U. S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

X .

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

For the quarterly period ended March 31, 2012

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to _____________

Commission File Number: 000-29735

TACTICAL AIR DEFENSE SERVICES, INC.


Nevada		88-0455809
(State or other jurisdiction		(IRS Employer
of Incorporation)		Identification Number)
	123 West Nye Lane, Suite 517
	Carson City, Nevada 89706
	(Address of principal executive offices)

	(775) 888-6744
	(Issuer’s Telephone Number)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the 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 small reporting company.


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

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court. Yes . No .

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

6,000,000,000 common shares outstanding, $0.001 par value, as of July 30, 2012

Forward Looking Statements

Certain information contained in this Quarterly Report on Form 10-Q (this “Report” or “Quarterly Report”) includes forward-looking statements expressed in good faith and based upon what we believe are reasonable assumptions, but there can be no assurance that these expectations will be achieved or accomplished. These forward looking statements can be identified by the use of terms and phrases such as “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.).

The statements herein which are not historical reflect our current expectations and projections about the Company’s future results, performance, liquidity, financial condition, prospects and opportunities and are based upon information currently available to the Company and management and their interpretation of what are believed to be significant factors affecting the businesses, including many assumptions regarding future events.

Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the filing date of this Quarterly Report, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in our reports filed with the SEC (which shall also include by reference herein and incorporate the same as if fully included in their entirety, all Form 10-Ks, Form 10-Qs, Form 8-Ks and other periodic reports filed by us in the SEC’s EDGAR filing system (www.sec.gov)) which attempt to update interested parties of the risks and factors and other disclosures that may affect our business, financial condition, results of operation and cash flows.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in this Quarterly Report.

PART I

ITEM 1.

FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. Operating results for the three month period ended March 31, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.


TACTICAL AIR DEFENSE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

	March 31,	December 31,
	2012 $	2011 $

ASSETS
Current Assets:
Cash	7,417	298
Loans Receivable	365,000	315,000
Total Current Assets	372,417	315,298

TOTAL ASSETS	372,417	315,298

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	173,000	200,000
Short-Term Debentures, including accrued interest	-	-
Total Current Liabilities	173,000	200,000
Long-Term Debentures, including accrued interest	2,205,369	2,020,946
TOTAL LIABILITIES	2,378,369	2,220,946
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIENCY:
Preferred stock, Series A-$.001 par value; 1,000,000 shares authorized; - 1,000,000 and -0- shares issued and outstanding at December 31, 2011 and March 31, 2012 respectively

	1,000	1,000
Preferred stock, Series B-$.001 par value; 5,000,000 shares authorized; - 1,333,332 and -0- shares issued and outstanding at December 31, 2011 and March 31, 2012 respectively

	1,333	1,333
Preferred stock, Series C-$.001 par value; 10,000,000 shares authorized; - -0- shares issued and outstanding at December 31, 2011 and March 31, 2012 respectively

	-	-
Common stock-$.001 par value; 6,000,000,000 shares authorized; - 3,763,732,071 and 3,645,884,592, shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively

	3,763,732	3,645,885
Additional paid-in-capital	35,969,147	36,003,669
Accumulated deficit	(41,741,164)	(41,557,535)

TOTAL STOCKHOLDERS' DEFICIENCY	(2,005,952)	(1,905,648)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY	372,417	315,298


TACTICAL AIR DEFENSE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended
	March 31,	March 31,
	2012	2011
	$	$
REVENUES
Operating costs
General and administrative expenses	128,743	536,476

TOTAL COSTS	128,743	536,476
OPERATING LOSS	(128,743)	(536,476)

OTHER (EXPENSE) INCOME:
Interest expense	(54,885)	(57,627)
Other
TOTAL OTHER EXPENSES	(54,885)	(57,627)

NET LOSS	(183,628)	(594,103)
Legal Settlement	-	(75,000)

NET LOSS APPLICABLE TO COMMON STOCKHOLDERS	(183,628)	(669,103)

Loss per common share - basic and diluted	(0.00)	(0.00)

Weighted average number of shares outstanding - basic and diluted	3,724,449,578	2,993,930,220


TACTICAL AIR DEFENSE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
	Three Months Ended

		March 31, 2012			March 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss)	$	(183,628)	$	(669,103)
Adjustments to reconcile net loss to net cash used in operating activities:
Impairment of Fixed Asset				-
Bad Debt Reserve
Stock-based compensation		-		13,492
Changes in operating assets and liabilities:
Loan Receivable		(50,000)		-
Accounts payable		(27,000)		(136,353)
Accrued liabilities		-		-
Net Cash Used in Operating Activities		(260,628)		(791,964)
CASH USED IN INVESTING ACTIVITIES
Investment in Subsidiary		-
Net Cash Used in Investing Activities		-		-
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in Notes Payable		267,747		791,944
Proceeds from sale of common stock		-		-
Net Cash Provided by Financing Activities		267,747		791,944
Increase (Decrease) in cash		7,119		(20)
Cash - Beginning of period		298		168
Cash - End of period	$	7,417	$	148
Interest paid	$	-	$	-
Taxes paid	$	-	$	-

TACTICAL AIR DEFENSE SERVICES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - COMPANY AND BASIS OF PRESENTATION:

General

TADS Corporate History

TADS was incorporated in the State of Nevada on July 9, 1998 under the name Natalma Industries, Inc. Originally, TADS operated as a junior mining company engaged in the exploration of mining properties. We were unsuccessful in locating a joint venture partner to assist us in the development of our mining claims. As a result, TADS was unable to pay for and perform the exploration and development required in its agreement with the owners of its properties and lost our rights to the mining claims. Our management at the time, therefore determined that it was in the best interest of our shareholders that we seek potential operating businesses and business opportunities with the intent to acquire or merge with another business, which led to the purchase substantially all of the assets of AeroGroup Incorporated (“AeroGroup”) on December 15, 2006 (the “AeroGroup Acquisition”). The complete terms of the AeroGroup Acquisition were disclosed in our Form 8-K filed with the SEC on December 18, 2006. AeroGroup Incorporated originally commenced its operations and business plan as a contractor of military flight training as AeroGroup International Corporation in January 2002, and eventually merged with and acquired AeroGroup Incorporated.

Current Business Operations

As a result of the U.S. Base Foreclosure Act, the overall downsizing of the armed forces of the U.S. and its foreign allies, and the advanced age of the U.S. military air fleet, there was insufficient equipment and personnel to meet demands for combat air training and air refueling training. The wars in Iraq and Afghanistan and various regional conflicts and terrorist’s acts, have only added to this crisis. The private-sector is now being asked to fill a role once the exclusive domain of the military, and the capabilities of civilian contractors are well recognized, and are frequently proven superior and more efficient than public-sector contractors. In addition, due to the escalating wild fires in the Western U.S., and the financial and environmental costs associated with this crisis, fire-fighting preparedness and capability have become a top priority at both the State and Federal levels of government. Again, the private sector is being asked to provide services that were previously the domain of the public-sector.

In order to meet present and future military, environmental, and financial threats, the United States and its allies has been forced to continue to commit billions of dollars to training, preparedness, and execution. These needs cannot be met without the support of the private-sector. We believe that there is currently no other private-sector contractor which has the potential capabilities to adequately fulfill these diverse and urgent demands, and we believe that TADS, through its current management and business contacts and relationships, has the potential ability to negotiate future contracts and business relationships in order to provide access to the aircraft, personnel, and operational skills necessary to claim a portion of this rapidly growing and highly-profitable market for diverse air support services. Although the Company believes it has the potential ability to negotiate such future contracts and business relationships, the Company does not currently have any such active contracts and it cannot be assured that it will be awarded any such contracts in the future.

Air Combat Training

Air combat training exercises are currently conducted by the training commands of the United States Air Force, United States Navy, and of most of our NATO and foreign allies. We believe neither the U. S. Department of Defense (the “DoD”) nor its allies have sufficient personnel, support equipment, or access to foreign enemy type aircraft, to meet current demand. In many instances our European allies have neither the facilities nor the extensive airspace required for fighter combat training or fighter bomber training that we hope to provide.

TADS believes it will be able to provide the armed forces of the U.S. and its allies with a vast array of training services and support functions including, but not limited to air combat instruction and tactical training, actual aggressor simulated combat, classroom instruction, and airspace scheduling, fueling, aircraft spare parts support, aircraft maintenance and aircraft maintenance training.

Air combat simulation exercises are currently conducted by the training commands of the United States Air Force, United States Navy, and of most of our NATO, and foreign allies. We believe neither the DoD nor its allies have sufficient training and support equipment and personnel to meet current demand. In many instances, our European allies have neither the facilities nor the extensive airspace required for fighter combat training or fighter bombing training that TADS believes it can provide.

Although not a requirement, it is probable that in order to be awarded any such contract, the Company would need to acquire, through either lease or purchase, certain military aircraft to be deployed in any related contract. The purchase of any such military aircraft could require significant additional funding, typically an asset-based funding, which funding the Company does not currently have in place, nor can guarantee that it will be able to acquire.

Our current proposed flight training services focus on two major components; initial qualification flight training and advanced flight training, both of which consist of ground, and in air flight training. In addition, we are preparing to perform other flight training support services as described herein.

Initial Qualification Flight Training

Initial qualification flight training consists of the training of military pilots that have only recently become qualified in their aircraft and of more experienced pilots returning for recurrency training. Initial qualification flight training involves aircraft specific flight theory, flight maneuvers, aerodynamics and emergency in flight procedures as they relate to combat in a specific aircraft. Pilots and other crew members are also trained in cockpit resource management, which focuses on division of duties between pilot and co-pilot and utilization of resources within the aircraft cockpit to complete the flight plan and address emergencies. Initial qualification training involves many hours of classroom instruction in aircraft systems operations, air-to-air flight maneuvers, tactics, formation flying, instrument training and air-to-ground tactics. In flight instruction is generally provided only once the pilot has shown proficiency in ground instruction and flight simulator instruction.

Advanced Flight Training

Advanced flight training focuses on combat and other advanced maneuvers and is conducted after the pilot completes initial qualification training and returns to a “full service” training facility where he is provided refresher or upgrade training to sharpen his or her combat skills. We intend to focus the training venue on approved overseas customers and NATO customers who would use our accessible facilities and ranges to qualify, in some cases, and re-qualify in other cases in specific combat skills like air-to-air, air-to-ground, electronic countermeasure training, air-refueling training, and other advanced maneuvers.

