**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-KSB**





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





**For
      the fiscal year ended April 30, 2005**





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





For
      the
      transition period from __________ to __________.





Commission
      file number: **0-9483**





**SPARTA
      COMMERCIAL SERVICES, INC.**


(Exact
      name of registrant as specified in its charter)


**NEVADA**
              **30-0298178**(State
                  or other jurisdiction of incorporation or organization)
              (IRS
                  Employer Identification
                  No.)




**462
      Seventh Ave, 20th Floor, New York, NY 10018**


(Address
      of principal executive offices) (Zip Code)





Issuer’s
      telephone number: **(212)
      239-2666**





Securities
      registered under Section 12(b) of the Exchange Act: None





Securities
      registered under Section 12(g) of the Exchange Act:





Common
      Stock, par value $0.001


(Title
      of
      class)





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes x No o





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B is not contained in this form, and no disclosure will be
      contained, to the best of registrant’s knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form 10-KSB
      or any amendment to this Form 10-KSB. o





The
      issuer’s revenues for its most recent fiscal year: $65,833.





The
      aggregate market value of voting and non-voting stock of the issuer held by
      non-affiliates on July 11, 2005 was $8,055758.





As
      of
      July 11, 2005, we had 86,293,879 shares of common stock issued and outstanding.





**DOCUMENTS
      INCORPORATED BY REFERENCE**





None.





Transitional
      Small Business Disclosure Format (check one): YES o NO x











**SPARTA
      COMMERCIAL SERVICES, INC.**





**TABLE
      OF CONTENTS**





Page**PART
                I**Item
                1.
            Description
                of Business
            3Item
                2.
            Description
                of Property
            12Item
                3.
            Legal
                Proceedings
            12Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            12**PART
                II**Item
                5.
            Market
                for Common Equity and Related Stockholder Matters
            13Item
                6.
            Management’s
                Discussion and Analysis and Plan of Operation
            16Item
                7.
            Financial
                Statements
            24Item
                8.
            Changes
                In and Disagreements With Accountants on Accounting and Financial
                Disclosure
            48Item
                8A.
            Controls
                and Procedures.
            49Item
                8B.
            Other
                Information
            50**PART
                III**Item
                9.
            Directors,
                Executive Officers, Promoters and Control Persons; ComplianceWith
                Section 16(a) of the Exchange Act
            51Item
                10.
            Executive
                Compensation
            54Item
                11.
            Security
                Ownership of Certain Beneficial Owners and Management
            57Item
                12.
            Certain
                Relationships and Related Transactions
            59Item
                13.
            Exhibits
            60Item
                14.
            Principal
                Accountant Fees and Services
            61








2





**PART
      I**





**ITEM
      1.**  **DESCRIPTION
      OF BUSINESS**





**GENERAL
      OVERVIEW**





Sparta
      Commercial Services, Inc. (“Sparta”“we,”“us,” or the “Company”) is a Nevada
      corporation.





We
      only
      recently began our current business operations. Prior to February 27, 2004,
      we
      did not conduct any substantive operations. On February 27, 2004, we acquired
      the business of Sparta Commercial Services, LLC.





Sparta
      Commercial Services, LLC is a Delaware limited liability company formed on
      October 1, 2001. Sparta’s business plan is to provide dealers of powersports
      vehicles with an alternative source of financing for new and used motorcycles.
      Since inception, Sparta developed proprietary web-based solutions for back-end
      processing, financing and leasing of new and used powersports vehicles. **** Currently,
      Sparta offers a private label program, lease and retail installment sales
      finance contracts to numerous dealerships in powersports industry. Sparta’s
      business model focuses on select motorcycles (i.e., 600cc and higher), 4-stroke
      all-terrain vehicles (ATVs), and select scooters. Sparta’s management believes
      that the emphasis on these products eliminates a number of vehicles that often
      under-perform due to the demographics of the purchaser and/or excessive
      depreciation in the market value of certain vehicle models.





Our
      offices are located at 462 Seventh Avenue, 20 th Floor,
      New York, NY 10018, telephone number: (212) 239-2666. We maintain a website
      at:
      www.spartacommercial.com.





**OUR
      ORGANIZATION HISTORY**





Our
      company was incorporated under the laws of the State of Nevada on May 13, 1980
      under the name Tomahawk Oil and Minerals, Inc. and engaged in oil and gas
      exploration activities.





On
      November 6, 1983, the company changed its corporate name to Tomahawk Industries,
      Inc.





In
      1984,
      Tomahawk entered the business of installing energy recovery and energy saving
      devices.





In
      July
      1987, Tomahawk filed for protection under Chapter 11 of the U. S. Bankruptcy
      Code and operated as a debtor-in-possession. The petition for bankruptcy
      protection was denied. Tomahawk ceased all business operations, liquidated
      its
      former subsidiary and abandoned all net assets remaining by April 30, 1988.
      Tomahawk effectively had no operations, assets or liabilities since its fiscal
      year ended April 30, 1988 through February 27, 2004.





On
      February 27, 2004, pursuant to an Agreement and Plan of Reorganization, we
      acquired Sparta Commercial Services, LLC, in a transaction viewed as a reverse
      acquisition. Under the terms of the agreement, we acquired all of the
      outstanding membership interests in Sparta Commercial Services, LLC in exchange
      for the agreement to issue such number of shares of our common stock as would
      represent approximately 91.75% percent of our outstanding shares. Sparta
      Commercial Services, LLC also entered into a consulting agreement for business
      and financial services with Glenn A. Little, the former principal of Tomahawk.
      The agreement is for a term of one year. Mr. Little received a fee of $100,000
      pursuant to the consulting agreement.





As
      a
      result of the acquisition, a change in control occurred in the ownership and
      management of Tomahawk. In connection with the acquisition, the managing member
      of Sparta, Anthony Havens, was appointed President and Chairman of Tomahawk.
      The
      former directors and officers of Tomahawk resigned as of the acquisition date.





On
      August
      25, 2004, we changed our corporate name from “Tomahawk Industries, Inc.” to
“Sparta Commercial Services, Inc.”





On
      September 13, 2004, we filed a Certificate of Amendment to the Articles of
      Incorporation with the Secretary of State of the State of Nevada increasing
      the
      authorized capital from 200,000,000 to 700,000,000 shares, of which 690,000,000
      shares are common stock, par value $0.001 and 10,000,000 shares are preferred
      stock, par value $0.001.








3





Effective
      December 27, 2004, pursuant to a Certificate of Amendment to the Articles of
      Incorporation with the Secretary of State of the State of Nevada, the Company's
      authorized capital was reduced from 700,000,000 shares, of which 690,000,000
      shares were common stock and 10,000,000 shares are preferred stock, to
      350,000,000 shares, of which 340,000,000 shares are common stock and 10,000,000
      shares are preferred stock. In connection with the decrease in authorized
      capital, the Company effected a 1:200 reverse stock split, with fractional
      shares paid in cash, followed immediately by a 25:1 forward stock
      split.





On
      December 28, 2004, we filed a Certificate of Designation with the Secretary
      of
      State of the State of Nevada in connection with its 10,000,000 shares are
      preferred stock, designating 35,850 shares as Series A Redeemable Preferred
      Stock.








**OUR
      BUSINESS**





We
      seek
      to become a specialized consumer finance company engaged primarily in the
      origination of lease and retail installment sales contracts of new and used
      motorcycles, scooters, and ATVs. We believe that the market for consumer finance
      programs for motorcycles and ATVs is underserved by traditional lenders.





We
      seek
      to provide both indirect loans and lease financing for motorcycles and ATVs.
      We
      intend to be an originator and indirect lender for retail installment loan
      and
      lease financing for the purchase or lease of new and used motorcycles, scooters,
      and ATVs.





Our
      principal business is to provide financing programs, primarily to purchasers
      of
      new and used motorcycles, scooters, and ATVs who meet our credit criteria.





We
      are
      developing relationships with vehicle dealers and manufacturers to provide
      our
      financing programs to their customers. We also seek to provide motorcycle,
      scooter, and all-terrain vehicle manufacturers a private label version of our
      financing programs for their customers.





**BUSINESS
      OVERVIEW**





Sparta’s
      business model has been designed to generate revenue from several
      sources:





·
            Retail
                installment sales contracts and
                leases;


·
            Private
                label programs for manufacturers and
                distributors;


·
            Ancillary
                products and services, such as private label gap coverage and private
                label service contracts; and


·
            Remarketing
                of off-lease and repossessed
                vehicles.





Sparta’s
      management believes that by offering dealers (and their customers) the option
      of
      either financing or leasing, Sparta will be able to capture a greater share
      of
      the dealer’s business. Additionally, by offering both alternatives, once
      profitability is achieved, Sparta believes that it will be in a position to
      achieve greater cash-flow than it could by offering only one of these
      alternatives because depreciation generated by Sparta’s leasing activities will
      reduce income tax due on income resulting from Sparta’s retail installment sales
      contracts.





**RETAIL
      INSTALLMENT SALES CONTRACTS AND LEASES**





Retail
      Installment Sales - Sparta intends to purchase retail installment sales
      contracts from both franchised and independent powersports dealers who qualify
      as Sparta Authorized Dealers and/or as Private Label Authorized Dealers under
      Sparta’s Private Label Programs. Sparta has developed policies and procedures
      for credit evaluation, collections, insurance follow up, and asset recovery.
      Sparta imposes strict credit criteria to determine which retail installment
      sales contract applications to approve. This credit criterion has been developed
      to be in compliance with the credit criterion required by our lenders. The
      dealers understand that if they consummate a credit transaction with a buyer
      on
      whose application we have given them a conditional approval that Sparta will
      purchase that contract if it is in full compliance with all terms and conditions
      of that approval and contained in our dealer agreement.








4





To
      insure
      that Sparta’s Credit Evaluation Process and Collateral Guidelines are
      consistently applied and that the credit/underwriting decision process provides
      rapid decisioning to Sparta Authorized Dealers and the Private Label Dealers,
      Sparta has developed a point of sale credit application and contract decisioning
      system. This system is named “iPLUS” and is structured as an Application Service
      Provider (“ASP”) and has the capability of providing the dealer with conditional
      approvals without human involvement seven days a week, twenty-four hours a
      day.
      This technology provides quick, consistent credit decisions for our dealer
      network and reduces the number of credit analysts required, thereby, reducing
      Sparta’s personnel expense. Depending on Sparta’s arrangement with its lending
      sources, in the case of consumer finance contracts, Sparta may finance its
      purchase of the contracts by borrowing from a lending source and pledging the
      retail finance contracts as collateral for the loan.





All
      of
      the installment sale contracts will be secured by qualified, titled motorcycles
      with 600+cc and higher engines, 4-stroke all-terrain vehicles (ATVs), or select
      scooters. Customer financing needs are projected to range from approximately
      $2,000 to $35,000. Contract terms of 24 to 60 months will be offered.





Leases
      -
      Sparta intends to purchase qualified vehicles for lease to customers of its
      Sparta Authorized Dealers and/or Private Label Dealers. While the steps in
      the
      leasing process are almost identical to those in the installment sales contract
      process, the major difference is that when a lease “approval” is transmitted to
      a dealer, the “approval” describes the terms and conditions under which Sparta
      will purchase a specific vehicle from the dealer and lease it to the applicant.
      Unlike an installment service contract which finances a customer’s purchase of a
      vehicle owned by the customer, the lease contract contains the payment terms
      and
      conditions under which Sparta will allow the customer to use (lease) the
      vehicle, which is owned by Sparta, and also contains a vehicle purchase price
      option which provides the customer with the right to purchase the vehicle at
      the
      lease-end. Depending on Sparta’s arrangement with its lending sources, in the
      case of leases, Sparta may finance its purchase of leased vehicles by borrowing
      from a lending source and assigning or pledging the lease and leased vehicle
      as
      collateral for the loan. Lease terms range from 24 to 60 months, although most
      lease terms are either 36 or 60 months. Leases generally have lower monthly
      payments than retail installment sales contracts because they finance only
      part
      of the vehicle with the balance being financed by the lessor.





**PRIVATE
      LABEL PROGRAMS FOR MANUFACTURERS AND DISTRIBUTORS**





Under
      “private label” financing agreements with the U.S. distributors of major
      manufacturers of scooters and ATVs, Sparta allows the manufacturer to put its
      name on Sparta’s finance and lease products, and offer such financing
      arrangements to its customers. Sparta owns the finance business under these
      “private label” programs, and derives revenues from sales of the distributor’s
      product line pursuant to individual finance arrangements with the dealer’s
      customers. The private label program also expands Sparta’s dealer base by the
      number of dealerships in the distributor’s chain, thereby generating additional
      opportunities to sell Sparta’s own financial services to these dealers for their
      customers interested in non-“private label” covered vehicles.





**REVENUE
      FROM ANCILLARY PRODUCTS AND SERVICES**





Sparta
      expects to receive additional revenue related to servicing its portfolio, such
      as lease acquisition fees, late payment fees, vehicle disposition fees at
      lease-end, early termination fees, charges for excess wear-and-tear on leased
      vehicles, and from ancillary products and services.





Sparta
      is
      being positioned as a full service organization providing products and services
      to its dealers that are costly to obtain on an individual dealer basis. Sparta
      plans to offer the following ancillary products and services:





**GAP
      COVERAGE** - Sparta
      markets its private label gap coverage on a fee basis to customers through
      dealers. This coverage protects the customer should the vehicle be stolen or
      wrecked and the holder’s primary insurance is not adequate to cover their payoff
      to the creditor that holds the lien on the vehicle.





**SERVICE
      CONTRACTS** - Sparta
      offers dealers private label service contract plans for purchased and leased
      vehicles on a fee basis. Service contracts will be offered to anyone who
      finances a vehicle, whether financed through Sparta or another source. For
      a one
      time, up front fee to the owner or lessee of the vehicle, the service contracts,
      administered by Interstate National Dealer Services, Inc. (“Interstate”),
      provide extended service coverage (repair or replacement from 12 to 60 months
      depending on the contract) for specified engine, drive train and electrical
      components of the vehicle. The actual service is performed by the originating
      dealer, which must be pre-approved by Interstate as an “authorized
      dealer.”








5





Sparta
      intends to continue to evaluate additional ancillary products and services
      and
      believes that it can create products and services to meet dealers’ needs,
      creating company brand loyalty in the dealer community and generating other
      revenue streams.





**REVENUE
      FROM REMARKETING** **OFF-LEASE
      AND REPOSSESSED VEHICLES** ****





**RE-LEASING
      TO ORIGINAL LESSEES** -
      Management intends to commence its re-leasing efforts as early as eleven months
      prior to the end of the scheduled lease term. Lessees’ options are expected to
      include: extending the lease, returning the vehicle to Sparta or buying the
      vehicle at the buy-out option price established at the beginning of the lease.
      Sparta’s policy requires lessees who wish to return their vehicles, return the
      vehicle to the originating dealer. If the lessee has moved, then the vehicle
      should be returned to the Sparta Authorized Dealer closest to the lessee. If
      this is impracticable, then Sparta will arrange to have the vehicle transported
      at the lessee’s expense. Sparta plans to offer a 64-month Purchase Plus lease
      program—a 60-month lease with a low residual value (usually 11% of original
      price) that the lessee can typically pay off in four or five additional monthly
      payments at the end of the 60-month lease term.





