U.S.
          Securities and Exchange Commission
 Washington,
          D.C. 20549
 
 
  FORM
            10-Q/A1
  
 [X]
                Quarterly
                    Report Under Section 13 or 15(d) of The Securities Exchange Act
                    of 1934
                    for the Quarterly Period Ended March 31,
                    2008
 
 [
                     ]
                Transition
                    Report Under Section 13 or 15(d) of The Securities Exchange Act
                    of 1934
                    for the Transition Period from _______ to
                    _______
 
 Commission
          File Number: 000-52749
  SALON
          CITY, INC.
 (Exact
          name of small business issuer as
          specified in its charter)
  
 NEVADA
                20-2107795(State
                    or other jurisdiction of
                (IRS
                    Employer Identification No.)incorporation
                    or organization)
  909
          North Palm Avenue
 Suite
          311
 West
          Hollywood, California 90069
 (Address
          of principal executive offices)
 
 310-358-9017
 (Issuer's
          telephone number)
  
 Check
          whether the issuer (1) filed all reports required to be filed by Section
          13 or
          15(d) of the Exchange Act during the past 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
                    [ ]
  1
  Indicate
          by check mark whether the registrant is a large accelerated filer, an
          accelerated filer, a non-accelerated filer, or a smaller reporting company.
          See
          definitions of “large accelerated filer”, “accelerated filer” and “smaller
          reporting company” in Rule 12b-2 of the Exchange Act.
  Large
                    accelerated
                    filer
                 ̈Non-accelerated
                    filer
                 ̈(Do
                    not check if a smaller
                    reporting company)Accelerated
                    filer
                 ̈Smaller
                    reporting
                    company
                þ
 
 Indicate
          by check mark whether the registrant is a shell company (as defined in
          rule
          12b-2 of the exchange act). Yes [ ] No [X]
 
 Number
          of
          shares of common stock outstanding as of May 13,
          2008: 992,049,925
 Number
          of
          shares of preferred stock outstanding as of May 13, 2008: -0-
  CAUTIONARY
          STATEMENT REGARDING FORWARD LOOKING INFORMATION
  The
          discussion contained in this 10-Q
          under the Securities Exchange Act of 1934, as amended, contains forward-looking
          statements that involve risks and uncertainties. The issuer's actual results
          could differ significantly from those discussed herein. These include statements
          about our expectations, beliefs, intentions or strategies for the future,
          which
          we indicate by words or phrases such as "anticipate," "expect," "intend,"
          "plan," "will," "we believe," "the Company believes," "management believes"
          and
          similar language, including those set forth in the discussions under "Notes
          to
          Financial Statements" and "Management's Discussion and Analysis or Plan
          of
          Operation" as well as those discussed elsewhere in this Form 10-QSB. We
          base our
          forward-looking statements on information currently available to us, and
          we
          assume no obligation to update them. Statements contained in this Form
          10-QSB
          that are not historical facts are forward-looking statements that are subject
          to
          the "safe harbor" created by the Private Securities Litigation Reform Act
          of
          1995.
  xplanatory We
            are
            amending this Form 10-Q to include a comparative audited balance sheet
            at
            December 31, 2007 to comply with the 10-Q presentation rules. We inadvertedly
            omitted this information in the prior submission.
  2
  TABLE
                    OF
                    CONTENTSPART
                    I. FINANCIAL INFORMATIONITEM
                    1.FINANCIAL
                    STATEMENTS
                4ITEM
                    2.MANAGEMENT'S
                    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                    RESULTS OF OPERATION
                9ITEM
                    3. QUANTITATIVE AND QUALITATIVE
                    DISCLOSURES ABOUT MARKET RISK
                11ITEM
                    4.CONTROLS
                    AND PROCEDURES
                11PART
                    II. OTHER INFORMATIONITEM
                    1.LEGAL
                    PROCEEDINGS
                11ITEM
                    1A. RISK
                    FACTORS
                11ITEM
                    2.UNREGISTERED
                    SALES OF EQUITY
                    SECURITIESAND USE
                    OF
                    PROCEEDS
                11ITEM
                    3.DEFAULTS
                    UPON SENIOR SECURITIES
                11ITEM
                    4. SUBMISSION OF
                    MATTERS TO A
                    VOTE OF SECURITY HOLDERS
                11ITEM
                    5.OTHER
                    INFORMATION
                11ITEM
                    6.EXHIBITS
                    AND
                    REPORTS ONFORM
                    8-K
                11SIGNATURES
                12INDEX
                    TOEXHIBITS
                13
  3
 Table
              of Contents
  ITEM
          1. FINANCIAL STATEMENTS
  SALON
                        CITY,
                        INC.Balance
                        SheetAt
                        March 31,
                        2008Unaudited
                    
                    AuditedAssets:
                    
                    
                    
                    
                    
                    
                    31-Mar-08
                    
                    31-Dec-07Current
                        assetsCash
                    
                    
                    
                    
                    
                    $               78,326
                    
                    $            111,735Accounts
                        receivable
                    
                    
                    
                    34,246
                    
                    8,549Total
                        current
                        assets
                    
                    
                    
                    
                    112,572
                    
                    120,284Fixed
                        assetsEquipment
                    
                    
                    
