**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-QSB**





(Mark
      One)





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





**For
      the quarterly period ended October 31, 2007**





o
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
                ACT





For
      the
      transition period from ________ to ___________.





Commission
      file number: **0-9483**





**SPARTA
      COMMERCIAL SERVICES, INC.**


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





**NEVADA**
            **30-0298178**(State
                or other jurisdiction of incorporation or organization)
            (IRS
                Employer Identification No.)





**462
      Seventh Ave, 20th Floor, New York, NY 10018**


(Address
      of principal executive offices)





**(212)
      239-2666**


(Issuer's
      telephone number)





Check
      whether the issuer (1) has 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 o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act) Yes o No **x**





As
      of
      December 14, 2007, we had 127,116,157 shares of common stock issued and
      outstanding.





Transitional
      Small Business Disclosure Format (check one): Yes o No **x**




1




**SPARTA
      COMMERCIAL SERVICES, INC.**





**FORM
      10-QSB**


**FOR
      THE QUARTER ENDED OCTOBER 31, 2007**





**TABLE
      OF CONTENTS**





**Page****PART
                I.**
            **FINANCIAL
                INFORMATION**Item
                1.
            Financial
                Statements (Unaudited)
            3Condensed
                Consolidated Balance Sheets as of October 31, 2007 and April 30,
                2007
            3Condensed
                Consolidated Statements of Operations for the
              Three
                and Six Months Ended October 31, 2007 and 2006
            4Condensed
                Consolidated Statements of Cash Flows for the
              Six
                Months Ended October 31, 2007 and 2006
            5Notes
                to Unaudited Condensed Consolidated Financial Statements
            6Item
                2.
            Management's
                Discussion and Analysis and Plan of Operation
            14Item
                3.
            Controls
                and Procedures
            21PART
                II.
            OTHER
                INFORMATIONItem
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            22Item
                6.
            Exhibits
            23Signatures
            
            24




2


**PART
      I. FINANCIAL INFORMATION**





**ITEM
      1.**  **FINANCIAL
      STATEMENTS**





**SPARTA
      COMMERCIAL SERVICES, INC.**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**





**October
                31,**
            
            **April
                30,****2007**
            
            **2007****(unaudited)****ASSETS**Cash
                and cash equivalents
            
            $
            13,538
            
            $
            22,032RISC
                loan receivables, net of reserve of  $100,638 and $59,338
                respectively (NOTE D)
            
            
            3,559,992
            
            
            2,492,819Motorcycles
                  and other vehicles under operating leases net
                  of accumulated depreciation of $296,661and $ 221,800 respectively,
                  and loss reserve of $37,266 and $ 26,059 respectively
                  (NOTE B)
            
            
            1,334,544
            
            
            1,088,686Interest
                receivable
            
            
            50,220
            
            
            25,832Accounts
                receivable
            
            
            54,280Prepaid
                expenses and other assets
            
            
            
            
            
            27,137Inventory
                (NOTE C)
            
            
            33,838
            
            
            20,784Property
                and equipment, net of accumulated depreciation and amortization of
                $117,073and $ 97,047 respectively (NOTE E)
            
            
            74,174
            
            
            94,200Restricted
                cash
            
            
            383,360
            
            
            284,943Deposits
            
            
            50,692
            
            
            50,692**Total
                assets**
            
            $
            5,554,638
            
            $
            4,107,125**LIABILITIES
                AND DEFICIENCY IN STOCKHOLDERS' EQUITY****Liabilities:**Accounts
                payable and accrued expenses
            
            $
            1,117,941
            
            $
            1,219,067Accrued
                equity based compensation (NOTE G)
            
            
            -
            
            
            40,310Accrued
                equity based penalties
            
            
            2,206
            
            
            2,380Notes
                payable-Senior Lender (NOTE F)
            
            
            4,541,846
            
            
            2,985,207Notes
                payable-Other (NOTE I)
            
            
            2,650,759
            
            
            1,140,259Loans
                payable-related parties (NOTE J)
            
            
            222,260
            
            
            202,260Deferred
                revenue
            
            
            34,691
            
            
            46,765**Total
                liabilities**
            
            
            8,569,703
            
            
            5,636,248**Deficiency
                in Stockholders' Equity:**Preferred
                        stock, $.001 par value; 10,000,000 shares authorized of which
                        35,850
                        shares have been designated as Series A convertible preferred
                        stock, with
                        a stated value of $100 per share, 3,050 and 19,795 shares
                        issued and
                        outstanding respectively
            
            
            305,000
            
            
            1,979,500Common
                  stock, $.001 par value; 340,000,000 shares authorized, 127,106,157and
                  123,216,157 shares issued and outstanding
                  respectively
            
            
            127,106
            
            
            123,216Common
                stock to be issued, 10,734,000 and 0 respectively
            
            
            10,734
            
            
            -Additional
                paid-in-capital
            
            
            17,026,026
            
            
            14,595,827Deferred
                compensation
            
            
            -
            
            
            (24,000
            )Accumulated
                deficit
            
            
            (20,483,931
            )
            
            (18,203,666
            )**Total
                deficiency in stockholders' equity**
            
            
            (3,015,065
            )
            
            (1,529,123
            )**Total
                liabilities and deficiency in stockholders'
                equity**
            
            $
            5,554,638
            
            $
            4,107,125





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




3


**SPARTA
      COMMERCIAL SERVICES, INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**FOR
      THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2007 AND 2006**


**(UNAUDITED)**





**Three
                Months Ended**
              **October
                31,**
            
            **Six
                Months Ended**
              **October
                31,****2007**
            
            **2006**
            
            **2007**
            
            **2006****Revenue**
            
            $
            297,303
            
            $
            219,555
            
            $
            581,300
            
            $
            411,197**Operating
                expenses:**General
                and administrative
            
            
            1,206,382
            
            
            1,324,556
            
            
            2,303,086
            
            
            2,491,337Depreciation
                and amortization
            
            
            71,429
            
            
            82,313
            
            
            150,825
            
            
            156,610**Total
                operating expenses**
            
            
            1,277,811
            
            
            1,406,869
            
            
            2,453,911
            
            
            2,647,947**Loss
                from operations**
            
            
            (980,508
            )
            
            (1,187,314
            )
            
            (1,872,611
            )
            
            (2,236,750
            )**Other
                expenses:**Interest
                expense and financing cost, net
            
            
            (214,719
            )
            
            (102,381
            )
            
            (385,115
            )
            
            (120,268
            )Change
                in value of warrant liabilities
            
            
            174
            
            
            (333,470
            )
            
            174
            
            
            299,474**Net
                Loss**
            
            
            (1,195,053
            )
            
            (1,623,165
            )
            
            (2,257,552
            )
            
            (2,057,544
            )**Preferred
                dividend payable**
            
            
            18,100
            
            
            29,936
            
            
            22,713
            
            
            59,873**Net
                loss attributed to common stockholders**
            
            $
            (1,213,153
            )
            $
            (1,653,101
            )
            $
            (2,280,265
            )
            $
            (2,117,417
            )**Basic
                and diluted loss per share**
            
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.02
            )
            $
            (0.02
            )**Basic
                  and diluted loss per share attributed tocommon
                  stockholders**
            
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.02
            )
            $
            (0.02
            )**Weighted
                average shares outstanding**
            
            
            124,797,340
            
            
            121,947,292
            
            
            124,385,994
            
            
            121,350,018





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




4


**SPARTA
      COMMERCIAL SERVICES, INC.**


**CONDENCED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**FOR
      THE SIX MONTHS ENDED OCTOBER 31, 2007 AND 2006**


**(UNAUDITED)**





**Six
                Months Ended**
              **October
                31,****2007**
            
            **2006****CASH
                FLOWS FROM OPERATING ACTIVITIES**Net
                Loss
            
            $
            (2,280,265
            )
            $
            (2,057,544
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
                and Amortization
            
            
            150,826
            
            
            156,610Allowance
                for loss reserves
            
            
            52,507
            
            
            98,342Amortization
                of deferred revenue
            
            
            (7,700
            )
            
            (6,600
            )Amortization
                of deferred compensation
            
            
            24,000
            
            
            223,500Equity
                based compensation
            
            
            273,151
            
            
            302,950Stock
                based finance cost
            
            
            273,008
            
            
            48,500Forgiveness
                of dividend payable
            
            
            224,164
            
            
            -Change
                in fair value of penalty warrant and warrant liability
            
            
            (174
            )
            
            (267,855
            )Changes
                in operating assets and liabilities:(Increase)
                decrease in:Lease
                payments receivable
            
