**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington
      D.C. 20549**




**FORM
      10-QSB**


(Mark
      One)




x
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934





For
      the
      quarterly period ended September
      30, 2007





o
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934





For
      the
      transition period from _________________ to _________________




Commission
                File No.:**000-52184**




**THE
      SMALL BUSINESS COMPANY**


(Exact
      name of registrant as specified in its charter)





**Delaware**
            **55-0808106**(State
                or other jurisdiction of
              incorporation
                or organization)
            (I.R.S.
                Employer
              Identification
                No.)**674
                Via de La Valle**
              **Solana
                Beach, CA 92075**
              ****(Address
                of principal executive offices)


Issuer’s
      telephone number: **(858)
      481-5600**




(Former
      name, former address and former fiscal year, if changed since last
      report)




**___________________**




Check
      whether the registrant filed all documents and reports required to be filed
      by
      Section 12, 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  ̈ No x




**APPLICABLE
      ONLY TO CORPORATE ISSUERS**




As
      of
      November 13, 2007, 18,722,834 shares of our common stock were
      outstanding.




Transitional
      Small Business Disclosure Format: Yes o No
x












**PART
      1---FINANCIAL INFORMATION**




**Item
      1. Financial Statements.**




**The
        Small Business Company, Inc.**
 (A
        Development Stage Company)
  Balance
        Sheets
 Unaudited


June
                  30,September
                  30,
              
              20072007
              
              (Audited)**ASSETS**Current
                  AssetsCash
              
              $
              447
              
              $
              16,347Deposits
              
              
              3,000
              
              
              2,000Inventory
              
              
              1,146
              
              
              -Total
                  Current Assets
              
              
              4,593
              
              
              18,347Property
                  and Equipment, net
              
              
              3,255
              
              
              3,640Total
                  Assets
              
              $
              7,848
              
              $
              21,987**LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                  LiabilitiesAccounts
                  Payable
              
              $
              16,658
              
              $
              32,437Total
                  Current Liabilities
              
              
              16,658
              
              
              32,437Long-Term
                  LiabilitiesNotes
                  Payable
              
              
              120,552
              
              
              138,215Credit
                  Cards Payable
              
              
              35,779
              
              
              22,281Convertible
                  Debentures
              
              
              300,000
              
              
              150,000Total
                  Long Term Liabilities
              
              
              456,331
              
              
              310,496Total
                  Liabilities
              
              
              472,989
              
              
              342,933Stockholders'
                  EquityCommon
                  Stock, authorized 500,000,000shares,
                  par value $0.0001, issued andoutstanding
                  on September 30, 2007 and June 30,2007
                  is 18,722,834 and 18,422,834 respectively
              
              
              1,873
              
              
              1,843Additional
                  Paid-in Capital
              
              
              855,948
              
              
              785,175Subscriptions
                  Receivable
              
              
              -
              
              
              -Deficit
                  Accomulated during Development Stage
              
              
              (1,322,962
              )
              
              (1,107,964
              )Total
                  Stockholders' Equity
              
              
              (465,141
              )
              
              (320,946
              )Total
                  Liabilities and Stockholders' Equity
              
              $
              7,848
              
              $
              21,987


The
        accompanying notes are an integral part of these statements




2




**The
      Small Business Company, Inc.**


(A
      Development Stage Company)




Statements
      of Operations


Unaudited




November
                  26,Three
                  Months Ended
              
              2002
                  (Inception)September
                  30,
              
              to
                  September 30,2007
              
              2006
              
              2007IncomeConsulting
                  Revenue
              
              $
              1,448
              
              $
              -
              
              $
              279,728Cost
                  of Goods Sold
              
              
              464
              
              
              
              
              
              464Gross
                  Profit
              
              
              984
              
              
              -
              
              
              279,264Operating
                  ExpensesGeneral
                  and Administrative
              
              
              144,741
              
              
              71,670
              
              
              1,327,891Professional
                  Fees
              
              
              51,938
              
              
              11,833
              
              
              143,339Depreciation
              
              
              385
              
              
              99
              
              
              4,974Total
                  Expenses
              
              
              197,064
              
              
              83,602
              
              
              1,476,204Net
                  Loss from Operations
              
              
              (196,080
              )
              
              (83,602
              )
              
              (1,196,940
              )Other
                  ExpensesWarrant
                  Issue Expense
              
              
              -
              
              
              -
              
              
              (53,843
              )Interest
                  Expense
              
              
              (18,918
              )
              
              (60
              )
              
              (72,179
              )Net
                  Loss
              
              $
              (214,998
              )
              $
              (83,662
              )
              $
              (1,322,962
              )Basic
                  and Diluted(Loss)
                  per Share
              
              $
              (0.01
              )
              $
              (0.01
              )Weighted
                  AverageNumber
                  of Shares
              
              
              18,485,877
              
              
              16,045,334




The
        accompanying notes are an integral part of these statements




3


**The
        Small Business Company, Inc.**
 (A
        Development Stage Company)
  Statements
        of Cash Flows
 Unaudited


November
                  26,Three
                  Months Ended
              
              2002
                  (Inception)September
                  30,
              
              to
                  September 30,2007
              
              2006
              
              2007Operating
                  ActivitiesNet
                  (Loss)
              
              $
              (214,998
              )
              $
              (83,662
              )
              $
              (1,322,962
              )Adjustments
                  to reconcile Net (Loss)Common
                  Stock issued for Services
              
              
              59,000
              
              
              25,000
              
              
              307,300Common
                  Stock issued for Interest Payment
              
              
              
              
              
              
              
              
              46,875Imbedded
                  Derivative Warrant Issue Expense
              
              
              11,803
              
              
              
