|------------|----------------------------------|--------|
|                                                                                                                                                  |   | (Unaudited)                   |       |                             |   |
| **ASSETS**                                                                                                                                            |   |                          |       |                             |   |
| Current                  Assets                                                                                                                       |   |                          |       |                             |   |
| Cash                                                                                                                                                  |   | $                             | 260,325    |                             | $      | 341,676 |   |
| Accounts                  receivable, less allowance for doubtful accounts of $25,084 and                  $22,978                                    |   |                          | 1,138,154  |                             |   | 647,786 |   |
| Inventories                                                                                                                                           |   |                          | 1,424,011  |                             |   | 1,072,208 |   |
| Deferred                  tax assets, current                                                                                                         |   |                          | 626,549    |                             |   | 362,433 |   |
| Prepaid                  expenses                                                                                                                     |   |                          | 69,880     |                             |   | 80,585 |   |
|                                                                                                                                                  |   |                          |       |                             |   |   |   |
| Total                  current assets                                                                                                                 |   |                          | 3,518,919  |                             |   | 2,504,688 |   |
|                                                                                                                                                  |   |                          |       |                             |   |   |   |
| Property                  and equipment, net                                                                                                          |   |                          | 398,674    |                             |   | 279,190 |   |
| Goodwill                                                                                                                                              |   |                          | 3,926,643  |                             |   | 3,926,643 |   |
| Intangible                  assets, net                                                                                                               |   |                          | 2,137,160  |                             |   | 2,634,680 |   |
| Other                  assets                                                                                                                         |   |                          | 33,801     |                             |   | 41,671 |   |
|                                                                                                                                                  |   |                          |       |                             |   |   |   |
| Total                  assets                                                                                                                         |   | $                             | 10,015,197 |                             | $      | 9,386,872 |   |
|                                                                                                                                                  |   |                          |       |                             |   |   |   |
| **LIABILITIES                  AND STOCKHOLDERS' EQUITY**                                                                                             |   |                          |       |                             |   |   |   |
| Current                  Liabilities                                                                                                                  |   |                          |       |                             |   |   |   |
| Accounts                  payable                                                                                                                     |   | $                             | 1,083,569  |                             | $      | 332,890 |   |
| Accrued                  liabilities                                                                                                                  |   |                          | 346,583    |                             |   | 759,514 |   |
| Accrued                  registration payment penalty                                                                                                 |   |                          | 493,000    |                             |   | 383,000 |   |
| Borrowings                  under line of credit                                                                                                      |   |                          | 1,077,593  |                             |   | - |   |
| Current                  portion of notes payable                                                                                                     |   |                          | 1,000,000  |                             |   | 1,000,000 |   |
|                                                                                                                                                  |   |                          |       |                             |   |   |   |
| Total                  current liabilities                                                                                                            |   |                          | 4,000,745  |                             |   | 2,475,404 |   |
|                                                                                                                                                  |   |                          |       |                             |   |   |   |
| Notes                  payable, long term                                                                                                             |   |                          | 1,000,000  |                             |   | 1,000,000 |   |
| Deferred                  tax liability, long term                                                                                                    |   |                          | 665,566    |                             |   | 913,988 |   |
|                                                                                                                                                  |   |                          |       |                             |   |   |   |
| Total                  liabilities                                                                                                                    |   |                          | 5,666,311  |                             |   | 4,389,392 |   |
|                                                                                                                                                  |   |                          |       |                             |   |   |   |
| Commitments                  and contingencies                                                                                                        |   |                          |       |                             |   |   |   |
|                                                                                                                                                  |   |                          |       |                             |   |   |   |
| Stockholders'                  Equity:                                                                                                                |   |                          |       |                             |   |   |   |
| Preferred stock,                  par value $0.00001 per share, 5,000,000 shares authorized, none                  issued and outstanding   |   |                          | -          |                             |   | - |   |
| Common                  stock, par value $0.00001 per share, 100,000,000 shares authorized,                  31,250,000 shares issued and outstanding |   |                          | 312        |                             |   | 312 |   |
| Additional                  paid-in capital                                                                                                           |   |                          | 6,405,216  |                             |   | 6,278,564 |   |
| Accumulated                  deficit                                                                                                                  |   |                          | (2,056,642 | )                                |   | (1,281,396 | ) |
|                                                                                                                                                  |   |                          |       |                             |   |   |   |
| Total                  stockholders' equity                                                                                                           |   |                          | 4,348,886  |                             |   | 4,997,480 |   |
|                                                                                                                                                  |   |                          |       |                             |   |   |   |
| Total                  liabilities and stockholders' equity                                                                                           |   | $                             | 10,015,197 |                             | $      | 9,386,872 |   |