            
            -
            
            
            (2,034,714
            )Other
                receivable
            
            
            (78,667
            )
            
            (23,250
            )Prepaid
                expenses and other assets
            
            
            27,137
            
            
            32,215Loan
                proceeds receivable
            
            
            -
            
            
            368,937Other
                current assets
            
            
            -
            
            
            (4,150
            )Inventory
            
            
            -
            
            
            -Restricted
                cash
            
            
            (98,417
            )
            
            (121,325
            )Deposits
            
            
            
            
            
            (1,850
            )Increase
                (decrease) in:Accounts
                payable and accrued expenses
            
            
            (141,436
            )
            
            555,063Deferred
                revenue
            
            
            (4,374
            )
            
            612,014Non-current
                liabilities
            
            
            -
            
            
            -Accrued
                registration penalty
            
            
            -
            
            
            -Net
                cash used in operating activities
            
            
            (1,586,240
            )
            
            (2,119,157
            )**CASH
                FLOWS FROM INVESTING ACTIVITIES:**Payments
                for motorcycles and other vehicles
            
            
            (387,865
            )
            
            (767,640
            )Purchase
                of RISC contracts
            
            
            (1,121,527
            )
            
            -Purchase
                of property plant and equipment
            
            
            -
            
            
            (14,734
            )Net
                cash used in investing activities
            
            
            (1,509,392
            )
            
            (782,374
            )**CASH
                FLOWS FROM FINANCING ACTIVITIES**Proceeds
                from notes from senior lender
            
            
            2,571,812
            
            
            1,802,989Payments
                on notes from senior lender
            
            
            (1,015,173
            )
            
            (229,582
            )Proceeds
                from convertible notes
            
            
            1,175,500
            
            
            -Proceeds
                from other notes
            
            
            335,000
            
            
            275,000Loan
                proceeds from other related parties
            
            
            20,000
            
            
            83,260Exercise
                of warrants
            
            
            -
            
            
            125,000Net
                cash provided by financing activities
            
            
            3,087,139
            
            
            2,056,667**Net
                Increase (decrease) in cash**
            
            $
            (8,493
            )
            $
            (844,864
            )**Unrestricted
                cash and cash equivalents, beginning of period**
            
            $
            22,032
            
            $
            856,382**Unrestricted
                cash and cash equivalents , end of period**
            
            $
            13,538
            
            $
            11,518**Cash
                paid for:**Interest
            
            $
            207,406
            
            $
            72,513Income
                taxes
            
            $
            6,415
            
            $
            -Non-cash
                items for the six months ended October 31, 2007 consisted of the
                conversion of 16,745 Preferred Shares into 10,733,974 shares of Common
                Stock





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


5


**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**OCTOBER
      31, 2007**


**(UNAUDITED)**




**NOTE
      A - SUMMARY OF ACCOUNTING POLICIES**





A
      summary
      of the significant accounting policies applied in the preparation of the
      accompanying financial statements follows.





**Basis
      of Presentation**





The
      accompanying unaudited condensed consolidated financial statements as of October
      31, 2007 and for the three and six month periods ended October 31, 2007 and
      2006
      have been prepared by the Company pursuant to the rules and regulations of
      the
      Securities and Exchange Commission, including Form 10-QSB and Regulation S-B.
      The information furnished herein reflects all adjustments (consisting of normal
      recurring accruals and adjustments), which are, in the opinion of management,
      necessary to fairly present the operating results for the respective periods.
      Certain information and footnote disclosures normally present in annual
      financial statements prepared in accordance with accounting principles generally
      accepted in the United States of America have been omitted pursuant to such
      rules and regulations. The Company believes that the disclosures provided are
      adequate to make the information presented not misleading. These financial
      statements should be read in conjunction with the audited financial statements
      and explanatory notes for the year ended April 30, 2007 as disclosed in the
      Company's 10-KSB for that year as filed with the SEC.





During
      the current quarter, the Company elected to change the presentation of its
      balance sheets to more properly present its assets and liabilities in a manner
      similar to that of other public finance companies. This change only removed
      the
      classification of assets as current or long term and now reflects all assets
      as
      assets. No changes were made to the liability or equity sections of the balance
      sheet.





The
      results of the six months ended October 31, 2007 are not necessarily indicative
      of the results to be expected for the full year ending April 30,
      2008.





The
      unaudited condensed consolidated financial statements include the accounts
      of
      the Company and its wholly owned subsidiary, Sparta Commercial Services, LLC.
      Sparta Commercial Services, LLC was inactive during the periods presented and
      was dissolved in February 2007. All significant intercompany transactions and
      balances have been eliminated in the consolidated financial statements.





**Estimates**





The
      preparation of the financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect certain reported amounts and disclosures. Accordingly, actual results
      could differ from those estimates.





**Revenue
      Recognition**





The
      Company originates leases on new and used motorcycles and other powersports
      vehicles from motorcycle dealers throughout the United States. The Company’s
      leases are accounted for as either operating leases or direct financing leases.
      At the inception of operating leases, no lease revenue is recognized and the
      leased motorcycles, together with the initial direct costs of originating the
      lease, which are capitalized, appear on the balance sheet as “motorcycles under
      operating leases-net”. The capitalized cost of each motorcycle is depreciated
      over the lease term, on a straight-line basis, down to the Company’s original
      estimate of the projected value of the motorcycle at the end of the scheduled
      lease term (the “Residual”). Monthly lease payments are recognized as rental
      income. Direct financing leases are recorded at the gross amount of the lease
      receivable (principal amount of the contract plus the calculated earned income
      over the life of the contract), and the unearned income at lease inception
      is
      amortized over the lease term.




6


**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**OCTOBER
      31, 2007**


**(UNAUDITED)**




**NOTE
      A - SUMMARY OF ACCOUNTING POLICIES (continued)**





The
      Company purchases Retail Installment Sales Contracts (“RISC”) from motorcycle
      dealers. The RISCs are secured by liens on the titles to the vehicles. The
      RISCs
      are accounted for as loans. Upon purchase, the RISCs appear on the Company’s
      balance sheet as RISC loan receivable current and long term. Interest income
      on
      these loans is recognized when it is earned.





The
      Company realizes gains and losses as the result of the termination of leases,
      both at and prior to their scheduled termination, and the disposition of the
      related motorcycle. The disposal of motorcycles, which reach scheduled
      termination of a lease, results in a gain or loss equal to the difference
      between proceeds received from the disposition of the motorcycle and its net
      book value. Net book value represents the residual value at scheduled lease
      termination. Lease terminations that occur prior to scheduled maturity as a
      result of the lessee’s voluntary request to purchase the vehicle have resulted
      in net gains, equal to the excess of the price received over the motorcycle’s
      net book value.





Early
      lease terminations also occur because of (i) a default by the lessee, (ii)
      the
      physical loss of the motorcycle, or (iii) the exercise of the lessee’s early
      termination. In those instances, the Company receives the proceeds from either
      the resale or release of the repossessed motorcycle, or the payment by the
      lessee’s insurer. The Company records a gain or loss for the difference between
      the proceeds received and the net book value of the motorcycle.





The
      Company charges fees to manufacturers and other customers related to creating
      a
      private label version of the Company’s financing program including web access,
      processing credit applications, consumer contracts and other related documents
      and processes. Fees received are amortized and booked as income over the length
      of the contract. The Company evaluates its operating and retail installment
      sales leases on an ongoing basis and has established reserves for losses, based
      on current and expected future experience.





**Stock
      Based Compensation**





The
      Company adopted SFAS No. 123(R) during third quarter of Fiscal year 2006, which
      no longer permits the use of the intrinsic value method under APB No. 25. The
      Company uses the modified prospective method to adopt SFAS No. 123(R), which
      requires compensation expense to be recorded for all stock-based compensation
      granted on or after January 1, 2006, as well the unvested portion of previously
      granted options. The Company is recording the compensation expense on a
      straight-line basis, generally over the explicit service period of three to
      five
      years. The Company made no stock-based compensation grants prior to the adoption
      of Statement 123(R) and therefore has no unrecognized stock compensation related
      liabilities or expense unvested or vested prior to 2006.