                    
                    27,631
                    
                    27,631Accumulated
                        depreciation
                    
                    
                    
                    (19,924)
                    
                    (18,883)Total
                        fixed
                        assets
                    
                    
                    
                    
                    
                    7,707
                    
                    8,748Total
                        assets
                    
                    
                    
                    
                    
                    
                    $             120,279
                    
                    $            129,032Liabilities
                        and Stockholders'
                        EquityCurrent
                        liabilitiesAccounts
                        payable and accrued
                        expenses
                    
                    $             445,351
                    
                    $            409,931Current
                        portion of bank loans
                        payable
                    
                    
                    18,721
                    
                    81,869Related
                        party
                        advances
                    
                    
                    
                    224,533
                    
                    234,903Total
                        current
                        liabilities
                    
                    
                    
                    
                    688,605
                    
                    726,703Long-term
                        bank loans
                        payable
                    
                    
                    
                    104,365
                    
                    23,833Total
                        liabilities
                    
                    
                    
                    
                    
                    792,970
                    
                    750,536Stockholders'
                        EquityPreferred
                        stock, (50,000,000
                        shares authorized, -0- sharesissued
                        or outstanding, par value $
                        .001 per share)
                    
                    -
                    
                    -Common
                        stock, (1,000,000,000
                        shares authorized, 989,783,258shares
                        issued and outstanding, par
                        value $.001 per share)
                    989,784
                    
                    984,083Additional
                        paid-in
                        capital
                    
                    
                    
                    2,237,323
                    
                    2,231,833Treasury
                        stock
                    
                    
                    
                    
                    (230,972)
                    
                    (230,972)Retained
                        deficit
                    
                    
                    
                    
                    (3,668,826)
                    
                    (3,606,449)Total
                        stockholders'
                        equity
                    
                    
                    
                    
                    (672,691)
                    
                    (621,505)Total
                        liabilities and
                        stockholders' equity
                    
                    
                    
                    $             120,279
                    
                    $            129,032
  4
 Table
              of Contents
  SALON
                      CITY, INC.Statements
                      of OperationsFor
                      the Three Months Ended March 31, 2008 and 2007Quarter
                      ended
                  
                  
                  Quarter
                      ended3/31/2008
                  
                  
                  3/31/2007Advertising
                      income
                  
                  $
                  83,664
                  
                  
                  $
                  103,115Distributors,
                      conference and other income
                  
                  
                  815
                  
                  
                  
                  140Total
                      revenue
                  
                  
                  84,479
                  
                  
                  
                  103,255Cost
                      of goods sold
                  
                  
                  (77,643
                  )
                  
                  
                  (95,404
                  )Gross
                      Profit
                  
                  
                  6,836
                  
                  
                  
                  7,851Selling,
                      general and administrative expenses
                  
                  
                  59,350
                  
                  
                  
                  96,591Net
                      ordinary (loss)
                  
                  
                  (52,514
                  )
                  
                  
                  (88,740
                  )Interest
                      expense
                  
                  
                  (9,863
                  )
                  
                  
                  (7,201
                  )Net
                      (loss)
                  
                  $
                  (62,377
                  )
                  
                  $
                  (95,941
                  )Basic
                      income (loss) per share
                  
                  $
                  
                  *
                  
                  $
                  
                  *Fully
                      diluted income (loss) per share
                  
                  $
                  
                  *
                  
                  $
                  
                  *Weighted
                      average shares outstanding
                  
                  
                  988,153,458
                  
                  
                  
                  990,258,974*
                      =
                      less than $.01 per share.The
                      accompanying notes are an
                      integral part of these financial
                      statements
  5
 Table
              of Contents
  SALON
                      CITY,
                      INC.Statements
                      of Cash
                      FlowsFor
                      the Three Months ended March
                      31, 2008 and 2007Quarter
                      ended
                  
                  
                  Quarter
                      ended3/31/2008
                  
                  
                  3/31/2007CASH
                      FLOWS FROM OPERATING
                      ACTIVITIES:Net
                      loss
                  
                  $
                  (62,377
                  )
                  
                  $
                  (95,941
                  )Adjustments
                      to reconcile net
                      (loss) to net cash(used
                      in) operating
                      activities:Depreciation
                  
                  
                  1,041
                  
                  
                  
                  1,250Common
                      stock issued for services
                      rendered
                  
                  
                  11,191
                  
                  
                  
                  45,000(Increase)
                      decrease in operating
                      assets:Accounts
                      receivable
                  
                  
                  (25,698
                  )
                  
                  
                  (34,163
                  )Other
                      current
                      assets
                  
                  
                  (44,000
                  )
                  
                  
                  10,000Increase
                      (decrease) in operating
                      liabilities:Accounts
                      payable and accrued
                      expenses
                  
                  
                  72,887
                  
                  
                  
                  10,420NET
                      CASH (USED IN) OPERATING
                      ACTIVITIES
                  
                  
                  (46,956
                  )
                  
                  
                  (63,434
                  )CASH
                      FLOWS FROM INVESTING
                      ACTIVITIES:Purchases
                      of
                      equipment
                  
                  
                  -
                  
                  
                  
                  (8,883
                  )NET
                      CASH (USED IN) INVESTING
                      ACTIVITIES
                  
                  
                  -
                  
                  
                  
