**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 January 31, 2008**




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 registrant as specified in its charter)





**NEVADA**
            
            **30-0298178**(State
                or other jurisdiction of
            
            (IRS
                Employerincorporation
                or organization)
            
            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
      March 14, 2008, we had 129,858,657 shares of common stock issued and
      outstanding.





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








**SPARTA
      COMMERCIAL SERVICES, INC.**


**FORM
      10-QSB**


**FOR
      THE QUARTER ENDED JANUARY 31, 2008**





**TABLE
      OF CONTENTS**





Page**PART
                I.**
            
            **FINANCIAL
                INFORMATION**Item
                1.
            
            Financial
                Statements (Unaudited)
            
            3Condensed
                Consolidated Balance Sheets as of January 31, 2008 and April 30,
                2007
            
            3Condensed
                Consolidated Statements of Operations for the Three and Nine Months
                Ended
                January 31, 2008 and 2007
            
            4Condensed
                Consolidated Statements of Cash Flows for the Nine Months Ended January
                31, 2008 and 2007
            
            5Notes
                to Unaudited Condensed Consolidated Financial Statements
            
            6Item
                2.
            
            Management's
                Discussion and Analysis or Plan of Operation
            
            15Item
                3.
            
            Controls
                and Procedures
            
            22**PART
                II.**
            
            **OTHER
                INFORMATION**Item
                2.
            
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            
            23Item
                6.
            
            Exhibits
            
            25Signatures
            
            26




2




**PART
      I. FINANCIAL INFORMATION**





**ITEM
      1.   FINANCIAL STATEMENTS**





**SPARTA
      COMMERCIAL SERVICES, INC.**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**





**January
                31,**
              **2008**
            
            **April
                30,**
              **2007****(unaudited)****ASSETS**Cash
                and cash equivalents
            
            $
            1,248
            
            $
            22,032RISC
                loan receivables, net of reserve of $100,547 and $59,338, respectively
                (NOTE D)
            
            
            3,523,300
            
            
            2,492,819Motorcycles
                and other vehicles under operating leases net of accumulated depreciation
                of $309,165and $ 221,800 respectively, and loss reserve of $34,431
                and $
                26,059, respectively (NOTE B)
            
            
            1,188,677
            
            
            1,088,686Interest
                receivable
            
            
            46,858
            
            
            25,832Accounts
                receivable
            
            
            84,871Prepaid
                expenses and other assets
            
            
            0
            
            
            27,137Inventory
                (NOTE C)
            
            
            63,411
            
            
            20,784Property
                and equipment, net of accumulated depreciation and amortization of
                $125,488 and $97,047, respectively (NOTE E)
            
            
            65,759
            
            
            94,200Restricted
                cash
            
            
            397,547
            
            
            284,943Deposits
            
            
            50,692
            
            
            50,692**Total
                assets**
            
            $
            5,422,362
            
            $
            4,107,125**LIABILITIES
                AND DEFICIENCY IN STOCKHOLDERS' EQUITY****Liabilities:**Accounts
                payable and accrued expenses
            
            
            1,190,926
            
            $
            1,219,067Accrued
                equity based compensation (NOTE G)
            
            
            0
            
            
            40,310Accrued
                equity based penalties
            
            
            2,178
            
            
            2,380Notes
                payable-Senior Lender (NOTE F)
            
            
            4,440,810
            
            
            2,985,207Convertible
                Notes Payable (NOTE I)
            
            
            1,975,759
            
            
            775,259Notes
                payable-Other (NOTE I)
            
            
            1,130,000
            
            
            365,000Loans
                payable-related parties (NOTE J)
            
            
            242,260
            
            
            202,260Deferred
                revenue
            
            
            26,467
            
            
            46,765**Total
                liabilities**
            
            
            9,008,400
            
            
            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, 825 and 19,795 shares issued and
                outstanding, respectively
            
            
            82,500
            
            
            1,979,500Common
                stock, $.001 par value; 340,000,000 shares authorized, 128,056,157
                and
                123,216,157 shares issued and outstanding, respectively
            
            
            128,056
            
            
            123,216Common
                stock to be issued, 12,272,730, and 0, respectively
            