U.S. Military Training

A crucial component to aerial combat training involves training against actual foreign adversary aircraft which are typically Russian, ex-Soviet bloc, or Chinese. However, because the U.S. military has little to no access to “enemy” aircraft, the status-quo has been to use aged U.S. military aircraft operating as the adversarial or “Red Air” aircraft. The status-quo leaves much to be desired because aged U.S. military aircraft do not possess the flying characteristics or capabilities of sophisticated enemy combat aircraft, nor do they emit the same electronic, radar signature, or visual signals.

Through its past and present relationships with companies licensed by the U.S. Department of Justice (BATF) to import foreign weapons of war, TADS believes it can provide unique Red Air aggressor aircraft. These are the aircraft that are the actual fighter aircraft currently used substantially many of the former Soviet bloc countries and non-allied nations.

In connection with contracts to provide adversary combat aircraft to the U.S. military, TADS believes it can supply various support services such as adversary pilots, spare parts, service and maintenance of the adversary aircraft, tactical training, actual aggressor simulated combat, and classroom instruction.

Foreign Air Combat Training

Unlike the training of the U.S. military, air combat training of foreign allied militaries typically entails air combat training techniques and strategies using U.S. military aircraft such as the F-16, which such foreign militaries have already purchased. Although a commercial endeavor, it has been a strategic decision of the U.S. government to supply U.S. fighter aircraft to its allies. However, the ability and resources of the U.S. military to thereafter train the foreign purchasers of its aircraft is extremely limited and sub-par.

As a result, there is a backlog of allied countries that have purchased F-16’s and other U.S. fighter aircraft, and that have immediate and ongoing need for air combat training. TADS believes they are able to offer to foreign militaries actual combat training from highly experienced U.S. fighter pilots, classroom training, and parts, service, and maintenance protocols for their aircraft. TADS also believes it has the capability to either train on foreign soil and foreign military bases to fulfill multi-year contracts, or to provide a turn-key solution by hosting foreign militaries on U.S. soil, and therein provide not only pilots, training protocols, and parts, service, and maintenance, but also the air-bases, bombing ranges, fueling services, housing requirements, etc.

Going Concern and Management's Plan

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate the continuation of the Company as a going concern. However, as shown in the accompanying consolidated financial statements, the Company has incurred losses from operations since inception and has a significant working capital deficiency as of December 31, 2011 of approximately $41,218,000.

On December 15, 2006, TADS acquired substantially all of the assets of AeroGroup and assumed certain contracts in exchange for the assumption by TADS of certain liabilities of AeroGroup. Management believes the Company can raise adequate capital for the Company’s required working capital needs for 2010. Management also believes that it still needs substantial capital in order to carry out its business plan, which is to become a civilian provider of outsourced military aviation services which includes fighter jet pilot training, maintenance training, aerial fire-fighting, disaster relief services, and other aerial services. No assurance can be given that the Company can obtain the required estimated additional working capital, or if obtained, that such funding will not cause substantial dilution to stockholders of the Company. Being a development stage company, the Company is subject to all the risks inherent in the establishment of a new enterprise and the marketing of a new product, many of which risks are beyond the control of the Company. All of the factors discussed above raise substantial doubt about the Company's ability to continue as a going concern.

These consolidated financial statements do not include any adjustments relating to the recoverability of recorded asset amounts that might be necessary as a result of the above uncertainty.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

In the opinion of management, the accompanying consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary for a fair statement of the results of operations and cash flows for the periods presented and the condensed consolidated balance sheet for the year ended December 31, 2011. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the SEC rules and regulations.

Financial Reporting

The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America. Revenues and expenses are reported on the accrual basis, which means that income is recognized as it is earned and expenses are recognized as they are incurred.

Use of Estimates

The Company’s significant estimates include accrued expenses and stock based transactions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. While the Company believes that such estimates are fair when considered in conjunction with the financial statements taken as a whole, the actual amounts of such estimates, when known, will vary from these estimates. If actual results significantly differ from the Company’s estimates, the Company’s financial condition and results of operations could be materially impacted.

Cash and Cash Equivalents

Cash and cash equivalents include all interest-bearing deposits or investments with maturities of three months or less.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company maintains cash balances at one financial institution, which is insured by the Federal Deposit Insurance Corporation (“FDIC”). The FDIC insured institution insures up to $250,000 on account balances. The amounts that are not insured by FDIC limitations are held in short-term securities.

Fair value of financial instruments

The carrying amounts reported in the balance sheet for accounts payable and accrued expenses, debenture and loans payable approximate their fair market value based on the short-term maturity of these instruments.

Impairment of long – lived assets and long- lived assets to be disposed of

The Company accounts for the impairment of long-lived assets in accordance with FASB ASC 360 “Property, Plant and Equipment”. ASC 360 requires write-downs to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount.

As of December 31, 2011, the property and equipment held by the Company have been reviewed, and it was determined that the value had been impaired 100%.

Revenue Recognition

Revenue for services and goods is recognized monthly as provided pursuant to the terms of contracts or purchase orders, which have prices that are fixed and determinable. The Company assesses the client’s ability to meet the contract terms, including meeting payment obligations, before entering into the contract. Deferred revenue results from customers who are billed for monitoring in advance of the period in which the services are provided, on a monthly, quarterly or annual basis.

The Company follows Staff Accounting Bulletin 104 (SAB 104), which requires the Company to defer certain revenue and expenses. The capitalized costs and deferred revenues related to the installation are then amortized over the life of an average customer relationship, on a straight line basis. If the customer is discontinued prior to the expiration of the original expected life, the unamortized portion of the deferred installation revenue and related capitalized costs are recognized in the period the discontinuation becomes effective. In accordance with EITF 00-21, “Revenue Arrangements with Multiple Deliverables”, the service contracts that include both installation and video streaming are considered a single unit of accounting.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Expenditures for major betterments and additions are capitalized while replacement, maintenance, and repairs, which do not extend the lives of the respective assets, are currently charged to expense. Any gain or loss on disposition of assets is recognized currently in the statement of income.

Earnings (loss) per share

Earnings (loss) per share is computed in accordance with FASB ASC 260, "Earnings per Share". Basic earnings (loss) per share is computed by dividing net income (loss), after deducting preferred stock dividends accumulated during the period, by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. The outstanding warrants for years ended December 31, 2011 and 2010 respectively are anti-dilutive and therefore are not included in earnings (loss) per share.

Accounting for stock-based compensation

In accordance with FASB ASC 718-10, “Compensation-Stock Compensation”, a public entity measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service.

In addition, a public entity is required to measure the cost of employee services received in exchange for an award of liability instruments based on its current fair value. The fair value of that award has been re-measured subsequently at each reporting date through the settlement date. Changes in fair value during the requisite service period will be recognized as compensation cost over that period.

For the year ended December 31, 2011 and 2010, the Company did not grant any stock options.

Non- Employee Stock Based Compensation

The cost of stock based compensation awards issued to non-employees for services are recorded at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in FASB ASC 505-50, “Equity-Based Payments to Non-Employees”.

Common stock purchase warrants

The Company accounts for common stock purchase warrants in accordance with FASB ASC 815-40, “Derivatives and Hedging”. Based on the provisions of ASC 815-40, the Company classifies as equity any contracts that (i) require physical settlement or net-share settlement, or (ii) gives the company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the company), or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement).

Income Taxes

The Company accounts for income taxes using FASB ASC 740-10, "Income Taxes," which requires recognition of deferred tax liabilities and assets for expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the quarter in which the differences are expected to reverse. A valuation allowance is recorded for deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company does not expect that this interpretation will have a material impact on its financial position, results of operations, or cash flows.

FASB ASC 740-10 also provides guidance about how an enterprise should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. Under ASC 740-10, a tax position could be effectively settled on completion of examination by a taxing authority if the entity does not intend to appeal or litigate the result and it is remote that the taxing authority would examine or re-examine the tax position. The Company does not expect that this interpretation will have a material impact on its financial position, results of operations, or cash flows.

NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS

ASU 2011-05 – Presentation of comprehensive income

ASU 2011-05 was the result of a joint project with the IASB and amends the guidance in ASC 220, Comprehensive Income, by eliminating the option to present components of other comprehensive income (OCI) in the statement of stockholders’ equity. Instead, the new guidance now requires entities to present all nonowner changes in stockholders’ equity either as a single continuous statement of comprehensive income or as two separate but consecutive statements.

All entities that report OCI items will be impacted by the changes in this ASU. The components of OCI have not changed, nor has the guidance on when OCI items are reclassified to net income; however, the amendments require entities to present all reclassification adjustments from OCI to net income on the face of the statement of comprehensive income.

The amendments to ASC 220, Comprehensive Income, included in ASU 2011-05, Presentation of Comprehensive Income, are effective for fiscal years and for interim periods within those fiscal years, beginning after December 15, 2011 (that is, the fiscal year beginning January 1, 2012 for calendar-year entities) for public entities and for interim and annual periods thereafter. The amended guidance must be applied retrospectively and early adoption is permitted.

ASU 2011-04 – Amendments to achieve common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs

The amendments in ASU 2011-04 do not modify the requirements for when fair value measurements apply; rather, they generally represent clarifications on how to measure and disclose fair value under ASC 820, Fair Value Measurement, including the following revisions:

The concepts of highest and best use and valuation premise are relevant only for measuring the fair value of nonfinancial assets and do not apply to financial assets and liabilities.

An entity should measure the fair value of an equity-classified financial instrument from the perspective of the market participant that holds the instrument as an asset.

An entity that holds a group of financial assets and financial liabilities whose market risk (that is, interest rate risk, currency risk, or other price risk) and credit risk are managed on the basis of the entity’s net risk exposure may apply an exception to the fair value requirements in ASC 820 if certain criteria are met. The exception allows such financial instruments to be measured on the basis of the reporting entity’s net, rather than gross, exposure to those risks.

Premiums or discounts related to the unit of account are appropriate when measuring fair value of an asset or liability if market participants would incorporate them into the measurement (for example, a control premium). However, premiums or discounts related to size as a characteristic of the reporting entity’s holding (that is, a “blockage factor”) should not be considered in a fair value measurement.

The amendments to ASC 820, Fair Value Measurement, included in ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, are effective prospectively for public entities for interim and annual periods beginning after December 15, 2011 (that is, the quarter ending March 31, 2012 for calendar-year entities). Early adoption is not permitted for public entities

ASU 2011-03 – Reconsideration of effective control for repurchase agreements

The amendments to ASC 860-10 included in ASU 2011-03, simplified the accounting for financial assets transferred under repurchase agreements (repos) and similar arrangements, by eliminating the transferor’s ability criteria from the assessment of effective control over those assets as well as the related implementation guidance.