                  (8,883
                  )CASH
                      FLOWS FROM FINANCING
                      ACTIVITIES:Proceeds
                      from sale of common stock
                      to investors
                  
                  
                  -
                  
                  
                  
                  13,000Incurrences
                      (repayment of) related
                      pary advances
                  
                  
                  (3,837
                  )
                  
                  
                  10,909Proceeds
                      from bank
                      loans
                  
                  
                  17,384
                  
                  
                  
                  48,456NET
                      CASH PROVIDED BY (USED IN)
                      FINANCING ACTIVITIES
                  
                  
                  13,547
                  
                  
                  
                  72,365NET
                      INCREASE IN CASH AND CASH
                      EQUIVALENTS
                  
                  
                  (33,409
                  )
                  
                  
                  48CASH
                      AND CASH
                      EQUIVALENTS:Beginning
                      of
                      period
                  
                  
                  111,735
                  
                  
                  
                  82,723End
                      of
                      period
                  
                  $
                  78,326
                  
                  
                  $
                  82,771SUPPLEMENTAL
                      CASH FLOW DISCLOSURES
                      AND NON-CASHFINANCING  INFORMATION:Cash
                      paid during the quarter for
                      interest
                  
                  $
                  -
                  
                  
                  $
                  -Cash
                      paid during the quarter for
                      income taxes
                  
                  $
                  -
                  
                  
                  $
                  -The
                      accompanying notes are an
                      integral part of these financial
                      statements
  6
 Table
              of Contents
  NOTES
            TO
            CONDENSED FINANCIAL STATEMENTS
 OF
 SALON
            CITY, INC.
 MARCH
            31, 2008 (UNAUDITED)
 
 
 NOTE
            A -
            BASIS OF PRESENTATION
 
 The
            accompanying unaudited condensed financial statements have been prepared
            in
            accordance with accounting principles generally accepted in the United
            States of
            America for interim financial information and pursuant to the rules and
            regulations of the Securities and Exchange Commission. Accordingly, they
            do not
            include all of the information and footnotes required by generally accepted
            accounting principles for complete financial statements.
 
 In
            the
            opinion of management, the unaudited condensed financial statements contain
            all
            adjustments consisting only of normal recurring accruals considered necessary
            to
            present fairly the Company's financial position at March 31, 2008 and
            the
            results of operations for the period ended March 31, 2008.
 
 Management’s
            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 effect the
            reported
            amounts of assets and liabilities, disclosures of contingent assets and
            liabilities at the date of the financial statements and the reported
            amounts of
            revenues and expenses during the reporting period. Actual results could
            differ
            from those estimates.
 
 Fair
            Value of Financial
            Instruments– The carrying amounts of financial instruments including
            accounts receivable, other current assets, equipment and related depreciation,
            accounts payable and accrued expenses and bank loans payable approximated
            fair
            value because of the immediate short-term maturity of these
            instruments.
 
 Income
            Taxes– Income
            taxes are provided for the tax effects of transactions reported in the
            financial
            statements and consist of deferred taxes related primarily to differences
            between the basis of certain assets and liabilities for financial and
            tax
            reporting and net operating loss-carry forwards. Deferred taxes represent
            the
            future tax return consequences of those differences, which will either
            be
            taxable or deductible when the assets and liabilities are recovered or
            settled.
 
 The
            income tax benefit consists of taxes currently refundable due to net
            operating
            loss carry back provisions less the effects of accelerated depreciation
            for the
            federal government. Deferred tax assets are reduced by a valuation allowance
            when, in the opinion of management, it is more likely than not that some
            portion
            or the entire deferred tax asset will not be realized. Deferred tax assets
            and
            liabilities are adjusted for the effect of changes in tax laws and rates
            on the
            date of enactment.
 
 Earnings
            (Loss) Per
            Share - The Company reports earnings (loss) per share in accordance
            with
            Statement of Financial Accounting Standard (SFAS) No.128. This statement
            requires dual presentation of basic and diluted earnings (loss) with
            a
            reconciliation of the numerator and denominator of the loss per share
            computations. Basic earnings per share amounts are based on the weighted
            average
            shares of common outstanding. If applicable, diluted earnings per share
            assume
            the conversion, exercise or issuance of all common stock instruments
            such as
            options, warrants and convertible securities, unless the effect is to
            reduce a
            loss or increase earnings per share. Accordingly, this presentation has
            been
            adopted for the periods presented. There were no adjustments required
            to net
            income for the period presented in the computation of diluted earnings
            per
            share. There were no common stock equivalents (CSE) necessary for the
            computation of diluted loss per share.
 
 Fixed
            Assets– Fixed
            assets are recorded at cost and include expenditures that substantially
            increase
            the productive lives of the existing assets. Maintenance and repair costs
            are
            expensed as incurred. Depreciation is provided using the straight-line
            method.
            Depreciation of property and equipment is calculated over the management
            prescribed recovery periods, which range from 5 years for equipment to
            7 years
            for furniture and fixtures.
 
 When
            a
            fixed asset is disposed of, its cost and related accumulated depreciation
            are
            removed from the accounts. The difference between undepreciated cost
            and
            proceeds from disposition is recorded as a gain or loss.
 
