UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2008

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

FOR THE TRANSITION PERIOD FROM _______ TO _______

COMMISSION FILE NUMBER 333-07953

DYNAMIC LEISURE CORPORATION
---------------------------
(Exact name of registrant as specified in its charter)

Minnesota 41-1508703
--------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

5680A West Cypress Street
Tampa, FL 33607
-------------------------
(Address of principal executive offices)

(813) 877-6300
--------------
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer, "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

APPLICABLE ONTO TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ]

As of May 15, 2008, the registrant had 16,888,557 shares of its $0.01 par value
common stock outstanding.

DYNAMIC LEISURE CORPORATION AND SUBSIDIARIES

INDEX TO
QUARTERLY REPORT ON FORM 10-Q
FOR THE FISCAL QUARTER ENDED MARCH 31, 2008

PAGE
----
PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited):

Consolidated Balance Sheets
as of March 31, 2008 (Unaudited) and December 31, 2007 ........... 3

Consolidated Statements of Operations for the
three months ended March 31, 2008 and 2007 (Unaudited) ........... 4

Consolidated Statement of Changes in Stockholders' Deficit
for the three months ended March 31, 2008 (Unaudited) ............ 5

Consolidated Statements of Cash Flows for the
three months ended March 31, 2008 and 2007 (Unaudited) ........... 6

Notes to Consolidated Financial Statements (Unaudited) ........... 7

Item 2. Management's Discussion and Analysis or Plan of Operation ........ 36

Item 3. Quantitative and Qualitative Disclosure about Market Risk ........ 46

Item 4. Controls and Procedures .......................................... 47

Item 4T. Controls and Procedures .......................................... 47

PART II. OTHER INFORMATION

Item 1. Legal Proceedings ................................................ 47

Item 1A. Risk Factors ..................................................... 48

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds ...... 61

Item 3. Defaults upon senior securities .................................. 62

Item 5. Other Information ................................................ 62

Item 6. Exhibits ......................................................... 62

Signatures ................................................................ 63

Exhibit Index ............................................................. 63

DYNAMIC LEISURE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

MARCH 31,
2008 DECEMBER 31,
(UNAUDITED) 2007
------------ ------------
ASSETS
Current Assets
Cash ........................................... $ 244,229 $ 198,500
Investments, restricted ........................ 84,997 84,997
Accounts receivable, net of an
allowance of $9,984 and $9,984 ............... 217,359 135,076
Prepaid travel ................................. 431,384 387,847
Other current assets ........................... 258,799 54,139
------------ ------------
Total Current Assets ......................... 1,236,768 860,559
------------ ------------
Property and equipment, net ...................... 875,836 922,028
------------ ------------
Other Assets
Goodwill ....................................... 2,902,196 2,902,196
Intangible assets, net ......................... 3,379,573 3,565,085
Deposits ....................................... 110,893 100,595
Debt issue costs, net .......................... 230,866 271,112
------------ ------------
Total Other Assets ........................... 6,623,528 6,838,988
------------ ------------
Total Assets ................................. $ 8,736,132 $ 8,621,575
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
Convertible promissory notes, net of
discount of $162,903 and $211,022 ............ $ 4,192,889 $ 3,939,770
Notes payable, current portion ................. 386,588 386,588
Acquisitions payable ........................... 1,111,452 1,204,857
Convertible promissory note to related party ... 350,000 350,000
Accounts payable ............................... 2,079,557 2,165,901
Accounts payable to related parties ............ 410,855 471,284
Accrued compensation ........................... 36,550 16,133
Accrued interest ............................... 1,049,152 865,728
Other accrued liabilities ...................... 376,383 286,221
Capital lease obligation ....................... 38,750 37,852
Deferred revenue and customer deposits ......... 1,178,622 1,116,420
Due to employee ................................ 160,000 160,000
Warrant and option liability ................... 9,274,734 2,475,112
Embedded conversion option liability ........... 8,073,128 3,272,977
------------ ------------
Total Current Liabilities .................... 28,718,660 16,748,843
------------ ------------
Long-Term Liabilities
Convertible promissory notes, net of
current portion, net of discount
of $2,006,411 and $1,346,542 ................. 1,483,589 1,163,458
Capital lease obligation, net of current portion 29,586 39,782
------------ ------------
Total Long-Term Liabilities .................. 1,513,175 1,203,240
------------ ------------

Total Liabilities ............................ $ 30,231,835 $ 17,952,083
------------ ------------

COMMITMENTS AND CONTINGENCIES (Note 12)

Stockholders' Deficit
Preferred stock, $0.01 par value,
20,000,000 shares authorized,
none issued and outstanding .................. $ - $ -
Common stock, $0.01 par value, 300,000,000
shares authorized, 16,888,557 and 15,733,557
issued and outstanding ....................... 168,886 157,336
Common stock issuable, $0.01 par value
(2,250,000 and 836,957 shares) ............... 22,500 8,370
Additional paid-in capital, net of
deferred consulting fees of $0
and $33,822 .................................. 7,743,390 7,673,448

Accumulated deficit ............................ (29,430,479) (17,169,662)
------------ ------------
Total Stockholders' Deficit .................. (21,495,703) (9,330,508)
------------ ------------

Total Liabilities and Stockholders' Deficit .. $ 8,736,132 $ 8,621,575
============ ============

See accompanying notes to the unaudited consolidated financial statements.

DYNAMIC LEISURE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

FOR THE THREE MONTHS ENDED
MARCH 31,
2008 2007
(unaudited) (unaudited)
------------ ------------

Total revenues ................................... $ 2,248,336 $ 1,971,393

Cost of revenues ................................. 1,885,233 1,475,434
------------ ------------

Gross Profit ................................... 363,103 495,959

Operating Expenses
Employee Compensation .......................... 415,671 560,229
Financial consulting, includes $33,822 and
$32,950 stock-based compensation ............. 39,777 190,927
Legal expense .................................. 35,694 40,084
Depreciation and amortization expense .......... 271,950 212,232
Internal accounting and external auditing
expense ...................................... 76,276 112,350
Director fees, includes $14,800 and $134,848
stock-based compensation ..................... 14,800 134,848
Investor relations, includes $0 and $157,100
stock-based compensation ..................... 56,906 203,554
Other general and administrative expenses ...... 276,674 433,081
------------ ------------

Total Operating Expenses ..................... 1,187,748 1,887,305
------------ ------------

Loss from Operations ......................... (824,645) (1,391,346)

Other Income (Expense)
Interest income ................................ 645 855
Interest expense, includes $588,250 and
$564,393 in debt discount amortization ....... (892,044) (763,882)
Warrant and option valuation income (expense) .. (5,744,622) 2,974,005
Embedded conversion option valuation expense ... (4,800,151) (15,279)
------------ ------------

Total Other Income (Expense), net ............ (11,436,172) 2,195,699
------------ ------------

Net Income (Loss) ............................ $(12,260,817) $ 804,353
============ ============

Net Income (Loss) per Share:
Basic .......................................... $ (0.68) $ 0.07
============ ============
Diluted ........................................ $ (0.68) $ 0.06
============ ============

Weighted average number of shares
outstanding during the period:
Basic ...................................... 17,928,194 12,324,495
============ ============
Diluted .................................... 17,928,194 12,330,015
============ ============

See accompanying notes to the unaudited consolidated financial statements.

DYNAMIC LEISURE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
For the Three Months Ended March 31, 2008

Additional
Common Stock Paid In Accumulated Total
Common Stock Issuable Capital Deficit Stockholders'
--------------------- ------------------- ---------- ------------ Equity
Shares Amount Shares Amount Amount Amount Deficit
---------- -------- --------- ------- ---------- ------------ ------------

BALANCE AT
DECEMBER 31, 2007 15,733,557 $157,336 836,957 $ 8,370 $7,673,448 $(17,169,662) $ (9,330,508)

Common stock
issued in
conversion of
promissory
note ............ 375,000 3,750 - - 11,250 - 15,000

Common stock
issued for
services ........ 780,000 7,800 - - 72,822 - 80,622

Common stock
issuable
related to
anti-dilution
provisions ...... - - 1,413,043 14,130 (14,130) - -

Net Loss at
March 31, 2008 .. - - - - - (12,260,817) (12,260,817)
---------- -------- --------- ------ ---------- ------------ ------------
BALANCE AT
MARCH 31, 2008 .. 16,888,557 $168,886 2,250,000 $22,500 $7,743,390 $(29,430,479) $(21,495,703)
========== ======== ========= ======= ========== ============ ============

See accompanying notes to the unaudited consolidated financial statements.

DYNAMIC LEISURE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

FOR THE THREE MONTHS ENDED
MARCH 31,
2008 2007
(unaudited) (unaudited)
------------ ------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ................................................... $(12,260,817) $ 804,353
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Change in accounts receivable allowance ......................... - 4,433
Depreciation .................................................... 46,192 14,778
Amortization of intangible assets ............................... 185,512 185,143
Amortization of debt issue costs ................................ 40,246 12,311
Amortization of debt discount to interest expense ............... 588,250 564,393
Common stock and warrants for services .......................... 80,622 324,898
Embedded conversion option valuation expense .................... 4,800,151 15,279
Warrant and option valuation expense (income) ................... 5,744,622 (2,974,005)
(Increase) decrease in assets and liabilities:
Accounts receivable ............................................. (82,283) (74,440)
Prepaid assets .................................................. (43,537) 56,758
Other assets .................................................... (14,958) 44,245
Accounts payable ................................................ (146,773) 397,971
Accrued expenses ................................................ 294,003 254,636
Deferred revenue and customer deposit ........................... 62,202 (109,218)
------------ ------------
Net Cash Used in Operating Activities ........................... (706,568) (478,465)
------------ ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Funds held in escrow ................................................ (200,000) -
Change in investments ............................................... - 10,745
------------ ------------
Net Cash Provided by (Used in) Investing Activities ............. (200,000) 10,745
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from convertible promissory notes .......................... 1,200,000 400,000
Repayment of convertible promissory notes ........................... (93,405) -
Proceeds from employee advances ..................................... - 60,000
Debt issue costs .................................................... (145,000) (50,000)
Repayment of capital leases ......................................... (9,298) (7,921)
Proceeds from common stock issuance ................................. - 22,500
------------ ------------
Net Cash Provided by Financing Activities ....................... 952,297 424,579
------------ ------------

Net Increase (Decrease) in Cash ....................................... 45,729 (43,141)

Cash at Beginning of Period ........................................... 198,500 203,911
------------ ------------
Cash at End of Period ................................................. $ 244,229 $ 160,770
============ ============
Supplemental disclosure of cash flow information:

Cash paid during the period for income taxes ........................ $ - $ -
============ ============
Cash paid during the period for interest ............................ $ 37,809 $ 7,731
============ ============

Supplemental Disclosure of non-cash investing and financing activities:

Conversion of debt to common stock .................................. $ 15,000 $ -
============ ============
Discount on promissory notes ........................................ $ - $ 1,403,353
============ ============
Conversion option liability related to promissory note .............. $ 1,055,000 $ 400,000
============ ============
Reclassification of FV of warrants and options from equity .......... $ - $ 85,447
============ ============

See accompanying notes to the unaudited consolidated financial statements.

DYNAMIC LEISURE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2008
(UNAUDITED)

NOTE 1 NATURE OF OPERATIONS

Nature of Business

The Company is engaged in the business of marketing, selling and
distributing vacation packages that include cruises, domestic and international
airline tickets, car rental services and accommodation products and services on
a wholesale basis to travel agencies and other travel resellers and on a retail
basis directly to consumers. The Company also sells certain stand-alone travel
products on an agency basis. For the quarter ended March 31, 2008 and in 2007
substantially all of the Company's travel products were for destinations in the
Caribbean and Mexico.

NOTE 2 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated balance sheet as of December 31, 2007 has
been derived from audited financial statements and the accompanying unaudited
consolidated financial statements for the three months ended March 31, 2008,
have been prepared in accordance with accounting principles generally accepted
in the United States of America ("GAAP") for interim financial information and
with the rules and regulations of the U.S. Securities and Exchange Commission
for interim financial reporting requirements. They do not include all of the
information and footnotes for complete consolidated financial statements as
required by GAAP.

It is management's opinion, however, that all material adjustments
(consisting of normal recurring adjustments) have been made which are necessary
for a fair consolidated financial statement presentation. The results for the
interim period are not necessarily indicative of the results to be expected for
the year.

For further information, refer to the Form 10-KSB for Dynamic Leisure
Corporation for the year ended December 31, 2007 filed with the Securities and
Exchange Commission on April 15, 2008.

The results of operations for the three months ended March 31, 2008,
are not necessarily indicative of the results to be expected for the year.

Principles of Consolidation

The consolidated financial statements include the accounts of Dynamic
and its subsidiaries. All significant intercompany balances and transactions
have been eliminated in consolidation.

For reporting purposes, the Company operated in only one industry for
all periods presented in the accompanying consolidated financial statements and
makes all operating decisions and allocates resources based on the best benefit
to the Company as a whole.

Reclassifications

Certain amounts in the 2007 financial statements have been reclassified
to conform with the 2008 presentation.

Use of Estimates

Our consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States ("GAAP"). These
accounting principles require us to make certain estimates, judgments and
assumptions. We believe that the estimates, judgments and assumptions upon which
we rely are reasonable based upon information available to us at the time that
these estimates, judgments and assumptions are made.

These estimates, judgments and assumptions can affect the reported
amounts of assets and liabilities as of the date of our consolidated financial
statements as well as the reported amounts of revenues and expenses during the
periods presented. Our consolidated financial statements would be affected to
the extent there are material differences between these estimates and actual
results. In many cases, the accounting treatment of a particular transaction is
specifically dictated by GAAP and does not require Management's judgment in its
application. There are also areas in which Management's judgment in selecting
any available alternative would not produce a materially different result.
Significant estimates in 2008 and 2007 include the valuation of accounts
receivable, valuation of goodwill, valuation and amortization of intangible
assets, valuation of stock-based transactions, valuation of discounts on debt,
valuation of beneficial conversion features in convertible debt, valuation of
derivatives, estimates of allowances for customer refunds and the estimate of
the valuation allowance on deferred tax assets.

Cash and Cash Equivalents

For the purpose of the cash flow statement, the Company considers all
highly liquid investments with original maturities of three months or less at
the time of purchase to be cash equivalents. In addition, receivables from
merchant banks for credit card transactions are included as cash equivalents as
they are considered deposits in transit. Credit card receivables included in
cash and cash equivalents at March 31, 2008 and December 31, 2007 were $34,860
and $6,830, respectively. The Company places its cash with a financial
institution and, at times, such deposits may be in excess of the FDIC insurance
limit. At March 31, 2008, the Company had one such amount that was in excess of
such limits by $61,500; however, the Company has not experienced any losses on
such accounts to date.

Accounts Receivable

Accounts Receivable result from either the sale of travel products or
agreements with various hotels, including co-op advertising support. The Company
evaluates the collectibility of accounts receivable while working with its
individual customers and vendors. A majority of the accounts receivable for
travel products are collected prior to travel departure.

Prepaid Travel

The Company is required to pay for certain travel (mainly airlines and
hotels) in advance. Payments made to these vendors in advance are recorded as an
asset in the prepaid travel account. The Company recognizes the expense when the
associated revenue is recognized.

Property and Equipment

Property and equipment is stated at cost. Depreciation is computed
using the straight-line method and is expensed based upon the estimated useful
lives of the assets which ranges from three to seven years. Expenditures for
additions and improvements are capitalized, while repairs and maintenance are
expensed as incurred.

Goodwill and Other Intangibles

The Company accounts for goodwill in a purchase business combination as
the excess of the cost over the fair value of net assets acquired. Business
combinations can also result in other intangible assets being recognized.
Amortization of intangible assets, if applicable, occurs over their estimated
useful lives. Statement of Financial Accounting Standard No. 142, "Goodwill and
Other Intangible Assets" ("SFAS 142") requires testing goodwill for impairment
on an annual basis (or interim basis if an event occurs that might reduce the
fair value of a reporting unit below its carrying value). The Company conducts
the annual review during the fourth quarter of the calendar year. The Company
conducted its review as of December 31, 2007. For purposes of the review, the
Company is considered one reporting unit as defined in SFAS 142. The fair value
of the Company's equity was determined by multiplying the market price of the
Company's common stock by the number of shares outstanding at December 31, 2007.
The fair value of the Company's outstanding common stock exceeded the carrying
value of the Company's assets net of liabilities; therefore, no impairment was

recognized during the year ended December 31, 2007. No events occurred during
the three months ended March 31, 2008 that caused the Company to perform an
interim test of goodwill for impairment.

Amortization of intangible assets, if applicable, occurs over their
estimated useful lives. Statement of Financial Accounting Standard No. 142,
"Goodwill and Other Intangible Assets" ("SFAS 142") requires testing goodwill
for impairment on an annual basis (or interim basis if an event occurs that
might reduce the fair value of a reporting unit below its carrying value). The
Company conducts the annual review during the fourth quarter of the calendar
year. No impairment was recognized during the three months ended March 31, 2008.

Impairment of Other Long-Lived Assets

Letters of Credit and Restricted Investments

At March 31, 2008, the Company had two outstanding letters of credit
totaling approximately $97,400 payable to the Airlines Reporting Corporation
(ARC), which allows the Company to purchase airline tickets through ARC's
computerized ticket system. The terms of the letter of credit agreements require
the Company to maintain certificates of deposit with the issuer of the letters
of credit in the amount of the letters of credit. These certificates of deposit
are reflected as short-term investments, restricted, on the accompanying balance
sheet. Short-term investments at March 31, 2008, also includes $10,000
restricted to cover a letter of credit for a seller of travel license.

Deferred Revenue and Customer Deposits

Deferred revenue and customer deposits primarily represents money
received from customers as either a deposit on, or full payment for, trips not
yet traveled or services not yet earned.

Revenue Recognition

The Company follows the criteria for the United States Securities and
Exchange Commission Staff Accounting Bulletin 104 and EITF 99-19 "Reporting
Revenue Gross as a Principal versus Net as an Agent" for revenue recognition.
The Company recognizes revenue when persuasive evidence of an arrangement
exists, delivery of product has occurred, the sales price is fixed or
determinable, and collectibility is reasonably assured.

The Company records merchant sales transactions at the gross purchase
price generally on the date of travel. The Company considers a transaction to be
a "merchant sales transaction" where the Company is the primary obligor to the
customer and the Company acts as the merchant of record in the package
transaction, which consists of several products from different vendors. In these
transactions the Company also controls selling prices, and is solely responsible
for making payments to vendors. The Company records transactions at the net
purchase price where the Company is not the merchant of record or the product is
not sold as a package. The Company records revenue and related costs of products
when travel occurs or, for certain products, when the service is completed. It
is the Company's policy to be paid by the customer in advance, with monies
received in advance of travel recorded as a deferred revenue liability. The
Company may receive cash or hotel room credits in exchange for providing
cooperative advertising for its vendors. The Company records accounts receivable
for these amounts and offsets the applicable advertising expense. Once the
advertising expense is reduced to zero, any excess cooperative advertising fees
are recorded as revenue.

Advertising Costs

The Company expenses advertising costs as incurred. During the three
months ended March 31, 2008 and 2007, the Company's advertising expense totaled
$2,638 and $12,190, respectively.

Accounting for Derivatives

The Company evaluates its convertible debt, options, warrants or other
contracts to determine if those contracts or embedded components of those
contracts qualify as derivatives to be separately accounted for under Statement
of Financial Accounting Standards 133 "Accounting for Derivative Instruments and
Hedging Activities" and related interpretations including EITF 00-19 "Accounting
for Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Company's Own Stock".

The result of this accounting treatment is that the fair value of the
embedded derivative is marked-to-market each balance sheet date and recorded as
a liability. If the fair value is recorded as a liability, the change in fair
value is recorded in the consolidated statement of operations as other income or
expense. Upon conversion or exercise of a derivative instrument, the instrument
is marked to fair value at the conversion date and its fair value is
reclassified to equity. Equity instruments that are initially classified as
equity that become subject to reclassification under SFAS 133 are reclassified
to liability at the fair value of the instrument on the reclassification date.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with
Financial Accounting Standard 123 (revised 2004) ("SFAS 123(R)"), "Share-Based
Payment" which replaced SFAS 123 "Accounting for Stock-Based Compensation" and
superseded APB Opinion No. 25 "Accounting for Stock Issued to Employees." SFAS
123(R) requires the fair value of all stock-based employee compensation awarded
to employees to be recorded as an expense over the related vesting period.

Concentration of Credit Risk and Other Concentrations

Nearly all of the Company's travel products sold year-to-date in 2008
and in 2007 were for destinations in the Caribbean and Mexico. This
concentration potentially exposes us to both political and weather risks of this
region.

The Company has a diverse U.S. customer base, including consumers
purchasing products through travel agencies and purchasing directly via the
Internet.

The Company has very little credit risk since the vast majority of its
travel products are paid for in advance.

The Company has negotiated contracts with airlines that allow the
Company to price certain products more favorably than its competitors. The loss
of such contracts could have a negative effect on the Company.

Income Taxes

The Company accounts for income taxes under the Financial Accounting
Standards No. 109 "Accounting for Income Taxes" ("Statement 109"). Under
Statement 109, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period, which includes the enactment date.

Basic and Diluted Net Income (Loss) Per Share

Basic net income (loss) per common share ("Basic EPS") excludes
dilution and is computed by dividing net income (loss) by the weighted average
number of common shares outstanding during the period. Diluted net income per
share ("Diluted EPS") reflects the potential dilution that could occur if stock
options or other contracts to issue common stock, such as convertible notes,
were exercised or converted into common stock. At March 31, 2008, there were
outstanding warrants, options, third-party debt and related-party debt
convertible into 98,780,968, 1,149,762, 136,243,980 and 388,889 common shares,
respectively, which may dilute future earnings per share. There is no
calculation of fully diluted earnings per share for the three months ending
March 31, 2008, due to the Company reporting a net loss and the exercise or
conversion of common stock equivalents would have been anti-dilutive.

The following is a reconciliation of basic net income per share to
diluted net income per share for the three months ended March 31, 2007:

Earnings per share from continuing operations:
- ----------------------------------------------
Income from continuing operations ............................ $ 804,353
Preferred stock dividends .................................... -
-----------
Income from continuing operations applicable
to common stock ............................................ 804,353

Effect of dilutive securities:
Warrant/option valuation income ............................ (9,819)
-----------
Income - diluted ............................................. $ 794,534
===========
Earnings per share:
Basic income per share ..................................... $ 0.07
===========
Diluted income per share ................................... $ 0.06
===========

Weighted average common shares outstanding - basic ........... 12,324,495
Potential shares exercisable under non-plan option ........... 5,520
-----------
Weighted average shares outstanding - diluted ................ 12,330,015
===========

Potential shares excluded from above weighted average share
calculations due to their anti-dilutive effect include:
- -----------------------------------------------------------
Upon exercise of plan options ................................ 101,206
Upon exercise of non-plan options ............................ 850,000
Upon exercise of warrants .................................... 12,821,217
Upon conversion of convertible promissory notes .............. 8,075,220
Upon conversion of convertible promissory
notes - related party ...................................... 388,889

Fair Value of Financial Instruments

Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial Instruments," requires disclosures of information about
the fair value of certain financial instruments for which it is practicable to
estimate the value. For purpose of this disclosure, the fair value of a
financial instrument is the amount at which the instrument could be exchanged in
a current transaction between willing parties, other than in a forced sale or
liquidation.