**RETURNED
      LEASED VEHICLES** -
      When a
      vehicle is returned to a Sparta Authorized Dealer at the end of the scheduled
      lease term, the dealer will inspect it for excessive wear and mileage over
      maximum levels specified under the lease agreement and prepare it for
      resale/lease. All Sparta Authorized Dealers and all Sparta Private Label Dealers
      are contractually bound to charge no more than cost plus ten-percent for repairs
      and to provide free storage for all consignment vehicles. Thereafter, Sparta
      plans to consign the vehicle to the originating dealer for sale or re-lease
      to a
      new party. Should the dealer decline to take the vehicle on consignment, it
      will
      be electronically marketed on the Classified Pages of the Sparta web site.
      Sparta believes the market for used vehicles is significant, and the opportunity
      to remarket the same vehicle numerous times is a key selling point with
      prospective dealerships. Sparta believes that using its dealer network in such
      a
      manner will result in a better overall economic return on its portfolio as
      well
      as strengthen dealer relationships.





**REPOSSESSED
      VEHICLES** -
      All
      repossessed vehicles are similarly returned to the originating Sparta Authorized
      Dealer to be reconditioned (if needed) for consignment sale or re-lease in
      the
      same manner and conditions as returned vehicles.





**SECOND
      CHANCE EXPRESS** -
      Sparta
      allows its Authorized Dealers to offer its inventory of returned or repossessed
      vehicles not only to customers with approved credit applications but, also
      to
      customers with less than prime credit. Applicants with low credit scores are
      evaluated under Sparta’s Second Chance Express Program. This unique
      finance/lease product is designed to offer a financing program tailored to
      this
      non-prime customer. The program allows Sparta to serve those customers who
      can
      offset their credit risk with higher down payments. A key benefit of this
      program to Sparta is that the minimum down-payment requirement is 20% in order
      to bring the amount financed in line with the current wholesale value of the
      vehicle. Under the Second Chance Express Program, Sparta pays its dealers a
      commission on any Sparta inventory vehicle, held on consignment on their “floor”
      or offered on the Sparta Classified Web Page, for which they arrange a sale
      or
      finance.





**CREDIT
      AND COLLECTIONS**





**POLICIES
      AND PROCEDURES**





Sparta
      has developed policies and procedures for credit evaluation, collections,
      insurance follow up, and asset recovery. Sparta imposes strict credit criteria
      to determine which retail installment sales contracts and lease applications
      are
      approved.





**CREDIT
      EVALUATION PROCESS AND COLLATERAL GUIDELINES**





To
      insure
      that Sparta’s Credit Evaluation Process and Collateral Guidelines are
      consistently applied and that the credit/underwriting decision process provides
      rapid decisioning to Sparta Authorized Dealers and the Private Label Dealers,
      Sparta has worked closely with Teledata Communications, Inc. (“TCI”), a leading
      provider of interactive credit accessing and decisioning solutions, to develop
      the iPLUS point of sale credit application and contract decisioning system.








6





**IPLUS
      (INTERNETPURCHASING LEASING UNDERWRITING SERVICING)**





Sparta’s
      retail installment sales contract and leasing programs are delivered through
      a
      proprietary, web-based, credit application processing system. This system is
      named iPLUS” and is structured as an Application Service Provider (“ASP”) and
      has the capability of providing the dealer with conditional approvals without
      human involvement seven days a week, twenty-four hours a day. This system also
      provides the powersports dealer with system capabilities comparable to those
      of
      new car franchises. Sparta believes iPLUS will provide the Sparta Authorized
      Dealers and Private Label Dealers with a competitive advantage and will increase
      Sparta’s ability to garner a larger share of the dealer’s business. Although we
      intend to add additional features, iPLUS is currently being utilized by
      us.





Major
      features of iPLUS include:





·
              100%
                  WEB Browser Based (www.spartacommercial.com)
 ·
              User friendly
                system
 ·
              No costly software required by the
                users
 ·
              Operates on any dial-up connection
                as slow as
                28.8
 ·
              Requires Internet Explorer 5.5 or
                above, Adobe
                Acrobat Reader 5.0 or above, both available at no charge on the
                Internet
 ·
              Integrated scorecard and decision
                engine
 ·
              Integrated credit bureau retrieval
                and review
                (can access any of the 3 major bureaus)
 ·
              Once application is submitted; decisions
                in
                seconds/7 Days a Week /24 Hours a Day
 ·
              Easy to complete customer
                application
 ·
              Dealer application
                management
 ·
              Dealer Desking Tool - Profit Manager
                (Assists
                dealer in structuring any approved
                application.)
 ·
              Prints approved customer contract
                and contract
                package
 ·
              Captures information in electronic
                format
 ·
              Complete underwriting documentation
                and
                control system
 ·
              Dealer
                communication
 ·
              Allows the dealer to track the entire
                decisioning, underwriting, and funding process in real
                time.





Additionally,
      this technology provides quick, consistent credit decisions for our dealer
      network and reduces the number of credit analysts required, thereby, reducing
      Sparta’s personnel expense.





Sparta
      has established program guidelines that are an integral function of the iPLUS
      decision process. These program guidelines establish and clarify credit criteria
      such as credit tiers, maximum amount financed, term and rate, dealer rate
      participation, deal structure, buyer profile, credit bureau parameters, budget
      parameters, and eligible collateral, including maximum loan-to-value ratios
      for
      each of its retail installment sales contracts and lease contracts, depending
      on
      the applicant’s credit rating and stability. Sparta has developed its own credit
      rating system by using an empirical score card and then assigning its own rating
      based on Sparta’s experience. This rating is used as the basis to determine the
      terms and conditions under which an applicant is approved or
      declined.





Sparta
      plans to conduct both applicant credit risk and asset evaluation before
      approving financing. Sparta’s policy is that it will not finance more than 100%
      of a vehicle’s retail value, but Sparta may lend an additional 10% above retail
      value to cover add-ons, extended warranty and other costs. Should the customer
      seek financing above this threshold, Sparta intends to ask for a down payment
      from the borrower or lessee to close the gap between selling price and retail
      value. The size of the down payment will be a function of the applicant’s credit
      rating, stability, budget, and the value of the underlying asset.





**COLLECTION
      PROCEDURES**





Approving
      retail installment sales contracts and leases that comply with the policies
      and
      procedures established by Sparta is just the first step. A principal factor
      in
      the success of Sparta’s business model is its ability to track contract and
      lease performance.








7





Advanced
      Lease Systems, Inc. (ALS) provides the software Sparta uses to manage its
      assets, customer base, collections, insurance, and accounting systems. Using
      a
      variety of basic and customized reports generated by ALS, Sparta monitors its
      customers’ compliance with their obligations under retail installment sales
      contracts or lease contracts. These reports are accessed on a real-time basis
      by
      employees of Sparta and are distributed to management personnel for review.
      The
      reports include delinquency reports, collection tickler (promises) reports,
      insurance status reports, termination reports, inventory reports, maturing
      contract reports, etc.





Sparta
      requires continuous physical damage insurance on all financed vehicles and
      continuous liability and physical damage insurance coverage on all leased
      vehicles. In addition, Sparta is required to be listed as Additional Named
      Insured and Loss Payee. Continuous insurance is critical, and Sparta intends
      to
      quickly repossess a vehicle if coverage lapses. Lapsed or cancelled policies
      will be covered by a “blanket” VSI insurance policy, which Sparta intends to
      purchase. Any lapse in insurance coverage for any reason will lead to automatic
      repossession of leased vehicles.





**USING
      DIVERSIFICATION TO REDUCE PORTFOLIO RISK**





Management
      will reduce portfolio risk not only by carefully screening applicants and
      monitoring covenant compliance, but also by diversifying its financing
      activities across credit tiers and Sparta’s list of motorcycle, ATV and scooter
      models that it will finance or lease.





**CREDIT
      TIERS** -
      Sparta
      expects that it will maintain a portfolio dominated by A/B credit applicants
      over C applicants in the ratio of at least 70/30. Management anticipates that
      it
      will be able to rebalance its portfolio by training its sales force to work
      closely with dealerships in their territories to help Sparta maintain its
      conservative 70/30 target.





Sparta
      will also be able to manage this ratio by revising the variables in its various
      programs (terms and conditions under which Sparta will lease vehicles or
      purchase retail installment contracts), such as minimum income, debt ratios,
      payment to income ratios, minimum down payment required, acquisition fees (paid
      by dealer), discounts (paid by dealer), etc.





**SPARTA
      APPROVED VEHICLE MODELS** -
      Advance rates and other credit restrictions will be in effect for certain models
      and years based on the relevant facts and circumstances.








**CERTAIN
      AGREEMENTS WITH RELATED THIRD PARTIES**





We
      entered into a license agreement, dated as of June 1, 2002, and as amended
      on
      December 3, 2003, with American Motorcycle Leasing Corp. Under the agreement,
      we
      have a non-exclusive, perpetual right to use American Motorcycle Leasing Corp.’s
      proprietary operating systems related to consumer credit underwriting
      procedures, vehicle and vehicle lease value evaluation methods, rental stream
      collection and insurance tracking policies and procedures. The license fee
      consisted of $300,000 **** and
      330,433 membership interests of Sparta Commercial Services, LLC, which were
      subsequently exchanged in connection with the reverse acquisition of Sparta
      Commercial Services, LLC for 34,256,941 shares of common stock of our company..





We
      entered into a services agreement, dated as of March 1, 2004, with American
      Motorcycle Leasing Corp. For a period of three years, American Motorcycle
      Leasing Corp. is to provide personnel, computer equipment and software, and
      facilities, in connection with our credit and underwriting activities and our
      use of the operating systems that we had licensed from American Motorcycle
      Leasing Corp. In return for such services, we agreed to pay $100,000 by March
      1,
      2005, and for the time of the personnel utilized at their salary rate at
      American Motorcycle Leasing Corp.





We
      entered into a purchase option agreement with American Motorcycle Leasing Corp.,
      an entity controlled by the Company’s president and a significant shareholder,
      on November 2, 2004 at a cost to Sparta Commercial Services of $250,000. This
      agreement granted Sparta Commercial Services the right, for a two year period,
      to purchase portions of a certain portfolio of equipment leases that American
      Motorcycle Leasing Corp. owns. The portfolio is secured by a first priority
      security interest in favor of Citibank, N.A. or its assigns. The cost of
      $250,000 has been charged to operations in fiscal 2005. As of April 30, 2005,
      payments against this obligation of $81,000 were made. In June, 2005, an
      additional $20,000 was paid.








8





**MARKET
      INFORMATION**





As
      reported in the 2003 Annual Statistical Report of the Motorcycle Industry
      Council, retail sales of new motorcycles have grown steadily from 1991 through
      2003. North American registrations of new 600cc and higher motorcycles reached
      495,400 in 2004. This represents a 7.1% increase over 2003. Registrations have
      increased for 13 consecutive years. Retail sales of new and used motorcycles
      reached $8.8 billion in 2002.





U.S.
      sales of new ATVs were estimated to be 900,000 units in 2004 with a market
      value
      of $1.8 billion and scooter sales approached 60,000 in 2003 and are growing
      at a
      20% annual rate, as reported in All Terrain Vehicle Magazine in the October
      11,
      2004 edition.








**SALES
      AND MARKETING**





Normally,
      vehicle finance programs are sold primarily at the dealer level, rather than
      the
      consumer level. Sparta’s strategy is to develop an in-house direct sales force
      that will promote Sparta’s products and services to qualified dealers, train
      them, and provide them with point-of-sale marketing materials. Sparta’s vehicle
      financing programs are already gaining market acceptance as evidenced by the
      four Private Label Contracts. This in-house direct sales force will be comprised
      of a Marketing Group and a Dealer Support Group.





The
      Marketing Group will continue to work directly with the manufactures and
      distributors to obtain additional Private Label affiliations and to monitor
      our
      competition. The Private Label partners will assist us directly in training
      the
      Private Label Dealers. This will be done at the manufacturers/distributors
      place
      of business, at industry shows, or with a group of dealers in a common
      geographic area.





As
      required we will add additional marketing representatives to our staff. These
      marketing representatives will be assigned geographic territories. We currently
      have two marketing representatives and expect to expand the number of marketing
      representatives.





The
      Dealer Support Group will accept application packages from dealers that want
      to
      be either or both Sparta Authorized Dealers or Private Label Dealers. They
      will
      then notify the approved dealers by email that they have been approved and
      provide them with the required information to process applications and print
      contracts through iPlus, including a Dealer Sign Up packet. The Dealer Support
      Group will be available to directly assist dealers by telephone, follow up
      with
      dealers on conditional approvals to assist dealers in forwarding the funding
      packages to us for purchase. This group will also accept all incoming calls
      from
      dealers, answering their inquiry or directing them, if necessary, to the
      appropriate department. We currently have two Dealer Support representatives
      and
      expect to expand the number of Dealer Support representatives.





Sparta
      has built an interactive website ( www.spartacommercial.com )
      for our
      authorized dealers. iPLUS is accessed through this website by our dealers and
      allows them to submit credit applications and receive on-line approvals or
      declines based on current Sparta credit criteria. The Customer Management
      section of iPLUS enables authorized dealers to track the status of all
      applicants submitted by their dealership. The dealer is able to review pending,
      approved, declined and active (funded) applications and contracts they have
      submitted. This enables the dealer to easily review their business with Sparta
      and gives Sparta the ability to easily monitor dealer activity at any point
      in
      time. The Sparta Loan/Lease Calculator configures both retail installment sales
      contract and lease payments, simultaneously and instantaneously, allowing
      dealers to provide their customers with highly accurate payment schedules.
      In
      addition, the website provides authorized dealers with access to a PowerPoint
      presentation that will fully acquaint their staff with the various Sparta
      financing products and how to sell them.





Authorized
      dealers are able to advertise both new and used vehicles in the Classified
      Section of our website, at no cost to the dealer. Sparta plans to use this
      feature of the website to remarket its own inventory (both repossessed and
      returned end-of-term vehicles) throughout the country. Sparta’s exclusive
“Second-Chance Express” program for customers with a poor or limited credit
      history was created to help re-market the company’s inventory. Incentives are in
      place for authorized dealers who sell or lease either a Sparta inventory vehicle
      at their dealership or one that is at another dealership in our
      network.








9





While
      Sparta does not market or sell directly to consumers, Sparta expects consumers
      to visit the Sparta website. Sparta has provided a consumer oriented PowerPoint
      presentation for their review. Additionally, visiting consumers will be able
      to
      view Sparta advertising, news and find general information about vehicle makes
      and models, road rallies, and other areas of vehicle interest. They will also
      be
      able to utilize our Dealer Locator to find the nearest authorized Sparta dealer
      in their neighborhood. Consumers will be able to view the Classified Section
      of
      the website and any consumer inquiring about the program will be directed to
      our
      nearest authorized dealer.