----

|                                                                 |   | Successor                                               |       | Predecessor                                                   |   | Successor                                             |   | Predecessor                                                 |       |
|----------------------------------------------------------------------|--------|---------------------------------------------------------|------------|---------------------------------------------------------------|--------|-------------------------------------------------------|--------|-------------------------------------------------------------|------------|
|                                                                 |   | For                the three months ended July 31, 2007 |       | For                the three months ended June  30, 2006 |   | For                the six months ended July 31, 2007 |   | For                the six months ended June  30, 2006 |       |
|                                                                 |   |                                                    |       |                                                          |   |                                                  |   |                                                        |       |
| Net                sales                                             |   | $                                                       | 2,142,320  |                                                          | $      | 2,511,406                                             |   | $                                                           | 4,361,073  |   | $ | 4,027,302 |   |
| Cost                of sales                                         |   |                                                    | 1,221,607  |                                                          |   | 1,901,500                                             |   |                                                        | 2,714,935  |   |   | 3,082,696 |   |
| Gross                profit                                          |   |                                                    | 920,713    |                                                          |   | 609,906                                               |   |                                                        | 1,646,138  |   |   | 944,606 |   |
|                                                                 |   |                                                    |       |                                                          |   |                                                  |   |                                                        |       |   |   |   |   |
| Operating                expenses:                                   |   |                                                    |       |                                                          |   |                                                  |   |                                                        |       |   |   |   |   |
| General                and administrative                            |   |                                                    | 1,114,740  |                                                          |   | 195,482                                               |   |                                                        | 2,189,633  |   |   | 466,848 |   |
| Depreciation                                                         |   |                                                    | 31,472     |                                                          |   | 7,975                                                 |   |                                                        | 57,667     |   |   | 12,304 |   |
| Amortization                of intangible assets                     |   |                                                    | 248,760    |                                                          |   | -                                                     |   |                                                        | 497,520    |   |   | - |   |
|                                                                 |   |                                                    |       |                                                          |   |                                                  |   |                                                        |       |   |   |   |   |
| Income                (loss) from operations                         |   |                                                    | (474,259   | )                                                             |   | 406,449                                               |   |                                                        | (1,098,682 | ) |   | 465,454 |   |
|                                                                 |   |                                                    |       |                                                          |   |                                                  |   |                                                        |       |   |   |   |   |
| Other                income (expense)                                |   |                                                    |       |                                                          |   |                                                  |   |                                                        |       |   |   |   |   |
| Interest                expense                                      |   |                                                    | (46,178    | )                                                             |   | -                                                     |   |                                                        | (81,930    | ) |   | - |   |
| Interest                income                                       |   |                                                    | 34         |                                                          |   | 4,872                                                 |   |                                                        | 2,828      |   |   | 9,238 |   |
| Registration                penalty                                  |   |                                                    | (110,000   | )                                                             |   | -                                                     |   |                                                        | (110,000   | ) |   | - |   |
| Other                income (expense), net                           |   |                                                    | (156,144   | )                                                             |   | 4,872                                                 |   |                                                        | (189,102   | ) |   | 9,238 |   |
|                                                                 |   |                                                    |       |                                                          |   |                                                  |   |                                                        |       |   |   |   |   |
| Income                (loss) before income taxes                     |   |                                                    | (630,403   | )                                                             |   | 411,321                                               |   |                                                        | (1,287,784 | ) |   | 474,692 |   |
| Income                tax (benefit) expense                          |   |                                                    | (250,900   | )                                                             |   | 7,120                                                 |   |                                                        | (512,538   | ) |   | 7,120 |   |
|                                                                 |   |                                                    |       |                                                          |   |                                                  |   |                                                        |       |   |   |   |   |
| Net                income (loss)                                     |   | $                                                       | (379,503   | )                                                             | $      | 404,201                                               |   |                                                        | (775,246   | ) |   | 467,572 |   |
|                                                                 |   |                                                    |       |                                                          |   |                                                  |   |                                                        |       |   |   |   |   |
| Net                loss per share - basic and diluted                |   | $                                                       | (0.01      | )                                                             |   |                                                  |   | $                                                           | (0.02      | ) |   |   |   |
|                                                                 |   |                                                    |       |                                                          |   |                                                  |   |                                                        |       |   |   |   |   |
| Weighted                average shares outstanding-basic and diluted |   |                                                    | 31,250,000 |                                                          |   |                                                  |   |                                                        | 31,250,000 |   |   |   |   |