The Company's financial instruments include cash, accounts receivable,
accounts payable, accrued liabilities, notes payable and capital leases. The
fair values of cash, accounts receivable, accounts payable and accrued
liabilities approximated carrying values due to the short-term nature of these
instruments. Fair values for notes payable and capital leases are not readily
available, but the carrying values are believed to approximate fair value.

NOTE 3 GOING CONCERN

For the three months ended March 31, 2008, the Company had a net loss
of $12,260,817, used net cash in operations of $706,568 and had a working
capital deficiency of $27,481,892, and a stockholders' deficiency of $21,495,703
at March 31, 2008. In addition, the Company was in default on convertible
promissory notes totaling $4,155,792 and unsecured promissory notes of $156,434
as of March 31, 2008. These matters raise substantial doubt about our ability to
continue as a going concern. Because the Company has not yet achieved or
acquired sufficient operating capital and given these financial results along
with the Company's expected cash requirements in 2008, additional capital
investment will be necessary to develop and sustain the Company's operations.

As of March 31, 2008, the Company had $7,845,792 in outstanding
Convertible Notes payable to third parties (see Note 6) including the notes in
default as described above, which are convertible into 136,243,980 shares of the
Company's common stock. While the Company expects substantially all of these
note holders to convert the Notes into shares of the Company's common stock,
there is no guarantee that this will occur. As of March 31, 2008, the Company
did not have adequate working capital to meet these obligations with cash
payments.

Management believes that its plans to raise additional capital will
allow for adequate funding of the Company's cash requirements through December
31, 2008, although there is no assurance regarding this belief or that the
Company will be successful in these efforts. The consolidated financial
statements do not contain any adjustments, which might be necessary if the
Company is unable to continue as a going concern.

NOTE 4 PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

Estimated
Useful Life March 31, December 31,
in Years 2008 2007
----------- ----------- ------------
Office furniture and equipment .. 3-5 $ 165,770 $ 165,770
Software ........................ 5-7 957,850 957,850
----------- -----------
Total property and equipment .... $ 1,123,620 $ 1,123,620
Less accumulated depreciation ... (247,784) (201,592)
----------- -----------
Property and equipment, net ..... $ 875,836 $ 922,028
=========== ===========

Depreciation expense was $46,192 and $14,778 for the three months ended
March 31, 2008 and 2007, respectively.

The Company owns the worldwide rights and source code to TourScape,
proprietary software for use in the wholesale travel industry. The Company's
historical cost for TourScape was $500,000 and other third party database
software and related implementation costs totaled $420,097. The software was
fully operational upon purchase and accordingly is capitalizable as internal use
software pursuant to Statement of Position 98-1 "Accounting for Costs of
Computer Software Developed or Obtained for Internal Use" (SOP 98-1). The
Company completed its implementation of the software and placed it in service on
March 31, 2007. The Company amortizes this software over seven years.

If the Company determines at a future date to sell or license the
software, proceeds received from the license of the software, net of direct
incremental costs of marketing, will be applied against the carrying value of
the software in accordance with SOP 98-1.

NOTE 5 INTANGIBLE ASSETS

Intangible assets at March 31, 2008, are as follows:

Accumulated Net Book
Life Cost Amortization Value
- ---------------------------- -------- ---------- ------------ ----------
Airline contracts .......... 7 yrs. $2,820,000 $ 758,032 $2,061,968
Hotel contracts ............ 7 yrs. 422,500 99,768 322,732
URLs ....................... 10 yrs. 1,011,000 187,239 823,761
Mailing list ............... 3 yrs. 150,000 24,108 125,892
General service agreement .. 2.5 yrs. 348,413 303,193 45,220
---------- ---------- ----------
$4,751,913 $1,372,340 $3,379,573
========== ========== ==========

Amortization expense for the three months ended March 31, 2008 and 2007
totaled $185,512 and $185,143, respectively.

Amortization of intangible assets in future years is expected to be as follows:

12 months
---------
2008 $ 607,132 (includes $185,512 recognized
for three months ended 3/31/08)
2009 $ 607,132
2010 $ 607,132
2011 $ 607,132
2012 $ 607,132
Thereafter $1,136,557

The Company reviews other long-lived assets and certain identifiable
assets related to those assets for impairment whenever circumstances and
situations change such that there is an indication that the carrying amounts may
not be recoverable. If the undiscounted future cash flows of the long-lived
assets are less than their carrying amounts, their carrying amounts are reduced
to fair value and an impairment loss is recognized. The Company conducted a test
of impairment as of December 31, 2007, as a result of losses incurred by the
Company as a whole during 2007 and 2006. No impairment was recognized during the
year ended December 31, 2007. No events occurred during the three months ended
March 31, 2008, that caused the Company to perform an interim test of intangible
assets for impairment.

NOTE 6 CONVERTIBLE NOTES PAYABLE WITH WARRANTS, NOTES PAYABLE, LOANS PAYABLE
AND CAPITAL LEASES PAYABLE

Convertible Promissory Notes
- ----------------------------

Convertible notes consisted of the following at March 31, 2008:

Original Debt Discount Components
------------------------------------ Cumulative
Beneficial Amortization
Interest Balance Notes Balance Conversion Warrant as of
Rate 12/31/2007 Converted Borrowings 3/31/2008 Feature Liability Total 3/31/2008
- -------- ---------- --------- ---------- ---------- ---------- ---------- ---------- ------------

9% (S) $1,450,000 $ - $ - $1,450,000 $1,208,332 $ - $1,208,332 $ 1,208,332
10% (S) 2,250,000 - - 2,250,000 206,618 3,296,324 3,502,942 3,502,942
5% (U) 273,292 - - 273,292 77,372 232,944 310,316 310,316
10% (U) 10,000 - - 10,000 - - - -
10% (U) 10,000 - - 10,000 50,000 - 50,000 50,000
10% (U) 12,500 - - 12,500 - - - -
6% (S) 995,000 15,000 - 980,000 400,000 600,000 1,000,000 667,745
8% (U) 150,000 - - 150,000 - 73,500 73,500 73,500
10% (U) 50,000 - - 50,000 50,000 - 50,000 50,000
10% (U) 150,000 - - 150,000 150,000 - 150,000 150,000
12% (S) 1,310,000 - - 1,310,000 - 1,127,500 1,127,500 379,152
12% (S) - - 1,000,000 1,000,000 - 1,000,000 1,000,000 74,194
12% (S) - - 200,000 200,000 - 200,000 200,000 37,095
---------- --------- ---------- ---------- ---------- ---------- ---------- ------------
$6,660,792 $ 15,000 $1,200,000 $7,845,792 $2,142,322 $6,530,268 $8,672,590 $ 6,503,276
========== ========= ========== ========== ========== ========== ========== ============

(S) - Secured
(U) - Unsecured

Unamortized Net Book
Principal Discount Value
----------- ----------- -----------
Current maturities ....... $ 4,355,792 $ 162,903 $ 4,192,889
Long-term portion ........ 3,490,000 2,006,411 1,483,589
----------- ----------- -----------
Total at March 31, 2008 .. $ 7,845,792 $ 2,169,314 $ 5,676,478
=========== =========== ===========

Terms and original debt discount assumptions for convertible notes
outstanding at March 31, 2008:

Original Warrant and OptionLiability
Convertible Promissory Notes Black-Scholes Valuation Assumptions
- ---------------------------------------------------------------------- --------------------------------------------------
Interest Balance Unamortized Maturity Conversion Exercise Expected Vola- Discount
Rate 03/31/2008 Discount Date Payments Price Shares Price Life(Yr) tility Rate
- -------- ---------- ----------- -------- -------- ---------- ---------- -------- -------- ------ --------

9% (S) $1,450,000 $ - 3/6/07 (A) $1.50 - $ - - - -
10% (S) 2,250,000 - 3/5/08 (C) 0.04 2,000,000 1.00 3.0 271% 5.07%
- - - - - (D) 1.00 250,000 1.00 2.25 142% 5.03%
- - - - - (E) 1.00 3,000,000 1.50 3.0 190% 4.60%
5% (U) 273,292 - 12/4/07 (F) 0.75 304,000 0.90 3.0 354% 3.96%
10% (U) 10,000 - 6/30/06 (G) 0.90 - - - - -
10% (U) 10,000 - 6/30/06 (G) 0.90 - - - - -
10% (U) 12,500 - 6/30/06 (G) 0.90 - - - - -
6% (S) 980,000 332,255 10/25/09 (H) (H) 5,000,000 1.50 3.0 154% 4.58%
8% (U) 150,000 - 12/31/07 (I) (I) - - - - -
10% (U) 50,000 - 6/29/09 (J) (J) 132,979 0.376 0.3 218% 4.94%
10% (U) 150,000 - 6/29/09 (J) (J) 398,936 0.376 0.3 218% 4.94%
12% (S) 1,310,000 748,348 6/29/09 (K) (K) 3,000,000 0.85 2.0 218% 4.89%
12% (S) 1,000,000 925,806 7/22/10 (L) (L) 12,500,000 0.05 2.5 213% 2.71%
12% (S) 200,000 162,905 1/22/09 (M) (M) 2,500,000 0.05 1.0 213% 2.71%
---------- -----------
$7,845,792 $ 2,169,314
========== ===========

Notes in default: $4,155,792
==========

(A) - This note went into default for nonpayment on its maturity date.

(B) - Not used.

(C) - Balance is past due and is in default. Conversion price was reset to
$0.04 from $0.128 related to anti-dilution provisions effective March 6,
2008.

(D) - Relates to $250,000 additional borrowings from MMA on 9/20/2006 and part
of the original $2,000,000 convertible note payable.

(E) - Relates to Note Modification Agreement for issuance of warrants to
purchase 3,000,000 shares of the Company's common stock.

(F) - Balance is past due and is in default. This note was modified on June 4,
2007, whereby the note's interest rate reduced to 5% per annum, all
accrued interest was added to the principal balance and $150,000 of the
note balance was converted into 200,000 shares of common stock.

(G) - Balance is past due and loan is in default. The Company is in
negotiations to extend the maturity date or have the note converted.

(H) - Balance is due on the maturity date plus all accrued interest. The debt
is convertible at a 45% discount to market or $0.05 per share as of March
31, 2008.

(I) - Balance is past due and is in default. The conversion price was reset to
a variable price on June 15, 2007, and June 29, 2007, based upon terms set
forth in the convertible debenture agreement. The debt is now convertible
at the lower of $0.23 per share or 80% of the lowest daily closing bid
price of the Company's common stock for five (5) trading days immediately
prior to conversion.

(J) - Balance is due at maturity plus all accrued interest. The debt is
convertible at the lower of $0.23 per share or 80% of the lowest daily
closing bid price of the Company's common stock for five (5) trading days
immediately prior to conversion.

(K) - Balance is due at maturity plus all accrued interest. The debt is
convertible at the lower of $0.23 per share or 80% of the lowest daily
closing bid price of the Company's common stock for five (5) trading days
immediately prior to conversion.

(L) - Requires interest-only payments for the first six months from the
closing date after which this debenture is to be redeemed over the
remaining 24 months through monthly principal and interest. The debt is
convertible at the lower of $0.10 per share or 85% of the lowest daily
closing bid price of the Company's common stock for five (5) trading days
immediately prior to conversion.

(M) - Requires redemption over twelve months after closing through monthly
principal and interest. Should the Company raise in excess of $500,000
during the life of the debentures, the Company is required to redeem 30%
of the outstanding principal balance of the debenture. Interest is
payable in cash or common stock at a value equal to the closing bid price
on the date the interest is due or when the interest is paid at the option
of Trafalgar. The debt is convertible at the lower of $0.10 per share or
85% of the lowest daily closing bid price of the Company's common stock
for five (5) trading days immediately prior to conversion.

All debt discounts are amortized over the terms of the respective
Notes. The amortization of the debt discount was $588,250 and $564,393 for the
three months ended March 31, 2008 and 2007, respectively, and was included in
interest expense in the accompanying consolidated financial statements.

In total as of March 31, 2008, the Company was in default on
third-party convertible promissory notes of $4,155,792.

April 2007 - Miller Note
- ------------------------

On April 16, 2007, the Company issued unsecured convertible promissory
notes in the principal amount totaling $150,000 to Miller Investments, LLC. The
notes bear interest at 8% per annum and matured on August 13, 2007.

On October 25, 2007, the Company entered into an agreement with Miller
Investments to extend the maturity date on the Note from August 15, 2007 to
December 15, 2007. In consideration for this loan extension, the Company agreed
to issue Miller Investments 150,000 shares of the Company's common stock valued
at $34,500 or $0.23 per share (the closing market price of the Company's common
stock on the day of issuance). This value will be recorded as debt discount and
amortized to interest expense over the extended term of the loan.

On December 1, 2007, the Company entered into an agreement with Miller
Investments to extend the maturity date on the Note to December 31, 2007. In
consideration for this loan extension, the Company agreed to issue Miller
Investments 300,000 shares of the Company's common stock valued at $39,000 or
$0.13 per share (the closing market price of the Company's common stock on the
day of issuance). This value was recorded as debt discount and is being
amortized to interest expense over the extended term of the loan.

At the option of the holder, the notes are convertible at any time into
shares of the Company's common stock at the lesser of (i) $1.00 per share or
(ii) the price per share paid by investors in the Company's next financing
transaction. The qualifying financing occurred on June 29, 2007, wherein the
Company consummated a financing with Trafalgar Capital Specialized Investment
Fund, Luxembourg ("Trafalgar"), that was later amended on August 1, 2007. As a
result, the conversion price of the Miller unsecured convertible promissory note
was to conform to a conversion price in Trafalgar debentures which was the
lesser of (a) $0.23 per share or (b) an amount equal to 80% of the lowest daily
closing bid price of the Company's common stock, as quoted by Bloomberg, LP, for
the five (5) trading days immediately prior to conversion. The Holder is
entitled to piggyback registration rights, subject to certain limitations as
described in the notes. In addition, the Company has granted the holder the
right to purchase additional notes from the Company in the principal amount of
$150,000 on the same terms and conditions within thirty (30) days after the date
of the notes. The fair value of the embedded conversion option associated with
this debt was not material as of December 31, 2007, and has not been recorded in
the embedded conversion option liability account on the accompanying balance
sheet.

At March 31, 2008, the secured convertible term notes were bifurcated
and recorded as two liability instruments--a debt instrument and an embedded
conversion option liability at fair value due to the variable conversion price.

June 2007 - Pisani and Seaside Capital Notes
- --------------------------------------------

On June 15, 2007, the Company issued unsecured convertible promissory
notes in the principal amount totaling $50,000 and $150,000 to Michael Pisani
and Seaside Capital II, LLC, respectively.

The terms of these notes were structured so that if in the event the
Company consummated an equity or debt financing, prior to the maturity date of
October 15, 2007, pursuant to which it sells shares of its common stock (or
securities convertible into or exercisable for shares of its common stock) with
an aggregate sales price of not less than $1,000,000, excluding these notes (a
"Qualified Financing"), then the outstanding principal amount of and all accrued
interest under these notes shall automatically convert into securities identical
to and at the same price and on the same terms as the securities issued in the
Qualified Financing. On July 11, 2007, the Company consummated a Qualified
Financing with Trafalgar Capital Specialized Investment Fund, Luxembourg
("Trafalgar"), and the Qualified Financing was later amended on August 1, 2007.
As a result, the terms of these notes are identical to the convertible
debentures issued to Trafalgar, as amended.

Due to the variable conversion price, the secured convertible term
notes were bifurcated and recorded as two liability instruments--a debt
instrument and an embedded conversion option liability at fair value.

The notes, as conformed to the Trafalgar debentures, mature on June 29,
2009, bear interest at 12% per annum, compounded monthly (9.5% after
effectiveness of a Registration Statement required under the Trafalgar
agreement) and are convertible into common stock at the lesser of (a) $0.23 per
share or (b) an amount equal to 80% of the lowest daily closing bid price of the
Company's common stock, as quoted by Bloomberg, LP, for the five (5) trading
days immediately prior to conversion. The Company has the right to redeem the
debenture at 120% of principal and accrued and unpaid interest.

MMA Capital, LLC Convertible Debt
- ---------------------------------

On January 13, 2006, the Company issued a Secured Convertible
Promissory Note with the principal balance of $2,000,000 to MMA Capital, LLC
("MMA"). As described below, on September 20, 2006, the parties amended this
Note to increase the principal amount by $250,000 to a total of $2,250,000.

On August 16, 2006, the Company entered into an agreement with MMA to
defer interest payments due on the Note each quarter until January 11, 2007, the
maturity date of the loan. On March 5, 2007, the maturity date of this note was
extended to March 5, 2008. The notes were not repaid on the maturity date and
are in default.

In consideration for this August 16, 2006 deferral, the Company agreed
to increase the interest rate retroactively from 8% to 10% and to issue MMA
100,000 shares of the Company's common stock. In accordance with EITF 96-19,
this transaction was treated as a modification of debt since the extra
consideration given in the agreement did not amount to more than a ten percent
change in the present value of the amount due to MMA over the life of the
promissory note. As a result, the increase in interest rate and the additional
consideration will be accounted for prospectively from the date of the
modification.

At the option of the holder, the outstanding principal amount of the
Note and accrued but unpaid interest may be converted into shares of the
Company's common stock at the conversion rate of $1.00 per share, subject to
adjustment in the event the Company issues shares for a consideration less than
$1.00 per share and to reflect the occurrence of forward or reverse stock
splits, corporate reorganizations or certain other corporate events. In
connection with this transaction, the Company agreed to file a registration
statement under the Securities Act of 1933, as amended, (the "Act") to register
the shares issuable upon conversion of the Note. It constitutes an event of
default under the Note and subjects the Company to liquidated damages if the
Company does not complete an effective registration statement within 180 days of
the effective date of the execution of a common stock subscription agreement,
which would be executed when the lender provides notice of conversion of all or
a portion of the debt, and if the Company does not maintain that effective
registration statement for at least 90 days. For each week of non-compliance,
liquidated damages are 2% of the product of (a) the sum of the holder's shares
of stock not registered on a timely basis and (b) the weekly average closing
price of the shares of the Company's common stock. The Company's obligations
under the promissory note are collateralized by a security interest in
substantially all of the Company's assets.

In connection with the transaction, the Company issued to MMA a warrant
to purchase up to 2,000,000 shares of the Company's common stock at an exercise
price of $1.00 per share. The warrant is exercisable for a period of three years
and the number of warrant shares and the exercise price are subject to
adjustment in the event the Company issues or sells shares for a consideration
less than $1.00 per share and to reflect the occurrence of forward or reverse
stock splits, corporate reorganizations or certain other corporate events. If,
at the time of exercise, there is not an effective registration statement
covering the sale of the shares issuable upon exercise of the warrant, the
warrant holder may exercise the warrant on a cashless basis, whereby the holder
surrenders a portion of the warrants in lieu of paying the exercise price in
cash.

A finder's fee equal to 8% of the proceeds ($160,000) was paid in cash
to Forte Capital Partners LLC, in connection with the transaction. The
transaction was exempt from the registration requirements of the Act by reason
of Section 4(2) as a transaction by an issuer not involving any public offering.
The $160,000 was recorded as a deferred debt issuance cost asset and is being
amortized over the debt term.

On September 20, 2006, the Company and MMA entered into a Second
Modification of Secured Convertible Promissory Note, pursuant to which the
principal of the Note was increased by $250,000 to $2,250,000. Further, on
September 20, 2006, the Company and MMA entered into a Modification of Warrant
to Purchase Shares of Common Stock, pursuant to which the number of warrant
shares was increased by 250,000 shares to 2,250,000 shares.

On March 5, 2007, the Company entered into a Settlement Agreement with
MMA pursuant to which in consideration for the Company's issuance to MMA of a
warrant exercisable for 3,000,000 shares of the Company's Common Stock with an
exercise price of $1.50 per share (the "MMA Warrant"), MMA agreed to (i) extend
the maturity date of the Company's outstanding promissory note payable to MMA to
March 5, 2008; and (ii) to dismiss its action against the Company filed on
November 22, 2006 in the United States District Court for the Northern District
of California entitled MMA Capital, LLC v. Dynamic Leisure Corporation, Case No.
C 06 7263 CRB (the "Action") with prejudice and to fully and finally waive all
contract breaches alleged in the Action. The fair value of the warrant to
purchase 3,000,000 shares of the Company's common stock of $1,266,122 was
recorded as debt discount and warrant liability on the Company's consolidated
balance sheet and the debt discount is being amortized over the remaining term
of the promissory note.

In addition, with respect to the registration statement on Form SB-2
filed with the Commission on December 18, 2006 (Commission File No. 333-139438)
(the "MMA Registration Statement"), the Company agreed to use its commercially
reasonable efforts to respond to any comments issued by the Staff of the
Commission within ten (10) business days and to file any required amendments
within five business days of receiving notice from the Commission that the
Post-Effective Amendment to Registration Statement on Form SB-2 (Commission File
No. 333-124283) is effective. In addition, the Company agreed not to withdraw
the MMA Registration Statement without first obtaining written approval from
MMA, to use commercially reasonable efforts to cause the MMA Registration
Statement to become effective, and to maintain the effectiveness of the MMA
Registration Statement, subject to certain exceptions, until the earlier of (i)
one year; (ii) the date on which all securities covered by the MMA Registration
Statement as amended from time to time, have been sold; or (iii) the date on
which all the securities covered by the MMA Registration Statement as amended
from time to time, can be sold in any three-month period without registration in
compliance with Rule 144 of the Securities Act of 1933, as amended (the
"Securities Act").

The Company's failure to comply with the provisions of Settlement
Agreement shall be deemed to be an event of default, which if not cured within
fifteen (15) days after receipt of written notice of such event of default,
entitles MMA to nominate one person to the Company's Board of Directors (the
"First MMA Nominee") and the Company is required to appoint MMA's nominee to its
Board of Directors within two days thereafter. MMA is entitled to nominate one
additional person to the Company's Board of Directors and the Company is
required to appoint such nominee to its Board of Directors within two days
thereafter, if an event of default is not cured by the Company within fifteen
(15) days of the date the First MMA Nominee is nominated. The maximum number of
nominees that MMA is entitled to under this provision is two.

