**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-QSB**

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

**For      the Quarterly Period Ended March 31, 2008**

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

**For      the transition period from _____________ to      ________________**

**Commission      File Number: 0-9500**

**SECURED      DIGITAL STORAGE CORPORATION**

| **New                Mexico**                                           | **85-0280415**                     |
|-------------------------------------------------------------------------|------------------------------------|
| (State                or other jurisdiction of                          | (IRS                Employer       |
| incorporation                or organization)                           | Identification                No.) |
|                                                                    |                               |
| **2001                Butterfield Road, Suite 1050, Downers Grove, IL** | **60515**                          |
| (Address                of principal executive offices)                 | (Zip                Code)          |

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**TABLE      OF CONTENTS**

**PART      I. - FINANCIAL INFORMATION**

| **Item                1.**                                                                                | **Consolidated                Financial Statements.**                                                   | 3  |
|-----------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------|----|
|                                                                                                      |                                                                                                    |
| Balance                Sheets March 31, 2008 (unaudited) and December 31, 2007                            |                                                                                                    |
| Statements                of Operations for the Three Months ended March 31, 2008 and                2007 |                                                                                                    |
| Statements                of Stockholders Equity (Deficit) March 31, 2008                (unaudited)      |                                                                                                    |
| Statements                of Cash Flows for the Three Months ended March 31, 2008 and                2007 |                                                                                                    |
| Notes                to Consolidated Financial Statements (unaudited)                                     |                                                                                                    |
|                                                                                                      |                                                                                                    |
| **Item                2.**                                                                                | **Management’s                Discussion and Analysis or Plan of                Operation.** | 15 |
|                                                                                                      |                                                                                                    |
| **Item                3.**                                                                                | **Controls                and Procedures.**                                                             | 17 |

**PART      II. - OTHER INFORMATION**

| **Item                1.** | **Legal                Proceedings.**                                           | 18 |
|----------------------------|---------------------------------------------------------------------------------|----|
|                       |                                                                            |
| **Item                2.** | **Unregistered                Sales of Equity Securities and Use of Proceeds.** | 18 |
|                       |                                                                            |
| **Item                3.** | **Defaults                upon Senior Securities.**                             | 18 |
|                       |                                                                            |
| **Item                4.** | **Submission                of Matters to a Vote of Security Holders.**         | 18 |
|                       |                                                                            |
| **Item                5.** | **Other                Information.**                                           | 18 |
|                       |                                                                            |
| **Item                6.** | **Exhibits.**                                                                   | 18 |
|                       |                                                                            |
| **Signatures**             | 19                                                                              |
|                       |                                                                            |