              
              
              65,646Depreciation
              
              
              385
              
              
              99
              
              
              4,974Changes
                  in Operating Assets and Liabilities(Increase)/Decrease
                  in Accounts Receivable
              
              
              (2,146
              )
              
              1,000
              
              
              (4,146
              )(Increase)/Decrease
                  in Prepaid ExpenseIncrease/(Decrease)
                  in Accounts Payable
              
              
              (15,779
              )
              
              15,000
              
              
              16,658Net
                  Cash Provided by (Used in) Operating Activities
              
              
              (161,735
              )
              
              (42,563
              )
              
              (885,655
              )Investment
                  ActivitiesPurchase
                  of Equipment
              
              
              -
              
              
              (1,187
              )
              
              (8,229
              )Net
                  Cash Provided by (Used in) Investment Activities
              
              
              -
              
              
              (1,187
              )
              
              (8,229
              )Financing
                  ActivitiesProceeds
                  from Notes Payable
              
              
              (17,663
              )
              
              
              
              
              120,552Proceeds
                  from Short Term Notes
              
              
              13,498
              
              
              
              
              
              35,779Proceeds
                  from Convertible Debentures
              
              
              150,000
              
              
              
              
              
              300,000Proceeds
                  from sale of Common Stock
              
              
              
              
              
              25,000
              
              
              438,000Net
                  Cash Provided by (Used in) Financing Activities
              
              
              145,835
              
              
              25,000
              
              
              894,331Net
                  Increase in Cash
              
              
              (15,900
              )
              
              (18,750
              )
              
              447Cash,
                  Beginning of Period
              
              
              16,347
              
              
              19,708
              
              
              -Cash,
                  End of Period
              
              $
              447
              
              $
              958
              
              $
              447Supplemental
                  Information:Interest
                  Paid
              
              $
              7,115
              
              $
              -
              
              $
              60,376Income
                  Taxes Paid
              
              $
              -
              
              $
              -
              
              $
              -


The
        accompanying notes are an integral part of these statements




4




**The
        Small Business Company, Inc.**
 (A
        Development Stage Company)
 
 **NOTES
        TO UNAUDITED FINANCIAL STATEMENTS**
 **(September
        30, 2007 and June 30, 2007)**
 
 
 **NOTE
        1.**  **GENERAL
        ORGANIZATION AND BUSINESS**
 
 The
        Small
        Business Company, Inc. (“Company”) was incorporated in Delaware on November 26,
        2002. The Company, based in Solana Beach, California began business as Optibiz,
        LLC, a California limited liability company and then converted to a Delaware
        corporation on November 26, 2002.
 
 The
        Company is in its development stage even though it has produced limited revenues
        in proof-of-concept beta testing and business development consulting services.
        The company develops, packages and will market business improvement solutions
        for small business owners in the form of books, CD’s, and Business Coaching. The
        company will market these products through mixed media including national
        cable
        TV commercials.
 
 **NOTE
        2.**  **RESTATED
        FINANCIALS**
 
 During
        the year ended June 30, 2006, the Company erroneously recorded $75,000 as
        a
        liability entitled Convertible Notes Payable. In substance the note instrument
        was actually a prepayment for a deferred issue of 1,320,000 of shares of
        stock.
        There is no provision for interest or any repayment option other than the
        issuance of stock.
 
 The
        Company’s financial statements were revised to eliminate the payable and record
        a contra Subscriptions Receivable resulting in a $75,000 increase in equity,
        which will be written to the common stock and additional, paid in capital
        upon
        issue of the stock.
 
 The
        issue
        of stock has been recorded as of June 27, 2007.
  **NOTE
        3.**  **SUMMARY
        OF SIGNIFICANT ACCOUNT POLICIES**
 
 Accounting
        Basis
 
 The
        statements were prepared following generally accepted accounting principles
        of
        the United States of America consistently applied. The Company uses a June
        30
        fiscal year end.
 
 5
 
 Cash
        and Cash Equivalents
 
 Cash
        and
        cash equivalents include all short-term liquid investments that are readily
        convertible to know amounts of cash and have original maturities of three
        months
        or less. As of September 30, 2007 there were no cash equivalents.
 
 Accounts
        Receivable
 
 The
        Company analyzes current accounts receivable for an allowance for doubtful
        accounts based on historical bad debt, customer credit-worthiness, the current
        business environment and historical experience with the customer. The allowance
        includes specific reserves for accounts where collection is deemed to be
        no
        longer probable.
 
 Advertising
        Costs
 
 Advertising
        Costs are expensed as incurred. No advertising costs were incurred for the
        period ended September 30, 2007 and the year ended June 30, 2006.
 
 Use
        of
        Estimates
 
 The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America requires management to
        make
        estimates and assumptions that affect the reported amounts of assets and
        liabilities and disclosure of contingent assets and liabilities at the date
        of
        the financial statements and the reported amounts of revenue and expenses
        during
        the reporting period. Actual results could differ from those
        estimates.
 
 Equipment
 
 Equipment
        is stated at cost. Depreciation is computed using the straight-line method
        over
        their estimated useful lives, which for computer equipment is three years.
        Maintenance and repairs are charged to expense as incurred. Fixed assets
        consist
        of the following
  September
                    30,
                
                
                June
                    302007
                
                
                2007Computers
                
                $
                7,629
                
                $
                7,629Equipment
                
                
                600
                
                
                600Less
                    Accumulated Depreciation
                
                
                (4,974
                )
                
                (4,589
                )Equipment,
                    net
                
                $
                3,255
                
                $
                3,640
  6
  Revenue
        Recognition
 
 Revenues
        from services are recognized when there is persuasive evidence of an
        arrangement, the fee is fixed or determinable, services have been rendered,
        payment has been contractually earned and it is reasonably assured that the
        related receivable or unbilled revenue is collectable.
 