**COMPETITION**





The
      consumer finance industry is highly fragmented and highly competitive. Broadly
      speaking, Sparta competes with commercial banks, savings & loans, industrial
      thrift and credit unions, and a variety of local, regional and national consumer
      finance companies. While there are numerous financial service companies that
      provide consumer credit in the automobile markets, including banks, other
      consumer finance companies, and finance companies owned by automobile
      manufacturers and retailers, most financial service companies are reluctant
      to
      lend to motorcyclists. Customers who approach these lending sources to take
      out
      installment loans are often encouraged to pursue personal loans
      instead.





There
      are
      few companies that provide nationwide dealer-based leasing options in the
      motorcycle industry segment, and these tend to be private label factory programs
      supporting their own brands. Because of their narrow focus (such as requiring
      that the equipment be covered by the brand's warranty), these companies have
      met
      with limited success.





Independent
      consumer financial services companies and large commercial banks that
      participated in this market have withdrawn substantially from the motorcycle
      loan niche over the past two years or have toughened their underwriting
      criteria. Sparta believes that those companies may have suffered as a result
      of
      compromising their underwriting criteria for the sake of volume. In addition,
      management believes that our competitors' practice of financing all makes and
      models of a particular manufacturer results in lower overall portfolio
      performance because of the poor demographics associated with some of those
      product lines. The marketplace also includes small competitors such as local
      credit unions, local banks and a few regional players.





Sparta
      will compete for customers with commercial banks, savings and loans, credit
      unions, consumer financing companies, and manufacturers' finance subsidiaries.
      Additionally, some powersports manufacturers such as Harley-Davidson and BMW
      have subsidiaries that provide financing.





The
      more
      significant competitors of Sparta include: GE Retail Services, Capital One,
      HSBC/Household Bank, Sheffield Financial/BB&T, Lending Tree, CIT Bank, AIG,
      and Transamerica. To management’s knowledge, none of these firms offer leases
      for powersports vehicles.





The
      largest of these firms, GE Retail Services, markets both directly to dealers
      in
      Powersports market and through co-branded private label programs. GE recently
      has co-branded with Yamaha, Moto Guzzi, Aprillia Brands and other national
      manufacturers and distributors of Powersports and recreational products such
      as
      Coachmen Industries. GE also offers dealer and distributor floor plan financing
      and private label credit cards.





Capital
      One markets a product for Capital One Bank, offering consumer direct and dealer
      indirect consumer contracts to the powersports industry. They offer smaller
      dealers the ability to have customers apply via the web site affiliate program
      and larger dealers can go direct to Capital One finance. Capital One recently
      announced the purchase of Onyx Finance and truly entered the vehicle financing
      arena with the purchase of Peoples First Finance. Typical terms range from
      30 to
      60 months with a minimum of individuals approved for a product named “The Blank
      Check”. Capital
      One Auto Finance, America's largest online vehicle lender, provides vehicle
      loans to customers directly via the Internet, as well as through a nationwide
      dealership network.





While
      some of Sparta’s larger competitors have vast sources of capital and may be able
      to offer lower interest rates due to lower borrowing costs, Sparta believes
      that
      the combination of management’s experience, expedient service, availability of
      the lease option and iPLUS give Sparta an advantage over its
      competitors.








10





**REGULATION**





Our
      planned financing operations are subject to regulation, supervision and
      licensing under various federal, state and local statutes and ordinances.
      Additionally, the procedures that we must follow in connection with the
      repossession of vehicles securing contracts are regulated by each of the states
      in which we plan to do business. Accordingly, the laws of such states, as well
      as applicable federal law, govern our operations. Compliance with existing
      laws
      and regulations has not had a material adverse affect on our operations to
      date.
      Our management believes that we maintain all requisite licenses and permits
      and
      are in material compliance with all applicable local, state and federal laws
      and
      regulations. We will periodically review our office practices in an effort
      to
      ensure such compliance.





The
      following constitute certain of the federal, state and local statutes and
      ordinances with which we must comply:





·
            Fair
                Debt Collection Act. The Fair Debt Collection Act and applicable
                state law
                counterparts prohibit us from contacting customers during certain
                times
                and at certain places, from using certain threatening practices and
                from
                making false implications when attempting to collect a
                debt.





·
            Truth
                in Lending Act. The Truth in Lending Act requires us and the dealers
                we do
                business with to make certain disclosures to customers, including
                the
                terms of repayment, the total finance charge and the annual percentage
                rate charged on each Contract or direct
                loan.





·
            Consumer
                Leasing Act. The Consumer Leasing Act applies to any lease of consumer
                goods for more than four months. The law requires the seller to disclose
                information such as the amount of initial payment, number of monthly
                payments, total amount for fees, penalties for default, and other
                information before a lease is
                signed.





·
            The
                Consumer Credit Protection Act of 1968. The Act required creditors
                to
                state the cost of borrowing in a common language so that the consumer
                could figure out what the charges are, compare costs, and shop for
                the
                best credit deal.





·
            Equal
                Credit Opportunity Act. The Equal Credit Opportunity Act prohibits
                creditors from discriminating against loan applicants on the basis
                of
                race, color, sex, age or marital status. Pursuant to Regulation B
                promulgated under the Equal Credit Opportunity Act, creditors are
                required
                to make certain disclosures regarding consumer rights and advise
                consumers
                whose credit applications are not approved of the reasons for the
                rejection.





·
            Fair
                Credit Reporting Act. The Fair Credit Reporting Act requires us to
                provide
                certain information to consumers whose credit applications are not
                approved on the basis of a report obtained from a consumer reporting
                agency.





·
            Gramm-Leach-Bliley
                Act. The Gramm-Leach-Bliley Act requires us to maintain privacy with
                respect to certain consumer data in our possession and to periodically
                communicate with consumers on privacy
                matters.





·
            Soldiers'
                and Sailors' Civil Relief Act. The Soldiers' and Sailor's Civil Relief
                Act
                requires us to reduce the interest rate charged on each loan to customers
                who have subsequently joined, enlisted, been inducted or called to
                active
                military duty.





·
            Electronic
                Funds Transfer Act. The Electronic Funds Transfer Act prohibits us
                from
                requiring our customers to repay a loan or other credit by electronic
                funds transfer ("EFT"), except in limited situations that do not
                apply to
                us. We are also required to provide certain documentation to our
                customers
                when an EFT is initiated and to provide certain notifications to
                our
                customers with regard to preauthorized
                payments.


11





·
            Telephone
                Consumer Protection Act. The Telephone Consumer Protection Act prohibits
                telephone solicitation calls to a customer's home before 8 a.m. or
                after 9
                p.m. In addition, if we make a telephone solicitation call to a customer's
                home, the representative making the call must provide his or her
                name, our
                name, and a telephone number or address at which our representative
                may be
                contacted. The Telephone Consumer Protection Act also requires that
                we
                maintain a record of any requests by customers not to receive future
                telephone solicitations, which must be maintained for five
                years.





·
            Bankruptcy.
                Federal bankruptcy and related state laws may interfere with or affect
                our
                ability to recover collateral or enforce a deficiency
                judgment.








**EMPLOYEES**





We
      currently have nine employees.








**ITEM
      2.**  **DESCRIPTION
      OF PROPERTY**





We
      presently maintain our executive offices at 462 Seventh Avenue, 20th Floor,
      New
      York, NY 10018, pursuant to a lease expiring on November 30, 2007. The premises
      contain approximately 7,000 square feet. The annual rate is $163,200 for
      calendar year 2005, $167,280 (annualized) for the first six months of calendar
      year 2006, $174,080 (annualized) for the second six months of calendar year
      2006, and $178,432 for the calendar year 2007. We believe that our present
      facilities are suitable for our present needs. Our offices are adequately
      covered by insurance for claims arising out of such occupancies.








**ITEM
      3.**  **LEGAL
      PROCEEDINGS**





As
      at
      April 30, 2005, we are not a party to any material pending legal
      proceeding.








**ITEM
      4.**  **SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS**





Not
      applicable.











12





**PART
      II**





**ITEM
      5.**  **MARKET
      FOR THE COMPANY’S COMMON EQUITY AND RELATED**  **STOCKHOLDER
      MATTERS**





**MARKET
      INFORMATION**





Our
      common stock is currently quoted on the OTC Bulletin Board under the symbol
      “SRCO”. Prior to December 27, 2004, the stock symbol was SRTA. Prior to August
      30, 2004, the stock symbol was TMHK.





In
      2001,
      we filed a request for clearance of quotations on the OTC Bulletin Board under
      SEC Rule 15c2-11, Subsection (a)(5) with NASD Regulation Inc. A Clearance Letter
      was issued in April 2001. The first posted trade was conducted on May 3, 2001,
      and, historically, there has been very low volume of trading of our common
      stock.





The
      quoted high and low closing market prices of our common stock on the OTC
      Bulletin Board, for the periods indicated, are presented in the table below.
      Prices prior to February 27, 2004 reflects prices for our former business,
      which
      was essentially a public shell vehicle. Our business changed on February 27,
      2004 when we acquired Sparta Commercial Services, LLC.




High
              
              LowFiscal
                  Year 2004 (May 1, 2003 - April 30, 2004) *First
                  quarter (May 1, 2003 - July 31, 2003)
              
              $
              0.01
              
              $
              0.01Second
                  quarter (August 1, 2003 - October 31, 2003)
              
              $
              0.05
              
              $
              0.01Third
                  quarter (November 1, 2003 - January 31, 2004)
              
              $
              0.03
              
              $
              0.017Fourth
                  quarter (February 1, 2004 - April 30, 2004)
              
              $
              0.20
              
              $
              0.03Fiscal
                  Year 2005 (May 1, 2004 - April 30, 2005) *First
                  quarter (May 1, 2004 - July 31, 2004)
              
              $
              1.60
              
              $
              0.80Second
                  quarter (August 1, 2004 - October 31, 2004)
              
              $
              0.96
              
              $
              0.48Third
                  quarter (November 1, 2004 - January 31, 2005)
              
              $
              0.96
              
              $
              0.48Fourth
                  quarter (February 1, 2005 - April 30, 2005)
              
              $
              1.05
              
              $
              0.45


*
            On
                December 27, 2004, the Company effected a net effective 25:200 common
                stock split. Fiscal year 2004stock
                prices have not been adjusted to give effect for a net effective
                25:200
                stock split effected








**HOLDERS**





The
      approximate number of holders of record of our common stock as of April 30,
      2005
      was 2,978, excluding stockholders holding common stock under nominee security
      position listings.





**DIVIDENDS**





We
      have
      never declared any cash dividends on our common stock. Future cash dividends
      on
      the common stock, if any, will be at the discretion of our Board of Directors
      and will depend on our future operations and earnings, capital requirements
      and
      surplus, general financial condition, contractual restrictions, and other
      factors that the Board of Directors may consider important. The Board of
      Directors does not intend to declare or pay cash dividends in the foreseeable
      future. It is the current policy to retain all earnings, if any, to support
      future growth and expansion.





**TRANSFER
      AGENT**





The
      transfer agent for our common stock is Executive Registrar & Transfer
      Inc.








13





**RECENT
      SALES OF UNREGISTERED SECURITIES**





In
      December 2004, we commenced a private placement to raise up to $3,000,000
      through the sale of up to 30 units of our securities at $100,000 per unit.
      Each
      unit consists of (i) 1,000 shares of series A convertible, redeemable preferred
      stock and (ii) warrants to purchase 320,513 shares of common stock, exercisable
      for three years at $0.195 per share. The preferred stock has a stated value
      of
      $100 per share, carries a 6% annual cumulative dividend, payable semi-annually
      in arrears, and is convertible into shares of common stock at the rate of one
      preferred share into 641 shares of common stock. The private placement is being
      conducted by a placement agent on a best efforts basis. The units are being
      offered solely to accredited investors. The units offered have not been
      registered under the Securities Act and may not be offered or sold in the United
      States absent registration or an applicable exemption from registration
      requirements. We agreed to file a registration statement, at our expense, for
      the resale of common stock underlying the units within 90 days of the final
      closing of the private placement. The placement agent is entitled to 10% of
      the
      cash proceeds from the private placement and reimbursement for expenses, and
      warrants to purchase such number of shares of common stock, exercisable for
      five
      years at $0.172 per share from the date of issuance, as equals 10% of the number
      of shares of common stock underlying the preferred stock sold. In transactions
      with accredited investors deemed exempt from registration pursuant to Section
      4(2) of the Securities Act, from December 2004 through April 30, 2005, we sold
      12.25 units for proceeds of $1,225,000, and issued 785,257 warrants to the
      placement agent. A subscription for 0.05 units was subsequently rescinded.
      Through July, 2005, we sold an aggregate of 29.95 units for proceeds of
      $2,995,000. We used the proceeds for working capital purposes.





Between
      May and July 2004, we sold certain rights to seven accredited investors for
      aggregate gross proceeds of $585,000 in transactions deemed exempt from
      registration pursuant to Section 4(2) of the Securities Act. Pursuant to the
      terms of the rights, in the event that we conduct a private placement
      transaction in 2004 utilizing a designated registered broker-dealer as a
      placement agent, the rights automatically convert into the securities sold
      in
      such private placement at the private placement sale price. On January 1, 2005,
      these rights were automatically converted into 5.85 units. Each unit consists
      of
      (i) 1,000 shares of series A convertible, redeemable preferred stock and (ii)
      warrants to purchase 320,513 shares of common stock, exercisable for three
      years
      at $0.195 per share.





In
      October and November 2004, pursuant to loan agreements, we issued promissory
      notes for the aggregate principal amount of $375,000. Pursuant to the loan
      agreements, the notes carried interest at the rate of 10% per year, and we
      agreed to grant 128,206 restricted shares of common stock to the note holders
      for each $100,000 loaned. The notes were to mature in April 2005. In the event
      of default on repayment of the promissory notes, as penalty, (i) the interest
      rate on the unpaid principal shall be increased to a rate of 20% per annum
      commencing from the date of default, (ii) the equity kicker shall be increases
      to a rate of 192,308 restricted shares of common stock for each $100,000 loaned,
      and (iii) the repayment after default of the promissory notes shall be
      collateralized by a subordinated security interest in the Company’s assets. The
      security interest shall be subordinate to the rights of any lending institution,
      any asset-based lending agreement, and any rights and preferences of any
      subscribers in the private placement of units that commenced in December 2004. Through April
      29,
      2005, we repaid notes with an aggregate principal amount of $150,000 and accrued
      interest thereon, and issued 192,309 shares of common stock to the note holders.
      In April 2005, the four note holders of the remaining principal amount of
      $225,000 agreed to extend the maturity date of the loans from April 30, 2005
      to
      May 31, 2005. In consideration of the extension, the interest rate on three
      notes were increased to the rate of 20% per year and the shares of common stock
      issuable to certain of those note holders will be based on 192,308 restricted
      shares of common stock for each $100,000 loaned. On or about May 25, 2005 and
      May 27, 2005, the four note holders further agreed to extend the maturity date
      of the loans, so that one note in the principal amount of $50,000 was due June
      15, 2005, and the three other notes in the aggregate principal amount of
      $175,000 were due June 30, 2005. In June 2005, we repaid two notes with the
      principal amount of $75,000 and issued 96,155 shares of common stock to the
      note
      holders with 48076 shares yet to be issued. **** In
      June
      2005, a holder of a $50,000 note due June 30, 2005 agreed to extend the maturity
      date to August 15, 2005, and another holder of a $100,000 note due June 30,
      2005
      agreed to extend the maturity date to September 1, 2005.