            
            12,273
            
            
            -Additional
                paid-in-capital
            
            
            17,473,613
            
            
            14,595,827Deferred
                compensation
            
            
            0
            
            
            (24,000
            )Accumulated
                deficit
            
            
            (21,282,480
            )
            
            (18,203,666
            )**Total
                deficiency in stockholders' equity**
            
            
            (3,586,038
            )
            
            (1,529,123
            )Total
                Liabilities and deficiency in stockholders’ equity
            
            $
            5,422,362
            
            $
            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 NINE MONTHS ENDED JANUARY 31, 2008 AND 2007**


**(UNAUDITED)**





**For
                the Three Months Ended**
              **January
                31,**
            
            **For
                the Nine Months Ended**
              **January
                31,****2008**
            
            **2007**
            
            **2008**
            
            **2007****Revenue**
            
            $
            288,605
            
            $
            214,642
            
            $
            865,532
            
            $
            625,839**Operating
                expenses:**General
                and administrative
            
            
            683,698
            
            
            913,876
            
            
            2,950,249
            
            
            3,405,213Depreciation
                and amortization
            
            
            67,930
            
            
            93,693
            
            
            218,756
            
            
            250,303**Total
                operating expenses**
            
            
            751,628
            
            
            1,007,569
            
            
            3,169,005
            
            
            3,655,516**Loss
                from operations**
            
            
            (463,023
            )
            
            (792,927
            )
            
            (2,303,473
            )
            
            (3,029,677
            )**Other
                expense:**Interest
                expense and financing cost, net
            
            
            (335,207
            )
            
            (139,649
            )
            
            (749,521
            )
            
            (259,917
            )Change
                in value of warrant liabilities
            
            
            202
            
            
            189
            
            
            202
            
            
            299,663**Net
                loss**
            
            
            (798,028
            )
            
            (932,387
            )
            
            (3,052,792
            )
            
            (2,989,931
            )**Preferred
                dividend**
            
            
            16,797
            
            
            29,937
            
            
            26,022
            
            
            89,810**Net
                loss attributed to common stockholders**
            
            $
            (814,825
            )
            $
            (962,324
            )
            $
            (3,078,814
            )
            $
            (3,079,741
            )**Basic
                and diluted loss per share**
            
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.02
            )
            $
            (0.02
            )**Basic
                and diluted loss per share attributed to****common
                stockholders**
            
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.02
            )
            $
            (0.03
            )**Weighted
                average shares outstanding**
            
            
            127,361,318
            
            
            123,213,646
            
            
            125,378,693
            
            
            121,971,228





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





4


**SPARTA
      COMMERCIAL SERVICES, INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**FOR
      THE NINE MONTHS ENDED JANUARY 31, 2008 AND 2007**


**(UNAUDITED)**





**Nine
                Months Ended****January
                31,****2008**
            
            **2007****CASH
                FLOWS FROM OPERATING ACTIVITIES:**Net
                loss
            
            $
            (3,052,792
            )
            $
            (2,989,931
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
                and amortization
            
            
            119,682
            
            
            250,303Allowance
                for loss reserve
            
            
            49,581
            
            
            86,861Amortization
                of deferred revenue
            
            
            (11,550
            )
            
            (9,167
            )Amortization
                of deferred compensation
            
            
            24,000
            
            
            301,500Equity
                based compensation
            
            
            384,471
            
            
            376,744Stock
                based finance cost
            
            
            407,459
            
            
            54,948Forgiveness
                of dividends payable
            
            
            205,968
            
            
            0Change
                in fair value of penalty warrant and warrant liability
            
            
            0
            
            
            (299,663
            )Changes
                in operating assets and liabilities:(Increase)
                decrease in:Lease
                payments receivable
            
            
            0
            
            
            (1,792,942
            )Other
                receivables
            
            
            (21,026
            )
            
            0Prepaid
                expenses and other assets
            
            
            (41,145
            )
            
            43,961Loan
                proceeds receivable
            
            
            0
            
            
            389,998Restricted
                cash
            
            
            (112,604
            )
            