 Advertising
            Costs -
            Advertising costs are expensed as incurred. The Company does not incur
            any
            direct-response advertising costs.
 
 Revenue
            Recognition
            -
 
 Advertising
            Revenue - Revenue
            from advertising is recognized when advertising services are earned and
            measurable based upon completed performance. For advertising services,
            performance becomes complete when the actual printing of the magazine
            is
            finished and the customer is billed with accompanied proof of
            printing.
 
 Distributor
            Revenue - Revenue
            from distributors for retail sales of publications is recognized at the
            point it
            is earned and measurable based upon completed performance. For revenue
            from
            distributors, performance becomes complete at a subsequent date when
            the
            distributor reports the actual number of publication units sold.
 
 Conference
            Revenue -
            Conference revenue is earned and measurable based upon completed performance,
            unless it is for non-refundable deposits related to ticket sales and
            sponsorships. Performance becomes complete for conferences at the end
            of the
            conference.
 
 All
            revenue transactions are reviewed for credit worthiness prior to commencement
            of
            the revenue process.
 
 Comprehensive
            Income
            (Loss) - The Company adopted Financial Accounting Standards Board
            Statement of Financial Accounting Standards No. 130, “Reporting Comprehensive
            Income”, which establishes standards for the reporting and display of
            comprehensive income and its components in the financial statements.
            There were
            no items of comprehensive income (loss) applicable to the Company during
            the
            year covered in the financial statements.
 7
 Table
                  of Contents
  NOTES
                TO
                CONDENSED FINANCIAL STATEMENTS
 OF
 SALON
                CITY, INC.
 MARCH
                31, 2008 (UNAUDITED)
  Long-Lived
              Assets -
              In accordance with SFAS No. 144, the Company reviews and evaluates
              its
              long-lived assets for impairment whenever events or changes in circumstances
              indicate that their net book value may not be recoverable. When such
              factors and
              circumstances exist, including those noted above, the Company compares
              the
              assets’ carrying amounts against the estimated undiscounted cash flows to be
              generated by those assets over their estimated useful lives. If the
              carrying
              amounts are greater than the undiscounted cash flows, the fair values
              of those
              assets are estimated by discounting the projected cash flows. Any excess
              of the
              carrying amounts over the fair values are recorded as impairments in
              that fiscal
              period.
 
 Cash
            and Cash
            Equivalents - For purposes of the Statements of Cash Flows, the Company
            considers liquid investments with an original maturity of three months
            or less
            to be cash equivalents.
 
 Recent
            Accounting
            Pronouncements - In September, 2006, the FASB issued SFAS No. 157, "Fair
            Value Measurements", which defines fair value, establishes a framework
            for
            measuring fair value in generally accepted accounting principles and
            expands
            disclosures about fair value measurements. SFAS No. 157 is effective
            for fiscal
            years beginning after November 15, 2007. The adoption of this standard
            on
            January 1, 2008 did not have a material effect on the Company's financial
            statements.
 
 In
            September, 2006, the FASB issued SFAS No. 158, "Employers' Accounting
            for
            Defined Benefit Pension and Other Postretirement Plans - An Amendment
            of FASB
            Statements No. 87, 88, 106 and 132(R)". SFAS No. 158 requires an employer
            to (i)
            recognize in its statement of financial position an asset for a plan's
            overfunded status or a liability for a plan's underfunded status; (ii)
            measure a
            plan's assets and its benefit obligations that determine its funded status
            as of
            the end of the employer's fiscal year (with limited exceptions); and
            (iii)
            recognize changes in the funded status of a defined benefit postretirement
            plan
            in the year in which the changes occur. Those changes will be reported
            in
            comprehensive income. The Company previously adopted in 2006 the requirement
            to
            recognize the funded status of a benefit plan and the disclosure requirements.
            The requirement to measure plan assets and benefit obligations to determine
            the
            funded status as of the end of the fiscal year and to recognize changes
            in the
            funded status in the year in which the changes occur is effective for
            fiscal
            years ending after December 15, 2008. The adoption of the measurement
            date
            provisions of this standard is not expected to have a material effect
            on the
            Company's financial statements.
 
 In
            February, 2007, the FASB issued SFAS No. 159, "The Fair Value Option
            for
            Financial Assets and Financial Liabilities". SFAS No. 159 permits entities
            to
            choose to measure many financial assets and financial liabilities at
            fair value.
            Unrealized gains and losses on items for which the fair value option
            has been
            elected are reported in earnings. SFAS No. 159 is effective for fiscal
            years
            beginning after November 15, 2007. The Company is not electing to measure
            its
            financial assets or liabilities at fair value pursuant to this
            statement.
 
 In
            December, 2007, the FASB issued No. 141, (revised 2007) "Business Combinations"
            ("SFAS No. 141R"). SFAS No. 141R replaces SFAS No. 141, which the Company
            previously adopted. SFAS No. 141R revises the standards for accounting
            and
            reporting of business combinations. In summary, SFAS No. 141R requires
            the
            acquirer of a business combination to measure, at fair value, the assets
            acquired, the liabilities assumed, and any noncontrolling interest in
            the
            acquiree at the acquisition date, with limited exceptions. SFAS No. 141R
            applies
            to all business combinations for which the acquisition date is on or
            after the
            beginning of the first annual reporting period beginning on or after
            December
            15, 2008. The Company does not believe that the adoption of this statement
            on
            January 1, 2009 will have a material effect on the Company's financial
            statements.
 