The MMA Warrant is exercisable for a term of three years for up to
3,000,000 shares of the Company's Common Stock at an initial exercise price of
$1.50 per share. The exercise price and number of shares of Common Stock
issuable upon exercise of the Warrant (the "Warrant Shares") are subject to
adjustment for stock splits, stock combinations and certain reorganizations. The
Warrant exercise price, but not the number of Warrant Shares is subject to a
"full-ratchet" adjustment upon the issuance by the Company of shares of Common
Stock for no consideration or for a consideration per share less than the

Warrant exercise price, subject to certain enumerated exceptions. The Company
has agreed to register the sale of the Warrant Shares on a registration
statement pursuant to the Securities Act. The MMA Warrant was issued in a
private placement transaction, exempt from registration under the Securities
Act, pursuant to Section 4(2) of the Securities Act and Regulation D promulgated
thereunder.

Per SFAS 133 and EITF 00-19 and related interpretations, the
convertible note at the January 13, 2006 issuance date was classified as one
financial instrument as it is considered conventional convertible debt. In
addition, the warrant was classified as a liability ("warrant liability") (see
Note 7) due to the liquidated damages provision in the registration rights
agreement at its initial fair value with a corresponding charge to debt
discount. The beneficial conversion value associated with the convertible debt
is recorded as a debt discount and additional paid in capital.

In accordance with SFAS 133, the warrants underlying the warrant
liability were and are revalued quarterly based on assumptions in effect on that
date using the Black-Scholes model. See Note 7 for the assumptions related to
the revaluation and the related effect on the warrant liability and warrant
valuation income (expense) during the period.

In December 2006, the FASB issued FSP EITF 00-19-2, "Accounting for
Registration Payments" which was effective immediately. This FSP amends EITF
00-19 to require potential registration payment arrangements be treated as a
contingency pursuant to FASB Statement 5 rather than at fair value. We
considered the effect of this standard on the above warrant classification as a
liability and determined that the accounting may have changed as a result of
this standard; however, due to the new financing that occurred on November 9,
2006 as discussed below, the warrants must remain classified as a liability at
March 31, 2008; therefore, there was no effect of implementing this standard.

On November 8, 2007, the Company issued common stock pursuant to the
conversion of a convertible debenture held by another investor at a conversion
price of $0.128 per share. As a result, the conversion price of the MMA
convertible debentures decreased to a fixed conversion price of $0.128, and the
shares of common stock purchasable under the MMA warrants for 2,250,000 shares
increased to 17,578,125 shares, and the warrant exercise price decreased to
$0.128 per share. There is no accounting effect related to the reset of the
conversion price of the convertible debentures. The reset of the shares and
exercise price related to the warrants was accounted for as a change in the fair
value of warrants recorded in the warrant and option liability account with a
decrease in the warrant and option liability income account.

On March 6, 2008, the Company issued common stock pursuant to the
conversion of a convertible debenture held by another investor at a conversion
price of $0.04 per share. As a result, the conversion price of the MMA
convertible debentures decreased to a fixed conversion price of $0.04, and the
shares of common stock purchasable under the MMA warrants for 2,250,000 shares
increased to 56,250,000 shares, and the warrant exercise price decreased to
$0.04 per share. There is no accounting effect related to the reset of the
conversion price of the convertible debentures. The reset of the shares and
exercise price related to the warrants was accounted for as a change in the fair
value of warrants recorded in the warrant and option liability account with a
decrease in the warrant and option liability income account.

DynEco March 2, 2005 Convertible Notes and Modification and Waiver Agreements
- -----------------------------------------------------------------------------

On January 13, 2006, and June 4, 2007, the Company and Alpha Capital
Aktiengesellschaft, JM Investors, LLC, Libra Finance, S.A. and RG Prager
Corporation entered into Modification and Waiver Agreements pursuant to which
Convertible Promissory Notes issued by the Company to these parties in the
aggregate principal balance of $327,000 on March 2, 2005. Pursuant to the
January 13, 2006 Modification and Waiver Agreement, interest on these Notes at
the rate of 5% per annum was to be paid quarterly, commencing March 31, 2006,
and monthly principal amortization payments of approximately $29,700 were to
commence on June 1, 2006.

The Company was in default of the terms of this Modification and Waiver
Agreement for nonpayment of its quarterly interest payments. Accordingly, the
Company began accruing default interest at the rate of 10% from the date of
default of June 1, 2006.

As consideration for the January 13, 2006, Modification and Waiver
Agreement, the Company paid these noteholders a total of $232,210, consisting of
$154,632 in principal payments and a premium in the amount of $77,578. The
Company recorded the premium as additional expense in the fourth quarter of
2005. The notes are convertible at the conversion rate of $0.75 per share,
subject to adjustments, including anti-dilution adjustments and an adjustment if
the Company issues common stock or rights to purchase common stock at a price
below $0.75 per share. As part of the terms of the Financing Transaction, the
note holders released their security interest in the Company's assets.

As additional consideration to induce the note holders to enter into
the January 13, 2006, Modification and Waiver Agreement, the Company issued the
investors an aggregate of 200,000 shares of its common stock. Pursuant to the
terms of the Modification and Waiver Agreement (a) those provisions of the
transaction documents dated March 2, 2005 providing exceptions to the adjustment
provisions of the notes and warrants were eliminated, (b) the exercise price of
the warrants to purchase up to 259,000 shares of the Company's common stock
issued under the March 2, 2005 transaction documents was changed to $1.00 per
share and the warrants are exercisable for three years from January 23, 2006 and
(c) the number of shares issuable upon exercise of these warrants cannot be
reduced to less than 300,000 shares, resulting in an issuance of 45,000
additional warrants. Under the Modification and Waiver Agreement, under certain
circumstances, the Company may require the investors to exercise the warrants in
full. The Company may prepay the remaining principal balance of the notes at
150% of the principle, plus interests and other amounts due, through the
redemption date but only if an effective registration statement exists.

During the first quarter of 2006, the Company recorded a non-cash loss
relating to (i) the extinguishment of debt of $208,442, (ii) the value of the
200,000 shares of common stock issued (valued at $0.90 per share on the date of
the Modification and Waiver Agreement, based on the closing price of common
stock), (iii) issuance of additional warrants, and (iv) the write-off of
deferred debt issue costs. The Company treated the modification as a
cancellation of warrants (which resulted in a reclassification of $240,592 of
warrant liability to equity) and issuance of new warrants. The new warrants were
valued at $232,944 at the modification date.

In accordance with SFAS 133, the warrants underlying the warrant
liability are revalued quarterly based on assumptions in effect on that date
using the Black-Scholes model. See Note 7 for the assumptions related to the
revaluation and the related effect on the warrant liability and warrant
valuation income (expense) during the period.

On January 13, 2006, the Company agreed to file an amendment to the
existing registration statement covering the sale of the shares issuable upon
conversion of these notes and exercise of the warrants. Such registration
statement was required to be filed on or before April 13, 2006 and become
effective not later than 60 days after the date of filing, or the Company would
be subject to the payment of liquidated damages to the note holders. The
registration statement was filed on April 12, 2006 and was required to become
effective by June 13, 2006. In addition, the Company agreed to file a new
registration statement covering the sale of the shares issuable pursuant to the
Modification and Waiver Agreement the sale of which was not covered by the
existing registration statement. Such additional registration statement was
required to be filed by May 13, 2006 and become effective not later than 60 days
after the date of filing, or the Company would be subject to the payment of
liquidated damages. The registration statement was filed on May 12, 2006 and was
required to become effective by July 13, 2006. A Form 8-K/A, including the
audited financial statements of the Company was filed on March 29, 2006, prior
to April 5, 2006 as required. The post-effective amended registration statement
and the additional registration statement did not become effective in the
required 60 days due to comments received from the SEC with respect to the
registration statement. The January 13, 2006, Modification and Waiver Agreement

provides for liquidated damages payable to the note holders of an amount equal
to two percent (2%) of the Purchase Price of the Notes remaining unconverted for
each thirty (30) days or part thereof, that a registration statement is not
effective. The Modification and Waiver Agreement required the Company pay the
liquidated damages in cash. The liquidated damages must be paid within ten (10)
days after the end of each thirty (30) day period or shorter part thereof for
which liquidated damages are payable.

On June 4, 2007, the Company entered into a second Modification and
Waiver Agreement with the note holders that combined all accrued interest and
penalties on these notes as of June 4, 2007, aggregating $268,134 with the
outstanding principal amount of the Notes of $155,158 and provided that interest
would accrue on the new principal amount at the rate of 5% per annum beginning
June 4, 2007. Penalties of $142,236 were recorded as interest expense on the
settlement date. Interest is payable on any conversion date or on the maturity
dates of the Notes, which have been extended to December 4, 2007. All principal
and accrued interest is convertible at any time into shares of the Company's
common stock at a fixed conversion price of $0.75, subject to adjustment. As
long as the Notes are outstanding, if the Company issues any Common Stock, other
than for certain enumerated exceptions as set forth in the Modification and
Waiver Agreement, prior to the complete conversion of the Notes for a
consideration less than $0.485 per share, the conversion price shall be reduced
to such other lower issue price. In addition, the purchase price of the warrants
is subject to adjustment if the Company issues any Common Stock other than for
certain enumerated exceptions set forth in the Modification and Waiver
Agreement, for a consideration less than $0.485 per share. In connection with
the June 4, 2007 Modification and Waiver Agreement, the investors agreed to
convert an aggregate of $150,000 due and payable under the Notes into 200,000
shares of the Company's common stock effective as of June 4, 2007. The notes
were not paid on the maturity date and are in default.

AJW - November 9, 2006 Convertible Term Notes
- ---------------------------------------------

On November 9, 2006, the Company entered into a Securities Purchase
Agreement with AJW Partners, LLC. ("Partners"), AJW Offshore, Ltd. ("Offshore"),
AJW Qualified Partners, LLC ("Qualified") and New Millenium Capital Partners,
II, LLC ("Millenium"). Partners, Offshore, Qualified and Millenium are
collectively referred to as the "Purchasers", whereby the Company sold to the
Purchasers Secured Convertible Term Notes (the "Notes") in the aggregate
principal amount of One Million Dollars ($1,000,000). The $1,000,000 was funded
in two tranches ($600,000 on November 9, 2006, and $400,000 on January 5, 2007).
The offering was made pursuant to Section 4(2) of the Act, as amended. The Notes
bear interest at 6% per annum, unless the common stock of the Company is greater
than $1.25 per share for each trading day of a month, in which event no interest
is payable during such month. The Company's obligations under the Notes are
collateralized by a security interest in substantially all of the Company's
assets. The proceeds of the offering were used to repay certain indebtedness and
for working capital.

The Notes are convertible into common stock of the Company at a 50%
discount to the average of the three lowest trading prices of the common stock
during the 20 trading day period prior to conversion; provided, however, that
the Notes are convertible into common stock of the Company at a 45% discount in
the event that the Registration Statement covering the resale of securities
underlying the Notes ("Registration Statement"), is filed on or before December
11, 2006; and (ii) a 40% discount in the event that the Registration Statement
becomes effective on or before March 9, 2007. In connection with the offering,
the Company issued an aggregate of 5,000,000 warrants to purchase common stock
at a price of $1.50 per share ("Warrants"). The Warrants are exercisable for a
period of seven years. The number of shares subject to the Warrant and the
exercise price are subject to adjustment for stock splits, stock combinations
and certain dilutive issuances, including the issuance of shares of Common Stock
for no consideration or for a consideration per share (before deduction of
reasonable expenses or commissions or underwriting discounts or allowances in
connection therewith) less than the 5-day average of the last reported sales of
the Company's Common Stock. In addition, in certain circumstances the warrant
exercise price will be adjusted if after the Registration Statement is declared
effective, the closing price for the Company's Common Stock closes below $1.00.

Due to the variable conversion price, the secured convertible term
notes were bifurcated and recorded as two liability instruments, a debt
instrument and an embedded conversion option liability at fair value.

The Company had an obligation to register shares of its common stock
pursuant to the terms of a Registration Rights Agreement with the note holders.
The Company believes that it no longer has an obligation to register these
shares as a result of the July 31, 2007 settlement described below and the
acquisition of Notes by Trafalgar Capital Specialized Investment Fund as
described below. The Company has the right to redeem the Notes under certain
circumstances, as well as the right to pay monthly cash payments to prevent any
conversion of the Notes during such month. The Notes are secured by all of the
Company's assets pursuant to the terms of a Security Agreement and Intellectual
Property Security Agreement.

On July 31, 2007, the Company entered into a settlement agreement with
AJW Partners, LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC and New
Millenium Capital Partners, II, LLC, (collectively, the "Subscribers"). Pursuant
to the settlement agreement, the Company agreed to pay $1,200,000 and to issue
an aggregate of 500,000 shares of the Company's common stock to the Subscribers,
in full satisfaction of all of the Company's obligations under the Securities
Purchase Agreement, Security Agreement, Intellectual Property Security Agreement
and Registration Rights Agreement dated November 9, 2006, by and between the
Company and the Subscribers and secured convertible term notes in the aggregate
principal amount of $1,000,000 issued by the Company in favor of the
Subscribers. In addition, pursuant to the settlement agreement, the Company
amended and restated the stock purchase warrants issued to the Subscribers
pursuant to the warrant purchase agreement as follows: a) to remove the
Company's obligation to secure the listing of the shares of common stock
issuable upon the exercise of up to 5,000,000 warrants with a national
securities exchange or automated quotation system upon which the Company common
stock is then listed, b) to remove the anti-dilution provision c) to provide the
holders of the warrants the right to receive securities or assets which may be
issued or payable upon a consolidation, merger or sale of the Company, d) to
provide the holders of the warrants the right to receive distribution of assets
of the Company, including cash and e) to remove the cashless exercise option.

On August 1, 2007, the Company amended an agreement with another
investor related to the sale of convertible debt and warrants resulting in
lowering the maximum conversion price of that convertible debt to $0.23 per
share. As a result, the shares of common stock purchasable under the warrant for
5,000,000 shares increased to 6,929,812 shares and the exercise price decreased
to $1.0823 per share. The reset of the shares and exercise price was accounted
for as a change in the fair value of warrants recorded in the warrant and option
liability account with a decrease in the warrant and option liability income
account.

On August 18, 2007, Trafalgar Capital Specialized Investment Fund,
Luxembourg acquired the notes held by the Subscribers rather than the Company
repaying the notes directly as agreed to in the Company's July 31, 2007
settlement agreement with the Subscribers. On August 6, 2007,the Company issued
the Subscribers 500,000 shares of its common stock valued at $140,000 or $0.28
per share (the closing market price of the Company's common stock on the day of
issuance) as provided for in the settlement agreement and on August 18, 2007
paid the Subscribers $210,000 in cash from proceeds from the issuance of a
convertible debenture to Trafalgar in settlement of all accrued interest due the
Subscribers and claims arising from the Notes. The value of the common stock and
cash consideration totaled $350,000, and $43,160 was applied to accrued interest
and the balance related to settlement charges recorded as interest expense
totaling $306,840 recorded in August 2007.

On November 11, 2007, Trafalgar converted $5,000 of secured convertible
term notes it acquired on August 18, 2007, into 39,062 shares of the Company's
common stock at a conversion rate of $0.128 per share.

On March 6, 2008, Trafalgar converted $15,000 of secured convertible
term notes it acquired on August 18, 2007, into 375,000 shares of the Company's
common stock at a conversion rate of $0.04 per share (80% percent of the lowest
bid price for the five (5) trading days immediately prior to the date of this
conversion notice).

Trafalgar - July 11, 2007 Secured Convertible Debentures
- --------------------------------------------------------

The Company entered into a Securities Purchase Agreement (the
"Agreement") with Trafalgar Capital Specialized Investment Fund, Luxembourg
("Trafalgar") with respect to the purchase by Trafalgar of up to $2,400,000 of
secured convertible debentures to be funded in three tranches with all
outstanding principal and accrued interest due two years from the date each
tranch is funded. On July 11, 2007, the Company closed on the first portion of
the funding and issued a two-year $700,000 convertible debenture to Trafalgar.
On August 18, 2007, the Company closed on the remaining funding, issued two-year
convertible debentures aggregating $610,000 to Trafalgar and, as dicussed above,
Trafalgar acquired the secured convertible debentures formerly held by AJW
Partners, LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC and New Millenium
Capital Partners, II, LLC. The debentures bear interest at 12% per annum,
compounded monthly (9.5% after effectiveness of a Registration Statement
required under the agreement; see below), and is convertible into common stock
at the lesser of (a) an amount equal to 100% of the Volume Weighted Average
Price ("VWAP") as quoted by Bloomberg LP as of June 29, 2007 (the "Fixed
Conversion Price"), or (b) an amount equal to 80% of the lowest daily closing
bid price of the Company's Common Stock, as quoted by Bloomberg, LP, for the
five (5) trading days immediately prior to conversion. The Company has the right
to redeem the debenture at 120% of principal and accrued and unpaid interest.
The funding is subject to customary commitment and other fees approximating an
aggregate 10% of the funded amount, as defined in the agreement. In connection
with the offering, the Company issued an aggregate of 3,000,000 warrants to
purchase common stock at a price of 85% of the Fixed Conversion Price component
of the convertible debentures, per share. The warrants are exercisable for a
period of five years. The number of shares subject to the warrant and the
exercise price are subject to adjustment for stock splits, stock combinations
and certain dilutive issuances, including the issuance of shares of Common Stock
for no consideration or for a consideration per share less than warrant price in
effect immediately prior to such issuance. In connection with the Agreement, the
Company entered into a registration rights agreement requiring the Company to
register the securities underlying the convertible debentures and warrants. The
Company must file within 55 days of June 29, 2007 and the registration statement
must be effective within 90 days of June 29, 2007. If the filing or
effectiveness dates are not complied with, or maintenance of effectiveness or
other defaults occur, as defined in the Registration Rights Agreement, the
Company will incur liquidated damages of 2% of the outstanding debenture value
for each 30 days the default remains uncured. The registration was not effective
as of March 31, 2008, and the Company has accrued liquidated damages on these
notes totaling approximately $161,792 at March 31, 2008, which is included in
other accrued liabilities on the accompanying balance sheet.

On August 1, 2007, the Company entered into an Amendment to Securities
Purchase Agreement, Secured Convertible Debenture and Security Agreement with
Trafalgar under which (i) the exercise price of the Warrants issued to Trafalgar
pursuant to the convertible debt financing which closed on July 11, 2007 (the
"Financing") was reduced to $0.23 per share, provided, however, that if after
registration of the shares issuable upon exercise of the Warrants, shares of the
Company's common stock trade above $0.75 per share for 30 consecutive trading
days, the exercise price of the Warrants will be increased to $0.50 per share;
(ii) the Company agreed to issue to Trafalgar a warrant exercisable for an
additional 5 million shares at $0.23 per share, provided, however, that if after
registration of the shares issuable upon exercise of the Warrants, shares of the
Company's common stock trade above $0.75 per share for 30 consecutive trading
days, the exercise price of this Warrant will be increased to $0.646 per share
and the number of shares exercisable pursuant to the Warrant will be reduced to
2 million; and (iii) the Fixed Price component of the variable conversion price
discussed above of the Convertible Debenture was reduced to $0.23.

Trafalgar - January 24, 2008 Secured Convertible Debentures
- -----------------------------------------------------------

On January 22, 2008, the Company entered into an agreement (the
"Purchase Agreement") with Trafalgar Capital Specialized Investment Fund,
Luxembourg ("Trafalgar") with respect to the purchase by Trafalgar of $1,200,000
of secured convertible debentures and the issuance of related warrants. On
January 24, 2008, the Company issued two (2) convertible debentures to Trafalgar
aggregating $1,200,000. The debentures bear interest at twelve percent (12%) per
annum, compounded monthly, and are convertible into common stock at the lesser
of (a) an amount equal to ten cents ($0.10) per share (the "Fixed Conversion
Price"), or (b) an amount equal to eighty-five percent (85%) of the lowest daily
closing bid price of the Company's common stock, as quoted by Bloomberg, LP, for
the five (5) trading days immediately prior to conversion with each debenture
subject to current exchange rate protection. In no event is Trafalgar entitled
to convert the debentures or accrued interest into an amount of shares that
would cause Trafalgar's ownership in the Company to exceed 4.99%. The $1,000,000
debenture requires interest-only payments for the first six (6) months from the
closing date after which this debenture is to be redeemed over the remaining
twenty-four (24) months through monthly principal and interest at a ten percent
(10%) redemption premium. The $200,000 debenture requires redemption over twelve
(12) months after closing through monthly principal and interest at a ten
percent (10%) redemption premium. Should the Company raise in excess of $500,000
during the life of the debentures, it shall be required to redeem thirty percent
(30%) of the outstanding principal balance of the debentures. Interest is
payable in cash or common stock at a value equal to the closing bid price on the
date the interest is due or when the interest is paid at the option of
Trafalgar.

The Purchase Agreement requires the Company to use proceeds from the
$200,000 debenture for the purpose of acquiring a travel company based in the
United Kingdom. Conditions to the Trafalgar purchase of the debentures included
provisions whereby the Company shall a) cause each of its other lenders to file
a Form UCC-3 within sixty (60) days of the date of the Purchase Agreement and
the Company shall file a form UCC-1 or such other forms as may be required to
perfect Trafalgar's interest in the pledged collateral as detailed in the
related security agreement, providing Trafalgar with a senior lien on all of the
Company's assets and intellectual property and provided proof of such filing to
Trafalgar, b) establish a stock option plan for senior executives, including its
Chief Executive Officer which shall allow the Company to grant to such employees
options to acquire an aggregate of up to ten million (10,000,000) shares of the
Company's common stock, provided that an option to acquire no less than seven
million (7,000,000) of such shares is granted to the Company's Chief Executive
Officer, c) take all necessary steps such that Trafalgar shall have the ability
to appoint one member to the Company's Board of Directors and d) shall reduce
the fixed conversion price to ten cents ($0.10) on all currently executed
convertible debentures held by Trafalgar and the exercise price to ten cents
($0.10) on all currently executed warrants held by Trafalgar. As of May 15,
2008, no purchase agreement as been entered into by the Company to acquire a
travel company based in the United Kingdom and the $200,000 is being held in
escrow by Trafalgar and is recorded as a deposit on the Company's consolidated
balance sheet.

Due to the variable conversion price, the secured convertible term
notes will be bifurcated and recorded as two liability instruments - a debt
instrument and an embedded conversion option liability at fair value.