In
      April
      2005, in a transaction deemed exempt from registration pursuant to Section
      4(2)
      of the Securities Act, we issued warrants to purchase 200,000 shares of our
      common stock to Jaffoni & Collins Incorporated pursuant to a consulting
      agreement for public relations services. The warrants are exercisable for three
      years at $0.195 per share.








14





On
      August
      2, 2004, pursuant to an employment agreement with Daniel J. Lanjewar, our former
      Chief Financial Officer, we agreed to issue 568,175 shares of our common stock
      in a transaction deemed exempt from registration pursuant to Section 4(2) of
      the
      Securities Act. The grant of shares was subject to vesting and subject to
      continued employment. On January 1, 2005, 113,635 shares vested, and the
      reminder of the shares were to vest in equal portions on July 1, 2005, July
      1,
      2006, July 1, 2007, and July 1, 2008, subject to proportionate adjustment in
      the
      event of employment termination for any incomplete vesting period. In April
      2005, Mr. Lanjewar resigned as our Chief Financial Officer, and was vested
      with
      an additional 113,637 shares of common stock, which is yet to be
      issued





On
      April
      29, 2005, pursuant to an option agreement with Richard Trotter, our Chief
      Operating Officer, we agreed to issue options to purchase up to 875,000 shares
      of our common stock in a transaction deemed exempt from registration pursuant
      to
      Section 4(2) of the Securities Act. Subject to vesting, the stock options are
      exercisable for five years from the vesting date at $0.605 per share. Twenty
      percent of the options vested on April 29, 2005, and the remaining options
      are
      to vest in equal installments over the next four anniversary dates of the
      agreement.





In
      July,
      2005, we sold one accredited investor in a transaction deemed exempt from
      registration pursuant to Section 4(2) of the Securities Act, for the sum of
      $5,000, 50 shares of Series A convertible, redeemable preferred stock and
      warrants to purchase 6,026 shares of common stock, exercisable for three years
      at $.0195 per share. The preferred stock has a stated value of $100 per share,
      carries a 6% annual cumulative dividend, payable semi annually in arrears,
      and
      is convertible into shares of common stock at a rate of one preferred share
      into
      641 shares of common stock. We used the proceeds for working capital
      purchases.








15





**ITEM
      6.**  **MANAGEMENT’S
      DISCUSSION AND ANALYSIS**





**“FORWARD** - **LOOKING”
      INFORMATION**





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








**INTRODUCTORY
      STATEMENT**





The
      following discussion and analysis should be read in conjunction with the
      information set forth in the audited consolidated financial statements for
      the
      years ended April 30, 2005 and April 30, 2004 and footnotes found in the
      Company's Annual Report on Form 10-KSB.





Unless
      otherwise stated, the discussion and analysis refers to the business of Sparta
      Commercial Services, Inc. and does not refer to the operations for our former
      business which was essentially a non-operating shell company.





The
      year
      ended April 30, 2005 was a period of development, as we continue to develop
      our
      products and market them to dealers and manufacturers.








**MERGER
      AND CORPORATE RESTRUCTURE**





Prior
      to
      February 27, 2004, we did not conduct any substantive operations. On February
      27, 2004, pursuant to an Agreement and Plan of Reorganization, we acquired
      Sparta Commercial Services, LLC, in a transaction viewed as a reverse
      acquisition. The purpose of the transaction was to try to create some value
      for
      our shareholders. As an inactive publicly registered shell corporation with
      no
      significant assets or operations, our business plan was to seek an acquisition
      candidate. Sparta sought access to financing, as a publicly-held company. As
      a
      result of the reverse acquisition, there was a change in control of our company.
      In accordance with SFAS No. 141, Sparta Commercial Services LLC was the
      acquiring entity. While the transaction is accounted for using the purchase
      method of accounting, in substance the Agreement is a recapitalization of the
      Company’s capital structure and is recorded as a capital transaction rather than
      a business combination under SFAS 141.





For
      accounting purposes, the Company has accounted for the transaction as a reverse
      acquisition and Sparta Commercial Services LLC shall be the surviving entity.
      The Company did not recognize goodwill or any intangible assets in connection
      with the transaction and there were no adjustments to the Company’s historic
      carrying values of the assets and liabilities.





The
      accompanying financial statements present the historical financial condition,
      results of operations and cash flows of Sparta Commercial Services LLC prior
      to
      the acquisition.





Till
      January 31, 2005, Sparta was a development stage company. Efforts had been
      principally devoted to developing business as an originator and indirect lender
      for retail installment loan and lease financing for the purchase or lease of
      new
      and used motorcycles (specifically 500cc and higher) and utility-oriented
      4-stroke all terrain vehicles (ATVs).





To
      date,
      we have generated limited sales revenues, have incurred expenses and have
      sustained losses. Consequently, our operations are subject to all the risks
      inherent in the establishment of a new business enterprise. For the period
      from
      October 1, 2001 (date of Sparta's inception) through April 30, 2005, we have
      accumulated losses of $6,277,658.





16





The
      period from inception till January 31, 2005 was a developmental stage period
      for
      us, setting up credit procedures, setting our arrangements with vehicle
      distributors, obtaining personnel, seeking financing to support our
      developmental efforts, and seeking credit facilities. In fiscal year 2005,
      we
      have begun to obtain regulatory approval in several states, where required,
      prior to commencing active operations. We are actively signing up dealers to
      participate in our financing programs, including our private label financing
      programs. We have signed up three manufacturers to our private label programs,
      and are in negotiations with several other manufacturers who have indicated
      an
      interest in a private label program. Presently, we do not have sufficient
      operating capital to fulfill our planned business plans. We estimate that we
      will need approximately $1,800,000 to conduct limited operations during the
      next
      twelve months. The lack of capital has made it difficult to obtain a credit
      line
      with a lending institution which we will need before commencing full active
      operations. We are presently in discussions with several institutions about
      obtaining a credit line, which would permit us to more quickly implement our
      business plan








**RESULTS
      OF OPERATIONS**


**COMPARISON
      OF THE YEAR ENDED APRIL 30, 2005 TO THE YEAR ENDED APRIL 30,
      2004**





For
      the
      year ended April 30, 2005, we have generated limited sales revenues, have
      incurred significant expenses, and have sustained significant losses. We believe
      we will begin to earn increasing revenues from operations in fiscal 2006 as
      we
      complete our transition to an operating company.





**Revenues**





Revenues
      totaled $65,833 in fiscal 2005 compared to $0 revenues in fiscal 2004. Fiscal
      2005 revenue was comprised of $22,800 in dealer fees, $9,900 in private label
      fees, $17,575 in lease payments and $15,558 in other fees and
      income.





**Costs
      and Expenses**





The
      Company incurred licensing fees of $150,633 for the year ended April 30, 2005,
      and $730,433 for the year ended April 30, 2004, respectively. The costs incurred
      were for the licensing of certain proprietary software, operating systems and
      processes for use in connection with the extension of credit and underwriting
      techniques for the purchase and lease of motor vehicles. The decrease from
      fiscal 2004 to fiscal 2005 reflects the fact that this process is nearing
      completion.





The
      Company incurred organization costs of $294,408 for the year ended April 30,
      2005, and $670,486 for the year ended April 30, 2004, respectively.
      Organizational costs consist of establishing business procedures, filing to
      do
      business web site development and related activities. The year to year decrease
      in organization costs is primarily attributed to the wind down of initial
      organizational activity.





The
      Company incurred compensation costs of $828,298 for the year ended April 30,
      2005 compared with $223,968 in fiscal 2004. The increase is related to the
      costs
      of the Company increasing its employment base during 2005 including the addition
      of a Chief Operating Officer and a Chief Financial Officer as well as several
      administrative personnel. At April 30, 2005, the headcount was 8. As the Company
      continues to expand, the Company will incur additional costs for personnel.
      In
      order for the Company to attract and retain quality personnel, management
      anticipates it will continue to offer competitive salaries and issue common
      stock to consultants and employees.





The
      Company paid $233,333 and $135,140 to its managing member, who is Chairman
      and
      Chief Executive Officer, in fiscal 2005 and 2004, respectively. These payments
      were charged to operations, and are included in the compensation costs shown
      above.





In
      connection with the private placement transaction, the Company has expensed
      non
      cash costs of $383,284 to issue warrants to the private placement agent for
      the
      year ended April 30, 2005 and $0 in fiscal 2004. The Company has expensed non
      cash costs $1,810,000 which equals the intrinsic value of the imbedded
      beneficial conversion feature for the Preferred Stock holders for the year
      ended
      April 30, 2005 and $0 in fiscal 2004. At April 30, 2005, accrued preferred
      dividends of $28,906 were charged to operations. There was no accrual made
      in
      fiscal 2004.





The
      Company incurred legal and accounting fees of $197,384 for the year ended April
      30, 2005, as compared to $ 85,962 for
      the
      year ended April 30, 2004, respectively. The increase in costs is related to
      legal and accounting expenses associated with finalizing the private placement
      and complying with various federal and state securities statutes, rules and
      regulations.





17


The
      Company incurred other operating expenses of $791,647 for the year ended April
      30, 2005. Notable expenses in this category are the cost of a purchase option
      for a portfolio of equipment leases of $250,000, rent of $125,214, consulting
      expenses of $84,365, travel of $79,547, advertising of $28,107,
      telecommunications of $21,476 and depreciation of $22,626. The remainder is
      comprised of expenses for postage, shipping, storage, repairs and other normal
      operating costs. In fiscal 2004, other operating costs totaled $70,119,
      comprised of rent of $19,772, travel of $18,430, advertising of $4,057 and
      all
      other expenses of $27,860.





**Net
      Loss**





Our
      net
      loss for the year ended April 30, 2005 was $4,418,727  in
      contrast to a loss of $1,772,257 for the year ended April 30, 2004,
      respectively. The increase in net loss was due primarily to the fact that the
      Company incurred expenses related to the private placement transaction,
      consisting of non cash expense of a beneficial conversion discount of
      $1,810,000, and a non cash expense of $383,284 for warrants issued to the
      placement agent in 2005 and to the fact that the Company has increased its
      resources and spending in 2005 as it transitioned from a development stage
      to an
      operating entity. The payment of $250,000 for a purchase option for equipment
      leases from American Motorcycle Leasing Corp. also contributed to the
      loss.





Our
      net
      loss per common share (basic and diluted) was $0.05 for the year ended April
      30,
      2005 and $0.25 for the year ended April 30, 2004.








**LIQUIDITY
      AND CAPITAL RESOURCES**





As
      of
      April 30, 2005, the Company had a working capital deficit of $728,207. The
      Company generated a deficit in cash flow from operations of $1,688,745 for
      the
      year ended April 30, 2005. This deficit is primarily attributable to the
      Company's net loss from operations of $2,579,821, adjusted for depreciation
      and
      amortization of $28,740, the cost of warrants issued of $473,264, the cost
      of
      shares issued to employees of $82,500, the cost of accrued preferred dividends
      of $28,906 and to changes in the balances of current assets and liabilities.
      Accounts payable and accrued expenses increased by $428,215 primarily due to
      the
      remaining accrual of a portfolio purchase option of $169,000, payroll taxes
      of
      $85,341, accrued interest on notes payable of $13,476, accrued preferred
      dividends of $28,906 and other normal operating expenses recorded but not yet
      paid.





Cash
      flows used in investing activities for the year ended April 30, 2005 was
      $220,863, primarily due to the purchase of property and equipment of $120,964
      and payments for motorcycles of $113,278.





The
      Company met its cash requirements during the period through net proceeds from
      the issuance of equity of $1,681,000 and obtaining net bridge loans of $300,000
      and a loan from officer for $25,000. Subsequent to this period, the Company
      has
      received additional proceeds from equity of $1,775,000. Additionally, the
      Company has received limited revenues from leasing and financing motorcycles
      and
      other vehicles, its recently launched private label programs and from dealer
      sign-up fees.





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





We
      estimate that we will need approximately $1,800,000 to conduct limited
      operations during the next twelve months. Based on capital received from equity
      financing to date, and certain indications of interest to purchase our equity,
      we believe that we have a reasonable chance to raise sufficient capital
      resources to meet projected cash flow deficits through the next twelve months.
      There can be no assurance that additional private or public financing, including
      debt or equity financing, will be available as needed, or, if available, on
      terms favorable to the Company. Any additional equity financing may be dilutive
      to shareholders and such additional equity securities may have rights,
      preferences or privileges that are senior to those of the Company's existing
      common or preferred stock. Furthermore, debt financing, if available, will
      require payment of interest and may involve restrictive covenants that could
      impose limitations on the operating flexibility of the Company. However, if
      we
      are not successful in generating sufficient liquidity from operations or in
      raising sufficient capital resources, on terms acceptable to us, this could
      have
      a material adverse effect on our business, results of operations, liquidity
      and
      financial condition, and we will have to adjust our planned operations and
      development on a more limited scale.








18





The
      effect of inflation on the Company's revenue and operating results was not
      significant. The Company's operations are located in North America and there
      are
      no seasonal aspects that would have a material effect on the Company's financial
      condition or results of operations.








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





The
      independent auditors report on our April 30, 2005 and 2004 financial statements
      included in the Company’s Annual Report states that the Company's historical
      losses and the lack of revenues raise substantial doubts about the Company's
      ability to continue as a going concern, due to the losses incurred and its
      lack
      of significant operations. If we are unable to develop our business, we have
      to
      discontinue operations or cease to exist, which would be detrimental to the
      value of the Company's common stock. We can make no assurances that our business
      operations will develop and provide us with significant cash to continue
      operations.








**PLAN
      OF OPERATIONS**





**Addressing
      the Going Concern Issues**





In
      order
      to improve the Company's liquidity, the Company's management is actively pursing
      additional equity financing through discussions with investment bankers and
      private investors. There can be no assurance the Company will be successful
      in
      its effort to secure additional equity financing.





We
      continue to experience net operating losses. Our ability to continue as a going
      concern is subject to our ability to develop profitable operations. We are
      devoting substantially all of our efforts to developing our business and raising
      capital. Our net operating losses increases the difficulty in meeting such
      goals
      and there can be no assurances that such methods will prove
      successful.





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





·
            seeking
                a credit line from institutional
                lenders;


·
            seeking
                institutional investors for equity investments in our company;
                and


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





To
      address these issues, we are negotiating the potential sale of securities with
      investment banking companies to assist us in raising capital.





**Product
      Research and Development**





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





**Acquisition
      or Disposition of Plant and Equipment**





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





**Number
      of Employees**





From
      our
      inception through the period ended April 30, 2005, we have relied on the
      services of outside consultants for services and currently have nine employees.
      In order for us to attract and retain quality personnel, we anticipate we will
      have to offer competitive salaries to future employees. We do not anticipate
      our
      employment base will significantly change during the next twelve months. As
      we
      continue to expand, we will incur additional cost for personnel. This projected
      increase in personnel is dependent upon our generating revenues and obtaining
      sources of financing. There is no guarantee that we will be successful in
      raising the funds required or generating revenues sufficient to fund the
      projected increase in the number of employees.