Currently under ASC 860-10-40-24 a transferor must meet four criteria to maintain effective control of securities transferred in a repo and to therefore account for the transfer as a secured borrowing rather than a sale. One of these criteria states that the transferor must be able to either repurchase or redeem the transferred securities on substantially the agreed terms, even if the transferee is in default. This criterion is satisfied only if the transferor has cash or collateral sufficient to fund substantially the entire cost of purchasing replacement securities.

The amendments in ASU 2011-03 remove this criterion and related implementation guidance from the Codification, thereby reducing the criteria that transferors must satisfy to qualify for secured borrowing accounting and, as a result, likely reducing the number of transfers accounted for as sales.

The amendments to ASC 860-10, Transfers and Servicing, included in ASU 2011-03, Reconsideration of Effective Control for Repurchase Agreements, are effective for both public and nonpublic entities prospectively for new transfers and existing transactions modified as of the first interim or annual period beginning on or after December 15, 2011 (that is, the fiscal year beginning January 1, 2012 for calendar-year entities). Early adoption is not permitted.

ASU 2011-02 - FASB amends creditor troubled debt restructuring guidance

This bulletin discusses ASU 2011-02, which was issued by the FASB to provide creditors with additional guidance in evaluating whether a restructuring of debt is a troubled debt restructuring. The new guidance does not amend the guidance for debtors. It is generally effective for public entities in the quarter ended September 30, 2011.

ASU 2011-01 - Troubled debt restructuring disclosures for public-entity creditors deferred

The FASB issued Accounting Standards Update (ASU) 2011-01, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20, which temporarily defers the date when public-entity creditors are required to provide the new disclosures for troubled debt restructurings in ASU 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. The deferred effective date will coincide with the effective date for the clarified guidance about what constitutes a troubled debt restructuring, which the Board is currently deliberating. The clarified guidance is expected to apply for interim and annual periods ending after June 15, 2011.

When providing the new disclosures under ASU 2010-20, public entities would be required to retrospectively apply the clarified guidance on what constitutes a troubled debt restructuring to restructurings occurring on or after the beginning of the year in which the proposed clarified guidance is adopted.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

NOTE 4 – SALE OF STOCK

Issuance of Convertible Debentures Q1/2012

On January 1, 2012, the Company issued a Convertible Debenture in a principle amount of $29,444.45 to Alexis Korybut as consideration for unpaid salary from Q4/2011. The Convertible Debenture has a term of three years, an interest rate of 12%, and has full-ratchet anti-dilution protection. The principle amount is convertible into 58,890,900 shares of Common Stock at a conversion price of $0.0005 per share.

On January 1, 2012, the Company issued a Convertible Debenture in a principle amount of $10,000 to Brad Hacker as consideration for accounting services for fiscal year 2011. The Convertible Debenture has a term of three years, an interest rate of 12%, and has full-ratchet anti-dilution protection. The principle amount is convertible into 20,000,000 shares of Common Stock at a conversion price of $0.0005 per share.

On January 1, 2012, the Company issued a Convertible Debenture in a principle amount of $41,528.22 to the Katherine M. O’Connor Trust as consideration for funding the purchase of aircraft to be sold to the Company. The Convertible Debenture has a term of three years, an interest rate of 12%, and has full-ratchet anti-dilution protection. The principle amount is convertible into 83,056,440 shares of Common Stock at a conversion price of $0.0005 per share.

On January 1, 2012, the Company issued a Convertible Debenture in a principle amount of $35,375.89 to Sopwith, LLC as consideration for funding the purchase of aircraft to be sold to the Company. The Convertible Debenture has a term of three years, an interest rate of 12%, and has full-ratchet anti-dilution protection. The principle amount is convertible into 70,751,780 shares of Common Stock at a conversion price of $0.0005 per share.

On February 29, 2012, the Company issued a Convertible Debenture in a principle amount of $57,804.38 to Jamie Goldstein as consideration for loans to the Company in Q1/2012. The Convertible Debenture has a term of three years, an interest rate of 12%, and has full-ratchet anti-dilution protection. The principle amount is convertible into 115,608,760 shares of Common Stock at a conversion price of $0.0005 per share.

On March 31, 2012, the Company issued a Convertible Debenture in a principle amount of $20,000.00 to The Bingham Law Group as consideration for unpaid legal services for Q1-2012. The Convertible Debenture has a term of three years, an interest rate of 12%, and has full-ratchet anti-dilution protection. The principle amount is convertible into 40,000,000 shares of Common Stock at a conversion price of $0.0005 per share.

On March 31, 2012, the Company issued a Convertible Debenture in a principle amount of $65,458.60 to Alexis Korybut as consideration for (i) unpaid salary from Q1/2012, (ii) out-of-pocket expenses, and (iii) a loan to the Company. The Convertible Debenture has a term of three years, an interest rate of 12%, and has full-ratchet anti-dilution protection. The principle amount is convertible into 130,917,200 shares of Common Stock at a conversion price of $0.0005 per share.

Conversion of Notes and Exercise of Warrants

The Company issued 35,711,416 shares of restricted Common Stock to The Bingham Law Group in February, 2012 in consideration for the conversion of a principle amount of $25,000.00 and accrued interest of $1,783.56, for a total consideration of $26,783.56, of a Convertible Promissory Note initially issued to The Bingham Law Group on July 1, 2011 with a principle amount of $25,000.00. No registration rights were issued in connection with these shares.

The Company issued 82,136,063 shares of restricted Common Stock to The Bingham Law Group in February, 2012 in consideration for the conversion of a principle amount of $50,000.00 and accrued interest of $6,542.47, for a total consideration of $56,542.47, of a Convertible Promissory Note initially issued to The Bingham Law Group on January 1, 2011 with a principle amount of $50,000.00. No registration rights were issued in connection with these shares.

NOTE 5 – COMMITMENTS:

Compensation Agreements

On May 15, 2012, the Company entered into an employment agreement with its Chief Executive Officer, Alexis C. Korybut. Pursuant to the terms of the agreement, Mr. Korybut will be employed in the positions of Chief Executive Officer, President and Chief Financial Officer of the Company and will receive an annual salary of $180,000, a one-time issuance of 3,000,000 shares of the Company’s Series A Preferred Stock and additional benefits as outlined in the agreement.

Legal Proceedings

Mr. Charlie Searock (“Searock”), a former executive officer of our company, has brought a laws suit in the District Court of the 336 th Judicial District of Grayson County, Texas against us and seven other defendants on February 6, 2007, on claims of breach of an employment agreement between Searock and International Tactical Training Center, Inc. (“ITTC”). (Charles J. Searock, Jr., vs. Tactical Air Defense Services, Inc., International Tactical Training Center, Inc., Mark Daniels, Victor Miller, John Farley, Gary Fears, Jamie Goldstein, and Joel Ramsden, Cause No.07-0322-336). ITTC and the Company are the only two corporate defendants named in the Searock lawsuit. Of the six individuals named as defendants, three are former ITTC management. Searock asserts that the Company is liable for ITTC’s breach of employment agreement because he alleges that the Company acquired ITTC’s assets, and that ITTC was a former subsidiary of AeroGroup, Inc., an entity not named as a defendant in the Searock lawsuit. In addition to his claim for breach of the ITTC employment contract, Searock also asserts theories of tort liability against the defendants. The Company denies any liability to Searock on his claim for breach of the ITTC employment contract and denies Searock has any factual basis to impose liability on the Company under any of his theories of tort liability. Specifically, the Company denies that it acquired, owns or controls ITTC’s former assets. The Company believes that this claim is without merit and is working towards resolution of the same. On October 25, 2010, Searock was awarded a default judgment of $1,248,962 including accrued interest, jointly and severally against TADS and the other defendants, all of whom who failed to appear for trial, and an award of exemplary damages of $2,000,000 against TADS. Searock claims that TADS and the other defendants were given notice of the trial, however it is TADS assertion and the assertion of the other defendants that none one of the defendants, including TADS, ever received notice of the trial, were unaware of the trial, and that the judgment is without merit. TADS is currently in the process of appealing the judgment in the Texas Appellate Court based upon not having received notice, and although no assurances can be given, the Company believes that the judgment will be vacated by the Court.

On or about July 3, 2012, Tactical Air Defense Services, Inc., a Nevada corporation (the “Company”) entered into a Settlement Agreement (the “Daniels Settlement Agreement”) with Mark Daniels (“Daniels”), the Company’s former Chief Executive Officer. A copy of the Daniels Settlement Agreement was attached to our Form 8-K filed with the SEC on July 3, 2012 and incorporated herein by reference in its entirety.

Pursuant to the terms of the Daniels Settlement Agreement, the Company agreed to settle its litigational claims against Daniels related to the litigation action entitled Tactical Air Defense Services, Inc., et. al v. Mark Daniels, et. al, in the Circuit Court of the 15^th Judicial Circuit in and for Palm Beach County, Florida through the removal of Daniels from the action. As consideration for the removal of Daniels from the action: (i) Daniels agreed to the rescission, cancellation, waiver and termination in full of all Company obligations relating to a promissory note issued by the Company to Daniels on or about April 15, 2009 with a current balance of approximately $221,000 including all principle and accrued interest; and (ii) Daniels is required to deliver a Two Hundred and Fifty Thousand Dollars ($250,000.00) cash payment to the Company within one hundred and twenty (120) days of the execution of the Daniels Settlement Agreement.

August 3, 2010 certain individuals including Alexander Baranov/Glovatsky and Victor Miller filed an improper and frivolous Involuntary Chapter 7 Petition (the “New Petition”) against the Company in the United States Bankruptcy Court for the Southern District of Florida, in an effort to circumvent the legitimate court process, in direct violation of the Court Order issued by Judge Paul Hyman on May 14, 2010.

The Company immediately requested an emergency Motion to Dismiss the New Petition based upon its contention that:

the New Petition violated the Court Order;

a majority of the new petitioners were currently involved in civil litigation with TADF; and

all of the claims of the new petitioners were either without merit, being contested, or were frivolous and improper.

On August 10, 2010, at an Emergency Hearing to Dismiss the fraudulent and improper Petition, the Federal Bankruptcy judge dismissed the Petition, as had been anticipated and previously disclosed by the Company, and, moreover, due to the egregious actions of the petitioners, reserved the right of the US Federal Bankruptcy Court to:

impose sanctions upon the petitioners, and

impose punitive sanctions upon the petitioners if it is determined that the actions of the petitioners violated the Court Order previously issued by U.S. Federal Bankruptcy Court Judge Hyman.