In connection with the offering, the Company issued a warrant to
purchase fifteen million (15,000,000) shares of the Company's common stock at
one tenth of one cent ($0.001) per share ("Warrant"). The Warrant is exercisable
for a period of five (5) years. The number of shares subject to the Warrant and
the exercise price are subject to adjustment for stock splits, stock
combinations and certain dilutive issuances, including the issuance of shares of
common stock for no consideration or for a consideration per share less than
warrant price in effect immediately prior to such issuance. In no event is
Trafalgar entitled to acquire common stock through the exercise of this warrant
in an amount of shares that would cause Trafalgar's ownership in the Company to
exceed 4.99%.

The Company entered into an Investor Registration Rights Agreement that
requires the Company to prepare and file no later than April 10, 2008
("Scheduled Filing Deadline") with the SEC a registration statement under the
1933 Act and have this registration statement declared effective no later ninety
(90) days ("Scheduled Effective Date") after the Scheduled Filing Deadline. In
the event the Company fails to file or obtain effectiveness of the registration
statement as agreed, the Company shall pay Trafalgar liquidated damages equal to
two percent (2%) of the liquidated value of the debentures outstanding for each
thirty (30) day period (or any part thereof) after the Scheduled Filing Deadline
or the Scheduled Effective Date. The liquidated damages are capped at fifteen
percent (15%). As of May 15, 2008, the Company has not filed with the SEC a
registration statement covering these securities, and the Company has begun to
accrue liquidated damages as of April 10, 2008.

Convertible Promissory Note, Related Party
- ------------------------------------------

On January 3, 2006, the Company issued a Convertible Promissory Note
with an annual interest rate of 10% in the principal amount of $350,000 to
Street Venture Partners, LLC, a related party, in conjunction with the purchase
of the Casual Car General Service Agreement (GSA). The Note went into default
for nonpayment on January 3, 2007, and the maturity date was extended on March
30, 2007 to July 1, 2008. As of March 31, 2008, the Note had an outstanding
balance of $350,000.

Other Notes Payable
- -------------------

Notes payable consisted of the following:

MARCH 31, DECEMBER 31,
2008 2007
--------- ------------
Notes Payable - Bearing interest at rates
ranging from 5% to 15% unsecured and due
at various dates through August 2007 ... $ 156,434 $ 156,434

Notes payable assumed from DynEco ....... 20,154 20,154

Line of credit - IRT/ITR ................ 210,000 210,000
--------- ---------
$ 386,588 $ 386,588
Less current portion .................... (386,588) (386,588)
--------- ---------
Notes payable, net of current portion $ - $ -
========= =========

At March 31, 2008, the Company was in default of the repayment terms on
certain 5% to 15% unsecured notes aggregating $156,434. This amount is included
in notes payable, current portion on the accompanying consolidated balance sheet
at March 31, 2008.

Capital Lease Obligation
- ------------------------

The Company's capital leases consisted of the following:

MARCH 31, DECEMBER 31,
2008 2007
--------- -------------
Total Capital Leases .................... $ 68,336 $ 77,634
Less Current Capital Leases ............. (38,750) (37,852)
--------- ---------
Long-term portion of Capital Leases .. $ 29,586 $ 39,782
========= =========

Future maturities of capital lease obligations are as follows:

2008 $37,852 (including $9,298 recognized for the three
months ended March 31, 2008)
2009 $20,998
2010 $11,897
2011 $ 6,887

NOTE 7 WARRANT AND OPTION LIABILITY

The Company has recorded warrant and option liability related to
convertible notes in connection with the Modification and Waiver Agreement of
January 13, 2006, the MMA Capital LLC financing due to the liquidated damages
provision in the registration rights agreement and outstanding convertible notes
with a variable conversion price issued on and subsequent to November 9, 2006.
These transactions require liability treatment under EITF 00-19 (see Note 6 and
discussion within FSP EITF 00-19-2). EITF 00-19 requires liability treatment for
all outstanding warrants and non-employee options as a result of the variable
conversion price provision contained in these Convertible Notes.

The Company recorded a warrant liability related to Convertible Notes
in connection with the Modification and Waiver Agreement of January 13, 2006 and
the MMA Capital LLC financing due to the liquidated damages provision in the
registration rights agreement requiring liability treatment under EITF 00-19
(see Note 6 and discussion within FSP EITF 00-19-2). The Company also recorded
warrant and option liability related to the Convertible Notes with a variable
conversion price issued on November 9, 2006. EITF 00-19 requires liability
treatment for all outstanding warrants and non-employee options as a result of
the variable conversion price provision contained in these Convertible Notes.

During the three months ended March 31, 2008, the warrant and option
liability was increased for the fair value of warrants to purchase 15,000,000
shares of the Company's common stock issued pursuant to the Trafalgar January
24, 2008, financing and additional shares issuable under warrants resulting from
anti-dilution provisions in the warrant agreements that were triggered during
the quarter.

The remaining warrant and option liability will continue to be revalued
until the expiration date of the debt or at such time EITF 00-19 and related
interpretations provide for the reclassification of these financial instruments
to equity, with any changes in valuation recorded as warrant and option
valuation income or expense.

The Company's warrant and option liability and related revaluation
assumptions are as follows:

11/9/06 Warrant
3/2/05 Variable All Other Total and Option
Convertible Conversion Trafalgar Warrants Warrant Valuation
Note MMA Price Capital and and Option (Income)
Holders Capital Notes Notes Options Liability Expense
----------- ----------- ----------- ---------- ----------- ----------- -----------

Balance at
12/31/2007 ...... $ 11,620 $ 1,104,720 $ 377,076 $ 631,097 $ 350,599 $ 2,475,112 $ -

Value of warrants
granted with
debt issuance ... - - - 1,199,421 - 1,199,421 144,421

Increase
related to
anti-dilution
provisions ...... - 1,604,697 146,154 - 207,320 1,958,171 1,958,171

Change in Value ... (2,825) 2,541,690 82,970 665,239 354,956 3,642,030 3,642,030
----------- ----------- ----------- ---------- ----------- ----------- -----------
Balance at
3/31/2008 ....... $ 8,795 $ 5,251,107 $ 606,200 $2,495,757 $ 912,875 $ 9,274,734 $ 5,744,622
=========== =========== =========== ========== =========== =========== ===========

11/9/06
3/2/05 Variable All Other
Convertible Conversion Trafalgar Warrants
Note MMA Price Capital and
Holders Capital Notes Notes Options
----------- -------------- ---------- --------------- ---------------

January 24, 2008 (including issuance of warrant for 1,326,443 additional shares for reset provisions)
- -----------------------------------------------------------------------------------------------------
Warrants/options .... 8,256,255 15,000,000
Exercise price ...... $0.9084 $0.001
Market price ........ $0.08 $0.08
Expected life (years) 2.1 5.0
Volatility .......... 245% 245%
Discount rate ....... 2.5% 2.9%

March 31, 2008 (including issuance of warrant for 38,671,875 and 4,296,875
warrants for reset provisions on March 6, 2008)
- --------------------------------------------------------------------------
Warrants/options .... 304,500 59,250,000 8,256,255 23,000,000 7,970,213
Exercise price ...... $1.00 $0.04 to $1.50 $0.9084 $0.001 to $0.23 $0.04 to $11.25
Market price ........ $0.11 $0.11 $0.11 $0.11 $0.11
Expected life (years) 0.8 0.8 to 1.9 1.9 4.5 0.5 to 3.6
Volatility .......... 213% 213% 213% 213% 213%
Discount rate ....... 1.7% 1.7% 2.0% 2.9% 2.2% to 2.8%

NOTE 8 EMBEDDED CONVERSION OPTION LIABILITY

The Company recorded an embedded conversion option liability related to
Convertible Notes with variable conversion prices issued on November 9, 2006,
June 15, 2007, July 11, 2007, August 18, 2007 and January 24, 2008. Such
variable conversion prices require liability treatment for embedded conversion
option consisting of conversion prices equal discounts to the market price of
the Company's common stock as of the end of each accounting period ranging from
15% to 45%. The remaining embedded conversion option liability will continue to
be revalued until the expiration date of the debt with any changes in valuation
recorded as conversion option valuation income or expense.

The Company's embedded conversion option liability and related
revaluation assumptions are as follows:

Trafalgar
11/9/06 1/5/07 4/16/07 6/15/07 Capital Total
Variable Variable Variable Variable Variable Embedded Conversion
Conversion Conversion Conversion Conversion Conversion Conversion Option
Price Price Option Option Price Option (Income)
Note Note Note Note Notes Liability Expense
---------- ---------- ---------- ---------- ---------- ----------- ----------

Balance
at 12/31/2007 .... $ 803,426 $ 535,618 $ - $ 254,491 $1,679,442 $ 3,272,977 $ -

Debt issued to
Trafalgar ........ $ - - - - 1,309,446 1,309,446 1,309,446

Change in Value ... 686,744 492,085 193,777 179,924 1,938,175 (3,490,705) 3,490,705
---------- ---------- ---------- ---------- ---------- ----------- ----------
Balance
at 3/31/2008 ..... $1,490,170 $1,027,703 $ 193,777 $ 434,415 $4,927,063 $ 8,073,128 $4,800,151
========== ========== ========== ========== ========== =========== ==========

Trafalgar
11/9/06 1/5/07 4/16/07 6/15/07 Capital
Variable Variable Variable Variable Variable
Conversion Conversion Conversion Conversion Conversion
Price Price Option Option Price
Note Note Note Note Notes
---------- ---------- ---------- ---------- ----------------

January 24, 2008
- ----------------
Principal ............ $1,200,000
Shares upon conversion 23,529,412
Exercise price ....... $0.051
Market price ......... $0.08
Expected life (years) 2.5 to 1.0
Volatility ........... 245%
Discount rate ........ 2.71%

March 31, 2008
- --------------
Principal ............ $600,000 $400,000 $150,000 $200,000 $2,510,000
Shares upon conversion 15,064,935 10,389,310 3,125,000 4,166,667 50,821,087
Exercise price ....... $0.039 $0.039 $0.06 $0.048 $0.048 to $0.051
Market price ......... $0.15 $0.15 $0.11 $0.11 $0.11
Expected life (years) 1.6 1.6 0.1 1.25 0.8 to 2.3
Volatility ........... 213% 213% 213% 213% 213%
Discount rate ........ 2.05% 2.05% 1.74% 1.74% 1.74% to 2.1%

NOTE 9 STOCKHOLDERS' DEFICIT

Common Stock Issued For Services
- --------------------------------

On March 6, 2008, the Company granted its Directors Daniel Brandano,
David Shapiro and Jay Vahl 240,000, 340,000 and 200,000 shares of fully vested
common stock, respectively, for services as board members valued at $78,800 in
the aggregate. For accounting purposes, the shares were valued at $46,800 or
$0.06 per share (based on the closing price of the Company's common stock on the
date of grant). The Company recorded as accrued expenses to related parties and
charged operations as of December 31, 2007 in the amount of $32,000 related to
these director fees with the balance charged to operations during the three
months ended March 31, 2008.

During 2007, the Company has entered into agreements with third parties
to provide various services including investor relation services, equity
research about the Company and financial consulting services. Pursuant to these
agreements, the Company issued vested shares of common stock. The fair value of
the shares of common stock on the grant dates are being recognized over the
terms to the agreements. During the three months ended March 31, 2008, a total
of $33,822 was recorded as equity and charged to operations as an expense for
shares issued in 2007.

Common Stock Issued Upon Conversion of Debt
- -------------------------------------------

On March 6, 2008, Trafalgar converted $15,000 of secured convertible
term notes it acquired on August 18, 2007 into 375,000 shares of the Company's
common stock at a conversion rate of $0.04 per share (80% percent of the lowest
bid price for the five (5) trading days immediately prior to the date of this
conversion notice).

Common Stock Issued Because Of Anti-Dilution Provisions
- -------------------------------------------------------

On January 22, 2008, the Company recorded 1,413,043 shares of common
stock as issuable with a charge to additional paid-in capital for the shares'
par value of $14,130. The shares are issuable to Miller Investments pursuant to
a 2006 stock subscription agreement with anti-dilution provisions invoked by the
January 22, 2008, sale of convertible debentures to Trafalgar.

Common Stock Warrants, Options and Valuation
- --------------------------------------------

The Company had outstanding vested and unvested warrants and options as
follows:

MARCH 31,
Exercisable Securities 2008
---------------------- ------------
Warrants ............. $ 98,780,968
Options .............. 1,149,762
------------
$ 99,930,730
============

The Company estimates the value of awards of share-based payments using
the Black-Scholes option pricing method that uses assumptions in effect on the
date of grant. The assumptions of volatility are based on historical volatility
since the Company does not have traded options on which to base any estimate of
implied volatility. The assumptions of expected term are based on the
contractual term since the Company has no reliable history to measure the
expected term. The risk-free rate for periods within the expected term of the
option is based on the U.S. treasury yield curve in effect at the time of the
grant.

Common Stock Warrants Issued to Non-Employees
- ---------------------------------------------

The following is a summary of warrant activity:

Weighted
Weighted Average
Average Remaining Aggregate
Exercise Contractual Intrinsic
Non-Employee Warrants Shares Price Term Value
- --------------------- ---------- -------- ----------- ---------

Outstanding at December 31, 2007 . 308,000 $ 1.16 1.83 -
Granted .......................... - - - -
Exercised ........................ - - - -
Forfeited or expired ............. - - - -
---------- ------ ---- ----

Outstanding at March 31, 2008 .... 308,000 $ 1.16 1.83 -
========== ====== ==== ====
Exercisable at March 31, 2008 .... 308,000 $ 1.16 1.83 -
========== ====== ==== ====

Warrants Issued for Cash or Related to Debt
- -------------------------------------------

The following is a summary of warrant activity for warrants sold for
cash or related to debt:

Weighted
Weighted Average
Average Remaining Aggregate
Exercise Contractual Intrinsic
Warrants Issued for Cash Shares Price Term Value
- ------------------------ ---------- -------- ----------- ---------

Outstanding at December 31, 2007 . 39,177,775 $ 0.58 2.80 -
Granted .......................... 15,000,000 $ 0.001 5.00 -
Increase related to
anti-dilution provisions ....... 44,295,193 $ 0.07 2.90 -
Exercised ........................ - - - -
Forfeited or expired ............. - - -
---------- ------- ---- ----

Outstanding at March 31, 2008 .... 98,472,968 $ 0.22 2.72 -
========== ======= ==== ====
Exercisable at March 31, 2008 .... 98,472,968 $ 0.22 2.72 -
========== ======= ==== ====

The weighted average valuation assumptions for grants with the sale of
common stock or issuance of debt for cash during 2008 are as follows:

2008
------
Expected volatility .......... 222%
Weighted average volatility .. 222%
Expected dividends ........... 0
Expected term (in years) ..... 2.2
Risk-free rate ............... 2.11%

On January 24, 2008, pursuant to Trafalgar's purchase of secured
convertible debentures, the Company issued an aggregate of 15,000,000 warrants
to purchase common stock at a price of $0.001 per share. The warrants are
exercisable for a period of five (5) years. The number of shares subject to the
warrant and the exercise price are subject to adjustment for stock splits, stock
combinations and certain dilutive issuances, including the issuance of shares of
common stock for no consideration or for a consideration per share less than
warrant price in effect immediately prior to such issuance.

On March 6, 2008, Trafalgar converted $15,000 of secured convertible
term notes at a conversion rate of $0.04 per share. As a result, shares of
common stock purchasable under warrant agreements with MMA and Miller
Investments increased from 17,578,125 and 1,953,125 to 56,250,000 and 6,250,000
shares, respectively, and the exercise price of these warrants decreased from
$0.128 to $0.04 per share. Additionally, shares of common stock purchasable
under warrant agreements with AJW Partners, LLC and affiliates increased from
6,929,812 to 8,256,255 shares, and the exercise prices of these warrants
decreased from approximately $1.08 to approximately $0.91 per share. There is no
accounting effect related to the reset of the conversion price of the
convertible debentures. The reset of the shares and exercise price related to
the warrants was accounted for as a change in the fair value of warrants
recorded in the warrant and option liability account with a charge to the
warrant and option liability expense account on March 8, 2008.

Non-Plan Common Stock Options to Non-Employees
- ----------------------------------------------

At March 31, 2008, the Company had the following non-plan options
outstanding and exercisable:

Outstanding Options Exercisable Options
---------------------------------- ----------------------
Weighted Weighted Weighted
Range of Average Average Average
Exercise Number Remaining Exercise Number Exercise
March 31, Price Outstanding Life Price Exercisable Price
- --------- --------------- ----------- --------- -------- ----------- --------

2008 $0.485 to $0.70 1,050,000 3.4 Years $ 0.66 1,050,000 $ 0.66

A summary of the changes in non-plan stock options outstanding is
presented below:
Weighted
Average
Shares Exercise Price
--------- --------------
Options outstanding as of December 31, 2007........ 1,050,000 $ 0.66
Options granted ................................... - -
Options exercised ................................. - -
Options cancelled ................................. - -
Options forfeited ................................. - -
--------- --------
Non-plan options outstanding at March 31, 2008 .... 1,050,000 $ 0.66
========= ========
Weighted average fair value of options granted
during the period ended March 31, 2008 ......... $ -
========

The Company estimates the value of awards of share-based payments using
the Black-Scholes option pricing method that uses assumptions in effect on the
date of grant. The assumptions of volatility are based on historical volatility
since the Company does not have traded options on which to base any estimate of
implied volatility. The assumptions of expected term are based on the
contractual term since the Company has no reliable history to measure the
expected term. The risk free rate for periods within the expected term of the
option are based on the U.S. treasury yield curve in effect at the time of the
grant.

Stock-Based Compensation Plans
- ------------------------------

On January 13, 2006, in conjunction with the a recapitalization on that
date, the Company assumed obligations under outstanding non-qualified option
plans consisting of the 2001 Equity Incentive Plan and two expired plans, the
1993 Corporate Stock Option Plan and the 1993 Advisors Stock Option Plan from a
predecessor. There were no grants under these plans during 2006, 2007 or
year-to-date 2008. The Company does not anticipate issuing any options under
these non-qualified option plans.

In May 2007, the Company's Board of Directors approved the 2007 Stock
Option/Stock Issuance Plan. No grants of options have been made from this plan
as of March 31, 2008; however, 1,050,000 shares of common stock have been
granted under this plan as of this period end.

At March 31, 2008, the Company had the following plan options
outstanding and exercisable:

Outstanding Options Exercisable Options
------------------------------------ -----------------------
Weighted Weighted Weighted
Range of Average Average Average
Exercise Number Remaining Exercise Number Exercise
Price Outstanding Life Price Exercisable Price
- -------- ----------- --------- -------- ----------- --------
$ 3.00 42,500 1.3 Years $ 3.00 42,500 $ 3.00
$ 11.40 50,595 1.9 Years $ 11.40 50,595 $ 11.40
$ 3.60 6,667 2.0 Years $ 3.60 6,667 $ 3.60
------- -------
99,762 99,762
======= =======

The following is a summary of the changes in plan options outstanding:

Weighted
Average
Shares Exercise Price
--------- --------------
Options outstanding at December 31, 2007 .......... 99,762 $ 7.30
Options exchanged in recapitalization ............. - $ -
Options granted ................................... - $ -
Options exercised ................................. - $ -
Options forfeited ................................. - $ -
--------- --------
Plan options outstanding at March 31, 2008 ........ 99,762 $ 7.30
========= ========
Plan options exercisable at March 31, 2008 ........ 99,762
=========
Weighted average fair value of options granted
during the period ............................... $ -
========

Predecessor 2001 Equity Incentive Plan

Under the 2001 Equity Incentive Plan, a total of 1,000,000 shares of
our common stock were reserved for issuance upon exercise of incentive and
non-qualified stock options, stock bonuses and rights to purchase awarded from
time-to-time, to our officers, directors, employees and consultants. Absent
registration under the Securities Act of 1933, as amended, or the availability
of an applicable exemption there from, shares of common stock issued upon the
exercise of options or as restricted stock awards will be subject to
restrictions on sale or transfer. As of March 31, 2008, options to purchase
22,278 shares are outstanding under the 2001 Equity Incentive Plan.

Predecessor 1993 Corporate Stock Option Plan

Under the 1993 Corporate Stock Option Plan, a total of 750,000 shares
of our common stock were reserved for issuance upon exercise of stock options
granted, from time-to-time, to our officers, directors, and employees. This
Corporate Stock Option Plan has expired. As of March 31, 2008, options to
purchase 70,817 shares are outstanding under the 1993 Corporate Stock Option
Plan.

Predecessor 1993 Advisors Stock Option Plan

Under the 1993 Advisors Stock Option Plan, a total of 750,000 shares of
our common stock reserved for issuance upon exercise of stock options granted,
from time-to-time, to our advisors and consultants.

Absent registration under the Securities Act of 1933, as amended, or
the availability of an applicable exemption therefrom, shares of common stock
issued under the above plans upon the exercise of options are subject to
restrictions on sale or transfer. As of the date of this report, options to
purchase 6,667 shares had been granted and are outstanding under the 1993
Advisors Stock Option Plan. The 1993 Advisors Stock Option Plan has terminated,
and no further awards may be made thereunder; however, outstanding awards of
6,667 shares are outstanding under this plan until their termination date on
December 31, 2008.

2007 Stock Option/Stock Issuance Plan

In May 2007, the Company's Board of Directors approved the 2007 Stock
Option/Stock Issuance Plan and reserved a total of 5,500,000 shares of common
stock for issuance under this plan. On May 23, 2007, the Company filed a Form S8
registering the shares issuable under this plan with the Securities and Exchange
Commission. The plan allows the issuance of stock options and outright grants of
common stock, from time-to-time, to its officers, directors, employees and
independent contractors who provide services to the Company. As of December 31,
2007, a total of 1,050,000 shares of common stock have been granted to
independent contractors/consultants. No grants of options have been made from
the Plan as of March 31, 2008.

Share-Based Compensation
- ------------------------

For the three months ended March 31, 2008, the Company recognized
compensation costs for employees, directors, consultants and others totaling
$48,622. This amount increased the Company's operating expenses and equity
during the period.

NOTE 10 INCOME TAXES

For financial statement purposes, no tax expense or benefit has been
reported as the Company has had cumulative net operating losses since inception,
and realization of tax benefits on accumulated net operating losses is
uncertain. Accordingly, a valuation allowance has been established for the full
amount of the deferred tax asset.

The utilization of net operating loss carryforwards are dependent upon
the Company's ability to generate sufficient taxable income during the
carryforward period. In addition, utilization of the carryforward may be limited
due to ownership changes as defined in the Internal Revenue Code.

NOTE 11 RELATED PARTIES AND SIGNIFICANT SHAREHOLDERS

Street Venture Partners, LLC
- ----------------------------

Street Venture Partners, LLC is a privately-held company owned equally
by Daniel G. Brandano, the Company's CEO and Chairman, and his spouse. As of
March 31, 2008, Street Venture Partners LLC owned 1,066,666 shares or
approximately 6.3% of the Company's issued and outstanding common stock.