19





**INFLATION**





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








**CRITICAL
      ACCOUNTING POLICIES**





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





**Stock-Based
      Compensation**





In
      December 2003, the FASB issued SFAS No. 148, "Accounting for Stock-Based
      Compensation-Transition and Disclosure-an amendment of SFAS 123." This statement
      amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide
      alternative methods of transition for a voluntary change to the fair value
      based
      method of accounting for stock-based employee compensation.





In
      addition, this statement amends the disclosure requirements of SFAS No. 123
      to
      require prominent disclosures in both annual and interim financial statements
      about the method of accounting for stock-based employee compensation and the
      effect of the method used on reported results. The Company has chosen to
      continue to account for stock-based compensation using the intrinsic value
      method prescribed in APB Opinion No. 25 and related interpretations.
      Accordingly, compensation expense for stock Warrants is measured as the excess,
      if any, of the fair market value of the Company's stock at the date of the
      grant
      over the exercise price of the related option. The Company has adopted the
      annual disclosure provisions of SFAS No. 148 in its financial reports for the
      period from January 1, 2003 through April 30, 2003 and will adopt the interim
      disclosure provisions for its financial reports for the subsequent periods.
      The
      Company has stock based awards of compensation to employees of $82,500 granted
      and outstanding during the period from October 1, 2001 (date of inception)
      through April 30, 2005.





**Website
      Development Costs**




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








20





**NEW
      ACCOUNTING PRONOUNCEMENTS**





In
      November 2004, the Financial Accounting Standards Board (FASB) issued SFAS
      151,
      Inventory Costs-- an amendment of ARB No. 43, Chapter 4. This Statement amends
      the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the
      accounting for abnormal amounts of idle facility expense, freight, handling
      costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4,
      previously stated that ". . . under some circumstances, items such as idle
      facility expense, excessive spoilage, double freight, and rehandling costs
      may
      be so abnormal as to require treatment as current period charges. . . ." This
      Statement requires that those items be recognized as current-period charges
      regardless of whether they meet the criterion of "so abnormal." In addition,
      this Statement requires that allocation of fixed production overheads to the
      costs of conversion be based on the normal capacity of the production
      facilities. This Statement is effective for inventory costs incurred during
      fiscal years beginning after June 15, 2005. Management does not believe the
      adoption of this Statement will have any immediate material impact on the
      Company.





In
      December 2004, the FASB issued SFAS No.152, "Accounting for Real Estate
      Time-Sharing Transactions--an amendment of FASB Statements No. 66 and 67" ("SFAS
      152) The amendments made by Statement 152 This Statement amends FASB Statement
      No. 66, Accounting for Sales of Real Estate, to reference the financial
      accounting and reporting guidance for real estate time-sharing transactions
      that
      is provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real
      Estate Time-Sharing Transactions. This Statement also amends FASB Statement
      No.
      67, Accounting for Costs and Initial Rental Operations of Real Estate Projects,
      to state that the guidance for (a) incidental operations and (b) costs incurred
      to sell real estate projects does not apply to real estate time-sharing
      transactions. The accounting for those operations and costs is subject to the
      guidance in SOP 04-2. This Statement is effective for financial statements
      for
      fiscal years beginning after June 15, 2005. with earlier application encouraged.
      The Company does not anticipate that the implementation of this standard will
      have a material impact on its financial position, results of operations or
      cash
      flows.





On
      December 16, 2004, the Financial Accounting Standards Board ("FASB") published
      Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-Based
      Payment ("SFAS 123R"). SFAS 123R requires that compensation cost related to
      share-based payment transactions be recognized in the financial statements.
      Share-based payment transactions within the scope of SFAS 123R include stock
      Warrants, restricted stock plans, performance-based awards, stock appreciation
      rights, and employee share purchase plans. On April 14, 2005, the SEC amended
      the effective date of the provisions of this statement. Accordingly, the Company
      will implement the revised standard in the forth quarter of fiscal year 2006.
      Currently, the Company accounts for its share-based payment transactions under
      the provisions of APB 25, which does not necessarily require the recognition
      of
      compensation cost in the financial statements. Management is assessing the
      implications of this revised standard, which may materially impact the Company's
      results of operations in the third quarter of fiscal year 2006 and thereafter.





On
      December 16, 2004, FASB issued Statement of Financial Accounting Standards
      No.
      153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29,
      Accounting for Nonmonetary Transactions (" SFAS 153"). This statement amends
      APB
      Opinion 29 to eliminate the exception for nonmonetary exchanges of similar
      productive assets and replaces it with a general exception for exchanges of
      nonmonetary assets that do not have commercial substance. Under SFAS 153, if
      a
      nonmonetary exchange of similar productive assets meets a commercial-substance
      criterion and fair value is determinable, the transaction must be accounted
      for
      at fair value resulting in recognition of any gain or loss. SFAS 153 is
      effective for nonmonetary transactions in fiscal periods that begin after June
      15, 2005. The Company does not anticipate that the implementation of this
      standard will have a material impact on its financial position, results of
      operations or cash flows.





In
      March
      2005, the FASB issued FASB Interpretation (FIN) No. 47, “Accounting for
      Conditional Asset Retirement Obligations, an interpretation of FASB Statement
      No. 143,” which requires an entity to recognize a liability for the fair value
      of a conditional asset retirement obligation when incurred if the liability’s
      fair value can be reasonably estimated. The Company is required to adopt the
      provisions of FIN 47 no later than the end of its fiscal 2006. The Company
      does
      not expect the adoption of this Interpretation to have a material impact on
      its
      consolidated financial position, results of operations or cash flows.








21





In
      May
      2005 the FASB issued Statement of Financial Accounting Standards (SFAS) No.
      154,
“Accounting Changes and Error Corrections, a replacement of APB Opinion No.
      20
      and FASB Statement No. 3.” SFAS 154 requires retrospective application to prior
      periods’ financial statements for changes in accounting principle, unless it is
      impracticable to determine either the period-specific effects or the cumulative
      effect of the change. SFAS 154 also requires that retrospective application
      of a
      change in accounting principle be limited to the direct effects of the change.
      Indirect effects of a change in accounting principle, such as a change in
      non-discretionary profit-sharing payments resulting from an accounting change,
      should be recognized in the period of the accounting change. SFAS 154 also
      requires that a change in depreciation, amortization, or depletion method for
      long-lived, non-financial assets be accounted for as a change in accounting
      estimate effected by a change in accounting principle. SFAS 154 is effective
      for
      accounting changes and corrections of errors made in fiscal years beginning
      after December 15, 2005. Early adoption is permitted for accounting changes
      and
      corrections of errors made in fiscal years beginning after the date this
      Statement is issued. The Company does not expect the adoption of this SFAS
      to
      have a material impact on its consolidated financial position, results of
      operations or cash flows.








**OFF-BALANCE
      SHEET ARRANGEMENTS**





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








**TRENDS,
      RISKS AND UNCERTAINTIES**





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





**CAUTIONARY
      FACTORS THAT MAY AFFECT FUTURE RESULTS**





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





**Potential
      Fluctuations in Annual Operating Results**





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





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





**Dependence
      Upon Management**





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








22





**Limitation
      of Liability and Indemnification of Officers and Directors**





Our
      officers and directors are required to exercise good faith and high integrity
      in
      our Management affairs. Our Articles of Incorporation provide, however, that
      our
      officers and directors shall have no liability to our shareholders for losses
      sustained or liabilities incurred which arise from any transaction in their
      respective managerial capacities unless they violated their duty of loyalty,
      did
      not act in good faith, engaged in intentional misconduct or knowingly violated
      the law, approved an improper dividend or stock repurchase, or derived an
      improper benefit from the transaction. Our Articles and By-Laws also provide
      for
      the indemnification by us of the officers and directors against any losses
      or
      liabilities they may incur as a result of the manner in which they operate
      our
      business or conduct the internal affairs, provided that in connection with
      these
      activities they act in good faith and in a manner that they reasonably believe
      to be in, or not opposed to, the best interests of Sparta, and their conduct
      does not constitute gross negligence, misconduct or breach of fiduciary
      obligations. To further implement the permitted indemnification, we have entered
      into Indemnity Agreements with our officers and directors.





**Continued
      Control of Current Officers and Directors**





The
      present officers and directors own approximately 67% of the outstanding shares
      of Common Stock, and therefore are in a position to elect all of our Directors
      and oth6wise control the Company, including, without limitation, authorizing
      the
      sale of equity or debt securities of Sparta, the appointment of officers, and
      the determination of officers' salaries. Shareholders have no cumulative voting
      rights. (See Security Ownership of Certain Beneficial Owners and
      Management)





**Management
      of Growth**





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





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





Companies
      trading on the OTC Bulletin Board, such as us, must be reporting issuers under
      Section 12 of the Securities Exchange Act of 1934, as amended, and must be
      current in their reports under Section 13, in order to maintain price quotation
      privileges on the OTC Bulletin Board. If we fail to remain current on our
      reporting requirements, we could be removed from the OTC Bulletin Board. As
      a
      result, the market liquidity for our securities could be severely adversely
      affected by limiting the ability of broker-dealers to sell our securities and
      the ability of stockholders to sell their securities in the secondary market.








23





**ITEM
      7**  **FINANCIAL
      STATEMENTS**





PageReport
                of Registered Independent Certified Public Accounting Firm
            F-1Consolidated
                Balance Sheets as of April 30, 2005 and 2004
            F-2Consolidated
                Statements of Losses for the years ended April 30, 2005 and 2004
            F-3Consolidated
                Statement of Deficiency in Stockholders’ Equity for the years ended April
                30, 2005 and 2004
            F-4Consolidated
                Statements of Cash Flows for the years ended April 30, 2005 and 2004
            F-5
                ~ F-6Notes
                to Consolidated Financial Statements
            F-7~
                F-23











24








RUSSELL
      BEDFORD STEFANOU MIRCHANDANI LLP


CERTIFIED
      PUBLIC ACCOUNTANTS








REPORT
      OF
      REGISTERED INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM





Board
      of
      Directors


Sparta
      Commercial Services, Inc.


New
      York,
      New York





We
      have
      audited the accompanying consolidated balance sheet of Sparta Commercial
      Services, Inc., as of April 30, 2005 and 2004, and the related consolidated
      statements of losses, deficiency in stockholders' equity and cash flows for
      each
      of the two years in the period ended April 30, 2005. These financial statements
      are the responsibility of the company's management. Our responsibility is to
      express an opinion on the financial statements based upon our
      audits.





We
      have
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States of America). Those standards require
      that we plan and perform the audit to obtain reasonable assurance about whether
      the financial statements are free of material misstatement. An audit includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements. An audit also includes assessing the accounting
      principles used and significant estimates made by management, as well as
      evaluating the overall financial statement presentation. We believe that our
      audits provide a reasonable basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the consolidated financial position of Sparta Commercial
      Services, Inc. at April 30, 2005 and 2004, and the consolidated results of
      its
      operations and its cash flows for each of the two years in the period ended
      April 30, 2005, in conformity with accounting principles generally accepted
      in
      the United States of America.





The
      accompanying financial statements have been prepared assuming the company will
      continue as a going concern. As discussed in the Note O to the accompanying
      financial statements, the company has suffered recurring losses from operations
      that raises substantial doubt about the company's ability to continue as a
      going
      concern. Management's plans in regard to these matters are also described in
      Note O. The financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.














/s/
      RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP


Russell
      Bedford Stefanou Mirchandani LLP


Certified
      Public Accountants


New
      York,
      New York


July
      15,
      2005




F-1


25




SPARTA
      COMMERCIAL SERVICES,
      INC.


**CONSOLIDATED
      BALANCE SHEETS**


**APRIL
      30, 2005 and 2004**





2005
            
            2004**ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            108,365
            
            $
            11,973Retail
                installment sale contract receivables-current (Note E)
            
            
            14,764
            
            
            --Marketable
                securities
            
            
            --
            
            
            13,379Other
                current assets, net
            
            
            6,700
            
            
            --Total
                current assets
            
            
            129,829
            
            
            25,352Motorcycles
                and other vehicles under operating leases, net of accumulated
              depreciation
                of $13,392 and $0, at April 30, 2005 and April 30, 2004,
              respectively
                (Note D)
            
            
            99,886
            
            
            --Property
                and equipment, net of accumulated depreciation and amortization of
                $15,378
                and
              $30,
                at April 30, 2005 and 2004, respectively (Note F)
            
            
            106,809
            
            
            1,193Other
                assets:Prepaid
                expenses and deposits (see Note C)
            
            
            48,967
            
            
            --Retail
                installment sale contract receivables (Note E)
            
            
            21,521
            
            
            --Total
                other assets
            
            
            70,488
            
            
            -Total
                assets
            
            $
            407,012
            
            $
            26,545**LIABILITIES
                AND DEFICIENCY IN STOCKHOLDERS’ EQUITY**Current
                Liabilities:Accounts
                payable and accrued expenses
            
            $
            509,936
            
            $
            81,721Note
                payable (Note G)
            
            
            300,000
            
            
            --Deferred
                revenue (Note A)
            
            
            23,100
            
            
            --Due
                to related party (Note H)
            
            
            25,000
            
            
            23,885Total
                current liabilities
            
            
            858,036
            
            
            105,606Commitments
                and contingencies (Note M)Deficiency
                in Stockholders' Equity: (Note I)Preferred
                Stock, $0.001 par value: 10,000,000 shares authorized of which 35,850
                shares
              have
                been designated as Series A convertible preferred stock, with a stated
                value of
              $100.
                18,100 and 0 shares of convertible preferred stock are issued and
                outstanding
              at
                April 30, 2005 and 2004, respectively.
            