            (122,874
            )Deposits
            
            
            0
            
            
            (1,850
            )Increase
                (decrease) in:Accounts
                payable and accrued expenses
            
            
            (111,265
            )
            
            684,645Deferred
                revenue
            
            
            (8,748
            )
            
            510,340Accrued
                registration penalty
            
            
            0
            
            
            (13,285
            )Net
                cash used in operating activities
            
            
            (2,167,968
            )
            
            (2,530,412
            )**CASH
                FLOWS FROM INVESTING ACTIVITIES:**Payments
                for motorcycles and other vehicles
            
            
            (199,604
            )
            
            (847,590
            )Purchase
                of RISC contracts
            
            
            (1,114,317
            )
            
            0Purchases
                of property and equipment
            
            
            0
            
            
            (14,734
            )Net
                cash used by investing activities
            
            
            (1,313,920
            )
            
            (862,324
            )**CASH
                FLOWS FROM FINANCING ACTIVITIES:**Proceeds
                from notes from banks
            
            
            2,854,370
            
            
            1,918,605Payments
                on notes from banks
            
            
            (1,398,767
            )
            
            (440,653
            )Proceeds
                from convertible notes
            
            
            1,200,500
            
            
            525,259Proceeds
                from other notes
            
            
            765,000
            
            
            275,000Loan
                proceeds from other related parties
            
            
            40,000
            
            
            157,260Exercise
                of warrants
            
            
            0
            
            
            125,000Net
                cash provided in financing activities
            
            
            3,461,102
            
            
            2,560,489**Net
                (decrease) increase in cash**
            
            
            (20,785
            )
            
            (832,247
            )**Cash
                and cash equivalents, beginning of period**
            
            $
            22,032
            
            $
            856,382**Cash
                and cash equivalents, end of period**
            
            $
            1,247
            
            $
            24,135**Cash
                paid for:**Interest
            
            $
            452,840
            
            $
            129,487Income
                Taxes
            
            $
            6,715
            
            $
            —





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**


**JANUARY
      31, 2008**


**(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 January
      31, 2008 and for the three and nine month periods ended January 31, 2008 and
      2007 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 quarter ended October 31, 2007, 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 three and nine months ended January 31, 2008 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, and unearned income at lease inception is amortized over the lease
      term.





6


**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**JANUARY
      31, 2008**


**(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.. 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 elated documents
      and processes.





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.





The
      Company has selected the Black-Scholes method of valuation for share-based
      compensation and has 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**


**JANUARY
      31, 2008**


**(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 nine
      months ended January 31, 2008 results and cash flows as well as the
      parameters used in the valuation of options granted in the first nine
      months ended January 31, 2008.





Under
              Pre-SFAS
              No.123
                (R)
              Accounting
            
            SFAS
                No.
              123(R)
                Impact
            
            Actual
              Nine Months Ended
              January
                31, 2008Earnings
                before taxes
            
            $
            (2,850,481
            )
            $
            (202,311
            )
            $
            (3,052,792
            )Net
                Earnings
            
            
            (2,850,481
            )
            $
            (202,311
            )
            $
            (3,052,792
            )**Net
                Earnings**Basic
                EPS
            
            $
            (0.02
            )
            $
            -
            
            $
            (0.02
            )Diluted
                EPS
            
            
            (0.02
            )
            
            -
            
            
            (0.02
            )**Cash
                Flows**Operating
                Activities
            
            $
            (2,167,968
            )
            $
            -
            
            $
            (2,167,968
            )Financing
                Activities
            
            $
            3,461,102
            
            
            -
            
            
            3,461,102





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 January 31, 2008 and 2007, respectively,
      and $0.02 and $0.03 for the nine months ended January 31, 2008 and 2007,
      respectively. At January 31, 2008 and 2007, 25,293,361
      and 31,028,051 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). The Company has not completed its
      evaluation of the potential impact, if any, of the adoption of SFAS No. 141R
      on
      its consolidated financial position, results of operations and cash
      flows.