----

**PART        I. —        FINANCIAL INFORMATION**

**SECURED      DIGITAL STORAGE CORPORATION**

**FINANCIAL      STATEMENTS**

**THREE      MONTHS ENDED MARCH 31, 2008 AND 2007**

----

**SECURED      DIGITAL STORAGE CORPORATION**

**Consolidated      Balance Sheets**

|                                                                                                                                                                                                                                           |   | **March                31,****2008**  |       | **December                31,****2007**  |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|------------|-----------------------------------------------|--------|
| **ASSETS:**                                                                                                                                                                                                                                    |   |                                  |       |                                          |   |
| Current              Assets:                                                                                                                                                                                                                   |   |                                  |       |                                          |   |
| Cash                                                                                                                                                                                                                                           |   | $                                          | 406,283    |                                          | $      | 384,095 |   |
| Prepaid                Expenses                                                                                                                                                                                                                |   |                                       | 275,035    |                                          |   | 316,316 |   |
|                                                                                                                                                                                                                                           |   |                                       |       |                                          |   |   |   |
| Total                Current Assets                                                                                                                                                                                                            |   |                                       | 681,318    |                                          |   | 700,411 |   |
| Noncurrent              Assets                                                                                                                                                                                                                 |   |                                       |       |                                          |   |   |   |
| Net                Fixed Assets                                                                                                                                                                                                                |   |                                       | 322,799    |                                          |   | 325,529 |   |
| Other                Assets                                                                                                                                                                                                                    |   |                                       | 145,331    |                                          |   | 161,523 |   |
|                                                                                                                                                                                                                                           |   |                                       |       |                                          |   |   |   |
| Total                Noncurrent Assets                                                                                                                                                                                                         |   |                                       | 468,130    |                                          |   | 487,052 |   |
| **TOTAL                ASSETS**                                                                                                                                                                                                                |   | $                                          | 1,149,448  |                                          | $      | 1,187,463 |   |
|                                                                                                                                                                                                                                           |   |                                       |       |                                          |   |   |   |
| **LIABILITIES              AND STOCKHOLDERS' EQUITY (DEFICIT):**                                                                                                                                                                               |   |                                       |       |                                          |   |   |   |
| Current                Liabilities:                                                                                                                                                                                                            |   |                                       |       |                                          |   |   |   |
| Accounts                Payable                                                                                                                                                                                                                |   | $                                          | 637,176    |                                          | $      | 504,930 |   |
| Accrued                Expenses                                                                                                                                                                                                                |   |                                       | 138,975    |                                          |   | 68,519 |   |
| Current                Portion of Debt                                                                                                                                                                                                         |   |                                       | 573,783    |                                          |   | 480,335 |   |
|                                                                                                                                                                                                                                           |   |                                       |       |                                          |   |   |   |
| Total                Current Liabilities                                                                                                                                                                                                       |   |                                       | 1,349,934  |                                          |   | 1,053,784 |   |
|                                                                                                                                                                                                                                           |   |                                       |       |                                          |   |   |   |
| Noncurrent                Liabilities:                                                                                                                                                                                                         |   |                                       |       |                                          |   |   |   |
| Long-Term                Debt                                                                                                                                                                                                                  |   |                                       | 286,053    |                                          |   | 314,643 |   |
|                                                                                                                                                                                                                                           |   |                                       |       |                                          |   |   |   |
| Total                Liabilities                                                                                                                                                                                                               |   |                                       | 1,635,987  |                                          |   | 1,368,427 |   |
|                                                                                                                                                                                                                                           |   |                                       |       |                                          |   |   |   |
| Stockholders'                Equity:                                                                                                                                                                                                           |   |                                       |       |                                          |   |   |   |
| Common                Stock, $.001 par value; 50,000,000 shares authorized; 16,826,104                issued                and outstanding at March 31, 2008 and 10,753,604 shares issued and                outstanding at December 31, 2007 |   |                                       | 16,826     |                                          |   | 10,754 |   |
| Additional                Paid-in Capital                                                                                                                                                                                                      |   |                                       | 4,608,583  |                                          |   | 3,492,548 |   |
| Retained                Earnings (Deficit)                                                                                                                                                                                                     |   |                                       | (5,111,948 | )                                             |   | (3,684,266 | ) |
|                                                                                                                                                                                                                                           |   |                                       |       |                                          |   |   |   |
| Total                Stockholders' Equity (deficit)                                                                                                                                                                                            |   |                                       | (486,539   | )                                             |   | (180,964 | ) |
|                                                                                                                                                                                                                                           |   |                                       |       |                                          |   |   |   |
| **TOTAL                LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)**                                                                                                                                                                         |   | $                                          | 1,149,448  |                                          | $      | 1,187,463 |   |

----

**SECURED      DIGITAL STORAGE CORPORATION**

**Consolidated      Statements of Operations**

|                                             |   | **Three                Months Ended**  |       |
|--------------------------------------------------|--------|---------------------------------------------|------------|
|                                             |   | **March                31,**           |       |
|                                             |   | **2008**                               |       | **2007**  |   |
|                                             |   |                                        |       |   |   |
| **Revenue:**                                     |   | $                                           | -          |   | $ | - |   |
|                                             |   |                                        |       |   |   |   |   |
| **Operating                Expenses:**           |   |                                        |       |   |   |   |   |
| Compensation                                     |   |                                        | 530,237    |   |   | - |   |
| Professional                Services             |   |                                        | 456,990    |   |   | 11,948 |   |
| Occupancy                                        |   |                                        | 39,927     |   |   | - |   |
| Operating                Leases                  |   |                                        | 75,958     |   |   | - |   |
| Depreciation                                     |   |                                        | 36,108     |   |   | - |   |
| Other                Administrative Expense      |   |                                        | 133,997    |   |   | 26,155 |   |
| Total                Operating Expenses          |   |                                        | 1,273,217  |   |   | 38,103 |   |
|                                             |   |                                        |       |   |   |   |   |
| **Total                Operating Profit (Loss)** |   |                                        | (1,273,217 | ) |   | (38,103 | ) |
|                                             |   |                                        |       |   |   |   |   |
| Interest                Expense, net             |   |                                        | 154,465    |   |   | 103,500 |   |
|                                             |   |                                        |       |   |   |   |   |
| Loss                Before Taxes                 |   |                                        | (1,427,682 | ) |   | (141,603 | ) |
|                                             |   |                                        |       |   |   |   |   |
| Taxes                                            |   |                                        | -          |   |   | - |   |
|                                             |   |                                        |       |   |   |   |   |
| Net                Loss                          |   |                                        | (1,427,682 | ) |   | (141,603 | ) |
|                                             |   |                                        |       |   |   |   |   |
| **Per                Share Information:**        |   |                                        |       |   |   |   |   |
|                                             |   |                                        |       |   |   |   |   |
| Weighted                average number of        |   |                                        |       |   |   |   |   |
| common                shares outstanding         |   |                                        | 16,283,480 |   |   | 1,300,018 |   |
|                                             |   |                                        |       |   |   |   |   |
| **Net                Loss per Common Share**     |   | $                                           | (0.09      | ) | $ | (0.11 | ) |