Although no assurances can be given, the Company believes that at the request of the Company, sanctions will be imposed upon the petitioners, and that it will be determined that the petitioners violated the Court Order issued by Judge Hyman.

As disclosed in our past filings, Sichenzia & Ross LLP (“Sichenzia”) had been pursuing a claim against the Company for unpaid services dating back to early 2007. The Company recently learned that Sichenzia obtained a judgment against the Company in the amount of $21,471.87 in the Civil Court of the City of New York, County of New York on April 3, 2008. We believe that this claim is without merit and are working towards resolution of the same.

As of the date of this Quarterly Report, the Company is not a party to any pending litigation or legal proceeding that is not described herein or in the ordinary course of business. To our knowledge, no such proceedings exist or are threatened other than those described herein.

NOTE 6 - OTHER EVENTS:

AeroTech Corporation-Acquisition Agreement

On or about July 12, 2012, the Company and AeroTech Corporation, a Florida corporation (“AeroTech”) entered into an Acquisition Agreement (the “Acquisition Agreement”). A copy of the Acquisition Agreement has been attached as an exhibit to our Form 8-K filed on July 20, 2012, the terms of which are hereby incorporated by reference in their entirety. Through the acquisition of AeroTech, the Company will acquire AeroTech’s existing business and assets including, but not limited to, five separate teaming agreements, a sole source justification and approval from the United States Army, and AeroTech’s pre-transaction management team.

Pursuant to the terms of the Acquisition Agreement, the Company will acquire 100% of the equity interest in AeroTech in exchange for the issuance of Five Million shares of the Company’s Series C Preferred Stock to be issued to AeroTech’s existing shareholders upon closing. A copy of the Company’s Certificate of Designation filed with the Nevada Secretary of State on May 31, 2011 outlining the rights, preferences and privileges of the Series C Preferred Stock has been attached as an exhibit to our Form 8-K filed on July 20, 2012, the terms of which are hereby incorporated by reference in their entirety. Following the closing of the Acquisition Agreement which, according to the Acquisition Agreement shall occur on or before August 11, 2012 unless mutually extended by all parties (the “Closing”), AeroTech will continue its existing business operations as a wholly owned subsidiary of the Company.

The Closing is subject to certain closing conditions that must be satisfied prior to Closing, with such conditions outlined in Section 4 of the Acquisition Agreement, including, but not limited to, the appointment and retainment of AeroTech’s existing management to the post transaction entity including: (i) Colonel Scott Patterson to be appointed to the position of Chief Operating Officer; and (ii) Mark Daniels, to be appointed to the position of President. Such appointments shall be subject to subsequent employment agreements with each respective individual, to be executed and finalized upon Closing. A copy of the Merger Agreement was attached to our Form 8-K filed with the SEC on July 12, 2012 and incorporated herein by reference in its entirety.

NOTE 7 – NOTES RECEIVABLE

On July 22, 2011, the Company entered into a Binding Letter of Intent (the “LOI”) with Tactical Air Support, Inc., a Nevada corporation (“Tac-Air”) in connection with certain government services contracts Tac-Air is currently seeking (the “Services Contracts”).

Subject to further definitive agreements and pursuant to the terms of the LOI, in the event Tac-Air is awarded the Services Contracts, the Company will receive the right to thirty percent (30%) of all future net profits derived from the Services Contracts.

In connection with the LOI and Services Contracts, the Company has provided Tac-Air funding codified by a secured promissory note issued to the Company by Tac-Air in the amount of Three Hundred and Fifteen Thousand Dollars (US$315,000 and the “Note”). The Note maintains zero interest, a maturity date of October 22, 2011 and is secured by and convertible into 100,000 shares of Tac-Air’s pledged, issued and outstanding common stock at the Company’s option, which represents a ten percent (10%) ownership interest in Tac-Air. A copy of the Note has been attached as an exhibit to our Form 8-K filed on July 28, 2012, and is hereby incorporated by reference.

On February 2, 2012, the Company made an additional loan to Tac-Air in the amount of fifty thousand dollars (US$50,000).

NOTE 8 – SUBSEQUENT EVENTS

Convertible Debenture Issuances Q2/2012

On April 15, 2012, the Company issued a Convertible Debenture in a principle amount of $11,000.00 to Jamie Goldstein as consideration for loans to the Company in Q2/2012. The Convertible Debenture has a term of three years, an interest rate of 12%, and has full-ratchet anti-dilution protection. The principle amount is convertible into 36,666,667 shares of Common Stock at a conversion price of $0.0003 per share.

On June 30, 2012, the Company issued a Convertible Debenture in a principle amount of $54,000.00 to Alexis Korybut as consideration for unpaid salary from Q2/2012. The Convertible Debenture has a term of three years, an interest rate of 12%, and has full-ratchet anti-dilution protection. The principle amount is convertible into 180,000,000 shares of Common Stock at a conversion price of $0.0003 per share.

On June 30, 2012, the Company issued a Convertible Debenture in a principle amount of $40,000.00 to The Bingham Law Group as consideration for unpaid legal services for Q2/2012. The Convertible Debenture has a term of three years, an interest rate of 12%, and has full-ratchet anti-dilution protection. The principle amount is convertible into 133,333,333 shares of Common Stock at a conversion price of $0.0003 per share.

On June 30, 2012, the Company issued a Convertible Debenture in a principle amount of $72,448.49 to Alexis Korybut as consideration for accrued and unpaid vacation from August 17, 2007 through June 30, 2012. The Convertible Debenture has a term of three years, an interest rate of 12%, and has full-ratchet anti-dilution protection. The principle amount is convertible into 241,494,967 shares of Common Stock at a conversion price of $0.0003 per share.

Conversion of Notes and Exercise of Warrants Q2/2012

On May 21, 2012, $25,000.00 of principle, together with accrued interest of $5,613.70, for a total amount of $30,613.70, of a Convertible Promissory Note issued to the Gary Fears Trust on July 1, 2010 in a principle amount of $218,570.50, was converted by Kristen Zankl at a conversion price of $0.0003 into 102,073,059 shares of restricted Common Stock of the Company.

On May 21, 2012, $86,000.00 of principle, together with accrued interest of $19,311.12, for a total amount of $105,311.12, of a Convertible Promissory Note issued to the Gary Fears Trust on July 1, 2010 in a principle amount of $218,570.50, was converted by Richard Applegate at a conversion price of $0.0003 into 351,131,324 shares of restricted Common Stock of the Company.

On May 21, 2012, $64,000.00 of principle, together with accrued interest of $12,235.56, for a total amount of $76,735.56, of a Convertible Promissory Note issued to the Gary Fears Trust on October 15, 2010 in a principle amount of $110,000.00, was converted by GFMB LLC at a conversion price of $0.0003 into 255,785,205 shares of restricted Common Stock of the Company.

On May 21, 2012, $65,000.00 of principle, together with accrued interest of $15,512.52, for a total amount of $80,514.42, of a Convertible Promissory Note issued to the Gary Fears Trust on May 19, 2010 in a principle amount of $150,000.00, was converted Lightening Equity Group LLC at a conversion price of $0.0003 into 268,381,735 shares of restricted Common Stock of the Company.

On May 21, 2012, $70,700.00 of principle, together with accrued interest of $13,737.11, for a total amount of $84,437.11, of a Convertible Promissory Note issued to the Gary Fears Trust on October 1, 2010 in a principle amount of $146,142.51, was converted by Lightening Equity Group LLC at a conversion price of $0.0003 into 281,457,023 shares of restricted Common Stock of the Company.

On May 21, 2012, a Convertible Promissory Note issued to Joint Strategy Group LLC on September 3, 2009 in a principle amount of $19,762.32, together with accrued interest of $6,393.25, for a total amount of $26,155.57, was converted by the Dylan Scott Goldstein Irrevocable Trust at a conversion price of $0.0003 into 87,185,220 shares of restricted Common Stock of the Company.

On May 21, 2012, a Convertible Promissory Note issued to Jamie Goldstein on April 1, 2011 in a principle amount of $75,000.00, together with accrued interest of $10,084.93, for a total amount of $85,084.93, was converted by the Dylan Scott Goldstein Irrevocable Trust at a conversion price of $0.0003 into 283,616,438 shares of restricted Common Stock of the Company.

On June 20, 2012, $25,000.00 of principle, together with accrued interest of $6,090.41, for a total amount of $31,090.41, of a Convertible Promissory Note issued to the Gary Fears Trust on May 19, 2010 in a principle amount of $150,000.00, was converted by Northern Capital Group, LLC at a conversion price of $0.0003 into 103,634,703 shares of restricted Common Stock of the Company.

Conversion of Notes and Exercise of Warrants Q3/2012

On July 6, 2012, a Convertible Promissory Note issued to The Bingham Law Group on November 22, 2011 in a principle amount of $25,000.00, together with accrued interest of $1,775.34, for a total amount of $26,775.34, was converted by The Bingham Law Group at a conversion price of $0.0005 into 53,550,680 shares of restricted Common Stock of the Company.

On July 6, 2012, $3,500.00 of principle, together with accrued interest of $296.88, for a total amount of $3,796.88, of a Convertible Promissory Note issued to Alexis Korybut on October 1, 2011 with a principle amount of $15,500.00, was converted by Maria Idiaquez Meneses at a conversion price of $0.0003 into 12,656,256 shares of restricted Common Stock of the Company.

On July 6, 2012, $3,000.00 of principle, together with accrued interest of $254.47, for a total amount of $3,254.47, of a Convertible Promissory Note issued to Alexis Korybut on October 1, 2011 with a principle amount of $15,500.00, was converted Evelyn Saldana Rodriguez at a conversion price of $0.0003 into 10,848,219 shares of restricted Common Stock of the Company.

On July 6, 2012, $6,000.00 of principle together with accrued interest of $508.93, for a total amount of $6,508.93, of a Convertible Promissory Note issued to Alexis Korybut on October 1, 2011 with a principle amount of $15,500.00, was converted by Greisy Tejada Lujan at a conversion price of $0.0003 into 21,696,438 shares of restricted Common Stock of the Company.

On July 6, 2012, $3,000.00 of principle together with accrued interest of $254.47, for a total amount of $3,254.47, of a Convertible Promissory Note issued to Alexis Korybut on October 1, 2011 with a principle amount of $15,500.00, was converted by Juliana Hoyas Castelar at a conversion price of $0.0003 into 10,848,219 shares of restricted Common Stock of the Company.