 In
            December, 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests
            in
            Consolidated Financial Statements", which requires consolidated net income
            to be
            reported at amounts that include the amounts attributable to both the
            parent and
            noncontrolling interest. SFAS No. 160 is effective for fiscal years beginning
            on
            or after December 15, 2008. The adoption of this standard is not expected
            to
            have a material effect on the Company's financial statements.
 
 In
            March,
            2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments
            and Hedging Activities". SFAS No. 161 changes the reporting requirements
            for
            derivative instruments and hedging activities under SFAS No. 133, "Accounting
            for Derivatives and Hedging Activities", by requiring enhanced disclosures
            about
            (a) how and why an entity uses derivative instruments, (b) how derivative
            instruments are accounted for under SFAS No. 133 and (c) the effect of
            derivative instruments and hedging activities on an entity's financial
            position,
            financial performance and cash flows. SFAS No. 161 is effective for fiscal
            years
            beginning after November 15, 2008. The Company does not believe that
            the
            adoption of this statement will have a material effect on the Company's
            financial statements.
  NOTE
            B –
EQUITY
 
 During
            the three months ended March 31, 2008, the Company issued 5,700,000 common
            shares to outside consultants for payment of services during this period.
            The
            transactions were valued at the stock prices on the dates of issuances
            ranging
            from $.001 to $.003 per share. $11,191 was expensed and is included in
            the
            accompanying statements of operations. This amount also reasonably approximates
            the fair market value of services received.
 
 NOTE
            C - GOING
            CONCERN
 
 As
            shown in the accompanying financial
            statements, the Company has
            suffered recurring losses from operation to date. The Company has a net
            loss and
            negative cash flows from operations of$62,377and
            $46,956for
            thethree monthsendingMarch
            31, 2008, respectively.
            These factors
            raisesubstantial doubt
            about its ability to
            continue as a going concern.
 
 Management's
            plans in regard to this
            matter are to raise equity capital and seek strategic relationships and
            alliances in order to increase revenues in an effort to generate positive
            cash
            flow. Additionally, we must continue to rely
            upon equity infusions
            from investors in order to improve liquidity and sustain operations.
            The
            financial statements do not include any adjustments that might result
            from the
            outcome of this uncertainty.
  8
 Table
              of Contents
  ITEM
          2. MANAGEMENT'S DISCUSSION
          AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATION
 
 As
          used herein the terms "we", "us",
          "our," the “Registrant,” and the "Company" means, Salon City, Inc., a Nevada
          corporation.
 
 GENERAL
          DESCRIPTION OF BUSINESS
  Introduction
 
 Headquartered
          inLos Angeles,California,wepublishSalonCitymagazine,
          where Life is Beautiful(SM).
          It is distributed nationally by Time/Warner Retail, a Time Warner
          Company, andinternationallyby
          Kable Distribution Services, an AmRep
          company.  As an emerging media company for beauty entertainment and a
          lifestyle brand for future products and services,we want to appeal to a
          global audience of consumers who want to be empowered to lead a healthier,
          more
          positive lifestyle.
 
 We
          wereincorporated inNevadaon
          January 4,
          2005.Werepresent
          the formal
          incorporation of a 10-year-old media, entertainment and distribution sole
          proprietorship. From our inception in 1997, known then as Salon City Press
          Club, we have
          published print and online media, most notably through our trade publicationSalon
          City Starmagazine.In
          March 2007,were-positioned
          the six-year old
          professional trade publication (Salon
          City
          Star) to the new web
          site, and then launched
          the
          first edition of the 100% consumer-focused publication,Salon
          City.Through 2008,
          the company will still be in the introductory stages of establishing the
          magazine’s presence in retail stores.
 
 To
          reach consumers, many of whom
          arethe end-users for
          salons
          and spas, we entered into a three year agreement with Time/Warner Retail
          to have
          them distributeSalonCitymagazine
          tothousands of
          bookstores and newsstands in America andCanada.We
          also entered in to a three year
          agreement with Kable
          Distribution Services to distributeSalonCitymagazine internationally. The magazine
          is currently sold in approximately 4800 bookstores and newsstands throughout
          theUSAandCanada,
          and in additional locations
          internationally in over 30 countries,including, but not
          limited to,Australia,Dubai,Germany,Hong
          Kong,Italy,Mexico,New
          Zealand,Singaporeand theUnited Kingdom.
 
 Competition
 
 The
          beauty and fashion magazine business
          can be highly competitive.We face broad competition for audiences and
          advertising revenue from other media companies that produce magazines,
          newspapers and online content. Overall competitive factors include product
          positioning, editorial quality, circulation, price and customer service.
          Competition for advertising dollars is primarily based on advertising rates,
          the
          nature and scope of readership, and reader response to advertisers’ products and
          services. We compete with our competitors based upon the price of our magazine,
          the quality of the articles and information that we publish, and the design
          features of our magazines.
 