----

**SECURED        DIGITAL STORAGE CORPORATION**

**Consolidated      Statements of Cash Flows**

**(Indirect      Method)**

|                                                                                                     |   | **Three                Months Ended March 31, **  |       |
|----------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------|------------|
|                                                                                                     |   | **2008**                                               |       | **2007**  |   |
|                                                                                                     |   |                                                        |       |   |   |
| **Cash                Flows from Operating Activities:**                                                 |   |                                                        |       |   |   |
|                                                                                                     |   |                                                        |       |   |   |
| Net                Loss                                                                                  |   | $                                                           | (1,427,682 | ) | $ | (141,603 | ) |
|                                                                                                     |   |                                                        |       |   |   |   |   |
| Adjustments                to reconcile net loss to net cash used in operating                activities |   |                                                        |       |   |   |   |   |
| Depreciation                                                                                             |   |                                                        | 36,108     |   |   | - |   |
| Stock                Based Compensation Expense                                                          |   |                                                        | 56,032     |   |   | - |   |
| Stock                Warrant Expense Issued with Debt                                                    |   |                                                        | 148,645    |   |   | - |   |
| Decrease                in Prepaid Expenses                                                              |   |                                                        | 41,281     |   |   | - |   |
| Decrease                in Other Assets                                                                  |   |                                                        | 16,192     |   |   | - |   |
| Increase                in Accounts Payable                                                              |   |                                                        | 132,246    |   |   | (49,710 | ) |
| Increase                in Accrued Expenses                                                              |   |                                                        | 70,456     |   |   | 17,500 |   |
|                                                                                                     |   |                                                        |       |   |   |   |   |
| **Net                Cash Flows Used by Operations**                                                     |   |                                                        | (926,722   | ) |   | (173,813 | ) |
|                                                                                                     |   |                                                        |       |   |   |   |   |
| **Cash                Flows from Investing Activities:**                                                 |   |                                                        |       |   |   |   |   |
|                                                                                                     |   |                                                        |       |   |   |   |   |
| Purchase                of Equipment & Leases                                                        |   |                                                        | (33,378    | ) |   | - |   |
|                                                                                                     |   |                                                        |       |   |   |   |   |
| **Cash                Flows Used by Investing Activities**                                               |   |                                                        | (33,378    | ) |   | - |   |
|                                                                                                     |   |                                                        |       |   |   |   |   |
| **Cash                Flows from Financing Activities:**                                                 |   |                                                        |       |   |   |   |   |
| Repayments                of Debt                                                                        |   |                                                        | (114,222   | ) |   | (103,000 | ) |
| Issuance                of Debt                                                                          |   |                                                        | 30,435     |   |   | 280,000 |   |
| Advance                for Subscriptions of Common Stock                                                 |   |                                                        | 994,100    |   |   | - |   |
| Exercise                of Stock Warrants to Common Stock                                                |   |                                                        | 71,975     |   |   | - |   |
|                                                                                                     |   |                                                        |       |   |   |   |   |
| **Net                Cash Flows Provided by Financing Activities**                                       |   |                                                        | 982,288    |   |   | 177,000 |   |
|                                                                                                     |   |                                                        |       |   |   |   |   |
| **Net                Increase (Decrease) in Cash**                                                       |   |                                                        | 22,188     |   |   | 3,187 |   |
|                                                                                                     |   |                                                        |       |   |   |   |   |
| **Cash                at Beginning of Period**                                                           |   |                                                        | 384,095    |   |   | 345 |   |
|                                                                                                     |   |                                                        |       |   |   |   |   |
| **Cash                at End of Period**                                                                 |   | $                                                           | 406,283    |   | $ | 3,532 |   |
|                                                                                                     |   |                                                        |       |   |   |   |   |
| **Supplemental                Disclosure of Cash Flow Information**                                      |   |                                                        |       |   |   |   |   |
| Cash                Paid for Interest                                                                    |   | $                                                           | 92,000     |   | $ | 86,000 |   |
| Cash                Paid for Income Taxes                                                                |   | $                                                           | -          |   | $ | - |   |