We
      have
      selected the Black-Scholes method of valuation for share-based compensation
      and
      have adopted the modified prospective transition method under SFAS 123R, which
      requires that compensation cost be recorded, as earned, for all unvested stock
      options outstanding at the beginning of the third quarter of adoption of SFAS
      123R. As permitted by SFAS 123R, prior periods have not been restated. The
      charge is being recognized in non cash compensation, which is included in
      stock-based compensation expense, on a straight-line basis over the remaining
      service period after the adoption date based on the options’ original estimate
      of fair value. Prior to the adoption of SFAS 123R, the Company applied the
      intrinsic-value-based method of accounting prescribed by Accounting Principles
      Board Opinion No. 25 (“APB 25”), “Accounting for Stock Issued to Employees.”
Under this method, compensation cost was recorded only if the market price
      of
      the underlying stock on the grant date exceeded the exercise price. As permitted
      by SFAS 123, the Company elected the disclosure only requirements of SFAS 123.
      The fair-value based method used to determine historical pro forma amounts
      under
      SFAS 123 was similar in most respects to the method used to determine
      stock-based compensation expense under SFAS 123R.




7


**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**OCTOBER
      31, 2007**


**(UNAUDITED)**




**NOTE
      A - SUMMARY OF ACCOUNTING POLICIES (continued)**





The
      following tables illustrates the effect that adoption of SFAS No. 123(R) had
      on
      the Company's year ended October 31, 2007 results and cash flows as well as
      the
      parameters used in the valuation of options granted in the first six months
      ended October 31, 2007.




Under
                Pre-SFAS
                No.123 (R)
                  Accounting
              
              SFAS No.
                123(R) Impact
              
              Actual
                Year Ended
                October 31, 2007Earnings
                  before taxes
              
              $
              (2,142,487
              )
              $
              (137,778
              )
              $
              (2,280,265
              )Net
                  Earnings
              
              
              (2,142,487
              )
              $
              (137,778
              )
              $
              (2,280,265
              )**Net
                  Earnings**Basic
                  EPS
              
              $
              (0.02
              )
              $
              -
              
              $
              (0.02
              )Diluted
                  EPS
              
              
              (0.02
              )
              
              -
              
              
              (0.02
              )**Cash
                  Flows**Operating
                  Activities
              
              $
              (1,586,231
              )
              $
              -
              
              $
              (1,586,231
              )Financing
                  Activities
              
              $
              3,087,139
              
              
              -
              
              
              3,087,139




Prior
      to
      the adoption of FASB No. 123R, during the third quarter of Fiscal 2006, the
      Company recorded employee stock based compensation pursuant to APB No.
      25.




**Net
      Loss Per Share**





The
      Company uses Statement of Financial Accounting Standards (SFAS) No. 128,
      "Earnings Per Share" for calculating the basic and diluted loss per share.
      The
      Company computes basic loss per share by dividing net loss and net loss
      attributable to common shareholders by the weighted average number of common
      shares outstanding. Diluted loss per share is computed similar to basic loss
      per
      share except that the denominator is increased to include the number of
      additional common shares that would have been outstanding if the potential
      shares had been issued and if the additional shares were dilutive. Common
      equivalent shares are excluded from the computation of net loss per share if
      their effect is anti-dilutive.





Per
      share
      basic and diluted net loss attributable to common stockholders amounted to
      $0.01
      and $0.01 for the three months ended October 31, 2007 and 2006, respectively,
      and $0.02 and $0.02 for the six months ended October 31, 2007 and 2006,
      respectively. At October 31, 2007 and 2006, 64,704,486 and 30,928,051 potential
      shares, respectively, were excluded from the shares used to calculate diluted
      earnings per share as their inclusion would reduce net loss per
      share.





**New
      Accounting Pronouncements**





In
      December 2007, the FASB issued SFAS No. 141 (revised 2007), Business
      Combinations, which replaces FASB Statement No. 141. SFAS No. 141R establishes
      principles and requirements for how an acquirer recognizes and measures in
      its
      financial statements the identifiable assets acquired, the liabilities assumed,
      any non controlling interest in the acquiree and the goodwill acquired. The
      Statement also establishes disclosure requirements which will enable users
      to
      evaluate the nature and financial effects of the business combination. SFAS
      No.
      141R is effective as of the beginning of an entity’s fiscal year that begins
      after December 15, 2008 (our Fiscal 2010). We have not completed our evaluation
      of the potential impact, if any, of the adoption of SFAS No. 141R on our
      consolidated financial position, results of operations and cash
      flows.


8




**SPARTA
        COMMERCIAL SERVICES, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **OCTOBER
        31, 2007**
 **(UNAUDITED)**
  **NOTE
        A - SUMMARY OF ACCOUNTING POLICIES (continued)**





In
      December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
      Consolidated Financial Statements – an amendment
      of
      Accounting Research Bulletin No. 51, which establishes accounting and reporting
      standards for ownership interests in subsidiaries held by parties other than
      the
      parent, the amount of consolidated net income attributable to the parent and
      to
      the noncontrolling interest, changes in a parent’s ownership interest and the
      valuation of retained noncontrolling equity investments when a subsidiary is
      deconsolidated. The Statement also establishes reporting requirements that
      provide sufficient disclosures that clearly identify and distinguish between
      the
      interests of the parent and the interests of the noncontrolling owners. SFAS
      No.160 is effective as of the beginning of an entity’s fiscal year that begins
      after December 15, 2008 (our Fiscal 2010). We have not completed our evaluation
      of the potential impact, if any, of the adoption of SFAS No. 160 on our
      consolidated financial position, results of operations and cash
      flows.





**Reclassification**





Certain
      reclassifications have been made to conform prior periods' data with the current
      presentation. These reclassifications had no effect on reported
      losses.




**NOTE
      B - MOTORCYCLES AND OTHER VEHICLES UNDER OPERATING LEASES**





Motorcycles
      and other vehicles under operating leases at October 31, 2007 and April 30,
      2007
      consist of the following:





October
                31,
            
            April
                30,2007
            
            2007Motorcycles
                and other vehicles
            
            $
            1,668,472
            
            $
            1,336,545*Less:*accumulated depreciation
            
            
            (296,661
            )
            
            (221,800
            )Motorcycles
                and other vehicles,net
                of accumulated depreciation
            
            
            1,371,811
            
            
            1,114,745*Less:*estimated reserve for residual values
            
            
            (37,266
            )
            
            (26,059
            )Motorcycles
                and other vehicles underoperating
                leases, net
            
            $
            1,334,545
            
            $
            1,088,686




Depreciation
      expense for vehicles for the three and six months ended October 31, 2007 was
      $62,464 and $130,800, respectively. Depreciation expense for property and
      equipment for the three and six months ended October 31, 2007 was $ 8,966 and
      $20,026, respectively. Depreciation expense for vehicles for the three and
      six
      months ended October 31, 2006 was $71,474 and $135,022, respectively.
      Depreciation expense for property and equipment for the three and six months
      ended October 31, 2006 was $8,075 and $16,058, respectively.




**NOTE
      C**–**INVENTORY**





Inventory
      is comprised of repossessed vehicles and vehicles which have been returned
      at
      the end of their lease. Inventory is carried at the lower of depreciated cost
      or
      market, applied on a specific identification basis. During the period ended
      October 31, 2007, the Company repossessed Vehicles of value $33,838, which
      will
      be resold.




9


**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**OCTOBER
      31, 2007**


**(UNAUDITED)**




**NOTE
      D**–**RETAIL (RISC) LOAN RECEIVABLES**





RISC
      loan
      receivables, which are carried at cost, were $3,659,578 and $2,552,157 at
      October 31, 2007 and April 30, 2007, respectively. The following is a schedule
      by years of future principal payments related to these receivables. Certain
      of
      the assets are pledged as collateral for the note described in Note F. Included
      in RISC Loan Receivables, net are $1,053 of net deficiency
      receivables.





Year
                ending October 31,2008
            
            $
            881,1062009
            
            
            872,2392010
            
            
            847,9012011
            
            
            741,1982012
            
            
            317,134$
            3,659,578Less:
                allowance for doubtful receivables
            
            
            (100,638
            )3,558,940





As
      of
      April 30, 2007 loan receivables net of allowance was $2,492,819.




**NOTE
      E**–**PROPERTY AND EQUIPMENT**





Major
      classes of property and equipment at October 31, 2007 and April 30, 2007 consist
      of the followings:




**October 31,**
                **2007**
              
              **April
                  30,**
                **2007**Computer
                  equipment, software and furniture
              
              $
              191,247
              
              $
              191,247Less:
                  accumulated depreciation and amortization
              
              
              (117,073
              )
              
              (97,047
              )Net
                  property and equipment
              
              $
              74,174
              
              $
              94,200




Depreciation
      and amortization expense was $11,060 and $20,026 for the three months and six
      months ended October 31, 2007respecticely and $43,798 for the year ended April
      30, 2007. Depreciation and amortization expense for the three and six months
      ended October 31, 2006 were $10,999 and $21,589 respectively.