Conversion of Preferred Stock Q2/2012

On April 18, 2012, 874,913 out of 1,333,332 shares of Series B Preferred stock issued to Cornucopia, Ltd. in May, 2011, was converted by Cornucopia, Ltd. on behalf of Alan Nisselson, Responsible Officer & Authorized Person of MarketXT Holdings, Corp into 349,956,000 shares of restricted Common Stock of the Company.

Conversion of Preferred Stock Q3/2012

On July 6, 2012, 108,619 out of 1,333,332 shares of Series B Preferred stock issued to Cornucopia, Ltd. in May, 2011, was converted by Cornucopia, Ltd. into 43,447,410 shares of restricted Common Stock of the Company.

Expiration of Warrants Q2/2012

In April, 2012, both the Series A-100 and Series A-101 warrants issued to Cornucopia, Ltd. expired with no exercise of such warrants and no issuance of any shares of Common Stock. Such warrants were issued to Cornucopia, Ltd. in April, 2011, in connection with a securities purchase agreement with Cornucopia, Ltd. in which Cornucopia, Ltd. was issued (a) Series A-100 warrant to purchase up to 533,333,333 shares of Common Stock at an exercise price of $0.00075 for a one year period; and (b) Series A-101 warrant to purchase up to 800,000,000 shares of Common Stock at an exercise price of the lesser of: (A) $0.0025 or (B) a fifty percent (50%) discount to the average closing price of the Common Stock for the thirty (30) trading days prior to exercise of the A-101 warrant.

Retirement of Notes and Exercise of Warrants Q3/2012

On July 3, 2012, pursuant to the terms of a settlement agreement between the Company and Mark Daniels, a promissory note issued to Daniels on April 15, 2009 in the principle amount of $159,878.00, including accrued interest of $61,761.09, for a total amount of $221,639.09, was definitively retired in its entirety. The Company has no further obligation with respect to said promissory note.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This discussion and analysis in this Quarterly Report on Form 10-Q should be read in conjunction with the accompanying Consolidated Financial Statements and related notes. Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. We review our estimates and assumptions on an on-going basis. Our estimates are based on our historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results are likely to differ from those estimates under different assumptions or conditions, but we do not believe such differences will materially affect our financial position or results of operations. Our critical accounting policies, the policies we believe are most important to the presentation of our financial statements and require the most difficult, subjective and complex judgments, are outlined below in ‘‘Critical Accounting Policies,’’ and have not changed significantly.

In addition, certain statements made in this report may constitute forward-looking statements. These forward-looking statements involve known or unknown risks, uncertainties and other factors that may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Specifically, but not limited to, 1) our ability to obtain necessary regulatory approvals for our products; and 2) our ability to increase revenues and operating income, is dependent upon our ability to develop and sell our products, general economic conditions, and other factors. You can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continues" or the negative of these terms or other comparable terminology. We base these forward-looking statements on our expectations and projections about future events, which we derive from the information currently available to us. Such forward-looking statements relate to future events or our future performance. Although we believe that the expectations reflected-in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Forward-looking statements are only predictions. The forward-looking events discussed in this Quarterly Report, the documents to which we refer you, and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties, and assumptions about us. For these statements, we claim the protection of the “bespeaks caution” doctrine. The forward-looking statements speak only as of the date hereof, and we expressly disclaim any obligation to publicly release the results of any revisions to these forward-looking statements to reflect events or circumstances after the date of this filing.

OVERVIEW AND PLAN OF OPERATION

Tactical Air Defense Services, Inc. (“TADS” or the “Company”) is a Nevada public corporation that offers air-combat training, aircraft maintenance training and other Aerospace/Defense services to the United States and Foreign militaries and agencies. The Company is currently a developmental stage company with uncertain viability and current revenue generating business operations limited to agreements with a joint-venture partner, Tactical Air Support, Inc.

The Company’s executive offices are located at 123 West Nye Lane, Suite 517, Carson City, Nevada, 89706 and the Company’s phone number is (775) 888-6744.

TADS Corporate History

Current Business Operations

We are currently pursuing and negotiating for the acquisition of maintenance and air training contracts, as both a prime contractor and as sub-contractor through certain teaming agreements, with both the United States Department of Defense and various foreign militaries, but for security purposes, cannot disclose the countries with which we are engaged in discussions or bids. We believe that our most likely future revenues will come from foreign military training, both air and maintenance. The contracts that we are pursuing can be executed with or without planes or other physical assets, but the acquisition of planes and equipment would greatly enhance our ability to capture more and larger contracts. As disclosed below, we are currently engaged in litigation to secure certain aircraft and parts that we believe have been improperly interfered with by third parties. Although we believe we will prevail in the acquisition of such assets, we are currently exploring other opportunities to acquire military aircraft and other military assets in order to further our business strategy.

Air Combat Training

Although not a requirement, it is probable that in order to be awarded any such contract, the Company would need to acquire, through either lease or purchase, certain military aircraft to be deployed in any related contract. The purchase of any such military aircraft would require significant additional funding, typically an asset-based funding, which funding the Company does not currently have in place, nor can guarantee that it will be able to acquire.

Initial Qualification Flight Training

Although not a requirement, it is probable that in order to be awarded any such contract, the Company would need to acquire, through either lease or purchase, certain military aircraft to be deployed in any related contract. The purchase of any such military aircraft would require significant additional funding, typically an asset-based funding, which funding the Company does not currently have in place, nor can guarantee that it will be able to acquire.

Advanced Flight Training

Although not a requirement, it is probable that in order to be awarded any such contract, the Company would need to acquire, through either lease or purchase, certain military aircraft to be deployed in any related contract. The purchase of any such military aircraft would require significant additional funding, typically an asset-based funding, which funding the Company does not currently have in place, nor can guarantee that it will be able to acquire.

U.S. Military Training

Although not a requirement, it is probable that in order to be awarded any such contract, the Company would need to acquire, through either lease or purchase, certain military aircraft to be deployed in any related contract. The purchase of any such military aircraft would require significant additional funding, typically an asset-based funding, which funding the Company does not currently have in place, nor can guarantee that it will be able to acquire.

Foreign Air Combat Training

Although not a requirement, it is probable that in order to be awarded any such contract, the Company would need to acquire, through either lease or purchase, certain military aircraft to be deployed in any related contract. The purchase of any such military aircraft would require significant additional funding, typically an asset-based funding, which funding the Company does not currently have in place, nor can guarantee that it will be able to acquire.

Current Asset Status

Embraer EMB 314 Super Tucano Joint Venture Services Agreement

On or about May 2, 2011, the Company entered into a joint venture Services Agreement (the “JV Agreement”) with Tactical Air Support, Inc., a Nevada corporation (“Tac-Air”) relating to the capital lease and operation of an Embraer EMB 314 Super Tucano aircraft (the “Tucano”). Pursuant to the terms of the JV Agreement, the Tucano was leased in the name of Tac-Air under a capital lease, with Tac-Air maintaining full control of the Tucano and responsibility for all associated operational, administrative, maintenance and insurance costs related to the operation of the Tucano. The Company delivered $80,280.00 as a security deposit (the “Deposit”) under the lease of the Tucano, with Tac-Air required to compensate the Company with an interest payment equal to one percent (1%) of the Deposit payable monthly. In addition, the Company is entitled to thirty percent (30%) of the operating profit received by Tac-Air relating to work performed with the Tucano. A copy of the JV Agreement was attached to our Form 8-K filed with the SEC on May 10, 2011 and incorporated herein by reference in its entirety.

As of the date of this Form 10-Q, the Tucano has been deployed under a revenue-producing contract through a U.S. government contract issued to Tac-Air and has generated total revenues of approximately $70,000 for providing 2 days of training support for the U.S. Army ground forces, and is currently being considered for additional U.S. government contracts.

As previously disclosed in the Company’s Form 8-K filed on December 10, 2010, the Company and Tac-Air entered into a Merger Agreement (the “Merger Agreement”) related to a proposed merger between the parties. Although the Merger had not closed prior to the termination period and the related agreement has since expired, in the event the parties are able to finalize and close the Merger while the Tucano continues to be employed under the JV Agreement, subject to further agreement between the parties, such JV Agreements shall be terminated and the Tucano shall continue to be employed by the combined entity.

Additional Tactical Air Support, Inc Arrangements

On or about June 2, 2011, the Company entered into a Letter of Intent (the “Aircraft LOI”) with Tac-Air relating to the proposed acquisition (the “Acquisition”) of certain aircraft (the “Aircraft”). A copy of the Aircraft LOI was attached to our Form 8-K filed with the SEC on June 3, 2011 and incorporated herein by reference in its entirety. Subject to further Definitive Agreements (as defined in the Aircraft LOI) and pursuant to the terms of the Aircraft LOI, in the event the parties are able to complete the Acquisition of the Aircraft, the Aircraft is to be purchased in the name of Tac-Air, with Tac-Air maintaining full control of the Aircraft and responsibility for all associated operational, administrative, maintenance and insurance costs related to the operation of the Aircraft. Subject to further Definitive Agreements and pursuant to the terms of the Aircraft LOI, the Company shall be responsible for the acquisition of necessary funding related to the Acquisition and shall receive the right to receive fifty percent (50%) of all future profits derived from the operation, sale, lease or any other use of the Aircraft. Previously, as outlined above, the parties entered into a Merger Agreement related to the proposed merger between the parties. Although the Merger had not closed prior to the termination period and the related agreement has since expired, in the event the parties are able to finalize and close the Merger while the Aircraft continues to be employed under the Definitive Agreements, subject to further agreement between the parties, such Definitive Agreements shall be terminated and the Aircraft shall continue to be employed by the combined entity.

On July 22, 2011, the Company entered into a Binding Letter of Intent (the “Services LOI”) with Tac-Air in connection with certain government services contracts Tac-Air is currently seeking (the “Services Contracts”). Subject to further definitive agreements and pursuant to the terms of the Services LOI, in the event Tac-Air is awarded the Services Contracts, the Company will receive the right to thirty percent (30%) of all future net profits derived from the Services Contracts. In connection with the Services LOI and Services Contracts, the Company has provided Tac-Air funding codified by a secured promissory note issued to the Company by Tac-Air in the amount of Three Hundred and Fifteen Thousand Dollars (US$315,000 and the “Note”). The Note maintains zero interest, a maturity date of October 22, 2011 and is secured by and convertible into 100,000 shares of Tac-Air’s pledged, issued and outstanding common stock at the Company’s option, which represents a ten percent (10%) ownership interest in Tac-Air. A copy of the Note has been attached as an exhibit to the previously filed Form 8-K filed on July 28, 2011, and is hereby incorporated by reference. As of the date of this filing, the Note is currently in default, but the Company has not yet exercised its option to acquire the 10% ownership interest in Tac-Air. Previously, as outlined above, the parties entered into a Merger Agreement related to the proposed merger between the parties. Although the Merger had not closed prior to the termination period and the related agreement has since expired, in the event the parties are able to finalize and close the Merger while the Services LOI continues to be in effect, subject to further agreement between the parties, such Services LOI shall be terminated and parties shall continue to work together under the combined entity.