----

**SECURED      DIGITAL STORAGE CORPORATION**

**Consolidated      Stockholders’ Equity (Deficit)**

**March      31, 2008**

|                                                                    |   | **Common                Stock**   |                         |       |   |                                          |   |                                           |                         |
|-------------------------------------------------------------------------|--------|-----------------------------------|------------------------------|------------|--------|-----------------------------------------------|--------|------------------------------------------------|------------------------------|
|                                                                    |   | **#                of****Shares** |                         | **Amount** |   | **Additional                Paid-in Capital** |   | **Retained                Earnings (Deficit)** |                         | **Totals** |   |
|                                                                    |   |                              |                         |       |   |                                          |   |                                           |                         |   |   |
| Balance                - December 31, 2007                              |   |                              | 10,753,604                   |       | $      | 10,754                                        |   | $                                              | 3,492,548                    |   | $ | (3,684,266 | ) | $ | (180,964 | ) |
|                                                                    |   |                              |                         |       |   |                                          |   |                                           |                         |   |   |   |   |   |   |   |
| Net                Loss                                                 |   |                              | -                            |       |   | -                                             |   |                                           | -                            |   |   | (1,427,682 | ) |   | (1,427,682 | ) |
| Stock                Based Compensation Expense                         |   |                              | -                            |       |   | -                                             |   |                                           | 56,032                       |   |   | - |   |   | 56,032 |   |
| Advance                for Subscriptions of Common Stock                |   |                              | -                            |       |   | -                                             |   |                                           | 994,100                      |   |   | - |   |   | 994,100 |   |
| Proceeds                from Exercise of Stock Warrants to Common Stock |   |                              | 6,072,500                    |       |   | 6,072                                         |   |                                           | 65,903                       |   |   | - |   |   | 71,975 |   |
|                                                                    |   |                              |                    |       |   |                                     |   |                                           |                    |   |   |                    |   |   |                    |   |
|                                                                    |   |                              |                         |       |   |                                          |   |                                           |                         |   |   |   |   |   |   |   |
| Balance                - March 31, 2008                                 |   |                              | 16,826,104                   |       | $      | 16,826                                        |   | $                                              | 4,608,583                    |   | $ | (5,111,948 | ) | $ | (486,539 | ) |

----

**SECURED      DIGITAL STORAGE CORPORATION**

**Notes      to Consolidated Financial Statements**

**March      31, 2008**

**Note      1 - Presentation of Interim Information and Significant Accounting      Policies:**

**Basis      of Accounting**

**Cash      and Cash Equivalents**

**Property      and Equipment**

**Use      of Estimates**

**Accounting      for Stock-Based Compensation**

----

|                                      |   | 2008   |   | 2007   |   |
|-------------------------------------------|--------|--------|--------|--------|--------|
| Expected                volatility factor |   |   | 200    | %      |   | 10 | % |
| Risk                free interest rate    |   |   | 2.85   |   |   | 4.50 | % |
| Expected                lives             |   |   | 5      |   |   | 5 |   |