**NOTE
      F - NOTES PAYABLE TO SENIOR LENDER**





The
      Company finances certain of its leases through a third party. The repayment
      terms are generally one year to five years and the notes are secured by the
      underlying assets. The weighted average interest rate at October 31, 2007 is
      10.22%.





At
      October 31, 2007, the notes payable mature as follows: ****





12
                Months EndedOctober
                31,
            
            Amount2008
            
            $
            1,068,1832009
            
            
            1,137,1642010
            
            
            935,0842011
            
            
            916,5742012
            
            
            484,841$
            4,541,846





During
      the six month period ended October 31, 2007, the Company repaid $1,015,173
      of
      the loans in cash.


10


**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**OCTOBER
      31, 2007**


**(UNAUDITED)**





**NOTE
      G**–**EQUITY TRANSACTIONS**





The
      Company is authorized to issue 10,000,000 shares of preferred stock with $0.001
      par value per share and $100 stated value per share, of which 35,850 shares
      have
      been designated as Series A convertible preferred stock, and 340,000,000 shares
      of common stock with $0.001 par value per share. As of October 31,
      200 7 and
      April 30, 200 7, the
      Company has
      issued and outstanding 3,050 and 19,795 shares of preferred stock issued and
      outstanding respectively. ****  The
      Company has
      127,106,157 and 123,216,157 shares of common stock issued and outstanding as
      of October
      31, 200 7
      and
      April 30, 200 7,
      respectively.





Preferred
      Stock Series A





During
      the three months ended July 31, 2005, the Company issued 17,750 preferred shares
      at a stated value of $100 per share and warrants to purchase 5,689,108 shares
      of
      common stock, exercisable for three years at $0.195 per share, for aggregate
      gross proceeds of $1,775,000 received from investors. In connection with the
      private placement, during the three months ended July 31, 2005, the Company
      issued as compensation to the placement agent warrants to purchase 1,137,822
      shares of common stock, exercisable for five years at $0.172 per share. The
      warrants, which were valued at $406,665 using the Black-Scholes option pricing
      model, were recognized as an expense during the quarter.





In
      accordance with EITF 00-27, a portion of the proceeds were allocated to the
      class ‘C’ warrants based on their relative fair value, which totaled $931,800
      using the Black Scholes option pricing model. Further, we attributed a
      beneficial conversion feature of $843,200 to the series ‘A’ preferred shares
      based upon the difference between the conversion price of those shares and
      the
      closing price of our common shares on the date of issuance. The assumptions
      used
      in the Black Scholes model are as follows: (1) dividend yield of 0%; (2)
      expected volatility of 188%, (3) weighted average risk-free interest rate of
      3.65%, and (4) expected life of 2 years as the conversion feature and warrants
      are immediately exercisable. Both the fair value of the class ‘C’ warrants and
      the beneficial conversion feature were recorded as a dividend and are included
      in the accompanying financial statements.





On
      July
      20, 2007, one shareholder holding 16,745 shares of preferred stock converted
      those shares into 10,733,974 shares of common stock and forgave $224,163 in
      accumulated but unpaid dividends on the preferred shares. The 10,733,974 shares
      of common stock issuable upon conversion of the preferred shares had not been
      physically issued as of October 31, 2007. These unissued shares are not included
      in the outstanding shares. The forgiven dividends were recognized as additional
      paid-in capital in the quarter ended July 31, 2007.





Common
      Stock





In
      August
      2007, the Company amended an April, 2007 agreement with a consultant and entered
      into a new three month consulting agreement with the consultant which agreement
      calls for cash payments by the Company of $3,000, which has been paid, and
      1,100,000 shares od unregistered common stock (which was issued in May 2007
      in
      conjunction with the April 2007 agreement) based upon the consultants
      performance under the agreement.





During
      the six months ended October 31, 2007, the Company granted options to purchase
      an aggregate of 1,170,000 shares of common stock to thirteen employees. However,
      four employees left during the three months ended July 31, 2007. The vested
      and
      unvested options have been valued at $71,651 using the Black-Scholes option
      pricing model with the following assumptions: (1) dividend yield of 0%; (2)
      expected volatility of 143%; (3) risk-free interest rate of 4.76%, vest over
      a
      48 month period and expire if unexercised in ten years


11


**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**OCTOBER
      31, 2007**


**(UNAUDITED)**





**NOTE
      G**–**EQUITY TRANSACTIONS (continued)**




In
      September and October 2006, in transactions deemed to be exempt from
      registration under the Securities Act in reliance on Section 4(2) of the
      Securities Act, the Company sold to four accredited investors bridge notes
      in
      the aggregate amount of $275,000. Three 45-day bridge notes aggregating $175,000
      and one 90-day $100,000 note were originally scheduled to expire on various
      dates through November 30, 2006, together with simple interest at the rate
      of
      10%. The notes provide that 100,000 shares of the Company's unregistered common
      stock are to be issued for each $100,000 of notes purchased, or any pro rated
      portion thereof. The Company had the right to extend the maturity date of notes
      for 30 to 45 days, and, in the event of extension, the lender would be entitled
      to an additional equity equal to 60% of the equity kicker shares. The maturity
      dates of the notes were subsequently extended to various dates between December
      5, 2006 to December 30, 2006, with simple interest rate of 10%, and additional
      equity of in the aggregate amount of 165,000 unregistered shares of common
      stock
      to be issued. In the event of default on repayment, for each uncured month,
      as
      penalty, the equity kicker and the additional equity to be issued to the lenders
      are to be increased by 50%, on a pro rata basis, and during default period,
      interest is to be at the rate of 20%. The repayment, in the event of default,
      of
      the notes is to be collateralized by certain security interest as per the terms
      of the agreement. As of October 31, 2007, the notes remain unpaid. In October
      2007, a total of 2,690,000 restricted shares of common stock were issued as
      equity kicker on the original note, as additional equity kicker shares for
      the
      extension, and as additional shares during the unpaid period.





On
      September 19, 2007, the Company sold to one accredited investor **** for
      the
      purchase price of $150,000 securities consisting of a $150,000 convertible
      debenture due December 19, 2007, 100,000 shares of unregistered common stock,
      and 400,000 common stock purchase warrants. The debentures bear interest at
      the
      rate of 12% per year compounded monthly and are convertible into shares of
      the
      Company's common stock at $0.0504 per share. The warrants may be exercised
      on a
      cashless basis and are exercisable until September 19, 2007 at $0.05 per share.
      In the event the debentures are not timely repaid, the Company is to issue
      100,000 shares of unregistered common stock for each thirty day period the
      debentures remain outstanding. The note was subsequently extended to January
      18,
      2008.





In
      July
      2007, the Company entered into a three month consulting agreement with a
      consulting firm pursuant to which the Company issued five year warrants to
      purchase 1,000,000 shares of unregistered common stock at $0.05 per share.
      The
      Company is to issue additional five year warrants to purchase 1,000,000 shares
      of unregistered common stock at $0.10 and $0.15 per share respectively on each
      of the four and eight month anniversary dates of the agreement.





In
      October 2007, the Company entered into a consulting agreement for financial
      advisory services with an individual pursuant to which the Company issued five
      year warrants to purchase 375,000 shares of unregistered common stock at $0.05
      per share.





.During
      the six months ended October 31, 2007 and October 31, 2006, the Company expensed
      $273,151 and $309,409, respectively, in non-cash charges related to stock and
      option compensation expense.




**NOTE
      H - SUBSEQUENT EVENTS**





In
      November 2007, the Company borrowed $20,000 from a Director on a no interest
      demand basis.





In
      November 2007, the Company issued 10,000 shares of unregistered common stock
      as
      an inducement for a 10%, $20,000 short term loan due December 3, 2007,
      subsequently extended to December 31, 2007.





In
      November 2007, the Company agreed to issue 12,500 shares of unregistered common
      stock as an inducement for a 10%, $25,000 short term loan due December 10,
      2007,
      subsequently extended to December 31, 2007.





In
      November 2007, the Company borrowed $100,000 from one individual on a demand
      basis.


12





**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**OCTOBER
      31, 2007**


**(UNAUDITED)**





**NOTE
      H - SUBSEQUENT EVENTS (continued)**





In
      December 2007, the Company sold to an accredited investor a $25,000 six month
      unsecured note...
      The note bears 6% simple interest, payable in cash or shares, at the Company’s
      option, with principal and accrued interest payable at maturity. Should the
      Company opt to convert the note at maturity, the notes will be convertible
      into
      shares of common stock at a price of $0.03.