----

|                                        |   | Common                Stock     |       |   |   |                                      |   |                               |      |
|---------------------------------------------|--------|---------------------------------|------------|--------|--------|-------------------------------------------|--------|------------------------------------|-----------|
|                                        |   | Number                of Shares |       | Amount |   | Additional                Paid-in Capital |   | Accumulated                Deficit |      | Total |   |
| **Successor**                               |   |                            |       |   |   |                                      |   |                               |      |   |   |
| Balance,                February 1, 2007    |   |                            | 31,250,000 |   | $      | 312                                       |   | $                                  | 6,278,564 |   | $ | (1,281,396 | ) | $ | 4,997,480 |   |
|                                        |   |                            |       |   |   |                                      |   |                               |      |   |   |   |   |   |   |   |
| Net                loss                     |   |                            | -          |   |   | -                                         |   |                               | -         |   |   | (775,246 | ) |   | (775,246 | ) |
|                                        |   |                            |       |   |   |                                      |   |                               |      |   |   |   |   |   |   |   |
| Fair                value of vested options |   |                            | -          |   |   | -                                         |   |                               | 126,652   |   |   | - |   |   | 126,652 |   |
|                                        |   |                            |       |   |   |                                      |   |                               |      |   |   |   |   |   |   |   |
| Balance,                July 31, 2007       |   |                            | 31,250,000 |   | $      | 312                                       |   | $                                  | 6,405,216 |   | $ | (2,056,642 | ) | $ | 4,348,886 |   |