**Other      Comprehensive Income**

**Loss      Per Share**

**Fair      Value of Financial Instruments**

----

**Unaudited      Pro Forma Financial Information**

|                                                |   |   | **Three                months ended**  |   |
|-----------------------------------------------------|--------|--------|---------------------------------------------|--------|
|                                                |   |   | **March                31, **          |   |
|                                                |   |   | **2008**                               |   |   | **2007**  |   |
| Net                revenues                         |   | $      | 0                                           |   | $ | 0 |   |
|                                                |   |   |                                        |   |   |   |   |
| Net                loss                             |   | $      | (1,427,682                                  | )      | $ | (293,433 | ) |
|                                                |   |   |                                        |   |   |   |   |
| Net                loss per share:             |   |   |                                        |   |   |   |   |
|                                                |   |   |                                        |   |   |   |   |
| Basic                and diluted                    |   | $      | (0.09                                       | )      | $ | (0.03 | ) |
| Weighted                average shares outstanding: |   |   |                                        |   |   |   |   |
| Basic                and diluted                    |   |   | 16,283,480                                  |   |   | 8,800,022 |   |

**Going      Concern**

**Reclassifications**

----

**Note      2 - Debt**

|                                                                                                                                              |   | **3/31/2008** |     |  **12/31/2007** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|----------|----------------------|--------|
|                                                                                                                                              |   |          |     |            |   |
| Note                payable, TAPO Ventures, LLC, related party, non-interest bearing                loan,                open ended               |   | $             | 100,000  |                 | $      | 100,000 |   |
|                                                                                                                                              |   |          |     |                 |   |   |   |
| Short                term loan, Larry Malone, related party, 8% interest per annum, due                March                25, 2008              |   |          | 15,000   |                 |   | - |   |
|                                                                                                                                              |   |          |     |                 |   |   |   |
| Short                term loan, Doug Stukel, related party, non-interest bearing, due                upon                demand                   |   |          | -        |                 |   | 75,000 |   |
|                                                                                                                                              |   |          |     |                 |   |   |   |
| Note                payable, two individuals, 7% interest per annum, 750,000 warrants                issued,                due February 28, 2008 |   |          | 300,000  |                 |   | 300,000 |   |
|                                                                                                                                              |   |          |     |                 |   |   |   |
| Debt                obligation under capital lease                                                                                                |   |          | 444,836  |                 |   | 468,623 |   |
|                                                                                                                                              |   |          |     |                 |   |   |   |
| Total                debt                                                                                                                         |   |          | 859,836  |                 |   | 943,623 |   |
|                                                                                                                                              |   |          |     |                 |   |   |   |
| Less:                Contra debt for stock warrants                                                                                               |   |          | -        |                 |   | (148,645 | ) |
|                                                                                                                                              |   |          |     |                 |   |   |   |
| Net                debt                                                                                                                           |   |          | 859,836  |                 |   | 794,978 |   |
| Less:                Current Portion                                                                                                              |   |          | (573,783 | )                    |   | (480,335 | ) |
|                                                                                                                                              |   |          |     |                 |   |   |   |
| Long                Term Debt                                                                                                                     |   | $             | 286,053  |                 | $      | 314,643 |   |

| 2008  |   | $      | 527,280 |   |
|-------|--------|--------|---------|--------|
| 2009  |   |   | 165,807 |   |
| 2010  |   |   | 165,807 |   |
| 2011  |   |   | 942     |   |
| Total |   | $      | 859,836 |   |

----

**Note      3 - Stock Based Compensation**

|                                         |   | Number                of Shares |      | Price                per Share |   |  Weighted                Average Share Price |   |
|----------------------------------------------|--------|---------------------------------|-----------|--------------------------------|--------|---------------------------------------------------|--------|
| January                1, 2007               |   |                            | -         |                           |   | -                                                 |   |   | - |   |
| 2007                grants                   |   |                            | 4,100,000 |                           | $      | 0.51                                              |   | $ | 0.51 |   |
|                                         |   |                            |      |                           |   |                                              |   |   |   |   |
| December                31, 2007             |   |                            | 4,100,000 |                           |   | 0.51                                              |   |   | 0.51 |   |
|                                         |   |                            |      |                           |   |                                              |   |   |   |   |
| 2008                grants                   |   |                            | 1,230,000 |                           |   | 0.80                                              |   |   | 0.80 |   |
| March                31, 2008                |   |                            | 5,330,000 |                           | $      | 0.51-                0.80                         |   | $ | 0.58 |   |
|                                         |   |                            |      |                           |   |                                              |   |   |   |   |
| Vested                Shares, March 31, 2008 |   |                            | 2,132,000 |                           | $      | 0.51-                0.80                         |   | $ | 0.58 |   |

|                                             |   | Options |      | Weighted                Average Grant Date Fair Value |   |
|--------------------------------------------------|--------|---------|-----------|-------------------------------------------------------|--------|
| Non                Vested Shares, March 31, 2008 |   |    | 3,198,000 |                                                  | $      | 0.27 |   |