In
      December 2007, the Company agreed to issue 133,333 shares of unregistered common
      stock to an individual as an inducement for a $200,000, 10%, short term loan
      due
      January 31, 2008. Interest is payable in cash or shares, at the Company’s
      option, with principal and interest payable at maturity.





**NOTE
      I**–**NOTES PAYABLE-OTHER**





Notes
                Payable-Other
            
            October 31, 2007
            
            April 30, 20076%
                Bridge Loan, due October 19, 2007 (extended to January 31,
                2008).
            
            $
            50,000
            
            $
            50,000Non-interest
                Demand Loan
            
            
            225,000
            
            
            40,00010%
                Bridge Notes, due September 21, 2007 (extended to December 31, 2007).
            
            
            275,000
            
            
            275,00012%
                Convertible Notes, due December 19, 2007 (extended to  January 18,
                2008).
            
            
            150,000
            
            
            -6%
                Convertible Notes, various due dates from August 24, 2007(extended
                to December 31, 2007) to February 23, 2008
            
            
            1,950,759
            
            
            775,259Total
            
            $
            2,650,759
            
            $
            1,140,259






**NOTE
      J - LOANS PAYABLE TO RELATED PARTIES**





In
      June
      2007, the Company borrowed $20,000 from a Director on a demand basis without
      interest. As of October 31, 2007, aggregated loans payable to officers and
      Directors were $222,260.





**NOTE
      K - GOING CONCERN MATTERS**





The
      accompanying financial statements have been prepared on a going concern basis,
      which contemplates the realization of assets and the satisfaction of liabilities
      in the normal course of business. As shown in the accompanying financial
      statements during the period October 1, 2001 (date of inception) through October
      31, 2007, the Company incurred losses of $20,483,931. Of these losses,
      $2,257,552 was incurred during the six months ending October 31, 2007 and
      $2,057,544 in the six months ending October 31, 2006. As of October 31, 2007,
      the Company also had a deficit net worth of $3,015,065. These factors among
      others may indicate that the Company will be unable to continue as a going
      concern for a reasonable period of time.





The
      Company's existence is dependent upon management's ability to develop profitable
      operations. Management is devoting substantially all of its efforts to
      developing its business and raising capital and there can be no assurance that
      the Company's efforts will be successful. While, the planned principal
      operations have commenced, no assurance can be given that management's actions
      will result in profitable operations or the resolution of its liquidity
      problems. The accompanying statements do not include any adjustments that might
      result should the Company be unable to continue as a going concern.





In
      order
      to improve the Company's liquidity, the Company's management is actively pursing
      additional equity financing through discussions with investment bankers and
      private investors. There can be no assurance the Company will be successful
      in
      its effort to secure additional equity financing.




13





**ITEM
      2.**  **MANAGEMENT'S
      DISCUSSION AND ANALYSIS AND PLAN OF OPERATION**





GENERAL





The
      following discussion of our financial condition and results of operations should
      be read in conjunction with (1) our interim unaudited financial statements and
      their explanatory notes included as part of this quarterly report, and (2)
      our
      annual audited financial statements and explanatory notes for the year ended
      April 30, 2007 as disclosed in our annual report on Form 10-KSB for that year
      as
      filed with the SEC.





"FORWARD-LOOKING"
      INFORMATION





This
      report on Form 10-QSB contains certain "forward-looking statements" within
      the
      meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
      which
      represent our expectations and beliefs, including, but not limited to statements
      concerning the Company's expected growth. The words "believe," "expect,"
      "anticipate," "estimate," "project," and similar expressions identify
      forward-looking statements, which speak only as of the date such statement
      was
      made. These statements by their nature involve substantial risks and
      uncertainties, certain of which are beyond our control, and actual results
      may
      differ materially depending on a variety of important factors.





RESULTS
      OF OPERATIONS





COMPARISON
      OF THE THREE MONTHS ENDED OCTOBER 31, 2007 TO THE THREE MONTHS ENDED OCTOBER
      31,
      2006





For
      the
      three months ended October 31, 2007 and 2006, we have generated limited, but
      increasing, sales revenues, have incurred significant expenses, and have
      sustained significant losses. We believe we will continue to earn increasing
      revenues from operations during the remainder of fiscal 2008 and in the upcoming
      fiscal year.





REVENUES





Revenues
      totaled $297,303 during the three months ended October 31, 2007 as compared
      to
      $219,555 during the three months ended October 31, 2006. Current period revenue
      was comprised of $97,212 in lease revenue, $152,981 in interest income from
      RISC
      loans, $3,850 in PPF Program fees and $43,260 in other income. Prior period
      revenue was comprised of $166,559 in lease revenue, $50,300 in private label
      and
      PPF Program fees, and $2,696 in other income.





COSTS
      AND
      EXPENSES





General
      and administrative expenses were $1,206,382 during the three months ended
      October 31, 2007, compared to $1,324,556 during the three months ended October
      31, 2006, a decrease of $118,174, or 8.9%. Expenses incurred during the current
      three month period consisted primarily of the following expenses: Compensation
      and related costs, $432,173; Accounting, audit and professional fees, $154,188;
      Consulting fees, $264,455; Rent and utilities, $71,533, Travel and
      entertainment, $14,401 and stock based compensation $86,834. Expenses incurred
      during the comparative three month period in 2006 consisted primarily of the
      following expenses: Compensation and related costs, $414,505; Accounting, audit
      and professional fees, $195,785; Consulting fees, $55,027; Rent and utilities,
      $74,634; Travel and entertainment, $22,448 and stock based compensation
      $309,409..





We
      incurred a non-cash charge of $66,533 during the three months ended October
      31,
      2007 related to options and shares of common stock and common stock options
      issued for consulting fees and services. The comparable non-cash charges for
      the
      three months ended October 31, 2006 was $309,409. During three months ending
      October 31, 2006, we had also recorded non-cash charge of $333,470 related
      to
      the increase in value of warrants issued with registration rights. There was
      a
      nominal income of $174 in the three months ended October 31, 2007.




14





NET
      LOSS





We
      incurred a net loss before preferred dividends of $1,195,053 for our three
      months ended October 31, 2007 as compared to $1,623,165 for the corresponding
      interim period in 2006. The $428,112 or 26% decrease in our net loss before
      preferred dividends for our three month interim period ended October 31, 2007
      was attributable primarily to an increase in revenue, a decrease in general
      and
      administrative expenses and no charge for warrant liability in the current
      quarter.





We
      also
      incurred non-cash preferred dividend expense of $18,100 for our three month
      period ended October 31, 2007, with an expense of $29,936 in the corresponding
      interim period of 2006. The decrease in preferred dividend expense was
      attributable to the conversion of preferred stock to common stock.





Our
      net
      loss attributable to common stockholders decreased to $1,213,153 for our three
      month period ended October 31, 2007 as compared to $1,653,101 for the
      corresponding period in 2006. The $439,948 decrease in net loss attributable
      to
      common stockholders for our three month period ended October 31, 2007 was due
      to
      the decrease in net loss of $428,112 and the decrease in preferred dividends
      of
      $11,836.





COMPARISON
      OF THE SIX MONTHS ENDED OCTOBER 31, 2007 TO THE SIX MONTHS ENDED OCTOBER 31,
      2006





For
      the
      six months ended October 31, 2007 and 2006, we have generated limited, but
      increasing, sales revenues, have incurred significant expenses, and have
      sustained significant losses. We believe we will continue to earn increasing
      revenues from operations during the remainder of fiscal 2007 and in the upcoming
      fiscal year.





REVENUES





Revenues
      totaled $581,300 during the six months ended October 31, 2007 as compared to
      $411,197 during the six months ended October 31, 2006. Current period revenue
      was comprised of $202,342 in lease revenue, $291,945 in interest income from
      RISC loans, $19,700 in private label fees and Preferred Provider Program and
      $67,313 in other income. Prior period revenue was comprised of $332,574 in
      lease
      revenue, $60,500 in private label and Preferred Provider Program fees and
      $18,125 in other income.





