Summary of SPARTA COMMERCIAL SERVICES, INC.

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

GENERAL

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

"FORWARD-LOOKING" INFORMATION

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

RESULTS OF OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED JANUARY 31, 2008
TO THE THREE MONTHS ENDED JANUARY 31, 2007

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

REVENUES

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

COSTS AND EXPENSES

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

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

NET LOSS

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

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

COMPARISON OF THE NINE MONTHS ENDED JANUARY 31, 2008
TO THE NINE MONTHS ENDED JANUARY 31, 2007

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

REVENUES

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

COSTS AND EXPENSES

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

For the nine months ended January 31, 2008, we had expensed non-cash costs of $297,401 related to shares and warrants granted in connection with debt financing, $217,311 in stock and options issued to employees and $167,160 in stock and warrants issued to consultants. During nine months ending January 31, 2007, we recorded non-cash income of $299,663 related to the decrease in value of warrants issued with registration rights and other expenses. We incurred a non-cash charge of $831,658 during the nine months ended January 31, 2007 related to options and shares of common stock issued for consulting fees, services and financing cost.

NET LOSS

We incurred a net loss before preferred dividends of $3,052,792 for our nine months ended January 31, 2008 as compared to $ 2,989,931 for the corresponding interim period in 2007. The $62,861 or 2% increase in our net loss before preferred dividends for our nine month interim period ended January 31, 2008 was attributable to an increase in revenue, a decrease in operating expenses and non-cash financing costs, an increase in interest expense and financing costs, and the $299,461 decrease in the change in the value of warrant liabilities.

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

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

LIQUIDITY AND CAPITAL RESOURCES

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

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

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

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

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

We estimate that we will need approximately $1,800,000 in additional funds to fully implement our business plan during the next twelve months for a credit line reserve and for our general operating expenses. Although we obtained a senior credit facility in July 2005 (renewed in 2006 and 2007), which allowed us to commence and continue our operations, this facility does not allow us to provide financing for other markets we wish to enter. Thus, we will need to obtain additional credit facilities to fully implement our business plan. We are presently seeking those additional credit facilities and long term debt. This additional, debt financing, if available, will require payment of interest and may involve restrictive covenants that could impose limitations on our operating flexibility. If we are not successful in generating sufficient liquidity from operations or in raising sufficient capital resources to finance our growth, on terms acceptable to us, this could have a material adverse effect on our business, results of operations, liquidity and financial condition, and we will have to adjust our planned operations and development on a more limited scale.

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

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

PLAN OF OPERATIONS

ADDRESSING THE GOING CONCERN ISSUES

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

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

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

� seeking additional credit lines from institutional lenders;

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

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

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

PRODUCT RESEARCH AND DEVELOPMENT

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

ACQUISITION OR DISPOSITION OF PLANT AND EQUIPMENT

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

NUMBER OF EMPLOYEES

At January 31, 2008, we had 18 full time employees. If we fully implement our business plan, we anticipate our employment base may increase by approximately 35% during the next twelve months. As we continue to expand, we will incur additional cost for personnel. This projected increase in personnel is dependent upon our generating revenues and obtaining sources of financing. There is no guarantee that we will be successful in raising the funds required or generating revenues sufficient to fund the projected increase in the number of employees.

INFLATION

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

CRITICAL ACCOUNTING POLICIES

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

REVENUE RECOGNITION

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

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

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

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

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

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

STOCK-BASED COMPENSATION

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

RECENT ACCOUNTING PRONOUNCEMENT

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

WEB SITE DEVELOPMENT COSTS

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

OFF-BALANCE SHEET ARRANGEMENTS

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

TRENDS, RISKS AND UNCERTAINTIES

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

CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS

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

POTENTIAL FLUCTUATIONS IN ANNUAL OPERATING RESULTS

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

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

DEPENDENCE UPON MANAGEMENT

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

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

CONTINUED CONTROL OF CURRENT OFFICERS AND DIRECTORS

The present officers and directors own approximately 53.97% of the outstanding shares of common stock, without giving effect to shares underlying convertible securities, and therefore are in a position to elect all of our Directors and otherwise control the Company, including, without limitation, authorizing the sale of equity or debt securities of Sparta, the appointment of officers, and the determination of officers' salaries. Shareholders have no cumulative voting rights.

MANAGEMENT OF GROWTH

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

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

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