8


**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**JANUARY
      31, 2008**


**(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). The Company has not
      completed its evaluation of the potential impact, if any, of the adoption of
      SFAS No. 160 on its 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 January 31, 2008 and April 30,
      2007
      consist of the following:





January
                31,
              2008
            
            April
                30,
              2007Motorcycles
                and other vehicles
            
            $
            1,532,272
            
            $
            1,336,545*Less:*accumulated depreciation
            
            
            (309,165
            )
            
            (221,800
            )Motorcycles
                and other vehicles, net of accumulated depreciation
            
            
            1,223,107
            
            
            1,114,745*Less:*estimated reserve for residual values
            
            
            (34,431
            )
            
            (26,059
            )Motorcycles
                and other vehicles under operating leases, net
            
            $
            1,188,676
            
            $
            1,088,686




Depreciation
      expense for vehicles for the three and nine months ended January 31, 2008 was
      $59,515 and $190,315, respectively, depreciation expense for property and
      equipment for the three and nine months ended January 31, 2008 was $8,415 and
      $28,441 respectively. Depreciation expense for vehicles for the three and nine
      months ended January 31, 2007 was $82,693 and $217,715, respectively,
      depreciation expense for property and equipment for the three and nine months
      ended January 31, 2007 was $10,999 and $32,588, 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. At January 31, 2008, the
      Company had repossessed vehicles of value $63,411, which will be
      resold.





9


**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**JANUARY
      31, 2008**


**(UNAUDITED)**





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





RISC
      loan
      receivables, which are carried at cost, were $3,623,846 and $2,552,157 at
      January 31, 2008 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 E. Included in RISC loans receivable are $6,725
      of net deficiency receivables.




12
                Months Ending
              January
                31,
            
            Amount2009
            
            $
            709,3642010
            
            
            819,0422011
            
            
            936,3982012
            
            
            854,0972013
            
            
            304,944$
            3,623,846Less:
                allowance for doubtful receivables
            
            
            (100,547
            )Net
                receivables
            
            $
            3,523,299





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





**NOTE
      E - PROPERTY AND EQUIPMENT**





Major
      classes of property and equipment at January 31, 2008 and April 30, 2007 consist
      of the followings:




**January
                31,**
              **2008**
            
            **April
                30,**
              **2007**Computer
                equipment, software and furniture
            
            $
            191,247
            
            $
            191,247Less:
                accumulated depreciation and amortization
            
            
            (125,488
            )
            
            (97,047
            )Net
                property and equipment
            
            $
            65,759
            
            $
            94,200





Depreciation
      and amortization expense was $8,415 and $28,441 for the three and nine months
      ended January 31, 2008, respectively. Depreciation and amortization expense
      was
      $10,999 and $32,588 for the three and nine months ended January 31, 2007,
      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 January 31, 2008 is
      10.16%.





At
      January 31, 2008, the notes payable mature as follows:





12
                Months EndingJanuary
                31,
            
            Amount2009
            
            $
            1,061,0842010
            
            
            1,262,5762011
            
            
            921,0882012
            
            
            862,2992013
            
            
            333,763Total
            
            $
            4,440,810





During
      the nine month period ended January 31, 2008, the Company repaid
      $1,398,767.




10





**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**JANUARY
      31, 2008**


**(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. T he
      Company has
      issued and outstanding 825 and 19,795 shares of preferred stock issued and
      outstanding as of January 31, 200 8 and
      April 30, 200 7,
      respectively. ****  The
      Company has
      128,056,157 and 123,216,157 shares of common stock issued and outstanding as
      of January
      31, 200 8
      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 $205,968
      in accumulated but unpaid dividends on the preferred shares. On January 31,
      2008, three shareholders holding 2,225 shares of preferred stock converted
      those
      shares into 1,426,230 shares of common stock The 12,160,204, shares of common
      stock issuable upon conversion of the preferred shares had not been physically
      issued as of January 31, 2008. 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
      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
      agreement had called for the issuance of additional warrants on a performance
      basis, however the agreement was cancelled with no further issuance of warrants
      required.





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 of unregistered common stock (which was issued in May 2007
      in
      conjunction with the April 2007 agreement) based upon the consultants
      performance under the agreement.