 Income
        Taxes
 
 The
        provision for income taxes is the total of the current taxes payable and
        the net
        of the change in the deferred income taxes. Provision is made for the deferred
        income taxes where differences exist between the period in which transactions
        affect current taxable income and the period in which they enter into the
        determination of net income in the financial statements.
 
 Earnings
        Per Share
 
 Basic
        earnings per share are computed by dividing net income by the average number
        of
        common shares outstanding during the period. Diluted earnings per share takes
        into consideration the potentially dilutive effect of common stock equivalents,
        such as outstanding stock options and warrants, which if exercised or converted
        into common stock would then share in the earnings of the Company. In computing
        diluted earnings per share, the Company utilizes the treasury stock method
        and
        anti-dilutive securities are excluded.
 
 Outstanding
        options and warrants are considered anti-dilutive.
 
 Stock
        Based Compensation
 
 The
        Company accounts for its stock based compensation based upon provisions in
        SFAS
        No. 123, *Accounting
        for Stock-Based Compensation* .
        In this
        statement stock based compensation is divided into two general categories,
        based
        upon who the stock receiver is, namely: employees/directors and
        non-employees/directors. The employees/directors category is further divided
        based upon the particular stock issuance plan, namely compensatory and
        non-compensatory. The employee/directors non-compensatory securities are
        recorded at the sales price when the stock is sold. The compensatory stock
        is
        calculated and recorded at the securities’ fair value at the time the stock is
        given. SFAS 123 also provides that stock compensation paid to non-employees
        be
        recorded with a value which is based upon the fair value of the services
        rendered or the value of the stock given, whichever is more reliable. The
        Company has selected to utilize the fair value of the stock issued as the
        measure of the value of services obtained.
  **NOTE
        4.**  **GOING
        CONCERN**
 
 The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern, which contemplates the realization of assets
        and the liquidation of liabilities in the normal course of business. The
        Company
        is in its development stage and has incurred net losses $1,313,659 as of
        September 30, 2007 . This
        condition creates an uncertainty as to the Company’s ability to continue as a
        going concern. Management is trying to raise additional capital through sales
        of
        common stock as well as seeking financing from third parties. The financial
        statements do not include any adjustments that might be necessary if the
        Company
        is unable to continue as a going concern.
  7
  Management
        has produced limited revenues through business consulting and beta testing
        of
        its products. The company has authored four books and four instructional
        CD’s
        for small business owners and is testing its business coaching platform.
        The
        Company will begun full-scale marketing of its products and services during
        the
        current fiscal year as it continues to execute its business plan.
 
 Management
        plans to obtain $200,000 in each of three growth phases. Funds are expected
        from
        revenues generated by the sale of products and services, the sale of stock
        and
        the issuance of debt instruments. The first phase to begin upon becoming
        a
        publicly traded company includes funding to publish, print and market our
        book
        titles; re-format and re-program our master CD title, and the publication,
        packaging and marketing of our master CD.
 
 The
        second phase to begin ninety days after phase one funding includes money
        for
        additional staff; the final deployment of our e-commerce website; publication,
        packaging and marketing of additional CD’s and securing additional inventory of
        books.
 
 The
        third
        phase to begin sixty days after phase two funding includes money to expand
        marketing efforts; move corporate headquarters to a larger facility; hire
        additional staff; and begin creating additional books and CDs.
 
 The
        Company expects to generate significant revenues from the marketing of its
        products and services. If additional funding is not forthcoming implementation
        of the expansion phases will be delayed and the Company will implement its
        plan
        to minimize overhead by enforcing the employment agreements with its founders
        to
        pay them only what the Company can afford.
  **NOTE
        5.**  **COMMITMENTS,
        CONTINGENCIES AND RELATED PARTIES**
 
 Employment
        Agreements
 
 In
        November 2002, the Company entered into employment contract with the CEO
        and the
        COO who are the majority shareholders. For each officer, the agreement provides
        an annual salary of up to $120,000 per year and a $500 monthly allowance
        for
        medical and dental insurance. However, the agreement specifically limits
        the
        salary to the current financial ability of the Company to pay the salary
        and
        provides for no back payment of unpaid amounts. Reported expenses reflect
        actual
        salaries in accordance with these agreements.
  8
  Lease
        Commitments
 
 The
        Company leases approximately 1,000 square feet of office space in Solana
        Beach,
        California, from an unaffiliated third party, for an annual rental of
        approximately $30,000. Rent expense for the years ended June 30, 2006 and
        2005
        was $30,000 each and projection for next five years is the same although
        Company
        growth may require more space and a higher lease payment.
  **NOTE
        6.**  **CONVERTIBLE
        DEBENTURES**
 
 On
        February 16, 2007 the Company filed its intent to issue a minimum of three
        and a
        maximum of fifteen units of convertible debentures. Each unit consists of
        a
        $25,000 note convertible to common stock at the rate of $0.20 per share and
        a
        three year warrant to purchase 25,000 common shares at $0.20 per share. The
        debentures carry a 10% interest rate payable quarterly from the date of issue
        with the principle due December 31, 2009.
 
 The
        debentures and accumulated interest may be converted at anytime up to maturity
        for common stock at the rate of $0.20 per share. The Company can redeem the
        debentures after December 31, 2007 at 105% of the outstanding principle balance
        and with payment of accrued interest to the redemption date.
 