Claudale Ltd.
- ------------

Claudale Limited is a Gibraltar-based company that manages a family
trust (which owns no shares of the Company's common stock) for Mr. Daniel G.
Brandano, the Company's CEO and Chairman. Mr. Brandano has no ownership interest
in Claudale Limited and disclaims beneficial ownership or control of any shares
of the Company's common stock owned by Claudale Limited.

At March 31, 2008, Claudale Ltd. owned 693,333 shares or approximately
4.1% of the Company's issued and outstanding common stock.

Brian J. Brandano
- -----------------

On October 1, 2007, the Company entered into a month-to-month
consulting agreement with Brian J. Brandano for management services as directed
by the corporate controller for which the Company pays $1,500 per week.

At March 31, 2008, Brian J. Brandano owned 292,243 shares or
approximately 1.7% of the Company's issued and outstanding common stock. Brian
J. Brandano is the son of Daniel G. Brandano, the Company's CEO and Chairman,
and was employed by the Company until July 2006.

Payable to Employee (Stephen A. Hicks)
- --------------------------------------

At March 31, 2008, the Company owed $160,000 to Stephen A. Hicks, the
former 100% shareholder of IRT/ITR, for advances made to IRT/ITR prior to its
acquisition by the Company. There is currently no interest being charged for the
use of the advance, nor is any interest anticipated to be paid.

NOTE 12 COMMITMENTS AND CONTINGENCIES

Neither the Company nor its subsidiaries have material commitments or
contingencies for purchasing goods or services that are not reported in the
Company's consolidated financial statements, notes, or other disclosures at
March 31, 2008.

Operating Leases
- ----------------

The Company currently leases office space in its Tampa, Florida, and
New York City locations. Monthly rent expense under the Tampa, Florida lease is
approximately $13,700 per month, and the lease expires June 2011. Monthly rent
expense under the New York City lease was approximately $11,500 per month, and
the lease expired in April 2008. The Company entered into a new lease in New
York City for approximately $5,000 per month, and the lease expires April 14,
2010. Rent expense for the three months ended March 31, 2008 was $97,370.

Future lease obligations are as follows for the years ended December
31:
2008 ..... $250,202
2009 ..... $207,361
2010 ..... $180,729
2011 ..... $ 95,549

Legal Proceedings
- -----------------

The Company filed a lawsuit in Hillsborough County, Florida, Circuit
Court on March 2, 2007 against Stephen Hicks. The complaint seeks recovery of
damages or alternative relief arising from breach of a contract under which the
Company acquired IRT/ITR. The complaint alleges non-compliance with certain
terms and conditions providing for integration of the companies.

On March 5, 2007, counsel for Stephen Hicks notified the registrant
that it was allegedly in breach of a convertible debenture payable under the
March 6, 2006 Purchase Agreement between the registrant and Hicks (the
"Agreement") that provided for the registrant's acquisition of IRT/ITR. The
Agreement calls for payment of a convertible debenture in the amount of
$1,450,000 as of March 6, 2007. In the event of any failure to pay on the
convertible debenture, the Agreement provides for a continuing obligation to pay
interest at a nine percent (9%) annual rate. On October 30, 2007, Stephen Hicks
filed an answer and counterclaim to the Company's complaint filed March 2, 2007,
alleging breach of the Agreement regarding the convertible debenture payable and
other financial matters pursuant to the Agreement. The Company has classified
the convertible debenture as a current liability and has recorded accrued
interest of $269,670 related to this obligation on its consolidated balance
sheet as of March 31, 2008. The Company believes it has recorded all other
financial obligations due under the Agreement.

The Company is currently in discussions with Mr. Hicks regarding the
settlement of the matters arising on March 2, 2007 and October 30, 2007.

In January 2008, the Company has been named as a principal party to
proceedings brought in the name of MMA Capital, LLC ("MMA") in United States
District Court for the Northern District of California alleging breach of the
Secured Convertible Promissory Note and Security Agreement executed by the
parties on or about January 11, 2006. The complaint also alleges breach of the
Confidential Settlement Agreement executed by the parties on or about March 5,
2007. On February 23, 2008, the Company filed a counterclaim against MMA
Capital, LLC in United States District Court for the Northern District of
California alleging breach of the Secured Convertible Promissory Note, Security
Agreement and Confidential Settlement Agreement. Section 6 of the Confidential
Settlement Agreement encouraged the Company to obtain additional or alternative
financing and that if the Company obtained additional or alternative financing
from any lender, which exceeded $3,000,000, MMA would subordinate its security
position in the collateral to the security position of the other lender. The
Company alleges MMA breached the Agreements by attempting to prevent and
interfere with its efforts to obtain additional financing with Trafalgar, by MMA
refusing to agree to subordinate its security interest in the collateral to the
security interest of Trafalgar despite Trafalgar already lending or investing
more than $3,000,000 to the Company. The Company also alleges MMA's interference
by, among other things, attempting to dissuade Trafalgar from providing
additional financing or investment and filing a bad faith temporary restraining
order that interfered with the Company's prospective economic advantage by
preventing the Company from obtaining all or more financing and/or investment
from Trafalgar and other investors or lenders. As a direct and proximate result
of MMA's alleged interference, the Company has been damaged in an amount in
excess of $2,500,000. The Counterclaim alleges MMA's actions were wanton,
willful and despicable, entitling the Company to punitive damages also. The
parties are in discussions to settle this matter.

In January 2008, the Company has been named as a principal party to
proceedings brought in the name of Bay West Tampa Investors, LLC in Hillsborough
County, Florida, Circuit Court seeking collection of payments under the
corporate office real estate lease. This matter was settled on February 6, 2008,
and full payment of obligations due at the time under the real estate lease was
made on March 14, 2008.

From time to time, we may become subject to proceedings, lawsuits and
unasserted claims in the ordinary course of business. Such matters are subject
to many uncertainties, and outcomes are not predictable with assurance. As of
the date of this report, we do not believe that any of these matters would be
material to the Company's financial condition or operation.

NOTE 13 SUBSEQUENT EVENTS

On May 1, 2008, the Company engaged Creative Capital Worldwide, LLC
("CCW") to provide investor relations advisory services on a non-exclusive
basis. The advisory agreement ("Agreement") provides for a monthly fee of $5,000
plus the issuance of 750,000 shares of the Company's common stock valued at
$52,500 or $0.07 per share determined using the market stock price as of the
date of the Agreement. The fair value of $52,500 will be amortized over the
two-month fixed term of the Agreement. The Agreement provides for piggy-back
registration rights for one (1) year. The Agreement may be terminated upon ten
(10) days' prior written notice on or after June 21, 2008, but not later than
June 30, 2008. Thereafter, the Agreement may be terminated upon thirty (30)
days' written notice. At the Company's option, this Agreement may be renewed for
a period of six (6) months beginning on July 1, 2008.

ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion and analysis provides information that
Management believes is useful in understanding our operating results, cash flows
and financial condition. The discussion should be read in conjunction with, and
is qualified in its entirety by reference to, the unaudited Condensed Financial
Statements and Notes thereto appearing elsewhere in this report and the audited
Financial Statements and related Notes to Financial Statements contained in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 2007.

Certain disclosures in this Quarterly Report on Form 10-Q include
certain forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended. Statements that include words such
as "believe," "expect," "should," intend," "may," "anticipate," "likely,"
"contingent," "could," "may," "estimate," or other future-oriented statements,
are forward-looking statements. Such forward-looking statements include, but are
not limited to, statements regarding our business plans, strategies and
objectives, and, in particular, statements referring to our expectations
regarding our ability to continue as a going concern, realize improved gross
margins, and timely obtain required financing. These forward-looking statements
involve risks and uncertainties that could cause actual results to differ from
anticipated results. The forward-looking statements are based on our current
expectations and what we believe are reasonable assumptions given our knowledge
of the markets; however, our actual performance, results and achievements could
differ materially from those expressed in, or implied by, these forward-looking
statements. Factors, within and beyond our control, that could cause or
contribute to such differences include, among others, the following: the success
of our capital-raising and cost-cutting efforts, and implementing new
technology; political and regulatory environments and general economic and
business conditions; the effects of our competition; the success of our
operating, marketing and growth initiatives; development and operating costs;
the amount and effectiveness of our advertising and promotional efforts; brand
awareness; the existence of adverse publicity; changes in business strategies or
development plans; quality and experience of our management; availability, terms
and deployment of capital; labor and employee benefit costs, as well as those
factors in our filings with the Securities and Exchange Commission, particularly
the discussions under "Risk Factors." Readers are urged to carefully review and
consider the various disclosures made by us in this report and those detailed
from time to time in our reports and filings with the SEC.

Our fiscal year ends on December 31. References to a fiscal year refer
to the calendar year in which such fiscal year ends.

OVERVIEW

Dynamic Leisure Corporation is engaged in the business of marketing,
selling and distributing a variety of vacation packages, cruises, domestic and
international airline tickets, car rental services and accommodation products
and services on a wholesale basis to travel agencies and other travel resellers
and on a retail basis directly to consumers. The Company also sells certain
stand-alone travel products on an agency basis. For the three months ended March
31, 2008 and its fiscal year ended December 31, 2007, substantially all of the
Company's travel products were for destinations in the Caribbean and Mexico.

Through our websites and customer service center, customers can search
for, inquire about, price and purchase vacation packages and other
travel-related products. We have experienced travel consultants and customer
service representatives available to both our wholesale and retail customers via
toll-free telephone or e-mail to assist customers in selecting and purchasing
vacation packages and stand-along travel related products.

Through our websites, www.Changes.com and www.eCasual.com, consumers
can search for and price cruises and vacation packages. Through our website
www.IslandResortTours.com, travel agencies and other travel resellers can search
for and price vacation packages for their clients. At March 31, 2008, we have
eight (8) travel consultants and customer service representatives headquartered
in our 10,000 square foot facility in Tampa, Florida and five (5) travel
consultants and customer service representatives in our New York office with
whom both our wholesale and retail customers may contact via toll-free telephone
or email to purchase vacation packages.

Our strategy now is focused primarily on the acquisition and
integration of key assets in the leisure travel industry to provide an ongoing
business base, including the implementation of our proprietary dynamic packaging
travel software, TourScape. The Company intends to grow by continuing to focus
on the leisure travel markets of the Caribbean and Mexico, by expanding its
travel products for destinations in Florida, California, Las Vegas, Hawaii,
Europe, and Central and South America, and by developing a more prominent
Internet presence.

We are a Minnesota corporation with our principal executive offices
located at 5680A W. Cypress Street Tampa, Florida 33607. Our telephone number is
(813) 877-6300.

RESULTS OF OPERATIONS

REVENUE

Revenues increased for the three months ended March 31, 2008 compared
to the corresponding period ended March 31, 2007 as follows:

Percent Percent
of of
2008 Revenue 2007 Revenue Change
---------- ------- ---------- ------- ------
Vacation packages .... $2,018,665 90% $1,755,555 89% 15%
Airline tickets and
related fees ......... 229,671 10% 215,838 11% 6%
---------- ------- ---------- ------- ------
Total ................ $2,248,336 100% $1,971,393 100% 14%
========== ======= ========== ======= ======

Our revenue was primarily derived from the sale of vacation packages
recorded on a gross basis and the sale of airline tickets recorded on a net
revenue basis. Our revenues from vacation package sales increased $263,110 or
15% as a result of our focus on expanding these types of revenues.

COST OF REVENUE

Cost of revenues increased for the three months ended March 31, 2008,
compared to the corresponding period ended March 31, 2007, as follows:

Percent Percent
of of
Related Related
2008 Revenue 2007 Revenue
---------- ------- ---------- -------
Vacation packages .............. $1,826,478 90% $1,424,251 81%
Airline tickets and related fees 58,755 26% 51,183 24%
---------- ------- ---------- -------
Total .......................... $1,885,233 84% $1,475,434 75%
========== ======= ========== =======

Cost of revenues related to the sale of vacation packages includes the
cost of hotel rooms, airline tickets, rental cars, transfers and other related
fees bundled into a single travel product purchased by our customers. Cost of
revenues related to the sale of airline tickets and related fee revenue reported
on a net basis consists of commissions payable to independent travel agents and
certain third-party processing fees.

The cost of revenues increased for the three months ended March 31,
2008, compared to the corresponding period of 2007, and the percentage of cost
of revenues to revenues increased. The increase in the percentage of cost of
revenue to revenue is the result of increased competition in the Caribbean and
eastern Mexico. The Company believes it can lower its costs of revenues as a
percentage of revenue by continuing to expand the sales of vacation packages to
destinations with higher margins such as Florida, Hawaii, Europe and South
America. The Company further expects its cost of revenues as a percentage of
revenue to decrease in the future through improved utilization of its wholesale
bulk air contracts and the full utilization of its TourScape software system;
however, competitive pressures are expected to limit the Company's ability to
substantially increase margins and reduce cost of revenues.

GROSS PROFIT

Gross profit decreased for the three months ended March 31, 2008,
compared to the corresponding period ended March 31, 2007, as follows:

Percent Percent
of of
Related Related
2008 Revenue 2007 Revenue Change
-------- ------- -------- ------- ------

Vacation packages .............. $192,187 10% $331,304 19% -%
Airline tickets and related fees 170,916 74% 164,655 76% -%
-------- ------- -------- ------- ------
Total .......................... $363,103 16% $495,959 25% -%
======== ======= ======== ======= ======

Our gross profit decreased for the three months ended March 31, 2008,
compared to the corresponding period of 2007, and the percentage of gross profit
to revenues decreased. The decrease in the total amount of gross profit and the
percentage gross profit to revenue is the result of increased competition in the
Caribbean. The Company believes it can increase its gross profit as a percentage
of revenue by continuing to expand the sales of vacation packages to
destinations with higher margins such as Florida, Hawaii, Europe and South
America.. The Company further expects its gross profit as a percentage of
revenue will increase in the future through improved utilization of its
wholesale bulk air contracts, and the full utilization of its TourScape software
system; however, competitive pressures are expected to limit the Company's
ability to substantially increase margins.

OPERATING EXPENSES

Our operating expenses decreased throughout the Company for the year
ended March 31, 2008, compared to the corresponding period ended March 31, 2007,
as follows:

2008 2007
------------------------------- -------------------------------
Stock- Stock-
Percent Based Percent Based
of Compen- of Compen-
Total Revenue sation Total Revenue sation Change
---------- ------- ---------- ---------- ------- ---------- ------

Employee compensation .......... $ 415,671 18% $ - $ 560,229 28% $ - (26%)
Financial consulting ........... 39,777 2% 33,822 190,927 10% 32,950 (79%)
Legal expense .................. 35,694 2% - 40,084 2% - (11%)
Depreciation & amortization .... 271,950 12% - 212,232 11% - 28%
Internal accounting and external
auditing expense ............. 76,276 3% - 112,350 6% - (32%)
Director fees .................. 14,800 1% 14,800 134,848 7% 134,848 (89%)
Investor relations ............. 56,906 3% - 203,554 10% 157,100 (72%)
Other G&A expenses ............. 276,674 12% - 433,081 22% - (36%)
---------- ------- ---------- ---------- ------- ---------- ------
Total .......................... $1,187,748 53% $ 48,622 $1,887,305 96% $ 324,898 (37%)
========== ======= ========== ========== ======= ========== ======

Operating expenses for the three months ended March 31, 2008, were
$1,187,748 compared to $1,887,305 for the corresponding period for 2007 or a
decrease of 37% between periods. Operating expenses exclusive of stock-based
compensation decreased by $423,281, a decrease of 27% between periods. Operating
expenses related to stock-based compensation decreased by $276,276 or 85%
between periods. This decrease is a result of fewer awards of common stock for
services and the decrease in the trading value of the Company's common stock
between the periods.

Employee compensation decreased by $144,558 for the three months ended
March 31, 2008, compared to the corresponding period for 2007 or a decrease of
26% between periods. The Company reduced its headcount by not replacing
individuals who voluntarily terminated employment with the Company during the
fourth quarter of 2007 and first quarter 2008 to conserve working capital in an
effort to align its expense structure with its current volume of business.

Financial consulting expense decreased for the three months ended March
31, 2008, compared to the corresponding period for 2007 by $151,150 or 84%. The
reduction is the result of the Company engaging fewer consultants in an effort
to align its expense structure with its current volume of business.

Legal expense decreased for the three months ended March 31, 2008,
compared to the corresponding period for 2007. Legal expense changes from
quarter to quarter based upon the timing of security filings, convertible debt
financings and assistance with resolving legal disputes. The change between
these periods was not significant.

Depreciation expense increased $31,414 for the three months ended March
31, 2008, compared to the corresponding period for 2007 as a result of the
Company's Tourscape software being placed in service in March 2007. The
amortization of deferred loan costs and intangible assets increased $27,935 and
$369, respectively. Deferred loan cost amortization increased as a result of the
additional costs subject to amortization being recorded after March 31, 2007.

Internal accounting and external auditing expenses decreased $36,074
during the three months ended March 31, 2008, compared to the corresponding
period for 2007 as a result of efficiencies developed by the Company's
accounting professionals between periods.

Director fees decreased in total as a result of a lower market price of
the Company's common stock on the date of grant of stock-based compensation
during the three months ended March 31, 2008, compared to the corresponding
period for 2007.

Investor relations expense decreased during the three months ended
March 31, 2008, compared to the corresponding period for 2007 as a result of the
Company's efforts to conserve working capital and focus expenditures on
revenue-generating activities.

Other general and administrative costs decreased $156,407 or 34% during
the three months ended March 31, 2008, compared to the corresponding period for
2007 as a result of the Company's efforts to conserve working capital. As we
increase the volume of our business, enter into additional contracts with
suppliers, and sell more products directly to customers over the Internet, we
anticipate general and administrative expenses as a percentage of revenue to
decrease even further.

The Company has utilized its securities in the past as consideration to
purchase certain services from business and financial consultants, investor
relation firms, attorneys and directors. As a result, operating expenses for
three months ended March 31, 2008, included $48,622 in stock-based compensation
representing the fair value of grants to common stock, warrants and options to
these parties compared to $324,898 in the corresponding period in 2007. The
Company expects to continue to use its securities to purchase services in the
future as the board of directors deems appropriate. Should this occur, the
Company will recognize stock-based compensation expense based on the fair value
of securities issued for services.

OTHER INCOME / EXPENSE

Our interest expense increased for the three months ended March 31,
2008, compared to the corresponding period ended March 31, 2007, as follows:

2008 2007
---------- ----------
Regular interest expense ............................. $ 303,794 $ 199,489
Amortization of debt discount on convertible debt .... 588,250 564,393
---------- ----------
Total ................................................ $ 892,044 $ 763,882
========== ==========

Interest expense decreased between periods primarily because of greater
levels of interest-bearing debt outstanding during the three months ended March
31, 2008, compared to the corresponding period for 2007.

Our warrant and option valuation expense and embedded conversion option
valuation expense changed between the three months ended March 31, 2008, and the
corresponding period in 2007 as follows:

2008 2007
------------ ----------
Warrant and option valuation income (expense)....... $ (5,744,622) $2,974,005
Embedded conversion option valuation
income (expense)................................. (4,800,151) (15,279)
------------ ----------
Total .............................................. $(10,544,773) $2,958,726
============ ==========

The fair value adjustment for outstanding warrants and options as of
March 31, 2008, resulted in the recognition of non-cash expense of $5,744,622
for the three months ended March 31, 2008, compared to non-cash income of
$2,974,005 for the corresponding period of 2007. The fair value of outstanding
warrants and options recorded as liabilities and the related increase or
decrease in warrant and option valuation income (expense) is directly related to
the number of potentially dilutive securities being valued, the trading price of
the Company's common stock at the balance sheet date and the Company's common
stock volatility factor. At March 31, 2008 and 2007, the Company had 99,830,968
and 13,721,217 options and warrants subject of liability treatment, the trading
value of the Company's common stock was $0.04 and $0.35 per share and the
volatility factor was 213% and 190%, respectively.

The embedded conversion option valuation as of March 31, 2008, resulted
in the recognition of non-cash expense of $4,800,151 for the three months ended
March 31, 2008, compared to $15,279 for the corresponding period of 2007.
Expense or income is the result of the change in value of conversion option
associated with the issuance of convertible notes totaling $3,840,000 with a
conversion price at 15% to 45% discount off the trading price of the Company's
common stock. The valuation of the embedded conversion option is a non-cash
expense to the Company.

NET INCOME (LOSS)

The Company had a net loss during the three months ended March 31,
2008, of $12,260,817 compared to a net income $804,353 in the corresponding
period in 2007. The net loss for the three months ended March 31, 2008, includes
non-cash general and administrative expenses of $48,622 from stock-based
compensation, depreciation and amortization expense of $271,950, non-cash
interest expense of $588,250 attributed to the issuance of securities and
related amortization of the resulting debt discount, non-cash embedded
conversion option revaluation expense of $4,800,151 and non-cash expense from
warrant and option liability revaluation of $5,744,622.

The net income for the quarter ended March 31, 2007 includes non-cash
income from warrant and option liability revaluation of $2,974,005, non-cash
general and administrative expenses of $324,898 from stock-based compensation,
depreciation and amortization expense of $212,232, and non-cash interest expense
of $564,393 attributed to the issuance of securities and related amortization of
the resulting debt discount.

LIQUIDITY AND CAPITAL RESOURCES

Our capital requirements consist of general working capital needs,
scheduled principal payments on our debt obligations and capital leases, planned
capital expenditures and, currently, the funding of deficit operations. Our
capital resources consist of cash generated from operations, short-term
borrowings under promissory notes payable and the sale of our common stock. Our
capital resources are impacted by our deficit operations and changes in the
volume of advance payments from customers and the timing of related payments to
suppliers. Our financial condition relies on continuing debt and equity
investment until the Company is able to achieve profitability in our wholesale
leisure travel business.

At March 31, 2008, we had cash of $244,229. The following table
reflects the cash flow activities during the three months ended March 31:

2008 2007
--------- ---------
Cash used by operating activities .................. $(706,568) $(478,465)
Cash provided by (used in) investing activities .... (200,000) 10,745
Cash provided by financing activities .............. 952,297 424,579
--------- ---------
Increase (decrease) in cash ........................ $ 45,729 $ (43,141)
========= =========

Operating activities

For the three months ended March 31, 2008, the Company used cash in
operating activities of $706,568. Cash was used to fund the Company's net loss
from operations of $12,260,817 offset by non-cash expenses for common stock and
warrants issued for services of $80,622 and depreciation and amortization
expense of $271,590, non-cash expense from warrant and option valuation expense
of $5,744,622 and non-cash embedded conversion option valuation expense of
$4,800,151. Cash used for operations included increased accounts receivable of
$82,283 and prepaid assets of $43,537 and a decrease in accounts payable of
$146,773. Cash was generated from operations by increasing accrued expenses by
$294,003 and deferred revenue and customer deposits by $62,202.