11


**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**JANUARY
      31, 2008**


**(UNAUDITED)**





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





During
      the nine months ended January 31, 2008, 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 and two
      employees left during the three months ended January 31, 2008. The vested and
      unvested options have been valued at $47,140 using the Black-Scholes option
      pricing model with the following assumptions: (1) dividend yield of 0%; (2)
      expected volatility of 161%; (3) risk-free interest rate of 2.75%, vest over
      a
      48 month period and expire if unexercised in ten years.





In
      September and October 2006, 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 were 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 January 31, 2008, 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. In January
      2008, an additional 440,000 restricted shares of common stock were issued for
      the months
      of
      November and December 2007 as the loans remained unpaid. The notes
      were subsequently extended to May 1, 2008.





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. 200,000 shares of restricted common stock were issued in
      February 2008 as the debenture remained unpaid in December 2007 and January
      2008. The note was subsequently extended to April 15, 2008.





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.





On
      November 19, 2007, the Company sold to an accredited investor, a short term
      note
      in the 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
      May
      1, 2008.





On
      November 26, 2007, the Company sold to an accredited investor, a short term
      note
      in the 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 May 1, 2008. $5,000 was repaid in January 2008 and $5,000 was repaid in
      February 2008.





12


**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**JANUARY
      31, 2008**


**(UNAUDITED)**





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





On
      December 5, 2007, the Company sold to an accredited investor, a six month
      unsecured note in the 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 on June 6, 2008.





On
      December 12, 2007, the Company sold to an accredited investor, a short term
      note
      in the amount of $200,000 due January 31, 2008. The note was subsequently
      extended to May 1, 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 100,000 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.





On
      January 7, 2008, the Company issued 500,000 shares of its restricted common
      stock to an individual in consideration for consulting services.





On
      January 31, 2008, the Company issued five year warrants to purchase 1,632,833
      shares of its restricted common stock at a price of $0.0438 per share to a
      corporation pursuant to a placement agency agreement.





During
      the three months ended January 31, 2008 and 2007, the Company expensed $235,877
      and $176,814, respectively in
      non-cash charges related to stock and option compensation expense. During
      the nine months ended January 31, 2008 and 2007, the Company expensed $681,151
      and $703,264, respectively, in non-cash charges related to stock and option
      compensation expense.





**NOTE
      H - SUBSEQUENT EVENTS**





On
      February 4, 2008, the Company issued 75,000 shares of its restricted common
      stock to an individual in consideration of a $25,000 loan to the Company. In
      February 2008, this loan was converted into a six month, 6% convertible note
      due
      August 4, 2008. At the Company’s option, the notes are convertible into shares
      of common stock at $0.0336 per share.





On
      February 5, 2008, the Company issued 75,000 shares of its restricted common
      stock to another individual in consideration of a $25,000 loan to the Company.
      In February 2008, this loan was converted into a six month, 6% convertible
      note
      due August 5, 2008. At the Company’s option, the notes are convertible into
      shares of common stock at $0.0336 per share.





On
      February 14, 2008, the Company, pursuant to a consulting agreement, issued
      to
      the consultant 1,000,000 shares of restricted common stock. The consulting
      agreement, unless cancelled, requires the Company to issue up to 4,000,000
      additional shares of restricted common stock to the consultant, in tranches
      of
      1,000,000 shares each, on the three, six, nine and twelve month anniversary
      dates of the agreement.





In
      February and March 2008, the
      Company sold to seven accredited investors, six month unsecured notes in the
      aggregate amount of $290,000. The notes bear 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 prices of $0.0336
      to $0.0816 to per share. The notes will mature in six months from the respective
      issuances on various dates through September 14, 2008.