 SalonCityis
          currently sold in the
          women’s
          interest and lifestyle sections of
          retail outlets. Our point of difference is that we have attracted the beauty
          professionals, who are highly sought after by upscale advertisers,
          to our magazine;
          this highly sought after market has traditionally been considered one with
          strong barriers of entry. Moreover, we believe we appeal to a broad demographic
          of mainstream sophisticated consumersthat many advertisers are
          seeking.
 
 Employees
 
 We
          currently have over 40 independent
          contractors working with the company, yet we are able to keep staffing
          costs to
          a minimum with only two full time employees. The 40 or so independent
          consultants work in numerous capacities inSalonCity’s
          publishing, online, media and
          events.
 
 We
          have never experienced any material
          labor disruption and believe that relations with our employees are
          good.
 
 RESULTS
          OF OPERATIONS FOR
          THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
 
 The
          following discussion should be read
          in conjunction with the financial statements included in this report and
          is
          qualified in its entirety by the foregoing.
  FORWARD
          LOOKING STATEMENTS
 
 Certain
          statements in this report, including statements of our expectations, intentions,
          plans and beliefs, including those contained in or implied by "Management's
          Discussion and Analysis" and the Notes to Financial Statements, are
          "forward-looking statements", within the meaning of Section 21E of the
          Securities Exchange Act of 1934, as amended (the "Exchange Act"), that
          are
          subject to certain events, risks and uncertainties that may be outside
          our
          control. The words “believe”, “expect”, “anticipate”, “optimistic”, “intend”,
“will”, and similar expressions identify forward-looking statements. Readers
          are
          cautioned not to place undue reliance on these forward-looking statements,
          which
          speak only as of the date on which they are made. We undertake no obligation
          to
          update or revise any forward-looking statements. These forward-looking
          statements include statements of management's plans and objectives for
          our
          future operations and statements of future economic performance, information
          regarding our expansion and possible results from expansion, our expected
          growth, our capital budget and future capital requirements, the availability
          of
          funds and our ability to meet future capital needs, the realization of
          our
          deferred tax assets, and the assumptions described in this report underlying
          such forward-looking statements. Actual results and developments could
          differ
          materially from those expressed in or implied by such statements due to
          a number
          of factors, including, without limitation, those described in the context
          of
          such forward-looking statements.
 
 9
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  CRITICAL
          ACCOUNTING POLICIES
  Revenue
          recognition
 
 Revenue
          is recognized when advertising services are earned and measurable based
          upon
          completed performance. All revenue transactions are reviewed for credit
          worthiness prior to commencement of the revenue process.
 
 Fixed
          Assets
 
 Fixed
          assets are recorded at cost and include expenditures that substantially
          increase
          the productive lives of the existing assets. Maintenance and repair costs
          are
          expensed as incurred. Depreciation is provided using the straight-line
          method.
          Depreciation of equipment is calculated over the management prescribed
          recovery
          periods, which range from 5 years for equipment to 7 years for furniture
          and
          fixtures.
 
 Expenditures
          for maintenance and repairs are expensed as incurred.
 
 Net
          Income / Loss
 
 We
          had a net (loss) of $(62,377)
          and $(95,941)
          for thethreemonths
          endedMarch 31, 2008 and
          2007, respectively. The
          net (loss) in these
          periods was due primarily to operational expenses, which were $59,350and
          $96,591for
          thethreemonths
          endedMarch 31, 2008and
          2007,
          respectively.It is also a function
          of revenues, cost
          of sales and other expenses as described in the upcoming paragraphs
          below.
 
 Revenue
 
 We
          recorded revenues of $83,664 and $103,115 for the three months ended March
          31,
          2008 and 2007, respectively. The decrease in revenues was attributable
          to market
          conditions, global volatility and our transitioning from limited trade
          advertising revenue to much higher potential consumer advertising revenue.
          This
          influenced the first quarter of 2008 results.
 
 To
          inform
          the reader and provide more decision usefulness herein, the following paragraphs
          were written describing more of what we do, the services we provide and
          the
          magazine we distribute.
 
 Salon
          City's concept arises from our core mission to offer the public positively
          oriented news and products that relate to a consumer’s desire to live a life of
          health and wellness. We intend to organize a consumer membership consisting
          of
          salons, spas and clients–what we call the “Salon City Society”–as it grows and
          emerges in the world of beauty, entertainment and lifestyle branding. We
          are in
          the process of building a globally respected brand associated with a positive,
          balanced lifestyle and vision for both the public and the beauty industry.
          While
          our redesigned consumer publication, Salon City magazine, has generated
          most of
          our revenues in 2008, other initiatives, including our new web shows, online
          entertainment and publication, will be unfolding later in 2008 and 2009.
          We
          believe our expanded media and product platform will add to our overall
          revenues.
 
 After
          six
          years as a trade publication, Salon City Star magazine was renamed, redesigned
          and relaunched on February 27, 2007. Our Hollywood-based magazine, Salon
          City,
          is now 100% consumer focused. Salon City is currently sold through thousands
          of
          national retailers like Hudson News, Barnes & Noble, Borders, Target, Kmart,
          Rite Aid and major grocery and drug chains throughout the USA and Canada,
          and in
          additional locations internationally in over 30 countries, including, but
          not
          limited to, Australia, Dubai, Germany, Hong Kong, Italy, Mexico, New Zealand,
          Singapore and the United Kingdom. Salon City features news from celebrities,
          everyday people and world beautymakers in music, art, literature and politics.
          Beauty entertainment and lifestyle news is the focus. Salon City, currently
          in
          its rollout stages, has an introductory circulation of approximately 75,000
          copies per issue and a frequency of eight times per year, resulting in
          a total
          annual circulation of 600,000.  Over the next five years the magazine
          is being strategically positioned to become a high sales volume publication
          with
          circulation in excess of 750,000 copies per issue. With anticipated funding
          in
          place, the company aims in 2009 to double revenues each year for the next
          five
          years.
 