Investing activities

For the three months ended March 31, 2008, the Company used cash in
investing activities of $200,000. Cash was set aside in escrow with Trafalgar's
attorney pending an investment in a U.K. travel company, as required in the
January 22, 2008 Trafalgar secured convertible note agreement. The $200,000 was
recorded in other current assets at March 31, 2008.

Financing activities

For the three months ended March 31, 2008, the Company provided cash
from financing activities of $952,297. Cash was received from the proceeds of a
$1,200,000 convertible promissory note. The Company used cash for the payment of
debt issuance costs of $145,000 and principal payments on a promissory note of
$93,405 and principal payments on capital leases of $9,298.

Primary source of liquidity

As of March 31, 2008, our primary source of liquidity was $244,229 of
cash and $217,359 of accounts receivable. At March 31, 2008, the Company had a
working capital deficit of $27,481,892, primarily due to warrant and option
liability of $9,274,734, embedded conversion option liability of $8,073,128,
acquisitions payable of $1,111,452, and the current maturity of convertible
notes payable of $4,355,792 partially offset by debt discount of $162,903. The
convertible notes payable consists of promissory notes convertible into
approximately 136,243,980 shares of the Company's common stock as of March 31,
2008. While we expect these notes to be converted into the Company's common
stock, thereby reducing liabilities, there is no assurance this will occur. As
of March 31, 2008, the Company has vested and outstanding warrants, non-plan and
plan options to purchase 98,780,968, 1,050,000 and 99,762 shares of the
Company's common stock with weighted average exercise prices of $0.22, $0.66 and
$7.25 per share, respectively. Exercise of any of these securities would provide

cash to the Company without additional financing fees. There is no assurance
that any of these securities will be exercised. As of May 15, 2008, we were in
default on $4,155,792 in convertible promissory notes and $156,434 in notes
payable. We anticipate being able to extend the maturity or settle the balance
owing on the convertible promissory notes through issuance of common stock;
however, such extension of the maturity dates or conversion of these notes to
common stock is not assured.

We have relied upon convertible debt and equity financing in order to
fund our operating deficit. Our inability to generate cash flow in excess of
immediately needed funds has created a situation where we will require
additional capital from external sources. There is no guarantee that we will be
able to obtain any necessary financing on terms favorable to us, if at all.
While we anticipate that all of our Convertible Note Payables will convert to
shares of the Company's common stock, which would reduce our potential cash
payment for the notes, the issuance of additional shares of our common stock
would further dilute our existing shareholders' holdings. It is not expected
that the internal sources of liquidity will improve until net cash is provided
from operating activities and, until such time, we will rely upon external
sources of liquidity, including additional private placements of the Company's
common stock and exercise of various outstanding stock warrants and stock
options. We are hopeful that the continued listing of our shares on the OTC
Bulletin Board and expansion of our business opportunities in the leisure travel
market will help increase the Company's market capitalization, encourage the
exercise of outstanding warrants and attract new sources of financing. We have
no understandings or commitments from anyone with respect to external financing,
and we cannot predict whether we will be able to secure necessary funding when
needed, or at all. As we continue to expand our business and deploy our
technology in our leisure travel business, our current monthly cash flow
requirements will exceed our near-term cash flow from operations. Even if we are
not required to meet our financing and interest payment needs from cash, and
instead our investors convert their outstanding convertible notes to common
stock, our available cash resources and anticipated cash flow from operations
are insufficient to satisfy our anticipated costs associated with new product
development and expansion into new markets in the near future. There can be no
assurance that we will be able to generate sufficient cash from operations in
future periods to satisfy our capital requirements; therefore, we will have to
continue to rely on external financing activities, including the sale of our
equity securities, to satisfy our capital requirements for the foreseeable
future. Due, in part, to our lack of historical earnings, our prior success in
attracting additional funding has been limited to transactions in which our
equity is used as currency. In light of the availability of this type of
financing, and the lack of alternative proposals, our board of directors has
determined that the continued use of our equity for these purposes may be
necessary if we are to sustain operations. Equity financings of the type we have
been required to pursue are dilutive to our stockholders and may adversely
impact the market price for our shares. However, we have no commitments for
borrowings or additional sales of equity, the precise terms upon which we may be
able to attract additional funding is not known at this time, and there can be
no assurance that we will be successful in consummating any such future
financing transactions on terms satisfactory to us, or at all.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Stock-Based Compensation Plans

On January 13, 2006, in conjunction with the recapitalization, the
Company assumed DynEco's obligations under one active and two expired
stock-based non-qualified compensation plans. The Board of Directors administers
these plans. There were no grants under these plans during 2007 or 2006. Terms
and prices are determined by the compensation committee or the board.

On January 1, 2006, the Company implemented Statement of Financial
Accounting Standard 123 (revised 2004) ("SFAS 123(R)"), "Share-Based Payment"
which replaced SFAS 123 "Accounting for Stock-Based Compensation" and superseded
APB Opinion No. 25 "Accounting for Stock Issued to Employees." SFAS 123(R)
requires the fair value of all stock-based employee compensation awarded to
employees to be recorded as an expense over the related vesting period. The
statement also requires the recognition of compensation expense for the fair
value of any unvested stock option awards outstanding at the date of adoption.

In May 2007, the Company's Board of Directors approved the 2007 Stock
Option/Stock Issuance Plan and reserved a total of 5,500,000 shares of common
stock for issuance under this plan. On May 23, 2007, the Company filed a
Registration Statement on Form S-8 with the Securities and Exchange Commission
to register the shares issuable under this plan. The plan allows the issuance of
stock options and outright grants of common stock, from time-to-time, to its
officers, directors, employees and independent contractors who provide services
to the Company. A total of 1,050,000 shares of common stock have been granted to
independent contractors/consultants as of March 31, 2008.

Beginning January 1, 2006 all employee stock compensation is recorded
at fair value using the Black-Scholes Pricing Model. In adopting SFAS 123(R),
the Company used the modified prospective application ("MPA"). MPA requires the
Company to account for all new stock compensation to employees using fair value.
For any portion of awards prior to January 1, 2006 for which the requisite
service has not been rendered and the options remain outstanding as of January
1, 2006, the Company shall recognize the compensation cost for that portion of
the award for which the requisite service was rendered on or after January 1,
2006. The fair value for these awards is determined based on the grant date. As
of the date of the recapitalization, there was no further service obligations
related to outstanding options. There was no cumulative effect of applying SFAS
123(R) at January 1, 2006.

Goodwill and Other Intangibles

Impairment of Other Long-Lived Assets

Revenue Recognition

received in advance of travel recorded as a deferred revenue liability. The
Company may receive cash or hotel room credits in exchange for providing
cooperative advertising for its vendors. The Company records accounts receivable
for these amounts and offsets the applicable advertising expense. Once the
advertising expense is reduced to zero, any excess cooperative advertising fees
are recorded as revenue.

The Company is not required to buy a specific number of lodging
occupancies which allows the Company to avoid creating any inventory risk. The
Company is not expressly required to buy a specific number of bulk airline
tickets, although the Company's primary airline supplier eliminated
approximately 80% of bulk rate contracts, which creates an implied minimum of
ticket sales requirement.

Accounting for Derivatives

The result of this accounting treatment is that the fair value of the
embedded derivative is marked-to-market each balance sheet date and recorded as
a liability. In the event that the fair value is recorded as a liability, the
change in fair value is recorded in the consolidated statement of operations as
an "other income or expense." Upon conversion or exercise of a derivative
instrument, the instrument is marked to fair value at the conversion date and
then that fair value is reclassified to equity. Equity instruments that are
initially classified as equity that become subject to reclassification under
SFAS 133 are reclassified to liability at the fair value of the instrument on
the reclassification.

Warrant and Option Liability and Embedded Conversion Option Liability

During our efforts to raise capital from external investments, we have
issued secured and unsecured convertible promissory notes that include
provisions requiring us to register related shares of common stock and one
issuance of convertible debt contains a variable conversion price. Per SFAS 133
and EITF 00-19 we are required to record the fair value of all outstanding
warrants and-non employee options and the fair value of the embedded conversion
option as liabilities.

The valuation of these liabilities is based on a Black-Scholes model
and will vary, potentially significantly, based on factors such as the remaining
time left to exercise the warrants, recent volatility in the price of the
Company common stock, and the market price of our common stock. Changes in the
valuation of the warrant and option liability and the embedded conversion option
liability are recorded as other income or expense in the period of the change.
In the three months ended March 31, 2008, the Company's revaluation of its
warrant and option liability resulted in expense of $5,744,622 due to the
reduction in the trading price of Company's common stock and the increase in
common stock underlying warrants relate to the triggering of anti-dilution
provisions. For the same period, the Company's initial recording and revaluation
of its embedded conversion option liability resulted in expense of $4,800,151.
The valuation of the warrant and option liability and embedded conversion option
liability are non-cash income or expense items to the Company.

The change in volatility is a result of the change in the expected term
of outstanding warrants and options due to the passage of time, which results in
a change in the time frame from which the stock price data points to compute
volatility were selected. Since volatility has been computed based on historical
volatility of the corporation, less data points are selected from the beginning
of the period and more data points are selected from the end of the period being
measured.

CONTRACTUAL OBLIGATIONS

Operating Lease Obligations

Purchase Obligations

We are not a party to any significant long-term service or supply
contracts.

Letters of Credit

AFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS

FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes
- -- an Interpretation of FASB Statement No. 109" ("FIN 48"): In June 2006, the
FASB issued this statement which clarifies the accounting for uncertainty in
income taxes recognized in an enterprise's financial statements in accordance
with SFAS No. 109, "Accounting for Income Taxes." FIN 48 prescribes a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return. FIN 48, which was effective for fiscal years beginning after
December 15, 2006, also provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure, and
transition. The Company plans on reviewing in detail its tax situation to
determine whether there are any uncertain tax positions, but presently believes
there are no material matters.

FASB Statement No. 141(R),"Business Combinations" ("SFAS 141(R)"): In
December 2007, the FASB issued No. 141R which will change the accounting for and
reporting of business combination transactions. The most significant changes in
the accounting for business combinations under SFAS 141(R) include: (1)
valuation of any acquirer shares issued as purchase consideration will be
measured at fair value as of the acquisition date; (2) contingent purchase
consideration, if any, will generally be measured and recorded at the
acquisition date, at fair value, with any subsequent change in fair value
reflected in earnings rather than through an adjustment to the purchase price
allocation; (3) acquired in-process research and development costs, which have
historically been expensed immediately upon acquisition, will now be capitalized
at their acquisition date fair values, measured for impairment over the
remaining development period and, upon completion of a successful development
project, amortized to expense over the asset's estimated useful life; (4)
acquisition related costs will be expensed as incurred rather than capitalized
as part of the purchase price allocation; and (5) acquisition related
restructuring cost accruals will be reflected within the acquisition accounting
only if certain specific criteria are met as of the acquisition date; the prior
accounting convention, which permitted an acquirer to record restructuring
accruals within the purchase price allocation as long as certain, broad criteria
had been met, generally around formulating, finalizing and communicating certain
exit activities, will no longer be permitted. SFAS 141(R) is effective for
reporting periods beginning on or after December 15, 2008. Earlier adoption is
not permitted. The Company anticipates that adoption of this pronouncement will
significantly impact how the Company accounts for business combination
transactions consummated after the effective date, in the various areas outlined
above.

SFAS No. 159, "The Fair Value Option for Financial Assets and Financial
Liabilities" ("SFAS 159"): In February 2007, the FASB issued SFAS 159 which
permits entities to choose to measure many financial instruments and certain
other items at fair value that are not currently required to be measured at fair
value. SFAS 159 will be effective for us on January 1, 2008. The adoption of
SFAS 159 had no impact on our consolidated financial position, cash flows or
results of operations.

SFAS No. 160, "Non-Controlling Interests in Consolidated Financial
Statements" ("SFAS 160"): In December 2007, the FASB issued SFAS No. 160, this
Statement amends Accounting Research Bulletin No. 51, "Consolidated Financial
Statements" to establish accounting and reporting standards for the
non-controlling interest in a subsidiary and for the deconsolidation of a
subsidiary. SFAS 160 is required to be adopted simultaneously with SFAS 141(R)
and is effective for reporting periods on or after December 15, 2008. An earlier
adoption is not permitted. Currently, the Company does not have any
non-controlling interest in our subsidiary and accordingly, the adoption of SFAS
had no impact on our consolidated financial position, cash flows or results of
operations.

In June 2007, the FASB ratified EITF Issue No. 07-03, "Accounting for
Nonrefundable Advance Payments for Goods and Services Received for Use in Future
Research and Development Activities." EITF 07-03 requires companies to defer
nonrefundable advance payments for goods and services and to expense such
advance payments as the goods are delivered or services are rendered. If the
Company does not expect to have the goods delivered or services performed, the
advance should be expensed. EITF 07-03 is effective for fiscal years beginning
after December 15, 2007. The adoption of EITF Issue No. 07-03 had no impact on
our consolidated financial position, cash flows or results of operations.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future affect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to our
investors.

ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial position,
results of operations or cash flows due to adverse change in foreign currency
and interest rates.

Exchange Rate

Our reporting currency is United States Dollars ("USD"). In the event we
generate revenues outside of the United States, foreign monetary rate
fluctuations may have an impact on our financial reporting. The fluctuation of
exchange rates of the foreign currency may have positive or negative impacts on
our results of operations; however, Management believes that the net income
effect of appreciation and devaluation of any such currency against the US
Dollar would be limited to our net operating results.

Interest Rate

Interest rates in the United Sates are considered to be fairly low and stable,
and inflation is considered to be controlled by the actions of the Federal
Reserve Board based upon certain factors including trade surplus or deficit and
consumer banking deposits, etc. Our current loans relate mainly to trade
payables and are mainly short term; however our debt is likely to rise with the
increase of the scope and scale of our business operations and expansion and,
were interest rates to rise at the same time, this could become a significant
impact on our operating and financing activities.

We have not entered into derivative contracts either to hedge existing risks or
for speculative purposes.

ITEM 4. CONTROLS AND PROCEDURES

Not applicable to smaller reporting companies.

ITEM 4T. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that
information required to be disclosed in our reports filed or submitted under the
Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms. As of the end of the period covered by
this Quarterly Report on Form 10-Q, we carried out an evaluation, under the
supervision and with the participation of management, including our Chief
Executive Officer (and Principal Financial Officer and Accounting Officer), of
the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation,
management and our Chief Executive Officer (and Principal Financial Officer and
Accounting Officer) concluded that our disclosure controls and procedures were
effective to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms.

Changes in Internal Controls

There was no change in our internal control over financial reporting (as defined
in Rule 13a-15(f) under the Exchange Act) identified in connection with the
foregoing evaluation that occurred during the period covered by this Quarterly
Report on Form 10-Q that materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company filed a lawsuit in Hillsborough County, Florida, Circuit Court on
March 2, 2007, against Stephen Hicks. The complaint seeks recovery of damages or
alternative relief arising from breach of a contract under which the Company
acquired IRT/ITR. The complaint alleges non-compliance with certain terms and
conditions providing for integration of the companies.

On March 5, 2007, counsel for Stephen Hicks notified the registrant that it was
allegedly in breach of a convertible debenture payable under the March 6, 2006
Purchase Agreement between the registrant and Hicks (the "Agreement") that
provided for the registrant's acquisition of IRT/ITR. The Agreement calls for
payment of a convertible debenture in the amount of $1,455,000 as of March 6,
2007. In the event of any failure to pay on the convertible debenture, the
Agreement provides for a continuing obligation to pay interest at a nine percent
(%) annual rate. On October 30, 2007, Stephen Hicks filed an answer and
counterclaim to the Company's complaint filed March 2, 2007, alleging breach of
the Agreement regarding the convertible debenture payable and other financial
matters pursuant to the Agreement. The Company has classified the convertible
debenture as a current liability and has recorded accrued interest of $269,670
related to this obligation on its consolidated balance sheet as of March 31,
2008. The Company believes it has recorded all other financial obligations due
under the Agreement.

The Company is currently in discussions with Mr. Hicks regarding the settlement
of the matters arising on March 2, 2007 and October 30, 2007.

In January 2008, the Company has been named as a principal party to proceedings
brought in the name of MMA Capital, LLC ("MMA") in United States District Court
for the Northern District of California alleging breach of the Secured
Convertible Promissory Note and Security Agreement executed by the parties on or
about January 11, 2006. The complaint also alleges breach of the Confidential
Settlement Agreement executed by the parties on or about March 5, 2007. On
February 23, 2008, the Company filed a counterclaim against MMA Capital, LLC in
United States District Court for the Northern District of California alleging
breach of the Secured Convertible Promissory Note, Security Agreement and
Confidential Settlement Agreement. Section 6 of the Confidential Settlement
Agreement encouraged the Company to obtain additional or alternative financing
and that if the Company obtained additional or alternative financing from any
lender, which exceeded $3,000,000, MMA would subordinate its security position
in the collateral to the security position of the other lender. The Company
alleges MMA breached the Agreements by attempting to prevent and interfere with
its efforts to obtain additional financing with Trafalgar, by MMA refusing to
agree to subordinate its security interest in the collateral to the security
interest of Trafalgar despite Trafalgar already lending or investing more than
$3,000,000 to the Company. The Company also alleges MMA's interference by, among
other things, attempting to dissuade Trafalgar from providing additional
financing or investment and filing a bad faith temporary restraining order that
interfered with the Company's prospective economic advantage by preventing the
Company from obtaining all or more financing and/or investment from Trafalgar
and other investors or lenders. As a direct and proximate result of MMA's
alleged interference, the Company has been damaged in an amount in excess of
$2,500,000. The Counterclaim alleges MMA's actions were wanton, willful and
despicable, entitling the Company to punitive damages also. The parties are in
discussions to settle this matter.

In January 2008, the Company has been named as a principal party to proceedings
brought in the name of Bay West Tampa Investors, LLC in Hillsborough County,
Florida, Circuit Court seeking collection of payments under the corporate office
real estate lease. This matter was settled on February 6, 2008, and full payment
of obligations due at the time under the real estate lease was made on March 14,
2008.

From time to time, we may become subject to proceedings, lawsuits and unasserted
claims in the ordinary course of business. Such matters are subject to many
uncertainties, and outcomes are not predictable with assurance. As of the date
of this report, we do not believe that any of these matters would be material to
the Company's financial condition or operation.

ITEM 1A. RISK FACTORS

RISKS RELATED TO OUR BUSINESS

An investment in our common stock involves a number of very significant risks.
You should carefully consider the following risks and uncertainties in addition
to other information in evaluating our company and its business before
purchasing shares of our common stock. Our business, operating results and
financial condition could be seriously harmed due to any of the following risks.
The risks described below are all of the material risks that we are currently
aware of that are facing our company. Additional risks not presently known to us
may also impair our business operations. You could lose all or part of your
investment due to any of these risks.

ESTABLISHING, MAINTAINING AND ENHANCING OUR BRAND RECOGNITION WILL BE A CRITICAL
ASPECT OF OUR EFFORTS TO ATTRACT AND EXPAND OUR ONLINE TRAVEL SALES.

We believe that establishing, maintaining and enhancing our brand will be a
critical aspect of our efforts to attract and expand our online sales. The
number of Internet sites that offer competing services, many of which already
have well-established brands in online services or the travel industry
generally, increases the importance of establishing and maintaining brand
recognition of our "Dynamic Leisure" and "eCasual" brands, and maintaining and
enhancing brand recognition of Changes in L'Attitudes, Island Resort Tours,
International Travel and Resorts, and any other brands that we may acquire
through future acquisitions.

Promotion of our brands will depend largely on our success in providing a
high-quality travel agent hosting experience and high level of customer service.
In addition, to attract and retain travel agents and customers and to respond to
competitive pressures, we intend to increase our spending substantially on
marketing and advertising with the intention of expanding our brand recognition.
We currently do not and may never have the available resources for marketing and
advertising that may be required However, we cannot assure you that these
expenditures if made will be effective to promote our brands or that our
marketing efforts generally will achieve our goals.

If we are unable to provide high-quality hosting services or customer support,
if we fail to promote and maintain our brands or if we incur excessive expenses
in these efforts, our business, operating results and financial condition would
be materially adversely affected.

IF WE ARE UNABLE TO INTRODUCE AND SELL NEW PRODUCTS AND SERVICES, OUR BRANDS
COULD BE DAMAGED.

We need to broaden the range of travel products and services and increase the
availability of products and services that we offer in order to enhance our
service. We will incur substantial expenses and use significant resources trying
to expand the range of products and services that we offer. However, we may not
be able to attract sufficient travel suppliers and other participants to provide
desired products and services to our consumers. In addition, consumers may find
that delivery through our service is less attractive than other alternatives. If
we launch new products and services and they are not favorably received by
consumers, our reputation and the value of our brands could be damaged.

Our relationships with consumers and travel suppliers are mutually dependent
since consumers will not use a service that does not offer a broad range of
travel services. Similarly, travel suppliers will not use a service unless
consumers actively make travel purchases through it. We cannot predict whether
we will be successful in expanding the range of products and services that we
offer. If we are unable to expand successfully, this could also damage our
brand.

If we are unable to broaden the range of travel products and services we offer
and successfully introduce and sell those new products and services, our
business may be harmed. Our business strategy is dependent on our further
diversifying our revenues into lodging, car rentals, cruises, vacation packages
and other travel related products. We cannot assure that our efforts will be
successful or result in greater revenues or higher margins.

THE SUCCESS OF OUR BUSINESS DEPENDS ON CONTINUED GROWTH OF ONLINE TRAVEL
COMMERCE AND ATTRACTING CUSTOMERS IN A COST-EFFECTIVE MANNER.

Our sales and revenues will not grow as we plan if consumers do not purchase
significantly more travel products online than they currently do and if the use
of the Internet as a medium of commerce for travel products does not continue to
grow or grows more slowly than expected. Consumers have traditionally relied on
travel agents and travel suppliers and are accustomed to a high degree of human
interaction in purchasing travel products. The success of our business is
dependent on significant increase in the number of consumers who use the
Internet to purchase travel products.

Our business strategy depends on our ability to broaden the appeal of our
website to business and other travelers and to increase the overall number of
consumer transactions conducted on our website in a cost-effective manner. In
order to increase the number of consumer transactions, we must attract more
visitors to our website and convert a larger number of these visitors into
paying customers. Currently, our website has focused on serving the leisure
traveler. Our ability to offer products and services that will attract a
significant number of business travelers to use our services is not certain. If
it does not occur, our growth may be limited. It may be necessary to spend
substantial amounts on marketing and advertising to enhance our brand
recognition and attract new customers to our website, and to successfully
convert these new visitors into paying customers. We cannot assure you that our
marketing and advertising efforts will be effective to attract new customers. If
we fail to attract customers and increase our overall number of consumer
transactions in a cost-effective manner, our ability to grow and become
profitable may be impaired.