13


**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**JANUARY
      31, 2008**


**(UNAUDITED)**





**NOTE
      I - NOTES PAYABLE OTHERS**





Notes
                Payable-Other
            
            January
                31,
              2008
            
            April
                30,
              20076%
                Bridge Loan, due October 19, 2007
            
            $
            50,000
            
            $
            50,0006%
                Bridge Loan due July 7, 2008
            
            
            25,000
            
            
            010%
                Bridge Loans due various dates from December 3 to January 31,
                2008
            
            
            240,000
            
            
            0Non-interest
                Demand Loan
            
            
            390,000
            
            
            40,00010%
                Bridge Notes, due September 21, 2007
            
            
            275,000
            
            
            275,00012%
                Convertible Notes, due April 15, 2008
            
            
            150,000
            
            
            -6%
                Convertible Notes, various due dates from August 24, 2007 to June
                6,
                2008
            
            
            1,975,759
            
            
            775,259Total
            
            $
            3,105,759
            
            $
            1,140,259




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





In
      November 2007, the Company borrowed $20,000 from a Director on a demand basis
      without interest. As of January 31, 2008, aggregated loans payable to officers
      and Directors were $242,260.





**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 January
      31, 2008, the Company incurred losses of $21,282,480. Of these losses,
      $3,052,792 was incurred during the nine months ending January 31, 2008 and
      $2,989,931 in the nine months ending January 31, 2007. As of January 31, 2008,
      the Company also had a deficit net worth of $3,586,038. 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.





14


**ITEM
      2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OR 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 JANUARY 31, 2008**


**TO
      THE THREE MONTHS ENDED JANUARY 31, 2007**





For
      the
      three months ended January 31, 2008 and 2007, 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 $288,605 during the three months ended January 31, 2008 as compared
      to
      $214,642 during the three months ended January 31, 2007. Current period revenue
      was comprised of $253,998 in lease and loan revenue, $3,850 in Private Label
      and
      Preferred Provider Program fees and $30,759 in other income. Prior period
      revenue was comprised primarily of $197,826 in lease and loan revenue and
      $10,001 in other income.




**COSTS
      AND EXPENSES**





General
      and administrative expenses were $683,698 during the three months ended January
      31, 2008, compared to $913,876 during the three months ended January 31, 2007,
      a
      decrease of $230,178, or 25.2%. Expenses incurred during the current three
      month
      period consisted primarily of the following expenses: Compensation and related
      costs, $385,540; Accounting, audit and professional fees, $44,410 Consulting
      fees, $34,348; Rent and utilities, $66,670, Travel and entertainment, $14,600
      and stock based compensation $69,702. Expenses incurred during the comparative
      three month period in 2007 consisted primarily of the following expenses:
      Compensation and related costs, $453,095; Accounting, audit and professional
      fees, $49,982; Consulting fees, $70,979; Rent, $66,849; and Travel and
      entertainment, $46,146





We
      incurred non-cash charges of $236,598 during the three months ended January
      31,
      2008, of which $69,703 is related to options and shares of common stock issued
      to employees and $1,166,895 is related to shares and warrants for financing
      cost. We incurred non-cash charges of $224,813 during the three months ended
      January 31, 2007, of which $169,169 is related to options and shares of common
      stock issued for consulting fees and services and $55,644 is related to shares
      and warrants for financing cost.





15


**NET
      LOSS**





We
      incurred a net loss before preferred dividends of $798,028 for our three months
      ended January 31, 2008 as compared to $932,387 for the corresponding interim
      period in 2007. The $134,359 or 14.4% decrease in our net loss before preferred
      dividends for our three month interim period ended January 31, 2008 was
      attributable primarily to a 34% increase in revenue and a 25% decrease in
      operating expenses partially off set by a 140% increase in interest expense
      and
      financing costs. We also incurred non-cash preferred dividend expense of
      $16,797for our three month period ended January 31, 2008, compared with an
      expense of $29,937 in the corresponding interim period of 2007.





Our
      net
      loss after dividends attributable to common stockholders decreased to $814,825
      for our three month period ended January 31, 2008 as compared to $962,324 for
      the corresponding period in 2007. The $147,499 decrease in net loss attributable
      to common stockholders for our three month period ended January 31, 2008 was
      due
      to the $73,963 increase in revenuers and the $255,941 decrease in operating
      expenses, the $195,558 increase in interest expenses and financing costs and
      the
      $13,140 decrease in preferred dividend..