COSTS
      AND
      EXPENSES





General
      and administrative expenses were $2,303,086 during the six months ended October
      31, 2007, compared to $2,491,337 during the six months ended October 31, 2006,
      a
      decrease of $188,251, or 7.6%. Expenses incurred during the current six month
      period consisted primarily of the following expenses: Compensation and related
      costs, $933,486; Accounting, audit and professional fees,$161,592; Consulting
      fees, $344,701; Rent and utilities, $145,947, Travel and entertainment, $38,598
      and stock based compensation $273,151. Expenses incurred during the comparative
      six month period in 2006 consisted primarily of the following expenses:
      Compensation and related costs, $853,899; Accounting, audit and professional
      fees, $330,425; Consulting fees, $160,442; Rent and utilities, $160,978; Travel
      and entertainment, $62,038 and stock based compensation, $526,450.





During
      six months ending October 31, 2006, we recorded non-cash income of $299,474
      related to the decrease in value of warrants issued with registration rights.
      A
      $174 non-cash income was recognized during the six months ended October 31,
      2007. We incurred a non-cash charge of $273,151 during the six months ended
      October 31, 2007 related to options and shares of common stock issued for
      consulting fees and services. For the six months ended October 31, 2006, we
      incurred a non-cash charge of $526,450 related to options and shares of common
      stock issued for consulting fees, services and financing cost.





NET
      LOSS





We
      incurred a net loss before preferred dividends of $2,257,552 for our six months
      ended October 31, 2007 as compared to $2,057,544 for the corresponding interim
      period in 2006. The $200,008 or 9.7% increase in our net loss before preferred
      dividends for our six month interim period ended October 31, 2007 was
      attributable to a $140,103 , 31.8%, increase in revenue, a decrease in non-cash
      financing costs, and no non-cash income.





We
      also
      incurred non-cash preferred dividend expense of $22,713 for our six month period
      ended October 31, 2007 as compared with a non-cash expense of $59,873 in the
      corresponding interim period of 2006. The decrease in preferred dividend expense
      was attributable to the conversion of preferred shares to common stock.




15





Our
      net
      loss attributable to common stockholders increased to $2,280,265 for our six
      month period ended October 31, 2007 as compared to $2,117,417 for the
      corresponding period in 2006. The $162,848 increase in net loss attributable
      to
      common stockholders for our six month period ended October 31, 2007 was due
      to
      the increase in net loss and the decrease in preferred dividends.





LIQUIDITY
      AND CAPITAL RESOURCES





As
      of
      October 31, 2007, we had a deficit net worth of $3,015,065. We generated a
      deficit in cash flow from operations of $1,586,240 for the six months ended
      October 31, 2007. This deficit is primarily attributable to our net loss from
      operations of $2,257,552, partially offset by depreciation and amortization
      of
      $150,826, other non-cash charges totaling $838,956 and to changes in the
      balances of current assets and liabilities. Accounts payable and accrued
      expenses decreased by $141,436, other receivables increases $78,667 and prepaid
      expenses decreased by $27,137.





Cash
      flows used in investing activities for the six months ended October 31, 2007
      was
      $1,509,392, primarily due to the purchase of RISC contracts of $1,121,527 and
      payments for motorcycles and vehicles of $387,865.





We
      met
      our cash requirements during the six month period through proceeds of
      convertible notes of $1,175,500, proceeds of notes payable $335,000 and loans
      payable to officers $20,000 and debt financing of $2,571,812, offset with
      payments of $1,015,173. Additionally, we have received limited revenues from
      leasing and financing motorcycles and other vehicles, fees from our municipal
      lease program, and from our Preferred Provider Program.





While
      we
      have raised capital to meet our working capital and financing needs in the
      past,
      additional financing is required in order to meet our current and projected
      cash
      flow deficits from operations and development. We are seeking financing, which
      may take the form of debt, convertible debt or equity, in order to provide
      the
      necessary working capital. There is no guarantee that we will be successful
      in
      raising the funds required.





We
      estimate that we will need to raise approximately $2,000,000 in additional
      funds
      to fully implement our business plan during the next twelve months and for
      our
      general operating expenses. As of the date of this filing, we have do not have
      sufficient operating capital to continue our planned business operations for
      the
      next twelve months and for our general operating expenses. The Company obtained
      a senior credit facility in July 2005, which has been subsequently renewed.
      This
      facility allowed us to commence and continue our financing activities. However
      this facility finances only three of the five credit tiers of our business
      model, thus we need to obtain additional credit facilities to fully implement
      our business plan. We are presently seeking those additional credit facilities
      and long term debt. This additional, debt financing, if available, will require
      payment of interest and may involve restrictive covenants that could impose
      limitations on the operating flexibility of the Company. If we are not
      successful in generating sufficient liquidity from operations or in raising
      sufficient capital resources to finance our general operating expenses and
      our
      growth, on terms acceptable to us, this would have a material adverse effect
      on
      our business, results of operations, liquidity and financial condition, and
      we
      will have to adjust our planned operations and development to a more limited
      scale.





AUDITOR'S
      OPINION EXPRESSES DOUBT ABOUT THE COMPANY'S ABILITY TO CONTINUE AS A "GOING
      CONCERN"





The
      independent auditors report on our April 30, 2007 and 2006 financial statements
      included in our Annual Report states that our historical losses and the lack
      of
      revenues raise substantial doubts about our ability to continue as a going
      concern, due to the losses incurred and its lack of significant operations.
      If
      we are unable to develop our business, we have to discontinue operations or
      cease to exist, which would be detrimental to the value of our common stock.
      We
      can make no assurances that our business operations will develop and provide
      us
      with significant cash to continue operations.





PLAN
      OF
      OPERATIONS





ADDRESSING
      THE GOING CONCERN ISSUES





In
      order
      to improve our liquidity, our management is actively pursing additional
      financing through discussions with investment bankers, financial institutions
      and private investors. There can be no assurance that we will be successful
      in
      its effort to secure additional financing.


16





We
      continue to experience net operating losses. Our ability to continue as a going
      concern is subject to our ability to develop profitable operations. We are
      devoting substantially all of our efforts to developing our business and raising
      capital.





The
      primary issues management will focus on in the immediate future to address
      this
      matter include:





·
            seeking
                additional credit lines from institutional
                lenders;


·
            seeking
                institutional investors for debt or equity investments in our company;
                and


·
            initiating
                negotiations to secure short term financing through promissory notes
                or
                other debt instruments on an as needed
                basis.





To
      address these issues, we are negotiating the potential sale of securities with
      investment banking companies to assist us in raising capital. We are also
      presently in discussions with several institutions about obtaining additional
      credit facilities.





PRODUCT
      RESEARCH AND DEVELOPMENT





We
      do not
      anticipate incurring significant research and development expenditures during
      the next twelve months.





ACQUISITION
      OR DISPOSITION OF PLANT AND EQUIPMENT





We
      do not
      anticipate the sale or acquisition of any significant property, plant or
      equipment during the next twelve months.





NUMBER
      OF
      EMPLOYEES





At
      October 31, 2007, we had 19 full time employees. If we fully implement our
      business plan, we anticipate our employment base may increase by approximately
      100% during the next twelve months. As we continue to expand, we will incur
      additional cost for personnel. This projected increase in personnel is dependent
      upon our generating revenues and obtaining sources of financing. There is no
      guarantee that we will be successful in raising the funds required or generating
      revenues sufficient to fund the projected increase in the number of
      employees.





INFLATION





The
      impact of inflation on our costs, and the ability to pass on cost increases
      to
      our customers over time is dependent upon market conditions. We are not aware
      of
      any inflationary pressures that have had any significant impact on our
      operations over the past quarter, and we do not anticipate that inflationary
      factors will have a significant impact on future operations.





CRITICAL
      ACCOUNTING POLICIES





The
      preparation of our consolidated financial statements in conformity with
      accounting principles generally accepted in the United States requires us to
      make estimates and judgments that affect our reported assets, liabilities,
      revenues, and expenses, and the disclosure of contingent assets and liabilities.
      We base our estimates and judgments on historical experience and on various
      other assumptions we believe to be reasonable under the circumstances. Future
      events, however, may differ markedly from our current expectations and
      assumptions. While there are a number of significant accounting policies
      affecting our consolidated financial statements; we believe the following
      critical accounting policy involves the most complex, difficult and subjective
      estimates and judgments.





REVENUE
      RECOGNITION





The
      Company originates leases on new and used motorcycles and other powersports
      vehicles from motorcycle dealers throughout the United States. The Company’s
      leases are accounted for as either operating leases or direct financing leases.
      At the inception of operating leases, no lease revenue is recognized and the
      leased motorcycles, together with the initial direct costs of originating the
      lease, which are capitalized, appear on the balance sheet as “motorcycles under
      operating leases-net”. The capitalized cost of each motorcycle is depreciated
      over the lease term, on a straight-line basis, down to the Company’s original
      estimate of the projected value of the motorcycle at the end of the scheduled
      lease term (the “Residual”). Monthly lease payments are recognized as rental
      income. Direct financing leases are recorded at the gross amount of the lease
      receivable (principal amount of the contract plus the calculated earned income
      over the life of the contract), and the unearned income at lease inception
      is
      amortized over the lease term.