 The
        warrants expire three years after issue and may be exercised at any time
        commencing six months after final sale.
  On
          April
          1, 2007, The Board of Directors of the Company authorized an increase (from
          $375,000 to $750,000) in the aggregate principal amount of Debentures which
          may
          be sold and issued to investors. Accordingly, the maximum number of Units
          offered for sale (“Maximum Offering”) has been increased from 15 Units to 30
          Units.
 As
        of
        September 30, 2007 the Company has sold an additional six convertible debenture
        units for aggregate total of $300,000 and recorded an additional $11,803
        imbedded derivative costs for a total of $23,605 associated with the issue
        of 300,000 warrants. The calculation was made using the Black-Scholes pricing
        model using the following variables (1) 5.16% risk-free interest rate, (2)
        three
        years to maturity, (3) expected volatility of 2.05%, (4) zero expected
        dividends, and (5) a strike price of $0.20.
 
 **NOTE
        7.**  **OPTIONS
        AND WARRANTS**
 
 Options
 
 The
        Company has no outstanding stock options.
 
 Warrants
 
 The
        Company accounts for non-cash stock-based compensation issued to non-employees
        in accordance with the provisions of SFAS No. 123 and EITF No. 96-18, Accounting
        for Equity Investments That Are Issued to Non-Employees for Acquiring, or
        in
        Conjunction with Selling Goods or Services. Common stock issued to non-employees
        and consultants is based upon the value of the services received or the quoted
        market price, whichever value is more readily determinable.
 
 The
        Company accounts for stock options and warrants issued to employees under
        the
        fair-value method based on the fair or calculated value of the equity
        instrument. This method requires the calculation of the fair value of the
        equity
        instrument. No options or warrants have been issued for employee
        compensation.
  9
  On
        May
        12, 2003, the Company authorized the issuance of 5,000,000 shares of common
        stock and 5,000,000 warrants. The securities are sold as units consisting
        of one
        share of common stock and one warrant.
 
 Following
        is a list of warrants granted and their status:
 Warrants
                  Granted
                
                
                Exercise
                  Price
                
                
                Expiration
                  DateInception
                    to June 30, 2003
                
                
                903,334
                
                $
                0.50
                
                
                Expired
                    5/30/06Year
                    Ended June 30, 2004
                
                
                72,000
                
                
                0.75
                
                
                Expired
                    2/23/0720,000
                
                
                0.75
                
                
                Expired
                    4/5/07Year
                    Ended June 30, 2005
                
                
                108,000
                
                
                0.75
                
                
                8/20/07Period
                    Ended December 31, 2006
                
                
                500,000
                
                
                0.25
                
                
                11/1/08February
                    9, 2007`
                
                
                700,000
                
                
                0.20
                
                
                2/28/08June
                    30, 2007
                
                
                150,000
                
                
                0.20
                
                
                6/30/10September
                  30,
                  2007
                
                
                150,000
                
                
                0.20
                
                
                9/30/10
  On
        February 9, 2007 the Company entered into a one year consulting agreement
        that
        included the issue of 300,000 commons shares upon consummation of the agreement
        and the provision for the issue of warrants to purchase 700,000 common shares
        at
        $0.20 per share. The warrants will be issued ratably over the life of the
        contract on the first calendar day of the month.
 
 The
        Company recorded imbedded derivative costs of $42,041 associated with the
        issue
        of 700,000 warrants. The calculation was made using the Black-Scholes pricing
        model using the following variables (1) 5.16% risk-free interest rate, (2)
        one
        year to maturity, (3) expected volatility of 2.05%, (4) zero expected dividends,
        and (5) a strike price of $0.20.
 
 As
        of
        June 30, 2007 the Company has issued warrants to purchase 150,000 common
        shares
        at $0.20 per share associated with its issue of convertible debentures and
        recorded $11,802 imbedded derivative cost associated with their issue as
        detailed above in Note 6.
  As
          of
          September 30, 2007 the Company has issued warrants to purchase 150,000
          common
          shares at $0.20 per share associated with its issue of convertible debentures
          and recorded $11,803 imbedded derivative cost associated with their issue
          as
          detailed above in Note 6.
 No
        warrants have been exercised. There is no public market for the stock.
  10
  **NOTE
        8.**  **STOCKHOLDERS’
        EQUITY**
 
 Common
        Stock
 
 The
        Small
        Business Company, Inc. (“Company”) was incorporated in Delaware on November 26,
        2002. The Company, based in San Diego, California, develops, packages and
        markets business improvement solutions for small business owners. The Company
        began business as Optibiz, LLC, a California limited liability company and
        then
        converted to a Delaware corporation on November 26, 2002.
 
 The
        Company is authorized 500,000,000 common shares with a $0.0001 par
        value.
 
 On
        November 26, 2002, 13,000,000 common shares were issued to the founders of
        the
        Company for services valued at $1,300.
 
 During
        the period from inception through June 30, 2003, 903,334 common shares were
        issued in private placements for $103,000 cash.
 
 During
        the year ended June 30, 2004, 92,000 common shares were issued at $0.25 per
        share or $23,000 cash and 493,000 common shares were issued for services
        at
        $0.25 per share or $123,250. Services were valued at the price per share
        stock
        was sold in our private placement.
 
 During
        the year ended June 30, 2005 1,364,000 common shares were issued for cash
        at
        $0.568 per share or $77,500. Additionally, 108,000 common shares were issued
        at
        $0.25 per share or $27,000 cash.
 
 During
        the year ended June 30, 2006 75,000 common shares were issued at $0.25 per
        share
        or $18,750 of services rendered and 10,000 common shares were issued at $0.25
        per share or $2,500 cash and $75,000 cash was received in prepayment of
        subscription agreements for 1,320,000 common shares to be issued at $0.0568
        per
        share no later than May 31, 2007.
 