**COMPARISON
      OF THE NINE MONTHS ENDED JANUARY 31, 2008**


**TO
      THE NINE MONTHS ENDED JANUARY 31, 2007**





For
      the
      nine months ended January 31, 2008 and 2007, 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 $865,532 during the nine months ended January 31, 2008 as compared
      to
      $625,839 during the nine months ended January 31, 2007. Current period revenue
      was comprised primarily of $749,292 in lease and loan revenue, $23,550 in
      Preferred Provider Program fees, $33,370 in Municipal Lease origination fees
      and
      $59,320 in other income. Prior period revenue was comprised primarily of
      $530,400 in lease and loan revenue, $61,317 in private label fees and Preferred
      Provider Program, and $28,126 in other income.





**COSTS
      AND EXPENSES**





General
      and administrative expenses were $2,950,249 during the nine months ended January
      31, 2008, compared to $3,405,213 during the nine months ended January 31, 2007,
      a decrease of $454,964, or 13.4%. Expenses incurred during the current nine
      month period consisted primarily of the following expenses: Compensation and
      related costs, $1,319,027; Accounting, audit and professional fees,$206,003;
      Consulting fees, $300,897; Rent and utilities, $212,617 Travel and
      entertainment, $53,198 and stock based compensation $384,470. Expenses incurred
      during the comparative nine month period in 2007 consisted primarily of the
      following expenses: Compensation and related costs, $1,306,994; Accounting,
      audit and professional fees, $380,407; Consulting fees, $231,421 Rent and
      utilities, $227,827,; and Travel and entertainment, $108,184 and stock based
      compensation $703,264.





For
      the
      nine months ended January 31, 2008, we had expensed non-cash costs of $297,401
      related to shares and warrants granted in connection with debt financing,
      $217,311 in stock and options issued to employees and $167,160 in stock and
      warrants issued to consultants. During nine months ending January 31, 2007,
      we
      recorded non-cash income of $299,663 related to the decrease in value of
      warrants issued with registration rights and other expenses. We incurred a
      non-cash charge of $831,658 during the nine months ended January 31, 2007
      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 $3,052,792 for our nine months
      ended January 31, 2008 as compared to $ 2,989,931 for the corresponding interim
      period in 2007. The $62,861 or 2% increase in our net loss before preferred
      dividends for our nine month interim period ended January 31, 2008 was
      attributable to an increase in revenue, a decrease in operating expenses and
      non-cash financing costs, an increase in interest expense and financing costs,
      and the $299,461 decrease in the change in the value of warrant
      liabilities.




16


We
      also
      incurred non-cash preferred dividend expense of $26,022 for our nine month
      period ended January 31, 2008 as compared with a non-cash expense of $89,810
      in
      the corresponding interim period of 2007. The decrease in preferred dividend
      expense was primarily attributable to the conversion of preferred shares to
      common stock during the nine month period ended January 31, 2008.





Our
      net
      loss attributable to common stockholders of $3,078,814 for our nine month period
      ended January 31, 2008 was essentially the same as compared to $3,079,741 for
      the corresponding period in 2007. This is because the $582,753 year to year
      decrease in operating loss and the $63,802 decrease in preferred dividend were
      off-set by the $489,604 year to year increase in interest expense and financing
      costs and
      the
      $299,461 decrease in the change in the value of warrant
      liabilities.





**LIQUIDITY
      AND CAPITAL RESOURCES**





As
      of
      January 31, 2008, we had a deficit net worth of $3,586,038. We generated a
      deficit in cash flow from operations of $2,167,968 for the nine months ended
      January 31, 2008. This deficit is primarily attributable to our net loss of
      $3,052,792, partially offset by depreciation and amortization of $119,682,
      $439,511 in equity based compensation, $334,225 in stock based finance costs,
      $224,163 in forgiveness of dividends, and to changes in the balances of current
      assets and liabilities. Accounts payable and accrued expenses decreased by
      $85,243, and deferred revenue decreased by $8,748,





Cash
      flows used in investing activities for the nine months ended January 31, 2008
      was $1,313,920, primarily due to the purchase of RISC contracts of $1,114,317
      and payments for motorcycles and vehicles of $199,604.