M&M Agreement

On August 31, 2010, the Company entered into a Settlement Agreement and Release with M&M Aircraft Acquisitions, Inc. (the “M&M Agreement”) to acquire the exclusive right to purchase a number of military jets and related parts and engines. Approximately $2,000,000 is required to complete the purchase of the assets under the M&M Agreement and the Company believes the ability to raise financing to cover such acquisition costs is good, however, as of the date of this Report, because M&M has failed to perform its obligations under the M&M Agreement, we cannot move forward on any financing or possession of the assets until such time as this issue is resolved. We have re-initiated legal action against M&M in Palm Beach County, Florida in order to take possession of the related aircraft and parts. Despite the legal hurdles, the Company is currently exploring a number of financing proposals for the funding of the acquisition of the assets. TADS believes that when fully operational and under contract, the aircraft may add between $9,000,000 and $13,500,000 in the aggregate per year to its top-line revenue. In addition, TADS anticipates that the aircraft, related parts, and jet engines may significantly increase the assets to its balance sheet, as well as provide additional cash-flows to the Company from sales of surplus spare parts and jet engines, however, the Company was recently denied a permanent injunction and although the Company believes it will ultimately prevail in certain legal disputes with M&M Aircraft Acquisitions, Inc. as described herein, the assets may not be available to the Company for an indefinite period, if ever.

The Company is currently exploring other opportunities to acquire military aircraft and other military assets in order to further its business strategy. In order to acquire any such military assets, the Company would either need to lease such assets with the requirement an upfront payment of a minimal security deposit, or purchase such assets. In either lease or purchase scenario, the Company would need additional funding and is currently exploring asset-based financing for the assets which it is contemplating purchasing and/or leasing, although it cannot give assurances that any such funding will be available to the Company for such use.

RESULTS OF OPERATIONS

Revenues


	Period Ended March 31

	2012	2011

Total Sales	$0	$0

We had no revenues for the period ended March 31, 2011 or for the period ended March 31, 2010.

Net Profit (Loss).


	Period Ended March 31

	2012	2011

Net Profit (Loss)	($183,628)	($669,103)

For the period ended March 31, 2012, we sustained net losses of $183,628 as compared with a net loss of $669,103 for the period ended March 31, 2011, The increase in net loss is attributed to increased costs associated with general and administrative expenses and an element of compensatory stock issuance.

Liquidity and Capital Resources

As at March 31, 2012, the Company had total assets of $372,417. There were liabilities of $2,378,369 comprised of $173,000 in accounts payable and $2,205,369 in long term debentures. Assets of $173,000 and liabilities of $2,205,369 resulted in a working capital deficiency of $2,378,369. The Company reported total stockholders’ deficit of $2,005,952 at March 31, 2012. We anticipate that our current cash on hand of $7,417 as of March 31, 2012 is not sufficient to satisfy our cash requirements without additional funding. The Company has funded its operations and met its capital expenditures requirements primarily through cash generated from contributions from the issuance of convertible debt securities and short-term promissory notes. In addition, we will need substantial additional capital during the next 12 months on order to complete our business plan.

During the year ending December 31, 2012, the Company believes that it will expend funds on the following:

Expenses related to the acquisition of potential contracts;

Leasing and refurbishment of certain military aircraft and equipment; and

Hiring of additional employees and independent contractors to fulfill potential contracts.

Total current judgments outstanding against the Company described more fully in Part II; Item 1. Legal Proceedings total approximately $2,025,000 plus accrued interest. Considering the overall current legal proceedings described more fully in Part II; Item 1. Legal Proceedings and those specific to the acquisition of assets under the M&M Agreement described above in Part I.; Item 2. Management’s Discussion and Analysis or Plan of Operations; Overview and Plan of Operation; Current Asset Status, the Company has and expects to continue to expend significant funds on legal expenses. Legal expenses have been a burden upon the liquidity of the Company since early 2010, and continue to be so, although we believe a portion of these expenses will be greatly reduced in the coming year as the litigation is anticipated to be resolved within that time frame. Considering the importance of some of the current litigation to the Company, although it is an expense that we would prefer not to incur, our management believes that it is a necessary expense and we believe we can obtain financing to continue to fund the litigation. In connection with the Searock judgments against the Company (described more fully in Part II; Item 1. Legal Proceedings), it is the Company’s position that it will be overturned on appeal in light of both the evidence and the fact that the Company did not receive proper notice of impending litigation and was not able to present any defense, and as such, until such time as final determinations by the courts have been made, we do not expect these judgments against the Company to affect our liquidity.

Need for Additional Capital

As indicated above, management does not believe that the Company has sufficient capital to sustain its current and execute its proposed operations without raising additional capital. Accordingly, we expect that we will require additional funding through additional equity and/or debt financings. However, other than the Cornucopia financing agreement (as described below), there can be no assurance that any additional financing will become available to us, and if available, on terms acceptable to us.

Any financing, if available, may involve restrictive covenants that may impact our ability to conduct our business or raise additional funds on acceptable terms. If we are unable to raise additional capital when required or on acceptable terms, we may have to delay, scale back or discontinue our expansion plans. In the event we are unable to raise additional capital we will not be able to sustain any growth or continue to operate.

As of the date of this report, we are currently have in place a financing agreement with Cornucopia to provide up to $1 million in funding, of which approximately $600,000 has hereto date been delivered to the Company in order to (i) help satisfy our immediate liquidity needs, and (ii) lease certain military aircraft that we believe will begin to generate revenue and earnings such that it will cover a material portion of our broader and future liquidity needs. Considering the approximately $2,025,00 plus accrued interest in judgments against us, the additional $600,000 in potential financing will not completely satisfy our current liquidity needs. We are also pursuing a number of contracts that we believe will generate revenues and earnings to cover any outstanding liquidity shortfall. In addition, although we can make no guarantees, we believe that the current M&M litigation for the related aircraft and parts will ultimately be settled in our favor, and that the acquisition of said assets will greatly change the liquidity prospects of the Company due to either putting such aircraft to work on contract or by selling the assets at a significant premium to the price that the Company will have paid for such assets, however, the Company was recently denied a permanent injunction and although the Company believes it will ultimately prevail in certain legal disputes with M&M Aircraft Acquisitions, Inc. as described herein, the assets may not be available to the Company for an indefinite period, if ever.

Effects of Inflation

Inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. However, our management will closely monitor the price change and continually maintain effective cost control in operations.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital expenditures.

Going Concern

The accompanying financial statements have been prepared assuming we will continue as a going concern. We have had substantial operating losses for the past years and are dependent upon outside financing to continue operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. It is management’s plan to raise necessary funds from shareholders to satisfy the expense requirements of the Company.

CONTRACTUAL OBLIGATIONS

Cornucopia Financing

On April 1, 2011, the Company entered into a letter of intent (the “LOI”) with Cornucopia in connection with a proposed financing arrangement. A copy of the LOI was attached as an exhibit to our Form 8-K filed on April 5, 2011, the terms of which are hereby incorporated by reference. Pursuant to the terms of the LOI and subject to further negotiation and final agreement and documentation, Cornucopia agreed to provide the Company up to One Million Dollars (US$1,000,000) in separate rounds of financing.

On April 25, 2011, the Company and Cornucopia entered into a Securities Purchase Agreement (the “Initial SPA”) for the initial round of the One Million Dollar (US$1,000,000) financing under the LOI. Pursuant to the terms of the Initial SPA, Cornucopia agreed to provide the Company with an initial Four Hundred Thousand Dollars (US$400,000) in financing through the sale and issuance by the Company of a total of 1,333,332 shares of Series B Preferred Stock (the “Preferred Stock”) in two separate tranches. A copy of the Initial SPA was attached as an exhibit to our Form 8-K filed on April 28, 2011, the terms of which are hereby incorporated by reference. As disclosed in the above reference Form 8-K and our Form 8-K filed on May 26, 2011, the Company has closed the initial round of Four Hundred Thousand Dollars (US$400,000) in financing.

Pursuant to the terms of the LOI, Cornucopia agreed to provide subsequent financing in the total amount of Six Hundred Thousand Dollars (US$600,000 and the “Subsequent Financing”), as required by and requested by the Company, through the sale and issuance by the Company of additional shares of Preferred Stock.

On July 22, 2011, the Company and Cornucopia entered into a Securities Purchase Agreement (the “Second SPA”) wherein Cornucopia purchased an additional 437,445 shares of Preferred Stock for a total purchase price of Two Hundred Thousand Dollars (US$200,000). The rights, preferences and privileges of the Preferred Stock are outlined in the Certificate of Designation designating the Preferred Stock, which was attached as an exhibit to our Form 8-K filed on April 28, 2011 and is hereby incorporated by reference. A copy of the Second SPA has been attached as an exhibit to our Form 8-K filed on August 12, 2011 and is hereby incorporated by reference.

The terms and conditions of the proposed and possible future Subsequent Financings under the LOI shall remain governed by the terms of the LOI.

Tac-Air Services Agreements

As disclosed in our Form 8-K filed on May 10, 2011, on or about May 2, 2011, the Company entered into a joint venture Services Agreement (the “Tac Agreement”) with Tac-Air relating to the capital lease and operation of an Embraer EMB 314 Super Tucano aircraft (the “Aircraft”). The Embraer EMB 314 Super Tucano is world renowned for its capabilities in counter insurgency and air to ground ordnance deliveries. Pursuant to the terms of the Tac Agreement, the Aircraft was leased in the name of Tac-Air under a capital lease, with Tac-Air maintaining full control of the Aircraft and responsibility for all associated operational, administrative, maintenance and insurance costs related to the operation of the Aircraft. Tactical Air Defense Services, Inc. has deliver $80,280.00 as a security deposit (the “Deposit”) under the lease of the Aircraft, with Tac-Air required to compensate the Company with an interest payment equal to one percent (1%) of the Deposit payable monthly. In addition, the Company is entitled to thirty percent (30%) of the operating profit received by Tac-Air relating to work performed with the Aircraft.