            
            1,810,000
            
            
            --Common
                Stock, $0.001 par value; 340,000,000 and 200,000,000 shares authorized
                at
              April
                30, 2005 and 2004, respectively; 86,005,415 and 7,079,654 shares
              issued
                and outstanding at April 30, 2005 and 2004, respectively
            
            
            86,005
            
            
            7,080Common
                stock - subscription payable
            
            
            --
            
            
            17,920Additional
                paid-in-capital
            
            
            3,930,629
            
            
            1,754,870Accumulated
                deficit
            
            
            (6,277,658
            )
            
            (1,858,931
            )Total
                deficiency in stockholders’ equity
            
            
            (451,024
            )
            
            (79,061
            )Liabilities
                and deficiency in stockholders’ equity
            
            $
            407,012
            
            $
            26,545





See
      accompanying notes to consolidated financial statements




F-2


26





**SPARTA
      COMMERCIAL SERVICES, INC.**


**CONSOLIDATED
      STATEMENT OF LOSSES**





For
                the Year Ended April 30,2005
            
            2004Revenue
            
            $
            65,833
            
            $
            --Operating
                Expenses:General
                and administrative
            
            
            2,616,914
            
            
            1,780,968Depreciation
                and amortization (Note F)
            
            
            28,740
            
            
            --Total
                Operating Expenses
            
            
            2,645,654
            
            
            1,780,968Loss
                from Operations
            
            
            (2,579,821
            )
            
            (1,780,968
            )Other
                Income (Expenses)
            
            
            --
            
            
            8,711Income
                Taxes (Note J)
            
            
            --
            
            
            --Net
                Loss
            
            
            (2,579,821
            )
            
            (1,772,257
            )Preferred
                dividend payable
            
            
            28,906
            
            
            --Preferred
                dividend-beneficial conversion discount on
              convertible
                preferred
            
            
            1,810,000
            
            
            --Net
                Loss Available to Common Stockholders
            
            $
            (4,418,727
            )
            $
            (1,772,257
            )Loss
                per common share (basic and assuming dilution) (Note K)
            
            $
            (0.05
            )
            $
            (0.25
            )Weighted
                average common shares outstanding (basic and diluted), as
              restated
                for splits
            
            
            85,812,006
            
            
            7,079,654





See
      accompanying notes to consolidated financial statements


F-3


27





**SPARTA
      COMMERCIAL SERVICES, INC.**


**CONSOLIDATED
      STATEMENT OF DEFICIENCY IN STOCKHOLDERS’ EQUITY**


**FOR
      THE YEARS ENDED April 30, 2005 and 2004**





Sparta
              Commercial
              Services
                LLC
              Membership
              Interest
            
            Common
              Shares
            
            Common
              Shares
              Amount
            
            Subscription
              Payable-
              Common
              Shares
            
            Subscription
              Payable
            
            Preferred
              Shares
            
            Preferred
              Shares
              Amount
            
            Additional
              Paid-in
              Capital
            
            Accumulated
              Deficit
            
            Total
              Stockholders’
              Equity
              (Deficiency)Balance
                at April 30, 2003
            
            $
            5,265,000
            
            
            --
            
            $
            165,250
            
            $
            --
            
            $
            --
            
            
            --
            
            $
            --
            
            $
            --
            
            $
            (86,674
            )
            $
            78,576Proceeds
                from capital contributions
            
            
            775,000
            
            
            --
            
            
            775,000
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            775,000Membership
                interests issued
              to
                consultants in exchange for
              services
                in June 2003 at $1 per
              unit
            
            
            448,000
            
            
            --
            
            
            448,000
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            448,000Membership
                interests issued
              in
                exchange for
              licensing
                fees in December
              2003
                at $1 per unit
            
            
            330,433
            
            
            --
            
            
            330,433
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            330,433Tomahawk
                Shares retained by
              Tomahawk
                stockholders in
              connection
                with merger with
              Sparta
                Commercial Services
              LLC
                in February 2004, as
              restated.
            
            
            --
            
            
            7,079,654
            
            
            7,080
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            54,107
            
            
            --
            
            
            61,187Shares
                deemed to be issued to
              Sparta
                members in relation to
              merger
                with Sparta
              Commercial
                Services LLC in
              February
                2004
            
            
            (6,818,433
            )
            
            --
            
            
            (1,718,683
            )
            
            17,920,346
            
            
            17,920
            
            
            --
            
            
            --
            
            
            1,700,763
            
            
            --
            
            
            --Net
                Loss
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            (1,772,257
            )
            
            (1,772,257
            )Balance
                at April 30, 2004
            
            $
            --
            
            
            7,079,654
            
            $
            7,080
            
            
            17,920,346
            
            $
            17,920
            
            
            --
            
            
            --
            
            $
            1,754,870
            
            $
            (1,858,931
            )
            $
            (79,061
            )Shares
                issued to Sparta
              members
                in relation to merger
              with
                Sparta Commercial
              Services
                LLC in February
              2004
                (Note B)
            
            
            --
            
            
            17,920,346
            
            
            17,920
            
            
            (17,920,346
            )
            
            (17,920
            )
            
            --
            
            
            
            
            
            --
            
            
            --
            
            
            --Balance
                of shares issued to
              members
            
            
            --
            
            
            60,795,625
            
            
            60,796
            
            
            
            
            
            
            
            
            --
            
            
            
            
            
            (60,796
            )Preferred
                shares issued to
              subscription
                holders
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            18,100
            
            
            1,810,000
            
            
            --
            
            
            --
            
            
            1,810,000Warrants
                issued to placement
              agent
                in January 2005
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            383,284
            
            
            --
            
            
            383,284Warrants
                on convertible
              preferred
                shares
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            487,660
            
            
            --
            
            
            487,660Beneficial
                conversion discount on convertible preferred shares
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            1,322,340
            
            
            --
            
            
            1,322,340Warrants
                Issued for services
              Issuance
                Cost of Preferred shares
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            89,980
            
            
            --
            
            
            89,980Shares
                Issued For Notes Payable
            
            
            --
            
            
            96,155
            
            
            96
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            (129,000
            )
            
            --
            
            
            (128,904
            )Shares
                issued to employees (vested portion)
            
            
            --
            
            
            113,635
            
            
            113
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            82,291
            
            
            --
            
            
            82,404Net
                Loss
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            (4,418,727
            )
            
            (4,418,727
            )Balance
                at April 30, 2005
            
            $
            --
            
            
            86,005,415
            
            $
            86,005
            
            
            --
            
            $
            --
            
            
            18,100
            
            
            1,810,000
            
            $
            3,930,629
            
            $
            (6,277,658
            )
            $
            (451,024
            )





See
      accompanying notes to consolidated financial statements


F-4


28





**SPARTA
      COMMERCIAL SERVICES, INC.**


**CONSOLIDATED
      STATEMENT OF CASH FLOWS**





For
                the Year Ended April 30,2005
            
            2004Cash
                flows from Operating Activities:Net
                loss
            
            $
            (4,418,727
            )
            $
            (1,772,257
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Warrants
                issued with convertible preferred shares (Note I)
            
            
            487,660
            
            
            --Beneficial
                conversion discount on convertible preferred stock (Note
                I)
            
            
            1,322,340
            
            
            --Depreciation
                and amortization (Note F)
            
            
            28,740
            
            
            30--Cost
                of warrants issued
            
            
            473,264
            
            
            --Shares
                issued to employees (vested portion)
            
            
            82,500
            
            
            ---Shares
                issued in exchange for licensing fees
            
            
            --
            
            
            330,433Shares
                issued to consultants for services (Note I)
            
            
            --
            
            
            448,000Acquisition
                costs (Note B)
            
            
            --
            
            
            61,187Gain
                on sale of investments
            
            
            --
            
            
            (8,711
            )(Increase)decrease
                in:Retail
                installment sale contract receivable
            
            
            (36,285
            )
            
            --Other
                current assets
            
            
            (6,700
            )
            
            --Prepaid
                expenses and deposits
            
            
            (48,967
            )
            
            --Increase(decrease)
                in:Accounts
                payable
            
            
            428,215
            
            
            79,221Increase
                in deferred revenue
            
            
            23,100
            
            
            --Due
                to related party
            
            
            (23,885).
            
            
            80,999Net
                Cash used in Operating Activities
            
            
            (1,688,745
            )
            
            (781,098
            )Cash
                Flows From Investing Activities:Net
                payments for property and equipment
            
            
            (120,964
            )
            
            (1,223
            )Payments
                for motorcycles
            
            
            (113,278
            )
            
            --(Payments
                for) proceeds from sale (purchase) of marketable
                securities
            
            
            13,379
            
            
            (4,668
            )Net
                Cash used in Investing Activities
            
            
            (220,863
            )
            
            (5,891
            )Cash
                Flows From Financing Activities:Proceeds
                from note payable (Note G)
            
            
            300,000
            
            
            --Proceeds
                from note payable -related party (Note G)
            
            
            25,000
            
            
            --Proceeds
                form sale of equity interests, net
            
            
            1,681,000
            
            
            775,000Net
                Cash Provided by Financing Activities
            
            
            2,006,000
            
            
            775,000





See
      accompanying notes to consolidated financial statements


F-5


29





**SPARTA
      COMMERCIAL SERVICES, INC.**


**CONSOLIDATED
      STATEMENT OF CASH FLOWS**


**(Continued)**





For
                the Years Ended April 30,2005
            
            2004Net
                increase (decrease) in cash and equivalents
            
            
            96,392
            
            
            (11,989
            )Cash
                and equivalents at beginning of period
            
            
            11,973
            
            
            23,962Cash
                and equivalents at end of period
            
            $
            108,365
            
            $
            11,973.Supplemental
                disclosures of cash flow information:Cash
                paid during the period for interest
            
            $
            ---
            
            $
            ---Cash
                paid during the period for taxes
            
            $
            ---
            
            $
            ---Non
                Cash Investing and Financing Transactions:Shares
                issued in exchange for services (Note I)
            
            $
            --
            
            $
            448,000Shares
                issued to employees (vested portion)
            
            
            82,500
            
            
            --Cost
                of warrants issued
            
            
            473,264
            
            
            --Warrants
                issued with convertible preferred shares
            
            
            487,660--Shares
                issued in exchange for licensing fees
            
            
            --
            
            
            330,433Beneficial
                conversion discount on convertible preferred stock
            
            
            1,322,340
            
            
            --Merger
                with Sparta: (Note B)Common
                stock retained
            
            
            --
            
            
            --Liabilities
                assumed in excess of assets acquired
            
            
            --
            
            
            --Shares
                issued in exchange for services(Note B)
            
            
            --
            
            
            61,187





See
      accompanying notes to consolidated financial statements


F-6


30





**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**APRIL
      30, 2005 and 2004**








**NOTE
      A - SUMMARY OF ACCOUNTING POLICIES**





A
      summary
      of the significant accounting policies applied in the preparation of the
      accompanying financial statements follows.





Business
      and Basis of Presentation





Sparta
      Commercial Services, Inc., formerly known as Tomahawk Industries, Inc. (the
      “Company” or “Tomahawk”) was formed on May 13, 1980 under the laws of the State
      of Nevada. On February 27, 2004, the Company entered into an Agreement of Plan
      and Reorganization ("Agreement") with Sparta Commercial Services, LLC
      ("Sparta”), a limited liability company formed on October 1, 2001 under the laws
      of the State of Delaware under the name of Sparta Financial Services, LLC.
      .In
      accordance with SFAS No. 141, Sparta was the acquiring entity. While the
      transaction is accounted for using the purchase method of accounting, in
      substance the Agreement is a recapitalization of the Company’s capital
      structure. As a result of the Agreement, there was a change in control of the
      Company. Also, subsequently, the Company’s name was changed from Tomahawk
      Industries, Inc. to Sparta Commercial Services, Inc. From April 1988 until
      the
      date of the Agreement, the Company was an inactive publicly registered shell
      corporation with no significant assets or operations (see Note B).





The
      Company is in the business as an originator and indirect lender for retail
      installment loan and lease financing for the purchase or lease of new and used
      motorcycles (specifically 500cc and higher) and utility-oriented 4-stroke all
      terrain vehicles (ATVs). The Company was in the development stage till January
      31, 2005, as defined by Statement of Financial Accounting Standards No. 7 (“SFAS
      No. 7”).





The
      consolidated financial statements include the accounts of the Company and its
      wholly owned subsidiary, Sparta Commercial Services, LLC. All significant
      intercompany transactions and balances have been eliminated in the consolidated
      financial statements.








Estimates





The
      preparation of the financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect certain reported amounts and disclosures. Accordingly, actual results
      could differ from those estimates.








Revenue
      Recognition





The
      Company originates leases on new and used motorcycles and other powersports
      vehicles from motorcycle dealers throughout the United States. All of the
      Company’s leases, which the Company enters into, are accounted for as operating
      leases. At the inception of the lease, no lease revenue is recognized and the
      leased motorcycles, together with the initial direct costs of originating the
      lease, which are capitalized, appear on the balance sheet as “motorcycles under
      operating leases-net”. The capitalized cost of each motorcycle is depreciated
      over the lease term, on a straight-line, basis down to the Company’s original
      estimate of the projected value of the motorcycle at the end of the scheduled
      lease term (the “Residual”). Monthly lease payments are recognized as rental
      income. An acquisition fee classified as fee income on the financial statements
      is received and recognized in income at the inception of the lease.





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





F-7


31





**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**APRIL
      30, 2005 and 2004**





**NOTE
      A - SUMMARY OF ACCOUNTING POLICIES (continued)**





Early
      lease terminations also occur because of (i) a default by the lessee, (ii)
      the
      physical loss of the motorcycle, or (iii) the exercise of the lessee’s early
      termination. In those instances, the Company receives the proceeds from either
      the


resale
      or
      release of the repossessed motorcycle, or the payment by the lessee’s insurer.
      The Company records a gain or loss for the difference between the proceeds
      received and the net book value of the motorcycle.





The
      company also provides financing for motorcycles and other powersports vehicles
      through the origination of retail installment sale contracts, where revenue
      is
      recognized over the term of the loan contract. Provision is made for delinquent
      accounts.





The
      Company charges fees to manufacturers and other customers related to creating
      a
      private label version of the Company’s financing program including web access,
      processing credit applications, consumer contracts and other related documents
      and processes. Fees received is amortized and booked as income over the length
      of the contract. At April 30, 2005 and 2004, the Company had recorded deferred
      revenue of $23,100 and $0, respectively.








Website
      Development Costs





The
      Company recognizes website development costs in accordance with Emerging Issue
      Task Force ("EITF") No. 00-02, "Accounting for Website Development Costs."
      As
      such, the Company expenses all costs incurred that relate to the planning and
      post implementation phases of development of its website. Direct costs incurred
      in the development phase are capitalized and recognized over the estimated
      useful life. Costs associated with repair or maintenance for the website are
      included in cost of net revenues in the current period expenses.








Cash
      Equivalents





For
      the
      purpose of the accompanying financial statements, all highly liquid investments
      with a maturity of three months or less are considered to be cash equivalents.








Marketable
      Securities





The
      Company classifies its marketable securities as “available for sale” securities
      which may be sold in response to changes in interest rates, liquidity needs
      and
      for other purposes. Securities classified as “available for sale” are carried in
      the financial statement at fair value. Realized gains and losses are included
      in
      other income. Unrealized gains and losses are reported as a separate component
      of stockholders’ equity.





At
      April
      30, 2005, the marketable securities balance was $0. At April 30, 2004,
      marketable securities consist of:





Cost
            
            Unrealized
                Gain
            
            Fair
                Market ValueEquity
                securities
            
            $
            -
            
            $
            -
            
            $
            -Mutual
                funds
            
            
            13,379
            
            
            -
            
            
            13,379Total
            
            $
            13,379
            
            $
            -
            
            $
            13,379


F-8


32





**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**APRIL
      30, 2005 and 2004**








**NOTE
      A - SUMMARY OF ACCOUNTING POLICIES (continued)**





Income
      Taxes





Deferred
      income taxes are provided using the asset and liability method for financial
      reporting purposes in accordance with the provisions of Statements of Financial
      Standards No. 109, “Accounting for Income Taxes”. Under this method, deferred
      tax assets and liabilities are recognized for temporary differences between
      the
      tax bases of assets and liabilities and their carrying values for financial
      reporting purposes and for operating loss and tax credit carry forwards.
      Deferred tax assets and liabilities are measured using enacted tax rates
      expected to apply to taxable income in the years in which those temporary
      differences are expected to be removed or settled. The effect on deferred tax
      assets and liabilities of a change in tax rates is recognized in the statements
      of operations in the period that includes the enactment date. Temporary
      differences between taxable income reported for financial reporting purposes
      and
      income tax purposes are insignificant.