**Note      4 - Fixed Assets**

|                                             |   |      |    |       |   |
|--------------------------------------------------|--------|-----------|---------|------------|--------|
|                                             |   | 3/31/2008 |    | 12/31/2007 |   |
| Computer                Software & Equipment |   | $         | 321,824 |       | $      | 290,674 |   |
| Leasehold                Improvements            |   |      | 30,000  |       |   | 30,000 |   |
| Furniture                and Fixtures            |   |      | 10,369  |       |   | 8,141 |   |
| Gross                Fixed Assets                |   |      | 362,193 |       |   | 328,815 |   |
| Less:                Accumulated Depreciation    |   |      | (39,394 | )          |   | (3,286 | ) |
|                                             |   | $         | 322,799 |       | $      | 325,529 |   |

**Note      5 - Capital Stock Transactions**

----

|                                          |   | Issue                Date |       | Expiration                Date |   | Exercise                Price |   | Granted |   | Exercised |   | Outstanding |   |
|-----------------------------------------------|--------|---------------------------|------------|--------------------------------|--------|-------------------------------|--------|---------|--------|-----------|--------|-------------|--------|
| LD                Acquisition Warrants        |   |                      | 11/15/2005 |                           |   | 11/15/2015                    |   | $       | 0.01   |      |   | 10,000,000  |   |   | 6,050,000 |   |   | 3,950,000 |   |
| Conversion                of Debt             |   |                      | 9/19/2007  |                           |   | 12/31/2012                    |   | $       | 0.51   |      |   | 724,500     |   |   | 22,500 |   |   | 702,000 |   |
| Notes                Payable Issuance         |   |                      | 11/12/2007 |                           |   | 11/12/2012                    |   | $       | 0.80   |      |   | 750,000     |   |   | - |   |   | 750,000 |   |
| Personal                Guarantee - Equipment |   |                      | 11/15/2007 |                           |   | 11/15/2012                    |   | $       | 0.80   |      |   | 750,000     |   |   | - |   |   | 750,000 |   |
|                                          |   |                      |       |                           |   |                          |   |    |   |      |   | 12,224,500  |   |   | 6,072,500 |   |   | 6,152,000 |   |

**NOTE      6 **
**Commitments      and Contingencies**

*Operating      and Capital Leases: *

|                                         |   | 3/31/2008 |    | 12/31/2007 |   |
|----------------------------------------------|--------|-----------|---------|------------|--------|
| Computer                Equipment            |   | $         | 158,980 |       | $      | 158,980 |   |
| Purchased                Software            |   |      | 106,657 |       |   | 106,657 |   |
| Less                Accumulated Depreciation |   |      | -       |       |   | - |   |
| Net                                          |   | $         | 265,637 |       | $      | 265,637 |   |

----

| For                the years ended December, 31, |   |  Operating                Leases |      | Capital                Leases |   |
|--------------------------------------------------|--------|---------------------------------------|-----------|-------------------------------|--------|
| Remaining                nine months of 2007     |   |                             |      |                          |   |
| 2008                                             |   | $                                     | 324,133   |                          | $      | 124,355 |   |
| 2009                                             |   |                                  | 365,388   |                          |   | 165,807 |   |
| 2010                                             |   |                                  | 363,022   |                          |   | 165,807 |   |
| 2011                                             |   |                                  | 68,246    |                          |   | 942 |   |
|                                             |   |                                  | 50,357    |                          |   | - |   |
|                                             |   | $                                     | 1,171,146 |                          | $      | 456,911 |   |

**NOTE      7 **
**Subsequent      Events**

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| **Item                2.** | **MANAGEMENT’S                DISCUSSION AND ANALYSIS ON PLAN OF                OPERATION** |
|----------------------------|---------------------------------------------------------------------------------------------------|