Moreover, we rely on the Internet infrastructure which may be unable to support
increased levels of demand. The internet infrastructure may not expand fast
enough to meet the increased levels of demand. In particular, the expected
benefits from our online operations may be reduced if internet usage does not
continue to grow. In addition, activities that diminish the experience for
internet users, such as spyware, spoof e-mails, viruses and spam directed at
internet users, as well as viruses and "denial of service" attacks directed at
internet companies and service providers, may discourage people from using the
internet, including for commerce. If consumer use diminishes or grows at a
slower rate, then our business and results of operations could be adversely
affected.

IF WE FAIL TO ATTRACT AND RETAIN SALES AGENTS IN A COST-EFFECTIVE MANNER, OUR
ABILITY TO GROW AND BECOME PROFITABLE MAY BE IMPAIRED.

Our business strategy depends on increasing our overall number of customer
transactions in a cost-effective manner. In order to increase our number of
transactions, we must attract additional sales agents. Although we have spent
significant financial resources on sales and marketing and plan to continue to
do so, these efforts may not be cost effective in attracting new sales agents or
increasing transaction volume. If we do not achieve our marketing objectives,
our ability to grow and increase revenues may be impaired. Presently, we have
two sales agents, and although we will require more sales agents to achieve our
business strategy, we cannot at this time estimate the number of additional
sales agents that will be necessary.

Moreover, violations by our travel agents of applicable laws or of our policies
and procedures in dealing with customers could reflect negatively on our
products and operations and harm our business reputation. In addition, it is
possible that a court could hold us civilly or criminally accountable based on
vicarious liability because of the actions of our travel agents. Adverse
publicity concerning any actual or purported failure of us or our travel agents
to comply with applicable laws and regulations, whether or not resulting in
enforcement actions or the imposition of penalties, could harm the goodwill of
our company and could reduce our ability to attract, motivate and retain travel
agents, which would reduce our revenues. We cannot ensure that all travel agents
will comply with applicable legal requirements.

ADVERSE CHANGES OR INTERRUPTIONS IN OUR RELATIONSHIPS WITH THIRD PARTIES COULD
AFFECT OUR ACCESS TO TRAVEL OFFERINGS, IMPAIR THE QUALITY OF OUR SERVICE AND
REDUCE OUR REVENUES.

Although our business is not substantially dependent on any agreement with any
specific third party, such as a travel supplier, we rely on various agreements
with our airline, hotel and auto suppliers. These agreements contain terms that
could affect our access to inventory and reduce our revenues. All of the
relationships we have are freely terminable by the supplier upon notice. None of
these arrangements are exclusive and any of our suppliers could enter into, and
in some cases may have entered into, similar agreements with our competitors. We
cannot assure you that our arrangements with third parties will remain in effect
or that any of these third parties will continue to supply us and our agents
with the same level of access to inventory of travel offerings in the future. If
access to inventory is affected, or our ability to obtain inventory on favorable
economic terms is diminished, it may reduce our revenues. Our failure to
establish and maintain representative relationships for any reason could
negatively impact sales of our products and reduce our revenues.

We also rely on third-party computer systems and other service providers,
including the computerized central reservation systems of the airline, lodging
and car rental industries to make airline ticket, lodging and car rental
reservations and credit card verifications and confirmations. Third parties
provide, for instance, our data center, telecommunications access lines and
significant computer systems, support and maintenance services. Any interruption
in these, or other, third-party services or deterioration in their performance
could impair the quality of our service. We cannot be certain of the financial
viability of all of the third parties on which we rely. If our arrangements with
any of these third parties are terminated or if they were to cease operations,
we might not be able to find an alternate provider on a timely basis or on
reasonable terms, which could hurt our business.

OUR BUSINESS BENEFITS FROM FAVORABLE "NET" OR "BULK" CONTRACTS, AND CANCELLATION
OR LIMITATION ON USE OF THESE CONTRACTS COULD ADVERSELY AFFECT OUR BUSINESS.

We hold "net" or "bulk" air contracts with American Airlines, British Airways,
Delta, Air France, US Air, Continental, SwissAir, Iceland Air and TACA. These
contracts permit us to create and sell air and bundled travel packages that are
less expensive to consumers and more profitable for us than packages based upon
"scheduled" airfare. In spring 2006, one major airline informed us that it
recently cancelled wholesale bulk contracts with many of our competitors. This
airline is our primary airline supplier. Although no airline has cancelled or
limited our bulk contracts, the contracts are terminable and modifiable at the
will of the airlines, in which case our business could be adversely affected.

OUR SUCCESS DEPENDS UPON IMPLEMENTING AND INTEGRATING OUR TOURSCAPE TECHNOLOGY.

As part of our business model, the implementation and integration of the
TourScape dynamic packaging technology is vital to increasing our company
efficiencies and thus increasing overall revenues. TourScape is a technology
platform designed to market and sell domestic and international leisure travel
products, both retail and wholesale. TourScape permits user-friendly interface
on the Internet and allows us to update product information for our reservation
agents quickly. We have installed TourScape into our servers and computers and
interfaced it with our websites. Because our employees helped design and refine
the TourScape program, we believe that we can expand TourScape as our needs
develop. However, if we cannot succeed in expending our TourScape technology,
our profitability may not increase as planned, or at all.

Our websites rely on our TourScape intellectual property and we cannot be sure
that this intellectual property is protected from copying or use by others,
including potential competitors. We regard much of our content and technology as
proprietary and try to protect our proprietary technology by relying on
trademarks, copyrights, trade secret laws and confidentiality agreements. In
connection with our license agreements with third parties, we seek to control
access to and distribution of our technology, documentation and other
proprietary information. Even with all of these precautions, it is possible for
someone else to copy or otherwise obtain and use our proprietary technology
without our authorization or to develop similar technology independently.

Effective trademark, copyright and trade secret protection may not be available
in every country in which our services are made available through the internet,
and policing unauthorized use of our proprietary information is difficult and
expensive. We cannot be sure that any steps we take will prevent
misappropriation of our proprietary information. This misappropriation could
have a material adverse effect on our business. In the future, we may need to go
to court to enforce our intellectual property rights, to protect our trade
secrets or to determine the validity and scope of the proprietary rights of
others. This litigation might result in substantial costs and diversion of
resources and management attention.

In the event we do not protect our TourScape technology effectively, this would
allow competitors to duplicate our product and services and this could make it
more difficult for us to compete with them. Since we currently do not have any
patents or trademarks, our success and ability to compete in the online travel
industry depend, in part, upon our TourScape technology. We rely primarily on
provisions in our contracts to protect our technology. We attempt to negotiate
beneficial intellectual property ownership provisions in our contracts. However,
laws and our actual contractual terms may not be sufficient to protect our
technology from use or theft by third parties. For instance, a third-party might
try to reverse engineer or otherwise obtain and use our technology without our
permission and without our knowledge, allowing competitors to duplicate our
products. We may have legal or contractual rights that we could assert against
such illegal use, but lawsuits claiming infringement or misappropriation are
complex and expensive, and the outcome would not be certain. In addition, the
laws of some countries in which we may wish to sell our products may not protect
software and intellectual property rights to the same extent as the laws of the
United States. Moreover, the intellectual property right laws afford us no
protection since we have no patents or trademarks.

OUR SUCCESS DEPENDS ON MAINTAINING THE INTEGRITY OF OUR SYSTEMS AND
INFRASTRUCTURE. SYSTEM INTERRUPTION AND THE LACK OF INTEGRATION AND REDUNDANCY
IN OUR INFORMATION SYSTEMS MAY AFFECT OUR BUSINESSES.

In order to be successful, we must provide reliable, real-time access to our
systems for our sales agent, customers and suppliers. As our operations grow in
both size and scope, we will need to improve and upgrade our systems and
infrastructure to offer an increasing number of people and travel suppliers
enhanced products, services, features and functionality. The expansion of our
systems and infrastructure will require us to commit substantial financial,
operational and technical resources before the volume of business increases,
with no assurance that the volume of business will increase. Consumers and
suppliers will not tolerate a service hampered by slow delivery times,
unreliable service levels or insufficient capacity, any of which could reduce
our revenues.

We may experience occasional system interruptions that make some or all systems
unavailable or prevent us from efficiently fulfilling orders or providing
services to our travel agents or third parties. We rely on our travel agents and
third party computer systems and service providers to facilitate and process a
portion of our transactions. Any interruptions, outages or delays in our systems
or third party providers' systems, or deterioration in their performance, could
impair each company's ability to process transactions for its travelers and the
quality of service that we can offer to our travel agents and travelers. We do
not have backup systems for certain critical aspects of our operations, many
other systems are not fully redundant and our disaster recovery planning may not
be sufficient. Fire, flood, power loss, telecommunications failure, break-ins,
earthquakes, acts of war or terrorism, acts of God, computer viruses, physical
or electronic break-ins and similar events or disruptions may damage or
interrupt computer or communications systems at any time. Any of these events
could cause system interruption, delays and loss of critical data, and could
prevent us from providing services to our travelers and/or third parties for a
significant period of time. In addition, we may have inadequate insurance
coverage or insurance limits to compensate for losses from a major interruption,
remediation may be costly and have a material adverse effect on our operating
results and financial condition.

Furthermore, developing our website and other technology entails significant
technical and business risks when using new technologies. We may fail to adapt
our website, transaction processing systems and network infrastructure to
consumer requirements or emerging industry standards. For example, our website
allows searches and displays of ticket pricing and travel itineraries will be a
critical part of our service, and may quickly become out-of-date or insufficient
from our customers' perspective and in relation to the search and display
functionality of our competitors' websites. If we face material delays in
introducing new services, products and enhancements, our sales agents, customers
and suppliers may forego the use of our products and use those of our
competitors.

WE MAY BE FOUND TO HAVE INFRINGED ON INTELLECTUAL PROPERTY RIGHTS OF OTHERS THAT
COULD EXPOSE US TO SUBSTANTIAL DAMAGES AND RESTRICT OUR OPERATIONS.

We could face claims that we have infringed the patents, copyrights or other
intellectual property rights of others. In addition, we may be required to
indemnify travel suppliers for claims made against them. Any claims against us
could require us to spend significant time and money in litigation, delay the
release of new products or services, pay damages, or develop new intellectual
property. As a result, intellectual property claims against us could have a
material adverse effect on our business, operating results and financial
condition.

RAPID TECHNOLOGICAL CHANGES MAY RENDER OUR TECHNOLOGY OBSOLETE OR DECREASE THE
ATTRACTIVENESS OF OUR PRODUCTS TO TRAVEL AGENTS AND CONSUMERS.

To remain competitive in the online travel industry, we must continue to enhance
and improve the functionality and features of our website. The Internet and the
online commerce industry are rapidly changing. In particular, the online travel
industry is characterized by increasingly complex systems and infrastructures
and new business models. If competitors introduce new products embodying new
technologies, or if new industry standards and practices emerge, our existing
web-site, technology and systems may become obsolete.

Our future success will depend on our ability to do the following: (i) enhance
our existing products; (ii) develop and license new products and technologies
that address the increasingly sophisticated and varied needs for prospective
customers and supplies; and (iii) respond to technological advances and emerging
industry standards and practices on a cost-effective and timely basis.

OUR BUSINESS IS EXPOSED TO RISKS ASSOCIATED WITH ONLINE COMMERCE SECURITY AND
CREDIT CARD FRAUD WHICH COULD REDUCE OUR REVENUES.

A fundamental requirement for online commerce and communications is the secure
transmission of confidential information, such as credit card numbers or other
personal information, over public networks. Our security measures may be
inadequate and, if any compromise of security were to occur, it could have a
detrimental effect on our reputation and adversely affect our ability to
maintain our existing travelers and/or attract new travelers.

Consumer concerns over the security of transactions conducted on the Internet or
the privacy of users may inhibit the growth of the Internet and online commerce.
To transmit confidential information such as customer credit card numbers
securely, we rely on encryption and authentication technology. Unanticipated
events or developments could result in a compromise or breach of the systems we
use to protect customer transaction data. Our servers and those of our service
providers may be vulnerable to viruses or other harmful code or activity
transmitted over the Internet. A virus or other harmful activity could cause a
service disruption.

In addition, we bear financial risk from products or services purchased with
fraudulent credit card data. Although we have implemented anti-fraud measures, a
failure to control fraudulent credit card transactions adequately could
adversely affect our business. Because of our limited operating history, we
cannot assure you that our anti-fraud measures are sufficient to prevent
material financial loss. Since we cannot exert the same level of influence or
control over our sales agents as we could were they our own employees, our sales
agents could fail to comply with our policies and procedures, which could result
in claims against us that could harm our financial condition and operating
results. We are not in a position to directly provide the same direction,
motivation and oversight for our sales agents as we would if such sales agents
were our own employees. As a result, there can be no assurance that our sales
agents will participate in our marketing strategies or plans, accept our
introduction of new products and services, or comply with our policies and
procedures.

Moreover, our processing, storage, use and disclosure of personal data could
give rise to liabilities as a result of government regulation, conflicting legal
requirements or differing views of personal privacy rights. In the processing of
our traveler transactions, we receive and store a large volume of personally
identifiable information. This information is also increasingly subject to
legislation and regulations in numerous jurisdictions around the world. This
government action is typically intended to protect the privacy of personal
information that is collected, processed and transmitted in or from the
governing jurisdiction. We could be adversely affected if legislation or
regulations are expanded to require changes in our business practices or if
governing jurisdictions interpret or implement their legislation or regulations
in ways that negatively affect our business, financial condition and results of
operations. As privacy and data protection have become more sensitive issues, we
may also become exposed to potential liabilities as a result of differing views
on the privacy of travel data. These and other privacy developments that are
difficult to anticipate could adversely affect our business, financial condition
and results of operation.

WE OPERATE IN A VERY COMPETITIVE ENVIRONMENT AND FACE INCREASING COMPETITION
FROM A VARIETY OF COMPANIES WITH RESPECT TO PRODUCTS AND SERVICES WE OFFER.

The market for the services we offer is intensely competitive. We compete with
both established and emerging traditional and online sellers of travel services
with respect to each of the services we offer. We face significant competition
from other distributors of travel products, including: (i) local, regional,
national and international traditional travel agencies; (ii) consolidators and
wholesalers of airline tickets, lodging and other travel products, including

Orbitz, Cheaptickets.com, Hotwire, Hotels.com; and (iii) operators of GDSs,
which control the computer systems through which travel reservations
historically have been made. Some of our competitors may offer services and
products on more favorable terms such as no fees and with unique access to
loyalty programs. Many of these competitors, such as airlines, hotel and rental
car companies, are also focusing on driving online demand to their own websites
in lieu of intermediaries like us. The introduction of new technologies and the
expansion of existing technologies may increase competitive pressures. Increased
competition may result in reduced operating margins, as well as loss of travel
agent partners, travelers, transactions and brand recognition. Some of our
competitors may have longer operating histories, larger customer bases, greater
brand recognition and significantly greater financial, marketing and other
resources than we have.

We cannot assure you that we will be able to compete successfully against
current, emerging and future competitors or provide differentiated products and
services to our travel agent partners and traveler base. Increased competition
could result in reduced operating margins, loss of segment share and damage to
our brand. There can be no assurance that we will be able to compete
successfully against current and future competitors or that competition will not
have a material adverse effect on our business, results of operations and
financial condition.

DECLINES OR DISRUPTIONS IN THE TRAVEL INDUSTRY, SUCH AS THOSE CAUSED BY GENERAL
ECONOMIC DOWNTURNS, TERRORISM, HEALTH CONCERNS OR STRIKES OR BANKRUPTCIES WITHIN
THE TRAVEL INDUSTRY COULD REDUCE OUR REVENUES.

Our business is affected by the health of the travel industry. Travel
expenditures are sensitive to business and personal discretionary spending
levels and tend to decline during general economic downturns. Events or
weaknesses in the travel industry that could negatively affect our business
include price escalation in travel-related industries, travel related strikes,
airline bankruptcies or liquidations and fuel price escalation. Additionally,
our business is sensitive to safety concerns and thus may decline after
incidents of terrorism, during periods of political instability or geopolitical
conflict in which travelers become concerned about safety issues, as a result of
inclement weather such as the hurricane that affected the markets around the
Gulf of Mexico in 2005 or when travel might involve health-related risks, such
as the avian flu. Moreover, since 2001, the travel industry has experienced a
protracted downturn, and there is a risk that a future downturn, or the
continued weak demand for travel, could adversely affect the growth of our
business. The long-term effects of events such as these could include, among
other things, a protracted decrease in demand for air travel due to fears
regarding terrorism, war or disease. These effects, depending on their scope and
duration, which we cannot predict at this time, could significantly reduce our
revenues.

BECAUSE OUR MARKET IS SEASONAL, OUR QUARTERLY RESULTS WILL FLUCTUATE.

Our business experiences seasonal fluctuations, reflecting seasonal trends for
the products offered by our sales agents, as well as Internet services
generally. For example, traditional leisure travel bookings are higher in the
first two calendar quarters of the year in anticipation of spring and summer
vacations and holiday periods, but online travel reservations may decline with
reduced Internet usage during the summer months. In the last two quarters of the
calendar year, demand for travel products generally declines and the number of
bookings flattens or decreases. These factors could cause our revenues to
fluctuate from quarter to quarter. Our results may also be affected by seasonal
fluctuations in the inventory made available to us by travel suppliers.

EVOLVING GOVERNMENT REGULATION COULD IMPOSE TAXES OR OTHER BURDENS ON OUR
BUSINESS, WHICH COULD INCREASE OUR COSTS OR DECREASE DEMAND FOR OUR PRODUCTS.

As a travel company selling air transportation products, we are subject to
regulation by government agencies having jurisdiction over economic issues
affecting the sale of air travel, including consumer protection issues and
competitive practices. We must also comply with laws and regulations relating to
our sales activities, including those prohibiting unfair and deceptive practices
and those requiring us to register as a seller of travel products, comply with
disclosure requirements and participate in state restitution funds. In addition,

many of our travel suppliers are heavily regulated and we are indirectly
affected by such regulation. Such agencies have the authority to enforce
economic regulations, and may assess civil penalties or challenge our operating
authority.

Increased regulation of the Internet or different applications of existing laws
might slow the growth in the use of the Internet and commercial online services,
which could decrease demand for our products, increase the cost of doing
business or otherwise reduce our sales and revenues. The statutes and case law
governing online commerce are still evolving, and new laws, regulations or
judicial decisions may impose on us additional risks and costs of operations. In
addition, new regulations, domestic or international, regarding the privacy of
our users' personally identifiable information may impose on us additional costs
and operational constraints.

Federal legislation imposing limitations on the ability of states to impose
taxes on Internet-based sales was enacted in 1998. The Internet Tax Freedom Act,
which was extended by the Internet Nondiscrimination Act, exempted certain types
of sales transactions conducted over the Internet from multiple or
discriminatory state and local taxation through November, 2007. The majority of
products and services we sell are already taxed: hotel rooms and car rentals at
the local level, and air transportation at the federal level with state taxation
preempted. Nevertheless, failure to renew this legislation could allow state and
local governments to impose additional taxes on some aspects of our
Internet-based sales, and these taxes could decrease the demand for our products
or increase our cost of operations.

Moreover, changing laws, rules and regulations and legal uncertainties may
adversely affect our business, financial condition and results of operations.
Our business, financial condition and results of operations could be adversely
affected by unfavorable changes in or interpretations of existing, or the
promulgation of new laws, rules and regulations applicable to us and our
businesses, including those relating to the internet and online commerce,
consumer protection and privacy, escheat and sales, use, occupancy, value-added
and other taxes, could decrease demand for products and services, increase costs
and/or subject us to additional liabilities. For example, there is, and will
likely continue to be, an increasing number of laws and regulations pertaining
to the internet and online commerce, which may relate to liability for
information retrieved from or transmitted over the internet, user privacy,
taxation and the quality of products and services. Furthermore, the growth and
development of online commerce may prompt calls for more stringent consumer
protection laws that may impose additional burdens on online businesses
generally.

In addition, the application of various domestic and international sales, use,
occupancy, value-added and other tax laws, rules and regulations to our
historical and new products and services is subject to interpretation by the
applicable taxing authorities. While we believe that we are compliant with these
tax provisions, there can be no assurances that taxing authorities will not take
a contrary position, or that such positions will not have an adverse effect on
our businesses, financial condition and results of operations. If the tax laws,
rules and regulations were amended or if current interpretations of the laws
were to change adversely to us, particularly with respect to occupancy or
value-added taxes, the results could have an adverse affect on our businesses,
financial condition and results of operations.

WE HAVE ACQUIRED THREE BUSINESSES AND MAY ACQUIRE OTHER BUSINESSES, PRODUCTS OR
TECHNOLOGIES. IF WE DO, WE MAY BE UNABLE TO INTEGRATE THEM WITH OUR BUSINESS OR
WE MAY IMPAIR OUR FINANCIAL PERFORMANCE.

During fiscal year 2006, we acquired three wholesale travel companies, Changes
in L'Attitudes, Inc., Island Resort Tours, Inc. and International Travel and
Resorts, Inc., and plan to acquire several more wholesale travel companies both
in the U.S.A. and in Europe as soon as practicable. We are currently negotiating
to purchase company assets and/or hire key personnel to expand our key
destinations to Hawaii and to Europe and to increase revenues through increased
bookings and utilization of our bulk air contracts. We are negotiating a
non-binding term sheet for a travel company with European expertise based
outside of London, England. These transactions will require additional funding
that has currently not been obtained.

Our future growth may depend, in part, on acquisitions. To that extent, we may
face the operational and financial risks that commonly accompany that strategy.
We may experience operational and financial risks in connection with any
potential acquisitions. In addition, businesses we may acquire may incur
significant losses from operations or experience impairment of carrying value.
We could face further operational risks, such as failing to assimilate the
operations and personnel of the acquired businesses, disrupting their ongoing
businesses, impairing management resources and their relationships with
employees and travelers as a result of changes in their ownership and management
Further, the evaluation and negotiation of potential acquisitions, as well as
the integration of an acquired business, will divert management time and other
resources. Some acquisitions may not be successful and their performances may
result in the impairment of their carrying value.

Certain financial and operational risks related to acquisitions that may have a
material impact on our business are: (i) use of cash resources and incurrence of
debt and contingent liabilities in funding acquisitions; (ii) stockholder
dilution if an acquisition is consummated through an issuance of our securities;
(iii) amortization expenses related to acquired intangible assets and other
adverse accounting consequences; (iv) costs incurred in identifying and
performing due diligence on potential acquisition targets that may or may not be
successful; (v) difficulties and expenses in assimilating the operations,
products, technology, information systems or personnel of the acquired company;
(vi) impairment of relationships with employees, retailers and affiliates of our
business and the acquired business; (vii) the assumption of known and unknown
liabilities of the acquired company; (viii) entrance into markets in which we
have no direct prior experience; and (ix) impairment of goodwill arising from
our acquisitions.