 On
        August
        10, 2006 the Company received $25,000 prepayment on subscription agreements
        for
        300,000 common shares to be issued at $0.082 per share no later than August
        10,
        2007.
 
 On
        August
        21, 2006 the Company issued 100,000 common shares at $0.25 per share for
        services of $25,000.
 
 On
        November 2, 2006 the Company received $50,000 prepayment on a subscription
        agreement for 500,000 common shares to be issued at $0.10 per share no later
        than November 1, 2007.
 
 On
        January 20, 2007 the Company issued 40,000 common shares at $0.25 per share
        for
        $10,000 cash.
 
 On
        February 12, 2007 the Company issued 180,000 common shares at $0.25 per share
        for $55,000 cash.
 
 On
        February 20, 2007 the Company issued 300,000 common shares at $0.25 per share
        for consulting services valued at $75,000.
  11
  On
        March
        13, 2007 the Company issued 10,000 common shares at $0.25 per share for services
        valued at $2,500.
 
 On
        April
        4, 2007 the Company issued 250,000 common shares at $0.10 per share for deferred
        issue of prepaid subscription received in the amount of $25,000.
 
 On
        May
        10, 2007 the Company issued 10,000 common shares at $0.25 per share for services
        valued at $2,500.
 
 On
        June
        14, 2007 the Company issued 187,500 common shares at $0.25 per share in payment
        of accrued interest in the amount of $46,856.
 
 On
        June
        27, 2007 the Company issued 300,000 common shares at $0.082 per share for
        deferred issue of prepaid subscription received in the amount of
        $25,000.
 
 On
        June
        27, 2007 the Company issued 1,000,000 common shares at $0.10 per share for
        deferred issue of prepaid subscription received in the amount of
        $100,000.
 
 On
        August
        15, 2007 the Company issued 100,000 common shares at $0.25 per share for
        services valued at $25,000.
 
 On
        September 24, 2007 the Company issued 200,000 common shares at $0.17 per
        share
        for services valued at $34,000.
  **NOTE
        9.**  **PROVISION
        FOR INCOME TAXES**
 
 The
        Company provides for income taxes under Statement of Financial Accounting
        Standards NO. 109, Accounting for Income Taxes. SFAS No. 109 requires the
        use of
        an asset and liability approach in accounting for income taxes. Deferred
        tax
        assets and liabilities are recorded based on the differences between the
        financial statement and tax bases of assets and liabilities and the tax rates
        in
        effect when these differences are expected to reverse.
 
 SFAS
        No.
        109 requires the reduction of deferred tax assets by a valuation allowance
        if,
        based on the weight of available evidence, it is more likely than not that
        some
        or all of the deferred tax assets will not be realized. In the Company’s
        opinion, it is uncertain whether they will generate sufficient taxable income
        in
        the future to fully utilize the net deferred tax asset. Accordingly, a valuation
        allowance equal to the deferred tax asset has been recorded. The total deferred
        tax asset is $243,752, which is calculated by multiplying a 22% estimated
        tax
        rate by the items making up the deferred tax account, the estimated NOL of
        $1,107,964. The total valuation allowance is a comparable $243,752.
 
 The
        provision for income taxes is comprised of the net changes in deferred taxes
        less the valuation account plus the current taxes payable as shown in the
        chart
        below for the years ended June 30, 2007 and 2006.
  12
  June
                  30,
                
                
                2007
                
                
                2006Deferred
                    Tax Asset
                
                $
                149,022
                
                $
                23,075Less:
                    Valuation Allowance
                
                
                (149,022
                )
                
                (23,075
                )Net
                    Current Deferred Tax Asset
                
                $
                0
                
                $
                0
 Below
        is
        a chart showing the federal net operating losses and the years in which they
        will expire:
  Year
                
                Amount
                
                Expiration2003
                
                $
                90,278
                
                
                20232004
                
                
                225,883
                
                
                20242005
                
                
                9,547
                
                
                20252006
                
                
                104,885
                
                
                20262007
                
                
                677,372
                
                
                2027Total
                    NOL
                
                $
                1,107,964
  **NOTE
        10.**  **THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS**
 
 Below
        is
        a listing of the most recent Statement
        of Financial Accounting Standards (SFAS)
        SFAS 155-157 and their effect on the Company.
 