----

|                                                                                                               |   | Successor                                             |      | Predecessor                                           |   |
|--------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|-----------|-------------------------------------------------------|--------|
|                                                                                                               |   | For                the six months ended July 31, 2007 |      | For                the six months ended June 30, 2006 |   |
| **Cash                Flows from Operating Activities**                                                            |   |                                                  |      |                                                  |   |
| Net                income (loss) for the period                                                                    |   | $                                                     | (775,246  | )                                                     | $      | 467,572 |   |
| Adjustments                to reconcile net income (loss) to net cash used in operating                activities: |   |                                                  |      |                                                  |   |   |   |
| Depreciation                and amortization                                                                       |   |                                                  | 555,187   |                                                  |   | 12,304 |   |
| Fair                value of vested options                                                                        |   |                                                  | 126,652   |                                                  |   | - |   |
| Income                tax benefit                                                                                  |   |                                                  | (512,538  | )                                                     |   | - |   |
| Changes                in operating assets and liabilities:                                                        |   |                                                  |      |                                                  |   |   |   |
| Accounts                receivable                                                                                 |   |                                                  | (490,368  | )                                                     |   | (417,626 | ) |
| Inventories                                                                                                        |   |                                                  | (351,803  | )                                                     |   | (185,223 | ) |
| Other                assets                                                                                        |   |                                                  | 7,869     |                                                  |   | - |   |
| Prepaid                expenses                                                                                    |   |                                                  | 10,705    |                                                  |   | (7,426 | ) |
| Accounts                payable                                                                                    |   |                                                  | 750,679   |                                                  |   | 159,838 |   |
| Accrued                liabilities                                                                                 |   |                                                  | (412,931  | )                                                     |   | 28,303 |   |
| Accrued                registration penalty payment                                                                |   |                                                  | 110,000   |                                                  |   | - |   |
| Income                taxes payable                                                                                |   |                                                  | -         |                                                  |   | (46,025 | ) |
| Customer                deposits                                                                                   |   |                                                  | -         |                                                  |   | 413,278 |   |
| Net                cash used in operating activities                                                               |   |                                                  | (981,794  | )                                                     |   | 424,995 |   |
|                                                                                                               |   |                                                  |      |                                                  |   |   |   |
| **Cash                Flows from Investing Activities**                                                            |   |                                                  |      |                                                  |   |   |   |
| Purchase                of property and equipment                                                                  |   |                                                  | (177,150  | )                                                     |   | (1,880 | ) |
| Net                cash used in investing activities                                                               |   |                                                  | (177,150  | )                                                     |   | (1,880 | ) |
|                                                                                                               |   |                                                  |      |                                                  |   |   |   |
| **Cash                Flows from Financing Activities**                                                            |   |                                                  |      |                                                  |   |   |   |
| Net                borrowings on line of credit                                                                    |   |                                                  | 1,077,593 |                                                  |   | - |   |
| Distributions                to shareholder                                                                        |   |                                                  | -         |                                                  |   | (300,000 | ) |
| Net                cash provided by financing activities                                                           |   |                                                  | 1,077,593 |                                                  |   | (300,000 | ) |
|                                                                                                               |   |                                                  |      |                                                  |   |   |   |
| Decrease                in cash                                                                                    |   |                                                  | (81,351   | )                                                     |   | 123,115 |   |
| Cash                and cash equivalents, beginning of period                                                      |   |                                                  | 341,676   |                                                  |   | 859,460 |   |
| Cash                and cash equivalents , end of period                                                           |   | $                                                     | 260,325   |                                                  | $      | 982,575 |   |
| **Supplemental                cash flow information**                                                              |   |                                                  |      |                                                  |   |   |   |
| Cash                paid for income taxes                                                                          |   | $                                                     | -         |                                                  | $      | - |   |
| Cash                paid for interest                                                                              |   | $                                                     | 77,940    |                                                  | $      | - |   |

----

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

*Description      of business*

*Business      Combinations*

*Basis      of presentation*

----

*Use      of estimates*

*Revenue      recognition*

*Goodwill      and other intangible assets*

----

*Major      customers*

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

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

*Stock-based      compensation*

*Share-Based      Payment*

----

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

*Registration      payment arrangements*

*Recent      accounting pronouncements    *

*Fair      Value Measurements*

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

----

**NOTE      2 - INVENTORIES **

|                          |   | July                31, 2007 |      | January                31, 2007 |   |
|-------------------------------|--------|------------------------------|-----------|---------------------------------|--------|
|                          |   | (unaudited)                  |      |                            |   |
|                          |   |                         |      |                            |   |
| Raw                materials  |   | $                            | 962,186   |                            | $      | 604,470 |   |
| Work              in process  |   |                         | 249,200   |                            |   | 273,303 |   |
| Finished                goods |   |                         | 212,625   |                            |   | 194,435 |   |
|                          |   | $                            | 1,424,011 |                            | $      | 1,072,208 |   |

**NOTE      3 - NOTES PAYABLE**

|                                |   | July                31, |       |
|-------------------------------------|--------|-------------------------|------------|
|                                |   | 2007                    |       |
|                                |   |                    |       |
| Total                notes payable  |   | $                       | 2,000,000  |   |
| Less                current portion |   |                    | (1,000,000 | ) |
| Long-term                portion    |   | $                       | 1,000,000  |   |

**NOTE      4 - LINE OF CREDIT**

whichever      is less. At July 31, 2007, $1,077,593 had been advanced and $387,883 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 July 31, 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 specifying a funded      debt to EBITDA (as defined) ratio, a minimum fixed-charge (as defined) coverage      ratio, and restrictions or limitations on issuance of additional debt, mergers,      leases, guaranties, transactions with affiliates, or change in control. CDC      determined it was not in compliance with all covenants as of July 31, 2007      and      is currently negotiating a waiver of certain covenants with the lender. The      Company has guaranteed the obligations of CDC under the credit agreement.