As disclosed in our Form 8-K filed on June 3, 2011, on or about June 2, 2011, the Company entered into a Letter of Intent (the “LOI”) with Tac-Air relating to the proposed acquisition (the “Acquisition”) of certain aircraft (the “Aircraft”). A copy of the LOI was attached to the Form 8-K filed on June 3, 2011 and incorporated herein by reference in its entirety. Subject to further Definitive Agreements (as defined in the LOI) and pursuant to the terms of the LOI, in the event the parties are able to complete the Acquisition of the Aircraft, the Aircraft is to be purchased in the name of Tac-Air, with Tac-Air maintaining full control of the Aircraft and responsibility for all associated operational, administrative, maintenance and insurance costs related to the operation of the Aircraft. Subject to further Definitive Agreements and pursuant to the terms of the LOI, Tactical Air Defense Services, Inc. shall be responsible for the acquisition of necessary funding related to the Acquisition and shall receive the right to receive fifty percent (50%) of all future profits derived from the operation, sale, lease or any other use of the Aircraft.

As disclosed in our Form 8-K filed on July 28, 2011, on or about July 22, 2011, the Company entered into a Binding Letter of Intent (the “LOI”) with Tac-Air in connection with certain government services contracts Tac-Air is currently seeking (the “Services Contracts”). Subject to further definitive agreements and pursuant to the terms of the LOI, in the event Tac-Air is awarded the Services Contracts, the Company will receive the right to thirty percent (30%) of all future net profits derived from the Services Contracts. In connection with the LOI and Services Contracts, the Company has provided Tac-Air funding codified by a secured promissory note issued to the Company by Tac-Air in the amount of Three Hundred and Fifteen Thousand Dollars (US$315,000 and the “Note”). The Note maintains zero interest, a maturity date of October 22, 2011 and is secured by and convertible into 100,000 shares of Tac-Air’s pledged, issued and outstanding common stock at the Company’s option, which represents a ten percent (10%) ownership interest in Tac-Air. A copy of the Note has been attached as an exhibit to our Form 8-K filed on June 3, 2011 and hereby incorporated by reference.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 4.

CONTROLS AND PROCEDURES

As required by Rule 13a-15 under the Securities Exchange Act of 1934 (“Exchange Act”) we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as March 31, 2012, being the date of our most recently completed fiscal quarter. This evaluation was carried out under the supervision and with the participation of our Chief Executive and Chief Financial Officer. Based upon that evaluation, our Chief Executive and Chief Financial Officer have concluded that our disclosure controls and procedures are not effective to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to them to allow timely decisions regarding required disclosure. Such reasons for ineffectiveness were originally described in the Company’s Form 10-K for the period ending December 31, 2011 and are again outlined below:

Insufficient segregation of duties in our finance and accounting functions due to limited personnel.

During the year ended December 31, 2011, the company internally performed all aspects of our financial reporting process, including, but not limited to, access to the underlying accounting records and systems, the ability to post and record journal entries and responsibility for the preparation of the financial statements. Due to the fact these duties were performed oftentimes by the same people, a lack of review was created over the financial reporting process that might result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the SEC. These control deficiencies could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected.

Insufficient corporate governance policies.

Our corporate governance activities and processes are not always formally documented. Specifically, decisions made by the board to be carried out by management should be documented and communicated on a timely basis to reduce the likelihood of any misunderstandings regarding key decisions affecting our operations and management.

We intend to take appropriate and reasonable steps to make the necessary improvements to remediate these deficiencies and we intend to consider the results of our remediation efforts and related testing as part of our next year-end assessment of the effectiveness of our internal control over financial reporting. However, due to the limited personnel and financial resources available to the Company at this time, the Company has been unable to ameliorate such weaknesses in our disclosure controls and procedures.

During our most recently completed fiscal quarter ended March 31, 2012, there were no changes in our internal control over financial reporting that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We currently do not have an audit committee, or a person serving on our Board of Directors who would qualify as a financial expert.

PART II

ITEM 1.

LEGAL PROCEEDINGS

On or about July 3, 2012, the Company entered into a Settlement Agreement (the “Daniels Settlement Agreement”) with Mark Daniels (“Daniels”), the Company’s former Chief Executive Officer. A copy of the Daniels Settlement Agreement was attached to our Form 8-K filed with the SEC on July 3, 2012 and incorporated herein by reference in its entirety. Pursuant to the terms of the Daniels Settlement Agreement, the Company agreed to settle its litigational claims against Daniels related to the litigation action entitled Tactical Air Defense Services, Inc., et. al v. Mark Daniels, et. al, in the Circuit Court of the 15^th Judicial Circuit in and for Palm Beach County, Florida through the removal of Daniels from the action. As consideration for the removal of Daniels from the action: (i) Daniels agreed to the rescission, cancellation, waiver and termination in full of all Company obligations relating to a promissory note issued by the Company to Daniels on or about April 15, 2009 with a current balance of approximately $221,000 including all principle and accrued interest; and (ii) Daniels is required to deliver a Two Hundred and Fifty Thousand Dollars ($250,000.00) cash payment to the Company within one hundred and twenty (120) days of the execution of the Daniels Agreement.

The Company immediately requested an emergency Motion to Dismiss the New Petition based upon its contention that:

the New Petition violated the Court Order;

a majority of the new petitioners were currently involved in civil litigation with TADF; and

all of the claims of the new petitioners were either without merit, being contested, or were frivolous and improper.

impose sanctions upon the petitioners, and

impose punitive sanctions upon the petitioners if it is determined that the actions of the petitioners violated the Court Order previously issued by U.S. Federal Bankruptcy Court Judge Hyman.

ITEM 1A.

RISK FACTORS

Not Applicable.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Convertible Debentures

First Quarter of 2011

On January 1, 2012, the Company issued a Convertible Debenture in a principle amount of $29,444.45 to Alexis Korybut as consideration for unpaid salary accrued during the fourth quarter of 2011. The Convertible Debenture has a term of three years, an interest rate of 12%, and has full-ratchet anti-dilution protection. The principle amount is convertible into 58,890,900 shares of Common Stock at a conversion price of $0.0005 per share. A copy of the debenture has been attached as an exhibit to our Form 10-K for the year ending December 31, 2011 and has been incorporated in its entirety herein by reference.

On February 29, 2012, the Company issued a Convertible Debenture in a principle amount of $57,804.38 to Jamie Goldstein as consideration for loans to the Company during the first quarter of 2012. The Convertible Debenture has a term of three years, an interest rate of 12%, and has full-ratchet anti-dilution protection. The principle amount is convertible into 115,608,760 shares of Common Stock at a conversion price of $0.0005 per share. A copy of the debenture has been attached as an exhibit to our Form 10-K for the year ending December 31, 2011 and has been incorporated in its entirety herein by reference.

On March 31, 2012, the Company issued a Convertible Debenture in a principle amount of $20,000.00 to The Bingham Law Group as consideration for unpaid legal services accrued during the first quarter of 2012. The Convertible Debenture has a term of three years, an interest rate of 12%, and has full-ratchet anti-dilution protection. The principle amount is convertible into 40,000,000 shares of Common Stock at a conversion price of $0.0005 per share. A copy of the debenture has been attached as an exhibit to our Form 10-K for the year ending December 31, 2011 and has been incorporated in its entirety herein by reference.

On March 31, 2012, the Company issued a Convertible Debenture in a principle amount of $65,458.60 to Alexis Korybut as consideration for (i) unpaid salary accrued during the first quarter of 2012, (ii) out-of-pocket expenses, and (iii) a loan to the Company. The Convertible Debenture has a term of three years, an interest rate of 12%, and has full-ratchet anti-dilution protection. The principle amount is convertible into 130,917,200 shares of Common Stock at a conversion price of $0.0005 per share. A copy of the debenture has been attached as an exhibit to our Form 10-K for the year ending December 31, 2011 and has been incorporated in its entirety herein by reference.

Subsequent Event Issuances

On April 15, 2012, the Company issued a Convertible Debenture in a principle amount of $11,000.00 to Jamie Goldstein as consideration for loans to the Company during the second quarter of 2012. The Convertible Debenture has a term of three years, an interest rate of 12%, and has full-ratchet anti-dilution protection. The principle amount is convertible into 36,666,667 shares of Common Stock at a conversion price of $0.0003 per share. A copy of the debenture has been attached as an exhibit to our Form 10-K for the year ending December 31, 2011 and has been incorporated in its entirety herein by reference.

On June 30, 2012, the Company issued a Convertible Debenture in a principle amount of $54,000.00 to Alexis Korybut as consideration for unpaid salary accrued during the second quarter of 2012. The Convertible Debenture has a term of three years, an interest rate of 12%, and has full-ratchet anti-dilution protection. The principle amount is convertible into 180,000,000 shares of Common Stock at a conversion price of $0.0003 per share. A copy of the debenture has been attached as an exhibit to our Form 10-K for the year ending December 31, 2011 and has been incorporated in its entirety herein by reference.

On June 30, 2012, the Company issued a Convertible Debenture in a principle amount of $40,000.00 to The Bingham Law Group as consideration for unpaid legal services accrued during the second quarter of 2012. The Convertible Debenture has a term of three years, an interest rate of 12%, and has full-ratchet anti-dilution protection. The principle amount is convertible into 133,333,333 shares of Common Stock at a conversion price of $0.0003 per share. A copy of the debenture has been attached as an exhibit to our Form 10-K for the year ending December 31, 2011 and has been incorporated in its entirety herein by reference.

Issuance of Common Stock

Conversion of Notes, Preferred Stock and Exercise of Warrants

First Quarter of 2011

Subsequent Event Issuances

The Company issued 349,956,000 shares of restricted Common Stock to Alan Nisselson, Responsible Officer & Authorized Person of MarketXT Holdings, Corp, in April, 2012 in consideration for the conversion of 874,913 shares of Series B Preferred stock issued to Cornucopia, Ltd. in May, 2011, at the request of Cornucopia, Ltd. No registration rights were issued in connection with these shares.

The Company issued 102,073,059 shares of restricted Common Stock to Kristen Zankl in May, 2012 in consideration for the conversion of a principle amount of $25,000.00 and accrued interest of $5,613.70, for a total consideration of $30,613.70, of a Convertible Promissory Note initially issued to the Gary Fears Trust on July 1, 2010 with a principle amount of $218,570.50 and subsequently assigned to Kristen Zankl. No registration rights were issued in connection with these shares.