17





The
      Company purchases Retail Installment Sales Contracts (“RISC”) from motorcycle
      dealers. The RISCs are secured by liens on the titles to the vehicles. The
      RISCs
      are accounted for as loans. Upon purchase, the RISCs appear on the Company’s
      balance sheet as RISC loan receivable current and long term. Interest income
      on
      these loans is recognized when it is earned.





The
      Company realizes gains and losses as the result of the termination of leases,
      both at and prior to their scheduled termination, and the disposition of the
      related motorcycle. The disposal of motorcycles, which reach scheduled
      termination of a lease, results in a gain or loss equal to the difference
      between proceeds received from the disposition of the motorcycle and its net
      book value. Net book value represents the residual value at scheduled lease
      termination. Lease terminations that occur prior to scheduled maturity as a
      result of the lessee’s voluntary request to purchase the vehicle have resulted
      in net gains, equal to the excess of the price received over the motorcycle’s
      net book value.





Early
      lease terminations also occur because of (i) a default by the lessee, (ii)
      the
      physical loss of the motorcycle, or (iii) the exercise of the lessee’s early
      termination. In those instances, the Company receives the proceeds from either
      the resale or release of the repossessed motorcycle, or the payment by the
      lessee’s insurer. The Company records a gain or loss for the difference between
      the proceeds received and the net book value of the motorcycle.





The
      Company charges fees to manufacturers and other customers related to creating
      a
      private label version of the Company’s financing program including web access,
      processing credit applications, consumer contracts and other related documents
      and processes. Fees received are amortized and booked as income over the length
      of the contract.





The
      Company evaluates its operating and retail installment sales leases on an
      ongoing basis and has established reserves for losses, based on current and
      expected future experience.





STOCK-BASED
      COMPENSATION





On
      December 16, 2004, the Financial Accounting Standards Board (FASB) issued FASB
      Statement No. 123R (revised 2004), "Share-Based Payment" which is a revision
      of
      FASB Statement No. 123, "Accounting for Stock-Based Compensation". Statement
      123R supersedes APB opinion No. 25, "Accounting for Stock Issued to Employees",
      and amends FASB Statement No. 95, "Statement of Cash Flows". Generally, the
      approach in Statement 123R is similar to the approach described in Statement
      123. However, Statement 123R requires all share-based payments to employees,
      including grants of employee stock options, to be recognized in the income
      statement based on their fair values. Pro-forma disclosure is no longer an
      alternative. Management has elected to apply Statement 123R in the third quarter
      of fiscal year 2006.





RECENT
      ACCOUNTING PRONOUNCEMENT





There
      have been no significant new pronouncements since the issuance of the Company’s
      Annual Report on Form 10-KSB for the fiscal year ended April 30,
      2007.





WEBSITE
      DEVELOPMENT COSTS





We
      have
      incurred costs to develop a proprietary web-based private label financing
      program for processing including web access, processing credit applications,
      consumer contracts and other related documents and processes. The Company has
      elected to recognize the costs of developing its website and related
      intellectual property the website development costs in accordance with Emerging
      Issue Task Force ("EITF") No. 00-02, "Accounting for Website Development Costs."
      As such, the Company expenses all costs incurred that relate to the planning
      and
      post implementation phases of development of its website. Direct costs incurred
      in the development phase are capitalized and recognized over the estimated
      useful life. Costs associated with repair or maintenance for the website is
      included in cost of net revenues in the current period expenses.





OFF-BALANCE
      SHEET ARRANGEMENTS





The
      Company does not maintain off-balance sheet arrangements nor does it participate
      in non-exchange traded contracts requiring fair value accounting
      treatment.


18




TRENDS,
      RISKS AND UNCERTAINTIES





We
      have
      sought to identify what we believe to be the most significant risks to our
      business, but we cannot predict whether, or to what extent, any of such risks
      may be realized nor can we guarantee that we have identified all possible risks
      that might arise. Investors should carefully consider all of such risk factors
      before making an investment decision with respect to our common
      stock.





CAUTIONARY
      FACTORS THAT MAY AFFECT FUTURE RESULTS





We
      have
      sought to identify what we believe are significant risks to our business, but
      we
      cannot predict whether, or to what extent, any of such risks may be realized,
      nor can we guarantee that we have identified all possible risks that might
      arise.





POTENTIAL
      FLUCTUATIONS IN ANNUAL OPERATING RESULTS





Our
      annual operating results may fluctuate significantly in the future as a result
      of a variety of factors, most of which are outside our control, including:
      the
      demand for our products and services; seasonal trends in purchasing; the amount
      and timing of capital expenditures and other costs relating to the commercial
      and consumer financing; price competition or pricing changes in the market;
      technical difficulties or system downtime; general economic conditions; and
      economic conditions specific to the consumer financing sector.





Our
      annual results may also be significantly impacted by the impact of the
      accounting treatment of acquisitions, financing transactions or other matters.
      Particularly at our early stage of development, such accounting treatment can
      have a material impact on the results for any quarter. Due to the foregoing
      factors, among others, it is likely that our operating results may fall below
      our expectations or those of investors in some future quarter.





DEPENDENCE
      UPON MANAGEMENT





Our
      future performance and success is dependant upon the efforts and abilities
      of
      our management. To a very significant degree, we are dependent upon the
      continued services of Anthony L. Havens, our President and Chief Executive
      Officer and member of our Board of Directors, and Mr. Richard Trotter, our
      Chief
      Operating Officer. If we lost the services of Mr. Havens, Mr. Trotter, or other
      key employees before we could get qualified replacements that loss could
      materially adversely affect our business. We do not maintain key man life
      insurance on any of our Management.





Our
      officers and directors are required to exercise good faith and high integrity
      in
      our management affairs. Our bylaws provide, however, that our directors shall
      have no liability to us or to our shareholders for monetary damages for breach
      of fiduciary duty as a director except with respect to (1) a breach of the
      director's duty of loyalty to the corporation or its stockholders, (2) acts
      or
      omissions not in good faith or which involve intentional misconduct or a knowing
      violation of law, (3) liability which may be specifically defined by law or
      (4)
      a transaction from which the director derived an improper personal
      benefit.





CONTINUED
      CONTROL OF CURRENT OFFICERS AND DIRECTORS





The
      present officers and directors own approximately 54.44% of the outstanding
      shares of common stock, without giving effect to shares underlying convertible
      securities, and therefore are in a position to elect all of our Directors and
      otherwise control the Company, including, without limitation, authorizing the
      sale of equity or debt securities of Sparta, the appointment of officers, and
      the determination of officers' salaries. Shareholders have no cumulative voting
      rights.





MANAGEMENT
      OF GROWTH





We
      may
      experience growth, which will place a strain on our managerial, operational
      and
      financial systems resources. To accommodate our current size and manage growth
      if it occurs, we must devote management attention and resources to improve
      our
      financial strength and our operational systems. Further, we will need to expand,
      train and manage our sales and distribution base. There is no guarantee that
      we
      will be able to effectively manage our existing operations or the growth of
      our
      operations, or that our facilities, systems, procedures or controls will be
      adequate to support any future growth. Our ability to manage our operations
      and
      any future growth will have a material effect on our
      stockholders.


19





If
      we
      fail to remain current on our reporting requirements, we could be removed from
      the OTC Bulletin Board which would limit the ability of broker-dealers to sell
      our securities and the ability of stockholders to sell their securities in
      the
      secondary market.





Companies
      trading on the OTC Bulletin Board, such as us, must be reporting issuers under
      Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange
      Act"), and must be current in their reports under Section 13, in order to
      maintain price quotation privileges on the OTC Bulletin Board. If we fail to
      remain current on our reporting requirements, we could be removed from the
      OTC
      Bulletin Board. As a result, the market liquidity for our securities could
      be
      severely adversely affected by limiting the ability of broker-dealers to sell
      our securities and the ability of stockholders to sell their securities in
      the
      secondary market.




20





**ITEM
      3.**  **CONTROLS
      AND PROCEDURES**





Our
      management, with the participation of our Chief Executive Officer and our
      Principal Financial Officer, evaluated the effectiveness of our disclosure
      controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) of
      the
      Exchange Act) as of the end of the period covered by this report. Based on
      that
      evaluation, our Chief Executive Officer and Principal Financial Officer
      concluded that our disclosure controls and procedures as of the end of the
      period covered by this report were effective.