----

**NOTE      5 - INCOME TAXES**

|     |   | For                the six months ended July 31, 2007 |    |
|----------|--------|-------------------------------------------------------|---------|
|     |   |                                                  |    |
| Federal: |   |                                                  |    |
| Current  |   | $                                                     | -       |   |
| Deferred |   |                                                  | 437,847 |   |
| State:   |   |                                                  |    |   |
| Current  |   |                                                  | -       |   |
| Deferred |   |                                                  | 79,691  |   |
|     |   |                                                  |    |   |
| Total    |   | $                                                     | 517,538 |   |

|                                                                    |   | July                31, |     | January                31, |   |
|-------------------------------------------------------------------------|--------|-------------------------|----------|----------------------------|--------|
|                                                                    |   | 2007                    |     | 2007                       |   |
|                                                                    |   | (unaudited)             |     |                       |   |
| Deferred                tax assets:                                     |   |                    |     |                       |   |
| Net                operating loss carry forward                         |   | $                       | 521,908  |                       | $      | 257,792 |   |
| Deferred                taxes due to change from Sub S to C corporation |   |                    | 80,000   |                       |   | 80,000 |   |
| Inventory                                                               |   |                    | 24,641   |                       |   | 24,641 |   |
| Share-based                compensation                                 |   |                    | 185,814  |                       |   | 135,405 |   |
| Total                deferred tax assets                                |   |                    | 812,363  |                       |   | 497,838 |   |
| Deferred                tax liability:                                  |   |                    |     |                       |   |   |   |
| Intangible                assets                                        |   |                    | (851,380 | )                          |   | (1,049,393 | ) |
|                                                                    |   |                    |     |                       |   |   |   |
| Net                deferred income tax liability                        |   | $                       | (39,017  | )                          | $      | (551,555 | ) |

----

| 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      6 - CAPITAL STOCK**

*Common      Stock*

**NOTE      7 - STOCK OPTIONS AND WARRANTS**

*Stock      Options*

----

      The fair      value of these option grants is estimated on the date of grant using the      Black-Scholes option-pricing model and is remeasured at each reporting date      based on market price until vested. For the six months ended July 31, 2007      the      Company recorded $25,557 of compensation expense related to non-employee stock      options.

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

| Options                Outstanding |   | Options                Exercisable  |   |
|------------------------------------|--------|------------------------------------------|--------|
|                               |   |                                     |   | Weighted |   |   |   |   |   |   |   |
|                               |   |                                     |   | Average |   |   |   |   |   |   |   |
|                               |   | Number                of                 |   | Remaining |   | Weighted |   |   |   |   |   |
| Range                of            |   | Shares                Under              |   | Contractual |   | Average |   | Shares                Under |   | Weighted |   |
| Exercise                Price      |   | Options                                  |   | life                (years) |   | Exercise                Price |   | Options |   | Exercise                Price |   |
|                               |   |                                     |   |   |   |   |   |   |   |   |   |
| $.30-$.65                          |   | 6,200,000                                |   | 6.38 |   | $0.39 |   | 4,059,583 |   | $0.38 |   |

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|                                         |   | Shares |      |
|----------------------------------------------|--------|--------|-----------|
|                                         |   |   |      |
| Nonvested                at February 1, 2007 |   |   | 2,245,833 |   |
| Granted                                      |   |   | 600,000   |   |
| Vested                                       |   |   | (705,416  | ) |
| Nonvested                at July 31, 2007    |   |   | 2,140,417 |   |

*Warrants*

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

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

Warrants      Outstanding and Exercisable

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

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**NOTE      8 - RELATED PARTY TRANSACTIONS**