Impairment
      of Long-Lived Assets





The
      Company has adopted Statement of Financial Accounting Standards No. 121 (SFAS
      121). The Statement requires that long-lived assets and certain identifiable
      intangibles held and used by the Company be reviewed for impairment whenever
      events or changes in circumstances indicate that the carrying amount of an
      asset
      may not be recoverable. SFAS No. 121 also requires assets to be disposed of
      be
      reported at the lower of the carrying amount or the fair value less costs to
      sell.








Intangible
      Assets





Organization
      costs have been expensed as incurred.








Comprehensive
      Income





Statement
      of Financial Accounting Standards No. 130 ("SFAS 130"), Reporting Comprehensive
      Income," establishes standards for reporting and displaying of comprehensive
      income, its components and accumulated balances. Comprehensive income is defined
      to include all changes in equity except those resulting from investments by
      owners and distributions to owners. Among other disclosures, SFAS 130 requires
      that all items that are required to be recognized under current accounting
      standards as components of comprehensive income be reported in a financial
      statement that is displayed with the same prominence as other financial
      statements. At April 30, 2005 and 2004, the Company has $0, as accumulated
      unrealized gain (loss) on marketable securities classified as held for sale.








Segment
      Information





The
      Company does not have separate, reportable segments under Statement of Financial
      Accounting Standards No. 131, Disclosures about Segments of an Enterprise and
      Related Information (“SFAS 131”). SFAS establishes standards for reporting
      information regarding operating segments in annual financial statements and
      requires selected information for those segments to be presented in interim
      financial reports issued to stockholders. SFAS 131 also establishes standards
      for related disclosures about products and services and geographic areas.
      Operating segments are identified as components of an enterprise about which
      separate discrete financial information is available for evaluation by the
      chief
      operating decision maker, or decision making group, in making decisions how
      to
      allocate resources and assess performance. The information disclosed herein,
      materially represents all of the financial information related to the Company’s
      principal operating segment.





F-9


33





**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**APRIL
      30, 2005 and 2004**








**NOTE
      A - SUMMARY OF ACCOUNTING POLICIES (continued)**





Stock
      Based Compensation





In
      December 2003, the FASB issued SFAS No. 148, "Accounting for Stock-Based
      Compensation-Transition and Disclosure-an amendment of SFAS 123." This
      statement amends SFAS No. 123, "Accounting for Stock-Based Compensation,"
      to provide alternative methods of transition for a voluntary change to the
      fair
      value based method of accounting for stock-based employee
      compensation.





In
      addition, this statement amends the disclosure requirements of SFAS No. 123
      to require prominent disclosures in both annual and interim financial statements
      about the method of accounting for stock-based employee compensation and the
      effect of the method used on reported results. The Company has chosen to
      continue to account for stock-based compensation using the intrinsic value
      method prescribed in APB Opinion No. 25 and related interpretations.
      Accordingly, compensation expense for stock Warrants is measured as the excess,
      if any, of the fair market value of the Company's stock at the date of the
      grant
      over the exercise price of the related option. The Company has adopted the
      annual disclosure provisions of SFAS No. 148 in its financial reports from
      January 1, 2003.





Had
      compensation costs for the Company’s stock options been determined based on the
      fair value at the grant dates for the awards, the Company’s net loss and losses
      per share would have been as follows (transactions involving stock options
      issued to employees and Black-Scholes model assumptions are presented in Note
      G):





2005
            
            2004Net
                loss - as reported
            
            $
            (4,418,727
            )
            $
            (1,772,257
            )Add:
                Total stock based employee compensation expense as reported under
                intrinsic value method (APB. No. 25)
            
            
            82,500
            
            
            -Deduct:
                Total stock based employee compensation expense as reported under
                fair
                value based method (SFAS No. 123)
            
            
            (247,100
            )
            
            -Net
                loss - Pro Forma
            
            $
            (
                4,583,327
            )
            $
            (1,772,257
            )Net
                loss attributable to common stockholders - Pro forma
            
            $
            (
                4,583,327
            )
            $
            (1,772,257
            )Basic
                (and assuming dilution) loss per share - as reported
            
            $
            (0.05
            )
            $
            (0.25
            )Basic
                (and assuming dilution) loss per share - Pro forma
            
            $
            (0.05
            )
            $
            (0.25
            )





On
      December 16, 2004, the Financial Accounting Standards Board (FASB) issued FASB
      Statement No. 123R (revised 2004), "Share-Based Payment" which is a revision
      of
      FASB Statement No. 123, "Accounting for Stock-Based Compensation". Statement
      123R supersedes APB opinion No. 25, "Accounting for Stock Issued to Employees",
      and amends FASB Statement No. 95, "Statement of Cash Flows". Generally, the
      approach in Statement 123R is similar to the approach described in Statement
      123. However, Statement 123R requires all share-based payments to employees,
      including grants of employee stock options, to be recognized in the income
      statement based on their fair values. Pro-forma disclosure is no longer an
      alternative. On April 14, 2005, the SEC amended the effective date of the
      provisions of this statement. The effect of this amendment by the SEC is that
      the Company will have to comply with Statement 123R and use the Fair Value
      based
      method of accounting no later than the third quarter of 2006. Management is
      assessing the implications of this revised standard, which may materially impact
      the Company's results of operations in the third quarter of fiscal year 2006
      and
      thereafter.








Liquidity





As
      shown
      in the accompanying financial statements, the Company incurred a net loss of
      $(6,277,658) during the period October 1, 2001 (date of inception) through
      April
      30, 2005. The Company’s current liabilities exceeded its current assets by $
      728,207 as of April 30, 2005.


F-10


34





**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**APRIL
      30, 2005 and 2004**








**NOTE
      A - SUMMARY OF ACCOUNTING POLICIES (continued)**





Concentrations
      of Credit Risk





Financial
      instruments and related items, which potentially subject the Company to
      concentrations of credit risk, consist primarily of cash, cash equivalents
      and
      trade receivables. The Company places its cash and temporary cash investments
      with high credit quality institutions. At times, such investments may be in
      excess of the FDIC insurance limit. The Company periodically reviews its trade
      receivables in determining its allowance for doubtful accounts. At April 30,
      2005 and 2004, allowance for doubtful accounts receivables was $0.








Research
      and Development





Company-sponsored
      research and development costs related to both present and future products
      will
      be expended in the period incurred.








Property
      and Equipments





Property
      and equipment are recorded at cost. Minor additions and renewals are expensed
      in
      the year incurred. Major additions and renewals are capitalized and depreciated
      over their estimated useful lives. Depreciation is calculated using the
      straight-line method over the estimated useful lives. Estimated useful lives
      of
      major depreciable assets are as follows:





Leasehold
                improvements
            5
                yearsAutomobiles
            5
                yearsFurniture
                and equipment
            5
                yearsComputer
                Equipment
            3
                years





The
      Company follows a policy of charging the costs of advertising to expenses
      incurred. During the years ended April 30, 2005 and 2004, the Company incurred
      advertising costs of $28,107 and $4,057, respectively.








Net
      Earnings (Losses) Per Common Share





The
      Company computes earnings per share under Statement of Financial Accounting
      Standards No. 128, "Earnings Per Share" (“SFAS 128”). Net earnings (losses) per
      common share is computed by dividing net income (loss) by the weighted average
      number of shares of common stock and dilutive common stock equivalents
      outstanding during the year. Dilutive common stock equivalents consist of shares
      issuable upon conversion of convertible preferred shares and the exercise of
      the
      Company's stock options and warrants (calculated using the treasury stock
      method).








Reclassifications





Certain
      reclassifications have been made to conform to prior periods’ data to the
      current presentation. These reclassifications had no effect on reported losses.





F-11


35





**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**APRIL
      30, 2005 and 2004**








**NOTE
      A - SUMMARY OF ACCOUNTING POLICIES (Continued)**





New
      Accounting Pronouncements





In
      November 2004, the Financial Accounting Standards Board (FASB) issued SFAS
      151,
      Inventory Costs-- an amendment of ARB No. 43, Chapter 4. This Statement amends
      the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the
      accounting for abnormal amounts of idle facility expense, freight, handling
      costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4,
      previously stated that ". . . under some circumstances, items such as idle
      facility expense, excessive spoilage, double freight, and rehandling costs
      may
      be so abnormal as to require treatment as current period charges. . . ." This
      Statement requires that those items be recognized as current-period charges
      regardless of whether they meet the criterion of "so abnormal." In addition,
      this Statement requires that allocation of fixed production overheads to the
      costs of conversion be based on the normal capacity of the production
      facilities. This Statement is effective for inventory costs incurred during
      fiscal years beginning after June 15, 2005. Management does not believe the
      adoption of this Statement will have any immediate material impact on the
      Company.





In
      December 2004, the FASB issued SFAS No.152, "Accounting for Real Estate
      Time-Sharing Transactions--an amendment of FASB Statements No. 66 and 67" ("SFAS
      152) The amendments made by Statement 152 This Statement amends FASB Statement
      No. 66, Accounting for Sales of Real Estate, to reference the financial
      accounting and reporting guidance for real estate time-sharing transactions
      that
      is provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real
      Estate Time-Sharing Transactions. This Statement also amends FASB Statement
      No.
      67, Accounting for Costs and Initial Rental Operations of Real Estate Projects,
      to state that the guidance for (a) incidental operations and (b) costs incurred
      to sell real estate projects does not apply to real estate time-sharing
      transactions. The accounting for those operations and costs is subject to the
      guidance in SOP 04-2. This Statement is effective for financial statements
      for
      fiscal years beginning after June 15, 2005 with earlier application encouraged.
      The Company does not anticipate that the implementation of this standard will
      have a material impact on its financial position, results of operations or
      cash
      flows.





F-12


36





**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**APRIL
      30, 2005 and 2004**








**NOTE
      A - SUMMARY OF ACCOUNTING POLICIES (Continued)**





New
      Accounting Pronouncements (Continued)





On
      December 16, 2004, the Financial Accounting Standards Board ("FASB") published
      Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-Based
      Payment ("SFAS 123R"). SFAS 123R requires that compensation cost related to
      share-based payment transactions be recognized in the financial statements.
      Share-based payment transactions within the scope of SFAS 123R include stock
      Warrants, restricted stock plans, performance-based awards, stock appreciation
      rights, and employee share purchase plans. On April 14, 2005, the SEC amended
      the effective date of the provisions of this statement. Accordingly, the Company
      will implement the revised standard in the forth quarter of fiscal year 2006.
      Currently, the Company accounts for its share-based payment transactions under
      the provisions of APB 25, which does not necessarily require the recognition
      of
      compensation cost in the financial statements. Management is assessing the
      implications of this revised standard, which may materially impact the Company's
      results of operations in the third quarter of fiscal year 2006 and thereafter.





On
      December 16, 2004, FASB issued Statement of Financial Accounting Standards
      No.
      153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29,
      Accounting for Nonmonetary Transactions (" SFAS 153"). This statement amends
      APB
      Opinion 29 to eliminate the exception for nonmonetary exchanges of similar
      productive assets and replaces it with a general exception for exchanges of
      nonmonetary assets that do not have commercial substance. Under SFAS 153, if
      a
      nonmonetary exchange of similar productive assets meets a commercial-substance
      criterion and fair value is determinable, the transaction must be accounted
      for
      at fair value resulting in recognition of any gain or loss. SFAS 153 is
      effective for nonmonetary transactions in fiscal periods that begin after June
      15, 2005. The Company does not anticipate that the implementation of this
      standard will have a material impact on its financial position, results of
      operations or cash flows.





In
      March
      2005, the FASB issued FASB Interpretation (FIN) No. 47, “Accounting for
      Conditional Asset Retirement Obligations, an interpretation of FASB Statement
      No. 143,” which requires an entity to recognize a liability for the fair value
      of a conditional asset retirement obligation when incurred if the liability’s
      fair value can be reasonably estimated. The Company is required to adopt the
      provisions of FIN 47 no later than the end of its fiscal 2006. The Company
      does
      not expect the adoption of this Interpretation to have a material impact on
      its
      consolidated financial position, results of operations or cash flows.





In
      May
      2005 the FASB issued Statement of Financial Accounting Standards (SFAS) No.
      154,
“Accounting Changes and Error Corrections, a replacement of APB Opinion No.
      20
      and FASB Statement No. 3.” SFAS 154 requires retrospective application to prior
      periods’ financial statements for changes in accounting principle, unless it is
      impracticable to determine either the period-specific effects or the cumulative
      effect of the change. SFAS 154 also requires that retrospective application
      of a
      change in accounting principle be limited to the direct effects of the change.
      Indirect effects of a change in accounting principle, such as a change in
      non-discretionary profit-sharing payments resulting from an accounting change,
      should be recognized in the period of the accounting change. SFAS 154 also
      requires that a change in depreciation, amortization, or depletion method for
      long-lived, non-financial assets be accounted for as a change in accounting
      estimate effected by a change in accounting principle. SFAS 154 is effective
      for
      accounting changes and corrections of errors made in fiscal years beginning
      after December 15, 2005. Early adoption is permitted for accounting changes
      and
      corrections of errors made in fiscal years beginning after the date this
      Statement is issued. The Company does not expect the adoption of this SFAS
      to
      have a material impact on its consolidated financial position, results of
      operations or cash flows.





F-13


37





**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**APRIL
      30, 2005 and 2004**








**NOTE
      B - MERGER AND CORPORATE RESTRUCTURE**





On
      February 27, 2004, the Company entered into an Agreement of Plan and
      Reorganization ("Agreement" or “Merger”) with Sparta Commercial Services LLC
      ("Sparta”). As a
      result of the Merger, there was a change in control of the public entity. In
      accordance with SFAS No. 141, Sparta was the acquiring entity. While the
      transaction is accounted for using the purchase method of accounting, in
      substance the Agreement is a recapitalization of Sparta’s capital
      structure.





For
      accounting purposes, the Company accounted for the transaction as a reverse
      acquisition and Sparta is the surviving entity. The total purchase price and
      carrying value of net assets acquired was $61,187. The Company did not recognize
      goodwill or any intangible assets in connection with the transaction. From
      April
      1988 until the date of the Agreement, the Company was an inactive corporation
      with no significant assets and liabilities.





Effective
      with the Agreement, all previously outstanding membership interests owned by
      the
      Sparta’s members were exchanged for an aggregate of 17,920,346 shares of the
      Company’s common stock. The value of the stock that was issued was the
      historical cost of the Company’s net tangible assets, which did not differ
      materially from their fair value.





The
      total
      consideration paid was $61,187 and the significant components of the transaction
      are as follows:





Common
                stock retained
            
            $
            56,637Assets
                acquired
            
            
            (594
            )Liabilities
                assumed
            
            
            5,144Cash
                paid
            
            
            --Total
                consideration paid/organization cost
            
            $
            61,187





In
      accordance with SOP 98-5, the Company expensed $61,187 as organization
      costs.