*Cautionary      and Forward Looking Statements*

| (a)    | volatility                or decline of the Company’s stock price;                                                                                                                       |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                           |
| (b)    | potential                fluctuation in quarterly results;                                                                                                                                     |
|   |                                                                                                                                                                                           |
| (c)    | failure                of the Company to earn revenues or profits;                                                                                                                             |
|   |                                                                                                                                                                                           |
| (d)    | inadequate              capital to              continue or expand its business, inability to raise additional capital              or              financing to implement its business plans; |
|   |                                                                                                                                                                                           |
| (e)    | failure                to make sales;                                                                                                                                                          |
|   |                                                                                                                                                                                           |
| (f)    | rapid                and significant changes in markets;                                                                                                                                       |
|   |                                                                                                                                                                                           |
| (g)    | litigation                with or legal claims and allegations by outside parties;                or                                                                                           |
|   |                                                                                                                                                                                           |
| (h)    | insufficient                revenues to cover operating costs.                                                                                                                                 |

*Results      of Operations for the Three-Months Ended March 31, 2008 compared to Same Period      in 2007*

*Results      of Operations for the Three-Months Ended March 31, 2007 compared to Same Period      in 2006*

----

*Changes      in Financial Condition*

*Liquidity      and Capital Resources*

----

| **Item                3.** | **CONTROLS                AND PROCEDURES** |
|----------------------------|--------------------------------------------|

|   | (a) | Evaluation                of Disclosure Controls and                Procedures: |
|--------|-----|---------------------------------------------------------------------------------|

|   | (b) | Changes                in Internal Control over Financial                Reporting: |
|--------|-----|-------------------------------------------------------------------------------------|

----

**PART      II.**

**OTHER      INFORMATION**

| **Item                1.** | **LEGAL                PROCEEDINGS.** |
|----------------------------|---------------------------------------|
|                       |  NONE                            |

| **Item                2.** | **UNREGISTERED                SALE OF EQUITY SECURITIES AND USE OF PROCEEDS.** |
|----------------------------|--------------------------------------------------------------------------------|
|                       |  NONE                                                                     |

| **Item                3.** | **DEFAULTS                UPON SENIOR SECURITIES.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|----------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                       | As                of March 31, 2008, the Company was in                payment default under the terms of a promissory note in the amount                of                $100,000, which as of the date hereof has not been subsequently cured.                The                total amount currently due as of the date of this report is $103,433.                As                of March 31, 2008, the Company was also in payment default under                the terms                of two additional promissory notes in the aggregate amount of $215,000.                The defaults have subsequently been cured                and no                amounts remain outstanding as of the date of this                report. |

| **Item                4.** | **SUBMISSION                OF MATTERS TO A VOTE OF SECURITY HOLDERS.** |
|----------------------------|-------------------------------------------------------------------------|
|                       |  NONE                                                              |

| **Item                5.** | **OTHER                INFORMATION.** |
|----------------------------|---------------------------------------|
|                       |  NONE                            |

| **Item                6.** | **EXHIBITS.** |
|----------------------------|---------------|

|   | 31.1                302 Sarbanes-Oxley Certification |
|--------|------------------------------------------------------|
|   | 31.2                302 Sarbanes-Oxley Certification |
|   | 32.1                906 Sarbanes-Oxley Certification |
|   | 32.2                906 Sarbanes-Oxley Certification |

----

|                        |   |   |                                      |                                                                                                                                 |
|-----------------------------|--------|--------|-------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|
| May                13, 2008 |   |   |  /s/                William M. Lynes |
|                        |   |   |                                      | William                M. Lynes, Chief Executive Officer and Chairman of the Board (principal executive                officer) |

|   |   |   |   |                                                        |
|--------|--------|--------|--------|-------------------------------------------------------------|
|   |   |   |   |  /s/                Patrick J. Gainer                  |
|   |   |   |   | Patrick                J. Gainer, Chief Financial Officer   |
|   |   |   |   | (principal                financial and accounting officer) |

----

| Exhibit                Number |   | Exhibit                Description              |   |
|-------------------------------|--------|-------------------------------------------------|--------|
|                          |   |                                            |   |
| 31.1                          |   | 302                Sarbanes-Oxley Certification |   |
|                          |   |                                            |   |
| 31.2                          |   | 302                Sarbanes-Oxley Certification |   |
|                          |   |                                            |   |
| 32.1                          |   | 906                Sarbanes-Oxley Certification |   |
|                          |   |                                            |   |
| 32.2                          |   | 906                Sarbanes-Oxley Certification |   |

----