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

**Company      Overview**

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**Acquisition**

*Business      Combinations*

| Purchase                price                                                                          |   |   |       |
|--------------------------------------------------------------------------------------------------------|--------|--------|------------|
| Cash                consideration                                                                      |   | $      | 4,000,000  |   |
| Notes                payable issued                                                                    |   |   | 2,000,000  |   |
| Value                of 250,000 shares issued at close                                                 |   |   | 60,000     |   |
| Obligation                for tax reimbursement                                                        |   |   | 200,000    |   |
| Cash                paid for services related to acquisition                                           |   |   | 469,451    |   |
| Fair                value of 2,000,000 shares issued for servicesrelated                to acquisition |   |   | 480,000    |   |
| Fair                value of 103,000 warrants issued for servicesrelated                to acquisition |   |   | 37,080     |   |
| Total                                                                                                  |   | $      | 7,246,531  |   |
|                                                                                                   |   |   |       |   |
| Purchase                price allocation                                                               |   |   |       |   |
| Current                assets, including cash of $438,690                                              |   | $      | 2,748,534  |   |
| Property                and equipment                                                                  |   |   | 74,694     |   |
| Intangible                assets                                                                       |   |   | 3,132,200  |   |
| Goodwill                                                                                               |   |   | 3,926,643  |   |
| Current                liabilities                                                                |   |   | (1,387,985 | ) |
| Deferred                tax liability                                                                  |   |   | (1,247,555 | ) |
| Total                purchase price                                                                    |   | $      | 7,246,531  |   |

**Results      of operations - For the three and six months ended July 31, 2007 (Successor)      compared to the three and six months ended June 30, 2006 (Predecessor)**

----

|                                       |   | Successor                    |      | Predecessor                  |   |
|--------------------------------------------|--------|------------------------------|-----------|------------------------------|--------|
| Sales-three                months ended    |   | July                31, 2007 |      | June                30, 2006 |   |
|                                       |   |                         |      |                         |   |
| Gaming                                     |   | $                            | 1,546,263 |                         | $      | 2,107,083 |   |
| Education                                  |   |                         | 266,404   |                         |   | 140,315 |   |
| Voting                                     |   |                         | 483,203   |                         |   | 447,772 |   |
| Medical                                    |   |                         | 145,956   |                         |   | 143,665 |   |
| Others                                     |   |                         | 124,251   |                         |   | 0 |   |
| Total                Optical Mark Readers  |   |                         | 2,566,077 |                         |   | 2,838,835 |   |
|                                       |   |                         |      |                         |   |   |   |
| Impact                recorders/indicators |   |                         | 1,605,671 |                         |   | 1,075,682 |   |
| Cable                Testing               |   |                         | 189,325   |                         |   | 112,785 |   |
|                                       |   |                         |      |                         |   |   |   |
| Total                                      |   | $                            | 4,361,073 |                         | $      | 4,027,302 |   |

----

**Liquidity      and Capital Resources**

----

| 2008  |   | $      | 166,310 |   |
|------------|--------|--------|---------|--------|
| 2009       |   |   | 49,966  |   |
| 2010       |   |   | 30,730  |   |
| 2011       |   |   | 2,935   |   |

**Critical      Accounting Policies**

**Revenue      recognition**

**Intangible      assets **

**Stock-based      compensation**

*Share-Based      Payment*

----

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

**Recent      accounting pronouncements  **

*Fair      Value Measurements*

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

**ITEM      3. CONTROLS AND PROCEDURES **

----

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**PART      II - OTHER INFORMATION**

**ITEM      1. LEGAL PROCEEDINGS **

.

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

**ITEM      3. DEFAULTS UPON SENIOR SECURITIES**

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

       

**ITEM      5. OTHER INFORMATION **

**ITEM      6. EXHIBITS**

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**SIGNATURES      **

|                                    |                                                                                   | **CHATSWORTH                DATA SOLUTIONS, INC.**  |
|-----------------------------------------|----------------------------------------------------------------------------------------|-----------------------------------------------------|
|                                    |                                                                                   |                                                |
|                                    |                                                                                   |
| Date:                September 19, 2007 |                                                                                   | /s/              J.              Stewart Asbury III |
|                                    | J.                Stewart Asbury III Chief                Executive Officer, President |

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**INDEX      TO EXHIBITS.**

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

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