 The
          magazine’s
          revenues will also be enhanced
          beginning in 2008 with a digital edition, which can be purchased on our
          internet
          site,www.saloncity.com.
          Additional media products are being
          planned to be soldon the
          site, including a professional-only publication and regularly produced
          webisodes
          ofSalonCity’s
          new TV program featuring original
          content.
 
 We
          are in the final stages of
          development before going live with the new website, web show and Salon
          City
          Network (consisting
          of
          Salon City produced video programs that will appear as part of our online
          entertainment) in the fourth quarter of 2007.  All of our online
          initiatives will be self-funded (magazine advertising revenue). In 2008,
          the
          company will invitesponsors
          and advertisers to participate
          in the branding of their products in exchange for contractual agreements
          that
          may generate revenue.
 
 Steve
          and Annie Casciola, our majority
          shareholders, officers and directors, have each been in the professional
          beauty industry over
          twenty
          five years. Steve Casciola was college trained in electrical
          engineering/business atArizonaStateUniversity.
          Steve Casciola opened two salons inSeattle’s
          Pike Street Market and
          U-District.In
          1981 through 1995, Steve Casciola
          later accepted corporate
          positionsandas
          Vice President of Marketing and Sales
          for top hair care companies.
 
 Annie
          Casciola was trained as a
          hairstylist at Vidal Sassoon inLondon.
          She was Vidal Sassoon’s
          first lady barber for men inNew York City,
          and later pursued her career
          on the West
          Coast.
 
 Cost
          of Goods Sold
 
 Cost
          of
          goods sold for the three months ended March 31, 2008 and 2007 were $77,643
          and
          $95,404. Gross margin percentages remained relatively the same for the
          three
          months ended March 31, 2008 compared to 2007. The reason for the decrease
          in
          cost of goods sold for the three months ended March 31, 2008 is due to
          management’s effectiveness at reducing printing and shipping costs and other
          general expenses.
 
 10
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  Expenses
 
 Operating
          expenses for the three months ended March 31, 2008 and 2007 were $59,350
          and
          $96,591, respectively. Professional fees were the primary reason for the
          decrease in the three month period in 2008 in that we issued $45,000 worth
          of
          our common shares for services rendered by a consultant during the three
          months
          ended March 31, 2007. The consultant provided advice to undertake for and
          consult with us concerning management, marketing, consulting, strategic
          planning, corporate organization and structure, financial matters in connection
          with the operation of our business, expansion of services, acquisitions
          and
          business opportunities, and review and advise us regarding its overall
          progress,
          needs and condition. We recorded compensation expense of $45,000 according
          to
          the closing stock prices on the dates of issuances. This approximated the
          fair
          value of services received. The 2008 services only had a charge of $11,191
          in
          comparison as 5,700,000 shares were issued to consultants for services
          rendered
          during the quarter but at much lower quoted stock prices.
 
 Management
          took appropriate cost-cutting actions which resulted in the first positive
          gross
          profit margin since launching the new consumer magazine. The company will
          continue to work on minimizing cost of goods sold and other expenses to
          improve
          efficiencies and gross profits. The steps taken proved successful and involved
          lowered printing, operational costs and marketing costs.  Printing costs
          were reduced 13% compared to the previous quarter. Lowered printing costs
          did
          not interfere with our ability to maintain domestic and international
          distribution, and in fact, have helped to increase it newsstand sales
          efficiencies by 20% and greater. Our elevation to OTCBB status will
          continue to cause a marked increase in professional fees and various expenses
          associated with the type of quarterly and annual reporting expected from
          an
          OTCBB company. Management expects certain OTCBB related costs will remain
          high
          in order to maintain its Bulletin Board trading status and as a fully-reporting,
          public company. We are planning a series of funding and capitalization
          steps
          to increase revenue, launch new initiatives and reduce costs anticipated
          with being a fully reporting OTCBB public company that is aggressively
          pursuing
          growth and expansion in the coming months.
  Liquidity
          and Capital
          Resources
 
 Net
          cash flows (used in) operating
          activities were $(46,956)
          and $(63,434)
          for thethree
          months endedMarch 31, 2008and
          2007,
          respectively. This was primarily
          attributable to net (losses), which were $(62,377)
          and $(95,941)
          for thethree
          months endedMarch 31, 2008and
          2007,
          respectively, offset by the non-cash
          charges for common shares issued for services rendered during thethreemonths
          endedMarch 31, 2008and
          2007in the amountsof
          $11,191 and $45,000m
          respectively,as
          discussed above.
 
 Net
          cash flows used in investing
          activities for thethree
          months endingMarch 31, 2008and
          2007were
          $-0-and
          $8,883,
          respectively. The cash flows used in
          investing activities for thethree
          months endedMarch 31, 2007wassolely
          used for the purchase
          of office
          related equipment in the
          amount of $8,833.
 