We
      met
      our cash requirements during the nine month period through net proceeds from
      bank loans of $1,455,603, proceeds from convertible notes payable of $1,200,500,
      proceeds from notes payable of $ 765,000 and loans payable to officers of
      $40,000. Additionally, we have received limited revenues from leasing and
      financing motorcycles and other vehicles, private label programs and from dealer
      sign-up fees and municipal lease origination fees.




Management
      has received verbal and is awaiting
      receipt of signed agreements, or has received signed agreements from all note
      holders, referred to in NOTE I in the accompanying financial
      statements, whose due dates are past due, to extend the due dates of such
      notes to May 1, 2008.





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 approximately $1,800,000 in additional funds to
      fully
      implement our business plan during the next twelve months for a credit line
      reserve and for our general operating expenses. Although we obtained a senior
      credit facility in July 2005 (renewed in 2006 and 2007), which allowed us to
      commence and continue our operations, this facility does not allow us to provide
      financing for other markets we wish to enter. Thus, we will 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 our operating
      flexibility. If we are not successful in generating sufficient liquidity from
      operations or in raising sufficient capital resources to finance our growth,
      on
      terms acceptable to us, this could 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 on 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.




17


**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.





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 equity 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
      January 31, 2008, we had 18 full time employees. If we fully implement our
      business plan, we anticipate our employment base may increase by approximately
      35% 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.




18


**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.





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.


19


**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.





**WEB
      SITE 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.





**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.




20


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 53.97% 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.





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
      the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and must
      be current in their reports under the Exchange Act, 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.




21


**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.




22


**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 January 31, 2008, 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. In
      January 2008, an additional 440,000 restricted shares of common stock were
      issued for the quarter as the loans remained unpaid. The notes were subsequently
      extended to May 1, 2008.





On
      September 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 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 April 15, 2008.





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 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 May 1, 2008. ****





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 amount of
      $25,000 due December 10, 2007. The
      note
      was subsequently
      extended to May 1, 2008. **** 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. $5,000 was repaid in January 2008 and $5,000
      was
      repaid in February 2008. ****





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 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 on June 6, 2008.




23


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 amount of
      $200,000 due January 31, 2008. **** The
      note
      was subsequently
      extended to May 1, 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.





On
      January 7, 2008, 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 500,000 shares of its restricted common stock to an individual
      in
      consideration for consulting services. ****





On
      January 31, 2008, 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 five year warrants to purchase 1,632,833 shares of its restricted
      common stock at a price of $0.0438 per share to a corporation pursuant to a
      placement agency agreement. ****





On
      February 4, 2008, 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 75,000 shares of its restricted common stock to an individual
      in
      consideration of a $25,000 loan to the Company. In February 2008, this loan
      was
      converted into a six month, 6% convertible note due August 4, 2008. At
      the
      Company’s option, the notes are convertible into shares of common stock at $0.0336
      per share.





On
      February 5, 2008, 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 75,000 shares of its restricted common stock to an individual
      in
      consideration of a $25,000 loan to the Company. In February 2008, this loan
      was
      converted into a six month, 6% convertible note due August 5, 2008. At
      the
      Company’s option, the notes are convertible into shares of common stock
      at $0.0336
      per share.





On
      February 14, 2008, 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, pursuant to a consulting agreement, issued to the consultant 1,000,000
      shares of restricted common stock. The consulting agreement, unless cancelled,
      requires the Company to issue up to 4,000,000 additional shares of restricted
      common stock to the consultant, in tranches of 1,000,000 shares each, on the
      three, six, nine and twelve month anniversary dates of the
      agreement.





In
      February and March 2008, 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 seven accredited investors, six month unsecured notes in the
      aggregate amount of $290,000. The notes bear 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 prices of $0.0336
      to $0.0816 to per share. The notes will mature in six months from the respective
      issuances on various dates through September 14, 2008.




24


**ITEM
      6.   EXHIBITS**





The
      following exhibits are filed with this report:





Exhibit
                Number
            
            Description
                of ExhibitExhibit
                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.


25




**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:
                March 24, 2008
            By:
            /s/
                Anthony L. HavensAnthony
                L. HavensChief
                Executive Officer




Date:
                March 24, 2008
            By:
            /s/
                Anthony W. AdlerAnthony
                W. AdlerPrincipal
                Financial Officer




26