The Company issued 351,131,324 shares of restricted Common Stock to Richard Applegate in May, 2012 in consideration for the conversion of a principle amount of $86,000.00 and accrued interest of $19,311.12, for a total consideration of $105,311.12, of a Convertible Promissory Note initially issued to the Gary Fears Trust on July 1, 2010 with a principle amount of $218,570.50 and subsequently assigned to Richard Applegate. No registration rights were issued in connection with these shares.

The Company issued 255,785,205 shares of restricted Common Stock to GFMB LLC in May, 2012 in consideration for the conversion of a principle amount of $64,000.00 and accrued interest of $12,235.56, for a total consideration of $76,735.56, of a Convertible Promissory Note initially issued to the Gary Fears Trust on October 15, 2010 with a principle amount of $110,000.00 and subsequently assigned to GFMB, LLC. No registration rights were issued in connection with these shares.

The Company issued 103,634,703 shares of restricted Common Stock to Northern Capital Group, LLC in June, 2012 in consideration for the conversion of a principle amount of $25,000.00 and accrued interest of $6,090.41, for a total consideration of $31,090.41, of a Convertible Promissory Note initially issued to the Gary Fears Trust on May 19, 2010 with a principle amount of $150,000.00. No registration rights were issued in connection with these shares.

The Company issued 53,550,680 shares of restricted Common Stock to The Bingham Law Group in July, 2012 in consideration for the conversion of a principle amount of $25,000.00 and accrued interest of $1,775.34, for a total consideration of $26,775.34, of a Convertible Promissory Note initially issued to The Bingham Law Group on November 22, 2011 with a principle amount of $25,000.00. No registration rights were issued in connection with these shares.

The Company issued 43,447,410 shares of restricted Common Stock to Cornucopia, Ltd. In July, 2012 in consideration for the conversion of 108,619 shares of Series B Preferred stock initially issued to Cornucopia, Ltd. in May, 2011. No registration rights were issued in connection with these shares.

The Company issued 12,656,256 shares of restricted Common Stock to Maria Idiaquez Meneses in July, 2012 in consideration for the conversion of a principle amount of $3,500.00 and accrued interest of $296.88, for a total consideration of $3,796.88, of a Convertible Promissory Note initially issued to Alexis Korybut on October 1, 2011 with a principle amount of $15,500.00 and subsequently assigned to Maria Idiaquez Meneses. No registration rights were issued in connection with these shares.

The Company issued 10,848,219 shares of restricted Common Stock to Evelyn Saldana Rodriguez in July, 2012 in consideration for the conversion of a principle amount of $3,000.00 and accrued interest of $254.47, for a total consideration of $3,254.47 of a Convertible Promissory Note initially issued to Alexis Korybut on October 1, 2011 with a principle amount of $15,500.00 and subsequently assigned to Evelyn Saldana Rodriguez. No registration rights were issued in connection with these shares.

The Company issued 21,696,438 shares of restricted Common Stock to Greisy Tejada Lujan in July, 2012 in consideration for the conversion of a principle amount of $6,000.00 and accrued interest of $508.93, for a total consideration of $6,508.93, of a Convertible Promissory Note initially issued to Alexis Korybut on October 1, 2011 with a principle amount of $15,500.00 and subsequently assigned to Greisy Tejada Lujan. No registration rights were issued in connection with these shares.

The Company issued 10,848,219 shares of restricted Common Stock to Juliana Hoyas Castelar in July, 2012 in consideration for the conversion of a principle amount of $3,000.00 and accrued interest of $254.47, for a total consideration of $3,254.47 of a Convertible Promissory Note initially issued to Alexis Korybut on October 1, 2011 with a principle amount of $15,500.00 and subsequently assigned to Juliana Hoyas Castelar. No registration rights were issued in connection with these shares.

The Company reasonably believes that all of the issuances of securities described above were deemed to be exempt from registration in reliance on Section 4(2) of the Securities Act as transactions by an issuer not involving a public offering. Each investor had a pre-existing relationship with the Company and/or represented that it had the financial wherewithal, knowledge and sophistication to invest in the securities of the Company. In addition, each recipient represented that they are acquiring the securities as an investment only and not with a view towards distribution of the same to the public. We made available to each investor with disclosure of all aspects of our business, including providing the investor with press releases, access to our auditors, and other financial, business, and corporate information. Finally, all securities issued were either restricted with an appropriate restrictive legend on certificates for shares, notes and warrants issued stating that the securities (and underlying shares) have not been registered under the Securities Act and cannot be sold or otherwise transferred without an effective registration or an exemption therefrom, or were issued pursuant to an exemption provided under Rule 144.

ITEM 3.

DEFAULT UPON SENIOR SECURITIES

None.

ITEM 4.

REMOVED AND RESERVED

None.

ITEM 5.

OTHER INFORMATION

Settlement Agreement with Mark Daniels

AeroTech Corporation-Acquisition Agreement

Employment Agreements

We have no other information to disclose that was required to be disclosed in a report on Form 8-K during first quarter of fiscal year 2012, but was not reported.

ITEM 6.

EXHIBITS


Exhibit Number	Title

3 (i)	Articles of Incorporation and amendments thereto. (Attached as an exhibit to our First Amended Form 10-Q for the period ending September 30, 2010 filed with the SEC on May 10, 2011 and incorporated herein by reference).
3 (ii)	Certificate of Designation filed with the Nevada Secretary of State designating the rights, preferences, powers, privileges and restrictions, qualifications and limitations of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock (Attached as an exhibit to our Form 10-K for the year ended December 31, 2011 filed previously with the SEC and incorporated herein by reference).
3.2	Bylaws (Attached as an exhibit to our Form SB-2 filed with the SEC on May 27, 1999 and incorporated herein by reference).
10.1	Convertible Promissory Note issued to Alexis Korybut in the principal amount of $15,500.00 dated October 1, 2011 (Attached as an exhibit to our Form 10-K for the year ended December 31, 2011 filed previously with the SEC and incorporated herein by reference).
10.2	Convertible Promissory Note issued to Jamie Goldstein in the principal amount of $1,500.00 dated October 1, 2011(Attached as an exhibit to our Form 10-K for the year ended December 31, 2011 filed previously with the SEC and incorporated herein by reference) .
10.3	Convertible Promissory Note issued to The Bingham Law Group in the principal amount of $25,000.00 dated November 22, 2011 (Attached as an exhibit to our Form 10-K for the year ended December 31, 2011 filed previously with the SEC and incorporated herein by reference).
10.4	Consulting Agreement between Tactical Air Defense Services, Inc. and JSG, LLC dated December 1, 2011 (Attached as an exhibit to our Form 10-K for the year ended December 31, 2011 filed previously with the SEC and incorporated herein by reference).
10.5	Consulting Agreement between Tactical Air Defense Services, Inc. and GFMB, LLC dated December 1, 2011 (Attached as an exhibit to our Form 10-K for the year ended December 31, 2011 filed previously with the SEC and incorporated herein by reference).
10.6	Convertible Promissory Note issued to Alexis Korybut in the principal amount of $29,444.45 dated January 1, 2012 (Attached as an exhibit to our Form 10-K for the year ended December 31, 2011 filed previously with the SEC and incorporated herein by reference).
10.7	Convertible Promissory Note issued to Brad Hacker in the principal amount of $10,000.00 dated January 1, 2012 (Attached as an exhibit to our Form 10-K for the year ended December 31, 2011 filed previously with the SEC and incorporated herein by reference).
10.8	Convertible Promissory Note issued to Katherine M. O’Connor Trust in the principal amount of $41,528.22 dated January 1, 2012 (Attached as an exhibit to our Form 10-K for the year ended December 31, 2011 filed previously with the SEC and incorporated herein by reference).
10.9	Convertible Promissory Note issued to Sopwith, LLC in the principal amount of $35,375.89 dated January 1, 2012 (Attached as an exhibit to our Form 10-K for the year ended December 31, 2011 filed previously with the SEC and incorporated herein by reference).
10.10	Convertible Promissory Note issued to Jamie Goldstein in the principal amount of $57,804.38 dated February 29, 2012 (Attached as an exhibit to our Form 10-K for the year ended December 31, 2011 filed previously with the SEC and incorporated herein by reference).
10.11	Convertible Promissory Note issued to The Bingham Law Group in the principal amount of $20,000.00 dated March 31, 2012 (Attached as an exhibit to our Form 10-K for the year ended December 31, 2011 filed previously with the SEC and incorporated herein by reference).
10.12	Convertible Promissory Note issued to Alexis Korybut in the principal amount of $65,458.60 dated March 31, 2012 (Attached as an exhibit to our Form 10-K for the year ended December 31, 2011 filed previously with the SEC and incorporated herein by reference).
10.13	Convertible Promissory Note issued to Jamie Goldstein in the principal amount of $11,000.00 dated April 15, 2012 (Attached as an exhibit to our Form 10-K for the year ended December 31, 2011 filed previously with the SEC and incorporated herein by reference).
10.14	Convertible Promissory Note issued to Alexis Korybut in the principal amount of $54,000.00 dated June 30, 2012 (Attached as an exhibit to our Form 10-K for the year ended December 31, 2011 filed previously with the SEC and incorporated herein by reference).
10.15	Convertible Promissory Note issued to The Bingham Law Group in the principal amount of $40,000.00 dated June 30, 2012 (Attached as an exhibit to our Form 10-K for the year ended December 31, 2011 filed previously with the SEC and incorporated herein by reference).
10.16	Convertible Promissory Note issued to Alexis Korybut in the principal amount of $72,448.49 dated June 30, 2012 (Attached as an exhibit to our Form 10-K for the year ended December 31, 2011 filed previously with the SEC and incorporated herein by reference).
10.17	Employment Agreement between Tactical Air Defense Services, Inc. and Alexis Korybut dated May 15, 2012 (Attached as an exhibit to our Form 10-K for the year ended December 31, 2011 filed previously with the SEC and incorporated herein by reference).
31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of the Principal Executive Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of the Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this Quarterly Report on Form 10-Q for the period ended March 31, 2012, to be signed on its behalf by the undersigned on August 16, 2012 thereunto duly authorized.


	TACTICAL AIR DEFENSE SERVICES, INC.
	/s/ Alexis Korybut
	By: Alexis Korybut Its: Chief Executive Officer (Principal Executive Officer, Principal Accounting Officer, Principal Financial Officer)

TACTICAL AIR DEFENSE SERVICES, INC. 10-Q/A