 **Statement
        No. 155 -** *Accounting
        for Certain Hybrid Financial Instruments*
  In
        February 2006, the FASB issued SFAS
        No.
        155, *Accounting
        for Certain Hybrid Financial Instruments* ,
        which
        amends SFAS No. 133, *Accounting
        for Derivatives Instruments and Hedging Activities* and SFAS
        No. 140, *Accounting
        for Transfers and Servicing of Financial Assets and Extinguishment of
        Liabilities* .
        SFAS
        No. 155 amends SFAS No. 133 to narrow the scope exception for interest-only
        and
        principal-only strips on debt instruments to include only such strips
        representing rights to receive a specified portion of the contractual interest
        or principle cash flows. SFAS No. 155 also amends SFAS No. 140 to allow
        qualifying special-purpose entities to hold a passive derivative financial
        instrument pertaining to beneficial interests that itself is a derivative
        instrument.
  **Statement
        No. 156 -** *Accounting
        for Servicing of Financial Assets*
  In
        March
        2006, the FASB issued SFAS
        No.
        156, *Accounting
        for Servicing of Financial Assets,* which
        provides an approach to simplify efforts to obtain hedge-like (offset)
        accounting. This Statement amends FASB Statement No. 140, *Accounting
        for Transfers and Servicing of Financial Assets and Extinguishments of
        Liabilities* ,
        with
        respect to the accounting for separately recognized servicing assets and
        servicing liabilities. The Statement (1) requires an entity to recognize
        a
        servicing asset or servicing liability each time it undertakes an obligation
        to
        service a financial asset by entering into a servicing contract in certain
        situations; (2) requires that a separately recognized servicing asset or
        servicing liability be initially measured at fair value, if practicable;
        (3)
        permits an entity to choose either the amortization method or the fair value
        method for subsequent measurement for each class of separately recognized
        servicing assets or servicing liabilities; (4) permits at initial adoption
        a
        one-time reclassification of available-for-sale securities to trading securities
        by an entity with recognized servicing rights, provided the securities
        reclassified offset the entity's exposure to changes in the fair value of
        the
        servicing assets or liabilities; and (5) requires separate presentation of
        servicing assets and servicing liabilities subsequently measured at fair
        value
        in the balance sheet and additional disclosures for all separately recognized
        servicing assets and servicing liabilities. SFAS No. 156 is effective for
        all
        separately recognized servicing assets and liabilities as of the beginning
        of an
        entity's fiscal year that begins after September 15, 2006, with earlier adoption
        permitted in certain circumstances. The Statement also describes the manner
        in
        which it should be initially applied.
  13
  **Statement
        No. 157** - *Fair
        Value Measurements*
  In
        September 2006, the FASB issued SFAS No. 157, *Fair
        Value Measurements* ,
        to
        clarify how to measure fair value and to expand disclosures about fair value
        measurements. The expanded disclosures include the extent to which companies
        measure assets and liabilities at fair value, the information used to measure
        fair value, and the effect of fair value on earnings and is applicable whenever
        other standards require (or permit) assets and liabilities to be measured
        at
        fair value. SFAS 157 is effective for financial statements issued for fiscal
        years beginning after November 15, 2007 and interim periods within those
        fiscal
        years.
  The
        adoption of these new Statements is not expected to have a material effect
        on
        the Company’s current financial position, results or operations, or cash
        flows.
  14




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




The
      following discussion and analysis is provided to increase the understanding
      of,
      and should be read in conjunction with, our unaudited financial statements
      and
      related notes included elsewhere in this Report. Historical results and
      percentage relationships among any amounts in these financial statements are
      not
      necessarily indicative of trends in operating results for any future period.
      This report contains “forward looking statements” within the meaning of the
      Private Securities Litigation Reform Act of 1995. The statements, which are
      not
      historical facts contained in this Report, including this Management’s
      discussion and analysis of financial condition and results of operation, and
      notes to our unaudited financial statements, particularly those that utilize
      terminology such as “may” “will,” “should,” “expects,” “anticipates,”
“estimates,” “believes,” or “plans” or comparable terminology are
      forward-looking statements. Such statements are based on currently available
      operating, financial and competitive information, and are subject to various
      risks and uncertainties. Future events and our actual results may differ
      materially from the results reflected in these forward-looking statements.
      Factors that might cause such a difference include, but are not limited to,
      dependence on existing and future key strategic and strategic end-user
      customers, limited ability to establish new strategic relationships, ability
      to
      sustain and manage growth, variability of operating results, our expansion
      and
      development of new service lines, marketing and other business development
      initiatives, the commencement of new engagements, competition in the industry,
      general economic conditions, dependence on key personnel, the ability to
      attract, hire and retain personnel who possess the technical skills and
      experience necessary to meet the service requirements of our clients, the
      potential liability with respect to actions taken by our existing and past
      employees, risks associated with international sales, and other risks described
      herein and in our other filings with the Securities and Exchange
      Commission.





The
      safe
      harbor for forward-looking statements provided by Section 21E of the Securities
      Exchange Act of 1934 excludes issuers of “penny stock” (as defined under Rule
      3a51-1 of the Securities Exchange Act of 1934). Our common stock currently
      falls
      within that definition





All
      forward-looking statements in this document are based on information currently
      available to us as of the date of this report, and we assume no obligation
      to
      update any forward-looking statements. Forward-looking statements involve known
      and unknown risks, uncertainties and other factors that may cause the actual
      results to differ materially from any future results, performance or
      achievements expressed or implied by such forward looking
      statements.





The
      following discussion of our financial condition and results of operations should
      be read in conjunction with our unaudited financial statements and related
      notes
      appearing elsewhere in this report.




***General***





The
      following discussion and analysis is provided to increase the understanding
      of,
      and should be read in conjunction with, our unaudited financial statements
      and
      related notes included elsewhere in this Report. Historical results and
      percentage relationships among any amounts in these financial statements are
      not
      necessarily indicative of trends in operating results for any future period.
      This report contains “forward looking statements” within the meaning of the
      Private Securities Litigation Reform Act of 1995. The statements, which are
      not
      historical facts contained in this Report, including this Management’s
      discussion and analysis of financial condition and results of operation, and
      notes to our unaudited financial statements, particularly those that utilize
      terminology such as “may” “will,” “should,” “expects,” “anticipates,”
“estimates,” “believes,” or “plans” or comparable terminology are
      forward-looking statements. Such statements are based on currently available
      operating, financial and competitive information, and are subject to various
      risks and uncertainties. Future events and our actual results may differ
      materially from the results reflected in these forward-looking statements.
      Factors that might cause such a difference include, but are not limited to,
      dependence on existing and future key strategic and strategic end-user
      customers, limited ability to establish new strategic relationships, ability
      to
      sustain and manage growth, variability of operating results, our expansion
      and
      development of new service lines, marketing and other business development
      initiatives, the commencement of new engagements, competition in the industry,
      general economic conditions, dependence on key personnel, the ability to
      attract, hire and retain personnel who possess the technical skills and
      experience necessary to meet the service requirements of our clients, the
      potential liability with respect to actions taken by our existing and past
      employees, risks associated with international sales, and other risks described
      herein and in our other filings with the Securities and Exchange
      Commission.