THE SUCCESS OF OUR BUSINESS DEPENDS UPON THE CONTINUING CONTRIBUTION OF OUR KEY
PERSONNEL AND EMPLOYEES, INCLUDING MR. DANIEL BRANDANO, OUR PRESIDENT AND CHIEF
EXECUTIVE OFFICER, WHOSE KNOWLEDGE OF OUR BUSINESS WOULD BE DIFFICULT TO REPLACE
IN THE EVENT WE LOSE HIS SERVICES.

Our operations are dependent on the efforts and relationships of Daniel Brandano
and the other executive officers as well as the senior management of our
organization. We will likely be dependent on the senior management of our
organization for the foreseeable future. If any of these individuals becomes
unable to continue in their role, our business or prospects could be adversely
affected. For example, the loss of Mr. Brandano could inhibit the development
and enhancement of our websites, could damage customer relations and our brand,
and could restrict our ability to raise additional working capital if and when
needed. Although we have entered into an employment agreement with Mr. Brandano,
there can be no assurance that he will continue in his present capacity for any
particular period of time. Moreover, our continued ability to compete
effectively depends on our ability to attract new employees and to retain and
motivate our existing employees. If we do not succeed in attracting
well-qualified employees or retaining or motivating existing employees, our
business would be adversely affected.

RISKS RELATED TO OUR COMPANY AND COMMON STOCK

WE HAVE EXPERIENCED HISTORICAL LOSSES AND A SUBSTANTIAL ACCUMULATED DEFICIT. IF
WE ARE UNABLE TO REVERSE THIS TREND, WE WILL LIKELY BE FORCED TO CEASE
OPERATIONS.

During the fiscal year ended December 31, 2007, and the three months ended March
31, 2008, we experienced net losses of $5,674,960 and $12,260,817, respectively.
During the fiscal year ended December 31, 2006, we experienced net losses of
$11,009,388. In addition, at March 31, 2008, we had a stockholders' deficit of
$21,495,703. Our operating results for future periods will include significant
expenses, including new product development expenses, potential marketing costs,
professional fees and administrative expenses, and will be subject to numerous
uncertainties. As a result, we are unable to predict whether we will achieve
profitability in the future, or at all.

WE HAVE A WORKING CAPITAL DEFICIT AND SIGNIFICANT CAPITAL REQUIREMENTS. SINCE WE
WILL CONTINUE TO INCUR LOSSES UNTIL WE ARE ABLE TO GENERATE SUFFICIENT REVENUES
TO OFFSET OUR EXPENSES, INVESTORS MAY BE UNABLE TO SELL OUR SHARES AT A PROFIT
OR AT ALL.

During the fiscal year ended December 31, 2007, and the three months ended March
31, 2008, we experienced net losses of $5,674,960 and $12,260,817, respectively.
Net cash used in operations for the fiscal year ended December 31, 2007 and the
three months ended March 31, 2008 was $1,658,698 and $706,568, respectively. On
March 31, 2008, we had a working capital deficit of $27,481,892. Because we have
not yet achieved or acquired sufficient operating capital and given these
financial results together with our expected cash requirements in 2008,
additional capital investments will be necessary to develop and sustain our
operations.

WE HAVE HISTORICALLY BEEN UNSUCCESSFUL IN OUR ATTEMPTS TO RAISE SUFFICIENT
CAPITAL TO FUND OUR PLANS. IF WE ARE UNABLE TO DO SO, WE MAY CEASE
OPERATIONS.

Historically, we have funded our operations through limited revenues and debt
and equity financing. Although we were successful in obtaining a $2,000,000
financing in January 2006, sold common stock for cash of $1,005,500 during the
two years ended December 31, 2007, and obtained bridge financing of
approximately $4,170,000 from September 2006 through January 2008, we have been
unsuccessful in attracting significant additional private funding for our
business. We continue to incur operating expenses, including executive and staff
salaries, lease obligations and acquisition costs, but we have not yet
integrated our acquired businesses and technologies, acquired target companies
according to our business model, obtained sufficient financing to carry out our
plans, or received sufficient operating revenues to support our human and
equipment infrastructures. Until such time, if ever, that we are successful in
obtaining additional financing to carry out our strategy, there is significant
risk that we may be required to cease operations.

SALES OF A SUBSTANTIAL NUMBER OF SHARES OF OUR COMMON STOCK INTO THE PUBLIC
MARKET BY CERTAIN STOCKHOLDER MAY RESULT IN SIGNIFICANT DOWNWARD PRESSURE ON THE
PRICE OF OUR COMMON STOCK AND COULD AFFECT YOUR ABILITY TO REALIZE THE CURRENT
TRADING PRICE OF OUR COMMON STOCK.

Sales of a substantial number of shares of our common stock in the public market
by certain stockholders could cause a reduction in the market price of our
common stock. As of the date of this Quarterly Report, we have 16,888,557 shares
of common stock issued and outstanding plus 2,250,000 shares of common stock
issuable.

As of the date of this Quarterly Report, there are 16,888,557 outstanding shares
of our common stock that are restricted securities as that term is defined in
Rule 144 under the Securities Act of 1933, as amended (the "Securities Act").
Although the Securities Act and Rule 144 place certain prohibitions on the sale
of restricted securities, restricted securities may be sold into the public
market under certain conditions. Further, as of the date of this Quarterly
Report, there are an aggregate of 1,149,762 stock options outstanding and an
aggregate of 98,780,968 warrants outstanding.

Any significant downward pressure on the price of our common stock as the
selling stockholders sell their shares of our common stock could encourage short
sales by the selling stockholders or others. Any such short sales could place
further downward pressure on the price of our common stock.

THE TRADING PRICE OF OUR COMMON STOCK ON THE OTC BULLETIN BOARD WILL FLUCTUATE
SIGNIFICANTLY AND STOCKHODLER MAY HAVE DIFFICULTY RESELLING THEIR SHARES.

Our common stock trades on the Over-the-Counter Bulletin Board. There is a
volatility associated with Bulletin Board securities in general and the value of
your investment could decline due to the impact of any of the following factors
upon the market price of our common stock: (i) disappointing results and/or
revenues from our websites; (ii) failure to meet our revenue or profit goals or
operating budget; (iii) decline in demand for our common stock; (iv) downward
revisions in securities analysts' estimates or changes in general market
conditions; (v) technological innovations by competitors or in competing
technologies; (vi) lack of funding generated for operations; (vii) investor
perception of our industry or our prospects; and (viii) general economic trends.

In addition, stock markets have experienced price and volume fluctuations and
the market prices of securities have been highly volatile. These fluctuations
are often unrelated to operating performance and may adversely affect the market
price of our common stock. As a result, investors may be unable to sell their
shares at a fair price and you may lose all or part of your investment.

ADDITIONAL ISSUANCE OF EQUITY SECURITIES MAY RESULT IN DILUTION TO OUR EXISTING
STOCKHOLDERS.

As of March 31, 2008, we have executed convertible promissory notes, granted
stock options, issued warrants to the same promissory note holders and others
and reserved options to be granted upon formation of a stock option plan to
purchase an aggregate of 265,702,156 shares of our common stock. The stock
options are exercisable at prices ranging from $0.485 per share to $11.40 per
share, and the warrants are exercisable ranging from $0.001 per share to $11.25
per share. In addition, we have granted common stock in the past to financiers
and consultants, and as we procure additional financing and acquire additional
business assets, we shall undoubtedly grant additional shares, as well as
warrants and stock options, to the financiers and shareholders of target
companies. To the extent that additional shares are issued, notes are converted,
and stock options and warrants are exercised, the shares that are issued may
result in an oversupply of shares and an undersupply of purchasers, thereby
diluting the market for our shares.

Our Articles of Incorporation authorize the issuance of 300,000,000 shares of
common stock and 20,000,000 shares of "blank check" preferred stock, which may
adversely affect the voting power of the holders of our securities and may deter
or delay changes in management. The board of directors has the authority to
issue additional shares of our capital stock to provide additional financing in
the future and the issuance of any such shares may result in a reduction of the
book value or market price of the outstanding shares of our common stock. If we
do issue any such additional shares, such issuance also will cause a reduction
in the proportionate ownership and voting power of all other stockholders. As a
result of such dilution, your proportionate ownership interest and voting power
will be decreased accordingly. Further, any such issuance could result in a
change of control.

To date, we have not issued any shares of preferred stock. Our Board of
Directors, without further approval of our common stockholders, is authorized to
fix the dividend rights and terms, conversion rights, voting rights, redemption
rights, liquidation preferences and other rights and restrictions relating to
any series of our preferred stock. Issuances of additional shares of preferred
stock, while providing flexibility in connection with possible financings,
acquisitions and other corporate purposes, could, among other things, adversely
affect the voting power of the holders of other of our securities and may, under
certain circumstances, have the effect of deterring hostile takeovers or
delaying changes in management control.

OUR COMMON STOCK IS CLASSIFIED AS A "PENNY STOCK" UNDER SEC RULES WHICH LIMITS
THE MARKET FOR OUR COMMON STOCK.

The SEC has adopted rules that regulate broker-dealer practices in connection
with transactions in "penny stocks." Penny stocks generally are equity
securities with a price of less than $5.00 (other than securities registered on
certain national securities exchanges or quoted on the NASDAQ system, provided
that current price and volume information with respect to transactions in such
securities is provided by the exchange or system). Penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
those rules, to deliver a standardized risk disclosure document prepared by the
SEC, which specifies information about penny stocks and the nature and
significance of risks of the penny stock market. A broker-dealer must also
provide the customer with bid and offer quotations for the penny stock, the
compensation of the broker-dealer, and sales person in the transaction, and
monthly account statements indicating the market value of each penny stock held
in the customer's account. In addition, the penny stock rules require that,
prior to a transaction in a penny stock not otherwise exempt from those rules,
the broker-dealer must make a special written determination that the penny stock
is a suitable investment for the purchaser and receive the purchaser's written

agreement to the transaction. These disclosure requirements may have the effect
of reducing the trading activity in the secondary market for stock that becomes
subject to those penny stock rules. If a trading market for our common stock
develops, our common stock will probably become subject to the penny stock
rules, and shareholders may have difficulty in selling their shares.

WE HAVE RECEIVED A GOING CONCERN OPINION FROM OUR INDEPENDENT AUDITORS REPORT
ACCOMPANYING OUR DECEMBER 31, 2007 AND DECEMBER 31, 2006 FINANCIAL STATEMENTS.

The independent registered public accounting firm's report accompanying our
December 31, 2007 and 2006 audited consolidated financial statements contains an
explanatory paragraph expressing substantial doubt about our ability to continue
as a going concern. The consolidated financial statements have been prepared
"assuming that the Company will continue as a going concern." Our ability to
continue as a going concern is dependent on raising additional capital to fund
our operations and ultimately on generating future profitable operations. There
can be no assurance that we will be able to raise sufficient additional capital
or eventually have positive cash flow from operations to address all of our cash
flow needs. If we are not able to find alternative sources of cash or generate
positive cash flow from operations, our business and shareholders will be
materially and adversely affected.

RISKS RELATED TO HOLDING OUR SECURITIES THERE ARE A LARGE NUMBER OF SHARES
UNDERLYING OUR CALLABLE SECURED CONVERTIBLE NOTES, WARRANTS AND STOCK OPTIONS
THAT MAY BE AVAILABLE FOR FUTURE SALE AND THE SALE OF THESE SHARES MAY DEPRESS
THE MARKET PRICE OF OUR COMMON STOCK.

As of March 31, 2008, we had callable secured convertible notes outstanding or
an obligation to issue callable secured convertible notes that may be converted
into an estimated 136,632,869 shares of our common stock at current market
prices, outstanding warrants or an obligation to issue warrants to purchase
98,780,968 shares of our common stock, outstanding options to purchase 1,149,762
shares of the Company's common stock and reserved options to be granted upon
formation of a stock option plan to purchase an 10,000,000 shares of the
Company's common stock. In addition, the number of shares of our common stock
issuable upon conversion of the outstanding callable secured convertible notes
may increase if there is an event of default. The sale of these shares may
adversely affect the market price of our common stock.

IF VARIOUS THIRD PARTIES CONVERT THEIR CONVERTIBLE NOTES BASED ON CURRENT
CONVERSION TERMS, THE ADDITIONAL STOCK ISSUANCES UNDERLYING THE CONVERSIONS
COULD HAVE A DEPRESSIVE EFFECT ON THE PRICE OF OUR COMMON STOCK.

At March 31, 2008, the Company had multiple convertible promissory notes
outstanding and payable to various third parties each with anti-dilution
provisions. Following is a summary of the material conversion terms related to
our largest convertible notes as of December 31, 2007: Note 1) a fixed
conversion price of $0.04, Note 2) a variable conversion price of the lesser of
(a) $0.23 per share or (b) an amount equal to 80% of the lowest daily closing
bid price of the Company's common stock, as quoted by Bloomberg, LP, for the
five (5) trading days immediately prior to conversion and Note 3) a variable
conversion price convertible into common stock of the Company at a 45% discount
to the average of the three lowest trading prices of the common stock during the
twenty (20) trading-day period prior to conversion. The significant downward
pressure on the price of our common stock as the selling stockholder converts
and sells material amounts could have an adverse affect on our stock price. In
addition, not only the sale of shares issued upon conversion or exercise of
notes, warrants and options, but also the mere perception that these sales could
occur may adversely affect the market price of our common stock.

IF WE ARE REQUIRED TO ISSUE SECURITIES WHICH ARE PRICED AT LESS THAN THE
CONVERSION PRICE OF OUR CONVERTIBLE SECURITIES OR THE EXERCISE PRICE OF WARRANTS
SOLD, IT WILL RESULT IN ADDITIONAL DILUTION TO US.

At March 31, 2008, we had debentures convertible into and warrants to purchase
136,632,869 and 98,780,968 shares of common stock, respectively. The convertible
debentures and certain warrants contain provisions that will require us to
reduce their conversion/exercise price in the event that we issue and/or sell

additional securities at a price less than the conversion price of our
convertible debentures or the exercise price of these warrants. If this were to
occur, current investors, other than the purchasers of the convertible
securities and warrants, would sustain material dilution in their ownership
interest of Dynamic Leisure Corporation.

THE ISSUANCE OF SHARES UPON CONVERSION OF THE CALLABLE SECURED CONVERTIBLE NOTES
AND EXERCISE OF OUTSTANDING WARRANTS MAY CAUSE IMMEDIATE AND SUBSTANTIAL
DILUTION TO OUR EXISTING STOCKHOLDERS.

The issuance of shares upon conversion of the callable secured convertible notes
and exercise of warrants may result in substantial dilution to the interests of
other stockholders since the selling stockholders may ultimately convert and
sell the full amount issuable on conversion. Although the selling stockholders
may not convert their callable secured convertible notes and/or exercise their
warrants if such conversion or exercise would cause them to own more than 4.99%
of our outstanding common stock, this restriction does not prevent the selling
stockholders from converting and/or exercising some of their holdings and then
subsequently converting the remainder of their holdings. In this way, the
selling stockholders may sell more than 4.99% while never holding more than the
foregoing limit at any one time. There is no upper limit on the number of shares
that may be issued which may in effect further dilute the proportionate equity
interest and voting power of holders of our common stock, including investors in
this offering.

IF WE ARE REQUIRED FOR ANY REASON TO REPAY OUR OUTSTANDING CALLABLE SECURED
CONVERTIBLE NOTES, WE WOULD BE REQUIRED TO DEPLETE OUR WORKING CAPITAL, IF
AVAILABLE, OR RAISE ADDITIONAL FUNDS. OUR FAILURE TO REPAY THE CALLABLE SECURED
CONVERTIBLE NOTES, IF REQUIRED, COULD RESULT IN LEGAL ACTION AGAINST US, WHICH
COULD REQUIRE THE SALE OF SUBSTANTIAL ASSETS.

On January 13, 2006, we issued a convertible promissory note in the amount of
$2,000,000. This note bears simple interest at the rate of 8% per annum and was
due and payable with interest on January 13, 2007 and was subsequently extended
to March 5, 2008. In February and March 2006, we issued convertible promissory
notes related to our acquisitions of CIL and IRT/ITR in the aggregate principal
amount of $2,050,000. These notes bear interest at the rate of 9% and were due
and payable with interest in February and March 2007. On September 20, 2006, we
modified our $2,000,000 convertible promissory note, pursuant to which the
principal of the note was increased by $250,000 to $2,250,000. On November 9,
2006, we entered into a Security Purchase Agreement involving the sale of an
aggregate of $1,000,000 principal amount of callable secured convertible notes
issuable in two tranches of $600,000 and $400,000 each and stock purchase
warrants to buy 5,000,000 shares of our common stock. The callable secured
convertible notes are due and payable, with 6% interest, three years from the
date of issuance, unless sooner converted into shares of our common stock. The
entire $1,000,000 was outstanding on March 31, 2007.

On March 5, 2007, we modified our $2,250,000 convertible note to extend the
maturity date to March 5, 2008 and granted the note holders a warrant to
purchase 3,000,000 shares of our common stock at $1.50 per share. On June 29,
2007 and January 22, 2008, we issued to an investor secured convertible
debentures of $1,310,000 and $1,200,000 and warrants to purchase 8,000,000 and
15,000,000 shares of our common stock, respectively. We were in default for
non-payment of its promissory notes aggregating $4,150,792 as of March 31, 2008,
along with certain other promissory notes totaling $107,500. Any event of
default such as our failure to repay the principal or interest when due, our
failure to issue shares of common stock upon conversion by the holder, our
failure to timely file a registration statement or have such registration
statement declared effective, breach of any covenant, representation or warranty
in the Securities Purchase Agreement or related convertible note, the assignment
or appointment of a receiver to control a substantial part of our property or
business, the filing of a money judgment, writ or similar process against us in
excess of $50,000, the commencement of a bankruptcy, insolvency, reorganization
or liquidation proceeding against us and the delisting of our common stock could
require the early repayment of the callable secured convertible notes, including
a default interest rate on the outstanding principal balance of the notes if the
default is not cured within the specified grace period. We anticipate that the

full amount of the callable secured convertible notes will be converted into
shares of our common stock, in accordance with the terms of the callable secured
convertible notes. If we are required to repay the callable secured convertible
notes, we would be required to use our limited working capital and raise
additional funds. If we were unable to repay the notes when required, the note
holders could commence legal action against us and foreclose on all of our
assets to recover the amounts due. Any such action would require us to curtail
or cease operations.

The Company was in default for non-payment of its promissory notes aggregating
$4,155,792 as of March 31, 2008, along with certain other promissory notes
totaling $156,434. Any event of default such as our failure to repay the
principal or interest when due, our failure to issue shares of common stock upon
conversion by the holder, our failure to timely file a registration statement or
have such registration statement declared effective, breach of any covenant,
representation or warranty in the Securities Purchase Agreement or related
convertible note, the assignment or appointment of a receiver to control a
substantial part of our property or business, the filing of a money judgment,
writ or similar process against us in excess of $50,000, the commencement of a
bankruptcy, insolvency, reorganization or liquidation proceeding against us and
the delisting of our common stock could require the early repayment of the
callable secured convertible notes, including a default interest rate on the
outstanding principal balance of the notes if the default is not cured within
the specified grace period. We anticipate that the full amount of the callable
secured convertible notes will be converted into shares of our common stock, in
accordance with the terms of the callable secured convertible notes. If we are
required to repay the callable secured convertible notes, we would be required
to use our limited working capital and raise additional funds. If we were unable
to repay the notes when required, the note holders could commence legal action
against us and foreclose on all of our assets to recover the amounts due. Any
such action would require us to curtail or cease operations.

On March 5, 2007, counsel for Stephen Hicks notified us that we were allegedly
in breach of a convertible debenture payable under the March 6, 2006 Purchase
Agreement between us and Hicks (the "Agreement") that provided for acquisition
of IRT/ITR. The Agreement calls for payment of a convertible debenture in the
amount of $1,450,000 as of March 6, 2007. If we are unable to resolve these
matters, the note holders could proceed with these legal actions against us and
foreclose on all of our assets to recover the amounts due. Any such action would
require us to curtail or cease operations.

WE MAY BE SUED OR BECOME A PARTY TO LITIGATION, WHICH COULD REQUIRE SIGNIFICANT
MANAGEMENT TIME AND ATTENTION AND RESULT IN SIGNIFICANT LEGAL EXPENSES AND MAY
RESULT IN AN UNFAVORABLE OUTCOME WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON
OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND CASH FLOWS.

We may be subject to a number of lawsuits from time to time arising in the
ordinary course of our business. For example, on March 2, 2007, we named Stephen
Hicks as a principle party to proceedings seeking recovery of damages or
alternative relief arising from breach of a contract under which we acquired
IRT/ITR. The complaint alleges non-compliance with certain terms and conditions
providing for integration of the companies. On March 5, 2007, counsel for
Stephen Hicks notified us that we were allegedly in breach of a convertible
debenture payable under the March 6, 2006 Purchase Agreement between us and Mr.
Hicks that provided for our acquisition of IRT/ITR. The Purchase Agreement calls
for payment of a convertible debenture in the amount of $1,450,000 as of March
6, 2007. The expense of defending this and other litigation may be significant.
The amount of time to resolve these lawsuits is unpredictable and defending
ourselves may divert management's attention from the day-to-day operations of
our business, which could adversely affect our business, results of operations
and cash flows. In addition, an unfavorable outcome in such litigation could
have a material adverse effect on our business, results of operations and cash
flows.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

On March 5, 2008, Secured Convertible Promissory Notes with the principal
balance of $2,250,000 to MMA Capital, LLC ("MMA") were payable along with unpaid
interest. The notes were not repaid on the maturity date and are in default.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

10.1 Settlement Agreement dated July 31, 2007 by and between the Company and
the Subscribers named therein and Form of Amended and Restated Stock
Purchase Warrant (incorporated by reference to Exhibit 10.1 to the
Company's Form 8-K filed on August 6, 2007)

10.2 Modification and waiver agreement dated October 25, 2007 between the
Company and Miller Investments, LLC related to a convertible promissory
note dated May 1, 2007.

31.1 Certification of Chief Executive Officer and Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification of Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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.

Dated: May 20, 2008 DYNAMIC LEISURE CORPORATION

By: /s/ Daniel G. Brandano
----------------------
Daniel G. Brandano
Chief Executive Officer

EXHIBIT INDEX

10.2 Modification and waiver agreement dated October 25, 2007 between the
Company and Miller Investments, LLC related to a convertible promissory
note dated May 1, 2007.

31.1 Certification of Chief Executive Officer and Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification of Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.