There
      was
      no change in our internal control over financial reporting (as defined in Rule
      13a-15(f) of the Exchange Act) that occurred during the fiscal quarter to which
      this report relates that has materially affected, or is reasonably likely to
      materially affect, our internal control over financial reporting.




21





**PART
      II. OTHER INFORMATION**





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





In
      September and October 2006, in transactions deemed to be exempt from
      registration under the Securities Act in reliance on Section 4(2) of the
      Securities Act, the Company sold to four accredited investors bridge notes
      in
      the aggregate amount of $275,000. Three 45-day bridge notes aggregating $175,000
      and one 90-day $100,000 note were originally scheduled to expire on various
      dates through November 30, 2006, together with simple interest at the rate
      of
      10%. The notes provide that 100,000 shares of the Company's unregistered common
      stock are to be issued for each $100,000 of notes purchased, or any pro rated
      portion thereof. The Company had the right to extend the maturity date of notes
      for 30 to 45 days, and, in the event of extension, the lender would be entitled
      to an additional equity equal to 60% of the equity kicker shares. The maturity
      dates of the notes were subsequently extended to various dates between December
      5, 2006 to December 30, 2006, with simple interest rate of 10%, and additional
      equity of in the aggregate amount of 165,000 unregistered shares of common
      stock
      to be issued. In the event of default on repayment, for each uncured month,
      as
      penalty, the equity kicker and the additional equity to be issued to the lenders
      are to be increased by 50%, on a pro rata basis, and during default period,
      interest is to be at the rate of 20%. The repayment, in the event of default,
      of
      the notes is to be collateralized by certain security interest as per the terms
      of the agreement. As of October 31, 2007, the notes remain unpaid. In October
      2007, a total of 2,690,000 restricted shares of common stock were issued as
      equity kicker on the original note, as additional equity kicker shares for
      the
      extension, and as additional shares during the unpaid period,.





During
      the three months ended October 31, 2007 in transactions deemed to be exempt
      from
      registration under the Securities Act in reliance on Section 4(2) of the
      Securities Act, the Company sold to nineteen accredited investors six month
      unsecured notes in the aggregate amount of $683,000. The notes bear interest
      at
      the simple interest rate of 6% per year. At the Company’s option, the notes are
      convertible into shares of common stock at prices ranging from $0.028 to $0.046
      per share. The notes mature in six months from the issuance on various dates
      through April 22, 2008.





**** During
      the three months ended October 31, 2007, in transactions deemed to be exempt
      from registration under the Securities Act in reliance on Section 4(2) of the
      Securities Act, the Company granted options to purchase an aggregate of 150,000
      shares of common stock to two employees. The options are exercisable for a
      period of ten years, subject to vesting condition, at $0.10 per share.





On
      May
      30, 2007, in a transaction deemed to be exempt from registration under the
      Securities Act in reliance on Section 4(2) of the Securities Act, the Company
      issued 1,100,000 shares of unregistered common stock pursuant to a three month
      consulting agreement entered into in April 2007, as amended in August
      2007.





On
      July
      24, 2007, in a transaction deemed to be exempt from registration under the
      Securities Act in reliance on Section 4(2) of the Securities Act, the Company
      entered into a three month consulting agreement with a consultant pursuant
      to
      which the Company issued five year warrants to purchase 1,000,000 shares of
      unregistered common stock at $0.05 per share. The Company is to issue additional
      five year warrants to purchase 1,000,000 shares of unregistered common stock
      at
      $0.10 and $0.15 per share respectively on each of the four and eight month
      anniversary dates of the agreement.





In
      September 2007, in a transaction deemed to be exempt from registration under
      the
      Securities Act in reliance on Section 4(2) of the Securities Act, the Company
      entered into a $150,000 loan agreement with an accredited individual pursuant
      to
      which the Company issued a $150,000 convertible debenture due December 19,
      2007,
      and 400,000 common stock purchase warrants. Additionally, in connection with
      said loan agreement, the Company issued the individual 100,000 shares of
      unregistered common stock. The debentures bear interest at the rate of 12%
      per
      year compounded monthly and are convertible into shares of the Company's common
      stock at $0.0504 per share. The warrants may be exercised on a cashless basis
      and are exercisable until September 19, 2007 at $0.05 per share. In the event
      the debentures are not timely repaid, the Company is to issue 100,000 shares
      of
      unregistered common stock for each thirty day period the debentures remain
      outstanding. The note was subsequently extended to January 18,
      2008.


22


On
      October 2, 2007, in a transaction deemed to be exempt from registration under
      the Securities Act in reliance on Section 4(2) of the Securities Act, the
      Company entered into a consulting agreement with a consultant pursuant to which
      the Company issued five year warrants to purchase 375,000 shares of unregistered
      common stock at $0.05 per share.





On
      November 19, 2007, in a transaction deemed to be exempt from registration under
      the Securities Act in reliance on Section 4(2) of the Securities Act, the
      Company sold to an accredited investor, a short term note in the aggregate
      amount of $20,000 due December 3, 2007. The note bears interest at the rate
      of
      10% per year. The Company issued 10,000 shares of unregistered common stock
      as
      an inducement for the loan. The note was subsequently extended to December
      31, 2007.





On
      November 26, 2007, in a transaction deemed to be exempt from registration under
      the Securities Act in reliance on Section 4(2) of the Securities Act, the
      Company sold to an accredited investor, a short term note in the aggregate
      amount of $25,000 due December 10, 2007. The note bears interest at the rate
      of
      10% per year. The Company is to issue 12,500 shares of unregistered common
      stock
      as an inducement for the loan. The note was subsequently extended
      to December 31, 2007.





On
      December 5, 2007, in a transaction deemed to be exempt from registration under
      the Securities Act in reliance on Section 4(2) of the Securities Act, the
      Company sold to an accredited investor, a six month unsecured note in the
      aggregate amount of $25,000. The note bears 6% simple interest, payable in
      cash
      or shares, at the Company’s option, with principal and accrued interest payable
      at maturity. Should the Company opt to convert these notes at maturity, these
      notes will be convertible into shares of common stock at a price of $0.03 per
      share. The note will mature in six months on June 6, 2008.





On
      December 12, 2007, in a transaction deemed to be exempt from registration under
      the Securities Act in reliance on Section 4(2) of the Securities Act, the
      Company sold to an accredited investor, a short term note in the aggregate
      amount of $200,000 due January 31, 2008. The note bears interest at the rate
      of
      10% per year. Interest is payable in cash or shares, at the lender’s option,
      with principal and accrued interest payable at maturity. The Company is to
      issue
      133,333 shares of unregistered common stock to the lender as an inducement
      for
      the loan. On a pro rata basis, the Company is to issue the lender 100,000 shares
      of the Company’s unregistered common stock for every 30 day period that the
      principal balance and any accrued interest of note remains outstanding after
      the
      maturity date.





**ITEM
      6.**  **EXHIBITS.**





The
      following exhibits are filed with this report:





Exhibit
                Number
            
            Description
                of ExhibitExhibit
                10.1*
            
            Form
                of Convertible DebentureExhibit
                11
            
            Statement
                re: computation of per share earnings is hereby incorporated by reference
                to "Financial Statements" of Part I- Financial Information, Item
                1 -
                Financial Statements, contained in this Form 10-QSB.Exhibit
                31.1*
            
            Certification
                of Chief Executive Officer Pursuant to Securities Exchange Act Rule
                13a-14(a)/15d-14(a)Exhibit
                31.2*
            
            Certification
                of Principal Financial Officer Pursuant to Securities Exchange Act
                Rule
                13a-14(a)/15d-14(a)Exhibit
                32.1*
            
            Certification
                of Chief Executive Officer Pursuant to Securities Exchange Act Rule
                13a-14(b) and 18 U.S.C. Section 1350Exhibit
                32.2*
            
            Certification
                of Principal Financial Officer Pursuant to Securities Exchange Act
                Rule
                13a-14(b) and 18 U.S.C. Section
                1350


__________


*
      Filed
      herewith.




23





**SIGNATURES**





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





SPARTA
                COMMERCIAL SERVICES, INC.Date:
                December 21, 2007
            By:
            /s/
                Anthony L. HavensAnthony
              L. HavensChief
              Executive OfficerDate:
                December 21, 2007
            By:
            /s/
                Anthony W. AdlerAnthony
              W. AdlerPrincipal
              Financial Officer




24