15




The
      safe
      harbor for forward-looking statements provided by Section 21E of the Securities
      Exchange Act of 1934 excludes issuers of “penny stock” (as defined under Rule
      3a51-1 of the Securities Exchange Act of 1934). Our common stock currently
      falls
      within that definition





All
      forward-looking statements in this document are based on information currently
      available to us as of the date of this report, and we assume no obligation
      to
      update any forward-looking statements. Forward-looking statements involve known
      and unknown risks, uncertainties and other factors that may cause the actual
      results to differ materially from any future results, performance or
      achievements expressed or implied by such forward looking
      statements.





The
      following discussion of our financial condition and results of operations should
      be read in conjunction with our unaudited financial statements and related
      notes
      appearing elsewhere in this report.





OVERVIEW





We
      are a
      Delaware corporation with executive officers in California and is focused on
      the
      development of business improvement solutions for small business owners. We
      were
      incorporated in Delaware in 2002. Since that time, we have created and marketed,
      in management’s opinion, simple, powerful, affordable solutions to millions of
      small business owners. Our product line is founded on its patent-pending
      knowledge base - The “DARE Process” (Decide, Analyze, Realize and Evaluate);
      which process has been formatted into a series of books, high margin CD’s and
      internet downloads. In our opinion, these simple, yet powerful tools empower
      current and future small and home based business owners to succeed. We intend
      to
      compliment these tools with a global network of licensed business coaches,
      DARE
      Success Coaches, who will provide subscription based personalized assistance
      to
      micro-entrepreneurs (sole proprietors to ten employees).





SIGNIFICANT
      ACCOUNTING POLICIES





*Accounting
      Basis*





The
      statements were prepared following generally accepted accounting principles
      of
      the United States of America consistently applied. The Company uses a June
      30
      fiscal year end.





*Cash
      and Cash Equivalents*





Cash
      and
      cash equivalents include all short-term liquid investments that are readily
      convertible to know amounts of cash and have original maturities of three months
      or less. As of September 30, 2007 there were no cash equivalents.





*Accounts
      Receivable*





The
      Company analyzes current accounts receivable for an allowance for doubtful
      accounts based on historical bad debt, customer credit-worthiness, the current
      business environment and historical experience with the customer. The allowance
      includes specific reserves for accounts where collection is deemed to be no
      longer probable.





*Advertising
      Costs*





Advertising
      Costs are expensed as incurred. No advertising costs were incurred for the
      period ended September 30, 2007 and the year ended June 30, 2007.





*Use
      of Estimates*





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




16




*Equipment*





Equipment
      is stated at cost. Depreciation is computed using the straight-line method
      over
      their estimated useful lives, which for computer equipment is three years.
      Maintenance and repairs are charged to expense as incurred. Fixed assets consist
      of the following





September
                30,
            
            June
                302007
            
            2007Computers
            
            $
            7,629
            
            $
            7,629Equipment
            
            
            600
            
            
            600Less
                Accumulated
            
            
            (4,974
            )
            
            (4,589
            )Equipment,
                net
            
            $
            3,255
            
            $
            3,640




*Revenue
      Recognition*





Revenues
      from services are recognized when there is persuasive evidence of an
      arrangement, the fee is fixed or determinable, services have been rendered,
      payment has been contractually earned and it is reasonably assured that the
      related receivable or unbilled revenue is collectable.





*Income
      Taxes*





The
      provision for income taxes is the total of the current taxes payable and the
      net
      of the change in the deferred income taxes. Provision is made for the deferred
      income taxes where differences exist between the period in which transactions
      affect current taxable income and the period in which they enter into the
      determination of net income in the financial statements.





*Earnings
      Per Share*





Basic
      earnings per share are computed by dividing net income by the average number
      of
      common shares outstanding during the period. Diluted earnings per share takes
      into consideration the potentially dilutive effect of common stock equivalents,
      such as outstanding stock options and warrants, which if exercised or converted
      into common stock would then share in the earnings of the Company. In computing
      diluted earnings per share, the Company utilizes the treasury stock method
      and
      anti-dilutive securities are excluded.




Outstanding
      options and warrants are considered anti-dilutive.




*Stock
      Based Compensation*




The
      Company accounts for its stock based compensation based upon provisions in
      SFAS
      No. 123, *Accounting
      for Stock-Based Compensation* .
      In this
      statement stock based compensation is divided into two general categories,
      based
      upon who the stock receiver is, namely: employees/directors and
      non-employees/directors. The employees/directors category is further divided
      based upon the particular stock issuance plan, namely compensatory and
      non-compensatory. The employee/directors non-compensatory securities are
      recorded at the sales price when the stock is sold. The compensatory stock
      is
      calculated and recorded at the securities’ fair value at the time the stock is
      given. SFAS 123 also provides that stock compensation paid to non-employees
      be
      recorded with a value which is based upon the fair value of the services
      rendered or the value of the stock given, whichever is more reliable. The
      Company has selected to utilize the fair value of the stock issued as the
      measure of the value of services obtained.




RESULTS
      OF OPERATIONS





*Three
      month ended September 30, 2007 vs. Three months ended September 30,
      2006.*





Revenues :
      We had
      $1,448 in revenues for the three months ended September 30, 2007 as compared
      to
      $0 in revenues for the same period in 2006. This increase is attributable to
      the
      launch or our re-engineered product line in September 2007





Operating
      Expenses :
      Our
      operating expenses for the three months ended September 30, 2007 increased
      by
      $113,462, or approximately 36%, to $197,064, from $83,602 for the comparable
      period in 2006. The increase in operating expenses was primarily attributable
      to
      book design and printing and the re-engineering and production of our compact
      discs, the engineering of our data base and marketing costs related to
      production of two television commercials.