 Net
          cash flows provided by financing
          activities were $7,017and
          $72,365for
          thethree
          months endedMarch 31, 2008,
          and 2007,
          respectively. This was mainly
          attributable to $13,000in
          proceeds from the sale of common
          stockin 2007,
          $10,909in
          receipt of loans from an
          officerin 2007,
          and $17,384
          and $48,456in proceeds from
          bank loans for thethreemonths
          endedMarch 31, 2008 and
          2007,
          respectively.
  Overall,
          we have funded all
          ofour cash needs from
          inception throughMarch 31,
          2008with proceeds from
          issuances of commonstock
          and shareholder loans.
  OnMarch
          31, 2008, we had cash of
          $78,326on
          hand. We do not have or anticipate
          having within the next twelve months any cash flow or liquidity problems
          and we are not in
          default or in breach of any note, loan, lease or other indebtedness or
          financing
          arrangement requiring us to make payments.
 
 No
          significant amount of our trade
          payables has been unpaid within the stated trade term. We are not subject
          to any unsatisfied
          judgments, liens or settlement obligations.
  ITEM
          3. QUANTITATIVE
          AND QUALITATIVE DISCLOSURES
          ABOUT MARKET RISK
 
 The
          information to be reported under
          this item is not required of smaller reporting companies.
 
 ITEM
          4T. CONTROLS AND PROCEDURES.
  DISCLOSURE
                    CONTROLS
                    AND PROCEDURESThe
                    Company’s management, including its Principal Executive Officer and
                    Principal Financial Officer, has evaluated the design, operation,
                    and
                    effectiveness of the Company’s disclosure controls and procedures pursuant
                    to Rule 13a-15 under the Securities Exchange Act of 1934 (the
“Exchange
                    Act”). There are inherent limitations to the effectiveness of any
                    system
                    of disclosure controls and procedures, including the possibility
                    of human
                    error and the circumvention or overriding of the controls and
                    procedures.
                    Accordingly, even effective disclosure controls and procedures
                    can only
                    provide reasonable assurance of achieving their control objectives.
                    Based
                    upon the evaluation performed by the Company’s management, including its
                    Principal Executive Officer and Principal Financial Officer,
                    it was
                    determined that, as of the end of the period covered by this
                    quarterly
                    report, the Company’s disclosure controls and procedures were effective to
                    provide reasonable assurance that information required to be
                    disclosed in
                    the reports filed or submitted pursuant to the Exchange Act is
                    recorded,
                    processed, summarized, and reported within the time periods specified
                    in
                    the rules and forms of the SEC, and that such information is
                    accumulated
                    and communicated to the Company’s management, including its Principal
                    Executive Officer and Principal Financial Officer, or persons
                    performing
                    similar functions, as appropriate to allow timely decisions regarding
                    disclosures
  Changes
          in Internal Control
          Over Financial Reporting
 
 The
          Company's Principal Executive Officer and Principal Financial Officer have
          determined that, during the period covered by this quarterly report, there
          were
          no changes in the Company's internal control over financial reporting that
          materially affected, or are reasonably likely to materially affect, the
          Company’s internal control over financial reporting. They have also concluded
          that there were no significant changes in the Company’s internal controls after
          the date of the evaluation.
  PART
          II. OTHER INFORMATION
 
 ITEM
          1. LEGAL PROCEEDINGS
 
 We
          are
          not aware of any pending or threatened legal proceedings, in which we are
          involved. In addition, we are not aware of any pending or threatened legal
          proceedings in which entities affiliated with our officers, directors or
          beneficial owners are involved.
  ITEM
          1A. RISK FACTORS
  Information
          regarding risk factors appears in Part I, “Item 2. Management’s Discussion
          and Analysis of Financial Condition and Results of Operations” under the
          captions “General Description of Business” and “Cautionary Note Regarding
          Forward-Looking Statements” contained in this Quarterly Report on Form 10-Q and
          in “Item 1A. RISK FACTORS” of our 2007 Annual Report on Form 10-KSB. There
          have been no material changes from the risk factors previously disclosed
          in our
          2007 Annual Report on Form 10-KSB.
 
 ITEM
          2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  None.
 
 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 AND REPORTS ON FORM 8-K
 
 (1)
                Exhibits:
                    Exhibits required to be attached
                    by Item 601 of Regulation S-B are listed in the Index to Exhibits
                    beginning on page 10 of this Form 10-Q, which is incorporated
                    herein by
                    reference.
 
 Reports
          on Form 8-K
          filed
 
 (1)
                None.
 
 11
 Table
              of Contents
  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,
          there
          unto duly authorized.
 SALON
                    CITY, INC.Date:
                    May 13, 2008
                By:
                /s/
                  Steven CasciolaSteven
                    Casciola
                  President,
                    CEO, CFO
  Table
              of Contents
 
 INDEX
          TO EXHIBITS
  Exhibit
                    No.31.1
                
                Certification
                    of Chief Executive Officer/Chief Financial
                    Officer32.1
                
                Statement
                    required by 18 U.S.C. Section 1350, as adopted
                    pursuant to section 906 of the Sarbanes-Oxley Act of
                    2002.