17




Net
      Loss :
      Due to
      the factors set forth above, our net loss increased to $214,998 for the three
      months ended September 30, 2007 from $83,662 for the comparable period in
      2006 **.**





Liquidity
      and Capital Resources





From
      our
      inception on November 26, 2002 to September 30, 2007, we have had a net loss
      from operations of $1,196,940 and had $1,476,204 in total operating expenses.
      We
      had a working capital deficit at September 30, 2007 of $12,065 and we had cash
      of $447 as of September 30, 2007. We have financed our operations from revenues
      received and the sale of our common stock. Since inception, we have received
      $279,728 in revenues, $156,331 in loans, 300,000 from the sale of convertible
      debentures and 438,000 in proceeds from the sale of our common stock.





We
      used
      $161,735 of net cash in operating activities for the three months ended
      September 30, 2007 as compared to using 42,563 for the three months ended
      September 30, 2006. This increase is primarily attributable to general and
      administrative expenses, legal expenses and product development costs. This
      was
      offset by non-cash charges for issuance of stock for services.





Net
      cash
      flows used in investing activities was $0 for the three months ended September
      30, 2007 as compared to $1,187 for the comparable period in 2006. Net cash
      flows
      provided by financing activities was $145,835 for the three months ended
      September 30, 2007 as compared to $25,000 for the comparable period in 2006.
      This increase in net cash provided by financing activities was primarily
      attributable to proceeds from notes payable and subscriptions received on the
      sale of our common stock and other securities.





As
      of
      September 30, 2007, we had cash on hand of $447 and accounts receivable of
      $0
      which is not sufficient to satisfy our current operating requirements. We
      anticipate that we will need at least $450,000 in additional working capital
      to
      satisfy our contemplated cash requirements for our current proposed plans and
      assumptions relating to our operations for a period of approximately 12 months.
      We are currently seeking to fund our capital requirements from the sale of
      our
      debt or equity securities, however it is possible that we will be unable to
      obtain sufficient additional capital through the sale of our debt and/or equity
      securities as needed. We have no commitment for additional debt or equity
      financing in place at this time. However, we plan to continue to pay for certain
      services with shares, obtain unsecured convertible loans for shares and seek
      other funding opportunities. If we don’t raise or generate these funds, the
      implementation of our short-term business plan will be delayed or
      eliminated.





Our
      ability to continue as a going concern is dependent on our ability to raise
      funds to implement our planned development; however we may not be able to raise
      sufficient funds to do so. Our independent auditors have indicated that there
      is
      substantial doubt about our ability to continue as a going concern over the
      next
      twelve months. Our poor financial condition could inhibit our ability to achieve
      our business plan. Because we are currently operating at a substantial loss
      with
      no operating history and very limited revenues, an investor cannot determine
      if
      we will ever become profitable.





Off
      Balance Sheet Arrangements





None





**Item
      3. Controls and Procedures.**





Our
      disclosure controls and procedures are designed to ensure that information
      required to be disclosed in reports that we file or submit under the Securities
      Exchange Act of 1934 is recorded, processed, summarized and reported within
      the
      time periods specified in the rules and forms of the Securities and Exchange
      Commission. Our Chief Executive Officer and the Chief Financial Officer have
      reviewed the effectiveness of our “disclosure controls and procedures” (as
      defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and
      15d-14(c)) within the last ninety days and have concluded that the disclosure
      controls and procedures are effective to ensure that material information
      relating to The Small Business Company is recorded, processed, summarized,
      and
      reported in a timely manner. There were no significant changes in our internal
      controls or in other factors that could significantly affect these controls
      subsequent to the last day they were evaluated by our Chief Executive Officer
      and Chief Financial Officer.




18




**PART
      II--OTHER INFORMATION**




**Item
      1. Legal Proceedings.**





None.





**Item
      2. Unregistered Sales of Equity Securities and Use of Proceeds.**





On
      August
      15, 2007, we issued 100,000 shares of common stock in consideration of graphic
      design services received as a compensatory stock grant. Our board valued the
      common stock at $0.25 per share, for a total value of $25,000. The issuance
      was
      exempt under Section 4(2) of the Act.





On
      September 24, 2007, we issued 200,000 shares of common stock for investor
      relation services received as a compensatory stock grant. Our board valued
      the
      common stock at $0.17 per share, for a total value of $34,000. The issuance
      was
      exempt under Section 4(2) of the Act.





**Item
      3. Defaults Upon Senior Securities.**





None.





**Item
      4. Submission of Matters to a Vote of Security Holders.**




None.





**Item
      5. Other Information.**




None.





**Item
      6. Exhibits**




ItemNo.
            
            Description
            
            Method
                of Filing31.1
            
            Certification
                of Stuart Schreiber pursuant to Rule 13a-14(a)
            
            Filed
                electronically herewith.32.1
            
            Chief
                Executive Officer and Chief Financial Officer Certification pursuant
                to 18
                U.S.C. § 1350 adopted pursuant to Section 906 of the Sarbanes Oxley Act of
                2002
            
            Filed
                electronically herewith.




19




**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.






**THE
                SMALL BUSINESS COMPANY**November
                15, 2007
            
            /s/
                Stuart SchreiberStuart
                SchreiberChief
                Executive Officer and Chief Financial Officer(Principal
                Executive, Financial and Accounting
                Officer)




20