**NOTE
      C - PREPAID EXPENSE AND DEPOSITS**





Prepaid
      expenses and deposits at April 30, 2005 and 2004 consist of the
      following:





2005
            
            2004Security
                deposit to landlord
            
            $
            40,800
            
            $
            --Advance
                lease system deposit
            
            
            5,000
            
            
            -Consolidated
                electric deposit
            
            
            3,167
            
            
            -Purchase
                option deposit
            
            
            250,000
            
            
            --Less:
                valuation allowance
            
            
            (250,000
            )
            
            --Total
                prepaid expenses and deposits
            
            $
            48,967
            
            $
            --





F-14


38





**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**APRIL
      30, 2005 and 2004**








**NOTE
      D - MOTORCYCLES AND OTHER VEHICLES UNDER OPERATING LEASES**





Motorcycles
      and other vehicles under operating leases at April 30, 2005 and 2004 consist
      of
      the following:





2005
            
            2004Motorcycles
                and other vehicles
            
            $
            113,278
            
            $
            --Less:
                accumulated depreciation
            
            
            (13,392
            )
            
            --Motorcycles
                and other vehicles, net of accumulated depreciation
            
            
            99,886
            
            
            ----
            
            
            --Less:
                estimated reserve for residual values
            
            
            --
            
            
            --Motorcycles
                and other vehicles under operating leases, net
            
            $
            99,886
            
            $
            --





At
      April
      30, 2005, motorcycles and other vehicles are depreciated to the estimated
      residual values of $42,964 over the lives of their lease contracts.





The
      following is a schedule by years of minimum future rentals on non cancelable
      operating leases as of April 30, 2005:





Year
                ending April 30,2006
            
            $
            25,8182007
            
            
            30,7002008
            
            
            18,8582009
            
            
            2,530Total
            
            $
            77,906








**NOTE
      E - RETAIL INSTALLMENT RECEIVABLES**





Retail
      installment sale receivables, which are carried at cost, were $36,285 and $0
      at
      April 30, 2005 and 2004, respectively. The following is a schedule by years
      of
      future payments related to these receivables. Future payments include
      amortization of cost as well as a profit margin.




Year
                ending April 30,2006
            
            $
            17,4262007
            
            
            17,3002008
            
            
            7,1092009
            
            
            99142,826Less:
                interest portion
            
            
            (6,541
            )36,285Less:
                allowance for doubtful receivables
            
            
            -36,285Less:
                current receivables
            
            
            (14,764
            )$
            21,521





F-15


39





**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**APRIL
      30, 2005 and 2004**








**NOTE
      F - PROPERTY AND EQUIPMENT**





Major
      classes of property and equipment at April 30, 2005 and 2004 consist of the
      followings:





2005
            
            2004Computer
                equipment , web site and furniture
            
            $
            122,187
            
            $
            1,223Less:
                accumulated depreciation and amortization
            
            
            15,378
            
            
            30Net
                property and equipment
            
            $
            106,809
            
            $
            1,193





Depreciation
      and amortization expense was $15,348 and $30 for the years ended April 30,
      2005
      and 2004, respectively.








**NOTE
      G - NOTES PAYABLE**





Notes
      payable at April 30, 2005 and 2004 are as follows:





2005
            
            2004Notes
                payables; 10% interest, unsecured, originally scheduled to expire
                on April
                30, 2005, the note holders are entitled to an “Equity Kicker” equal to
                128,206 restricted shares of common stock for each $100,000 loaned,
                in the
                event of default, as penalty, the repayment after default of promissory
                note shall be collateralized by certain security interest as per
                the terms
                of the agreement. Notes were subsequently extended until August 31,
                2005
                and beyond, with interest increased to 20% in certain instances,
                and the
                Equity Kicker equal to 192,308 restricted shares of common stock
                for each
                $100,000 loaned in certain instances.
            
            $
            300,000
            
            $
            --Note
                payable to officer of the Company, unsecured, non-interest bearing,
                payable on demand (Note H)
            
            
            25,000
            
            
            --325,000
            
            
            --Less:
                current portion
            
            
            (325,000
            )
            
            --Notes
                payable - long term
            
            $
            --
            
            $
            --





F-16


40





**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**APRIL
      30, 2005 and 2004**








**NOTE
      H - RELATED PARTY TRANSACTIONS**





The
      Company entered in to a licensing agreement relating to the use of a proprietary
      operating system, with an entity controlled by the Company’s President and Chief
      Executive Officer. During the years ended April 30, 2005 and 2004, the Company
      charged to operations $150,633 and $730,433, respectively, in connection with
      the licensing agreement. At April 30, 2005 and 2004, the balance outstanding
      on
      account of licensing agreement payable to related party was $0. During the
      years
      ended April 30, 2005 and 2004, the Company paid $81,000 and $0, for a purchase
      option agreement whereby the Company has the option to purchase from a related
      party, portions of a certain portfolio of equipment leases for motorcycles.





The
      Company entered into a purchase option agreement with American Motorcycle
      Leasing Corp., an entity controlled by the Company’s President and a significant
      shareholder, on November 2, 2004 at a cost to Sparta Commercial Services of
      $250,000.. This agreement granted Sparta Commercial Services the right, for
      a
      two year period, to purchase portions of a certain portfolio of equipment leases
      that American Motorcycle Leasing Corp. owns. The portfolio is secured by a
      first
      priority security interest in favor of Citibank, N.A. or its assigns. The cost
      of $250,000 has been charged to operations in fiscal 2005. As of April 30,
      2005,
      payments against this obligation of $81,000 were made. In June, 2005, an
      additional $20,000 was paid.





Up
      to
      November 30, 2004, the Company leased office space from an entity controlled
      by
      the Company’s President and Chief Executive Officer. From December 1, 2004, the
      Company has entered into a lease agreement for office premises with an unrelated
      party. (Note M)





In
      January 2005, the Company received a loan of $25,000 from an officer. This
      loan
      is non-interest bearing and is payable on demand. (Note G)








**NOTE
      I - EQUITY INSTRUMENTS**





The
      Company is authorized to issue 10,000,000 shares of preferred stock with $0.001
      par value per share and $100 stated value per share, of
      which
      35,840 shares have been designated as Series A convertible preferred stock and
      340,000,000 shares of common stock with $0.001 par value per share. As of April
      30, 2005 and 2004, the Company has issued and outstanding 18,100 and 0 shares
      of
      preferred stock issued and outstanding, respectively. The Company has 86,005,415
      and 7,079,654 shares of common stock issued and outstanding as of April 30,
      2005
      and 2004, respectively.





On
      December 27, 2004, the Company effected a one-for-two hundred reverse stock
      split followed by a forward split of twenty five-for-one of its authorized
      and
      outstanding shares of common stock, $.001 par value. All references in the
      financial statements and notes to financial statements, numbers of shares and
      share amounts have been retroactively restated to reflect the reverse split.





Common
      Stock








In
      June
      2003, Sparta issued 448,000 shares of membership interest to various consultants
      in exchange for services valued at $1 per share. The units of membership
      interest issued was valued at approximately $1 per share, which represents
      the
      fair value of the units issued, which did not differ materially from the value
      of the services rendered.





During
      the year ended April 30, 2004, Sparta issued for cash 775,000 shares of
      membership interest for $775,000.


F-17


41





**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**APRIL
      30, 2005 and 2004**








**NOTE
      I - EQUITY INSTRUMENTS (continued)**





In
      December 2003, Sparta issued 330,433 shares of membership interest for licensing
      fees payable to a company controlled by principal members of Sparta. The units
      of membership interest issued was valued at approximately $1 per share, which
      represents the fair value of the units issued, which did not differ materially
      from the value of the services rendered.





In
      February 2004, as per agreement of Plan and Reorganization ("Agreement") with
      Sparta, all previously outstanding membership interests owned by the Sparta’s
      members were exchanged for an aggregate of 17,920,346 shares of the Company’s
      common stock. In September 2004, the Company issued 17,920,346 shares of common
      stock. The value of the stock that was issued was the historical cost of the
      Company’s net tangible assets, which did not differ materially from their fair
      value. After the authorized capital of the company was increased, the Company
      issued an additional 60,813,982 shares of its common stock that was due to
      Sparta’s former members under the merger agreement. Also, as per the Agreement,
      7,079,654 shares of common stock were retained by the stockholders of the
      Company.





**** In
      January, 2005, 113,635 shares of restricted stock issued to the former Chief
      Financial Officer, Daniel Lanjewar, were vested and issued.





In
      April,
      2005, 96,155 shares were issued pursuant to an agreement with two individuals
      who provided short term note payable financing to the Company.








Preferred
      Stock Series A





In
      December 2004, the Company commenced a private placement to raise up to
      $3,000,000 through the sale of up to 30 units of our securities at $100,000
      per
      unit. Each unit consists of (i) 1,000 shares of series A convertible, redeemable
      preferred stock and (ii) warrants to purchase 320,513 shares of common stock,
      exercisable for three years at $0.195 per share. The preferred stock has a
      stated value of $100 per share, carries a 6% annual cumulative dividend, payable
      semi-annually in arrears, and is convertible into shares of common stock at
      the
      rate of one preferred share into 641 shares of common stock.





In
      December 2004, the Company began a private placement transaction utilizing
      a
      designated registered broker-dealer as a placement agent. During the year ended
      April 30, 2005, the Company issued 12,250 preferred shares at a stated value
      of
      $100 per share and warrants to purchase 3,926,286 shares of common stock,
      exercisable for three years at $0.195 per share, for aggregate gross proceeds
      of
      $1,225,000 received from investors. In connection with the private placement,
      during the year ended April 30, 2005, the Company issued as compensation to
      the
      placement agent warrants to 785,257 shares of common stock, exercisable for
      five
      years at $0.172 per share. The warrants, which were valued at approximately
      $383,284 using the Black-Scholes option pricing model, were recognized as a
      cost
      of issuance of the Series A Preferred shares.





During
      the year ended April 30, 2005, the Company s old
      rights to acquire securities of the Company to investors for aggregate gross
      proceeds of $585,000. Pursuant to the terms of the rights, as the Company
      conducted a closing to a private placement transaction in 2004 utilizing a
      designated registered broker-dealer as a placement agent, on January 1, 2005,
      the rights have automatically converted into 5,850 preferred shares at a stated
      value of $100 per share and warrants to purchase 1,875,001 shares of common
      stock, exercisable for three years at $0.195 per share.





In
      accordance with Emerging Issues Task Force Issue 98-5, Accounting for
      Convertible Securities with a beneficial Conversion Features or Contingently
      Adjustable Conversion Ratios ("EITF 98-5"), the Company recognized an imbedded
      beneficial conversion feature present in the Preferred Stock. The Company
      recognized and measured an aggregate of $1,810,000, which equals to the
      intrinsic value of the imbedded beneficial conversion feature, to additional
      paid-in capital and a return to the Preferred Stock holders. Since the preferred
      shares were convertible at the date of issuance, the return to the preferred
      shareholders attributed to the beneficial conversion feature has been recognized
      in full at the date the Preferred Stock was issued.





F-18


42





**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**APRIL
      30, 2005 and 2004**







**NOTE
      J - INCOME TAXES**





Financial
      Accounting Standard No. 109 requires the recognition of deferred tax liabilities
      and assets for the expected future tax consequences of events that have been
      included in the financial statement or tax returns. Under this method, deferred
      tax liabilities and assets are determined based on the difference between
      financial statements and tax bases of assets and liabilities using enacted
      tax
      rates in effect for the year in which the differences are expected to reverse.
      Temporary differences between taxable income reported for financial reporting
      purposes and income tax purposes are insignificant.





At
      April
      30, 2005, the Company has available for federal income tax purposes a net
      operating loss carry forward of approximately $4,500,000, expiring in the year
      2024, that may be used to offset future taxable income. The Company has provided
      a valuation reserve against the full amount of the net operating loss benefit,
      since in the opinion of management based upon the earnings history of the
      Company, it is more likely than not that the benefits will not be realized.
      Also, due to change in the control after reverse acquisition of Sparta
      Commercial Services, Inc., the Company’s past accumulated losses to be carried
      forward may be limited.





Components
      of deferred tax assets as of April 30, 2005 are as follows:





Non
                current:Net
                operating loss carry forward
            
            $
            1,530,000Valuation
                allowance
            
            
            (1,530,000
            )Net
                deferred tax asset
            
            $
            -











**NOTE
      K - LOSSES PER COMMON SHARE**





The
      following table presents the computation of basic and diluted loss per
      share:





2005
            
            2004Net
                loss available for common shareholders
            
            $
            (4,418,727
            )
            $
            (1.772,257
            )Basic
                and diluted loss per share
            
            $
            (0.05
            )
            $
            (0.25
            )Weighted
                average common shares outstanding-basic
              Diluted
            
            
            85,812,006
            
            
            7,079,654


F-19


43





**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**APRIL
      30, 2005 and 2004**








**NOTE
      L**  **-
      STOCK OPTIONS AND WARRANTS**





On
      April
      29, 2005, the Company issued to the Chief Operating Officer non qualified stock
      options to purchase 875,000 shares of the company’s common stock at an exercise
      price of $0.605 per share. The options have a five year life.





a)
      The
      following table summarizes the stock options issued to officers and employees
      outstanding and the related price. These are the first options issued under
      the
      plan.




Stock
                Options Outstanding
            
            
            
            Stock
                Options ExercisableExercise
              Prices
            
            Number
              Outstanding
            
            Weighted
                Average Remaining Contractual Life
              (Years)
            
            Weighted
                Average Exercise
              Price
            
            Number
              Exercisable
            
            Weighted
                Average Exercise
              Price$
                0.605
            
            
            875,000
            
            
            5.00
            
            $
            0.605
            
            
            175,000
            
            $
            0.605








Transactions
      involving stock options issued to employees are summarized as
      follows:





Number
                of Shares
            
            Weighted
                Average
              Price
                Per ShareOutstanding
                at April 30, 2003
            
            
            --
            
            $
            --Granted
            
            
            --
            
            
            --Exercised
            
            
            --
            
            
            --Outstanding
                at April 30, 2004
            
            
            --
            
            
            --Granted
            
            
            875,000
            
            $
            0.605Exercised
            
            
            --
            
            
            --Canceled
                or expired
            
            
            --
            
            
            --Outstanding
                at April 30, 2005
            
            
            875,000
            
            $
            0.605





The
      weighted fair value of the stock options granted during the years ended April
      30, 2005 and 2004 and the weighted average significant assumptions used to
      determine fair values, using the Black Scholes option pricing model are as
      follows:





Significant
                Assumptions (weighted average):
            
            
            2005
            
            
            2004Risk
                free interest rate at grant date:
            
            
            3
            %
            
            n/aExpected
                stock price volatility
            
            
            60
            %
            
            n/aExpected
                dividend payout
            
            
            0
            
            
            n/aExpected
                option life in years
            
            
            5
            
            
            n/a








If
      the
      Company recognized compensation cost for the non qualified stock option plan
      in
      accordance with SFAS No. 123, the company would have incurred an additional
      $247,100 in expense resulting in a pro forma net loss of $(4,665,827), or
      $(0.05) per share.





F-20


44





**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**APRIL
      30, 2005 and 2004**








**NOTE
      L**  **-
      STOCK OPTIONS AND WARRANTS (CONTINUED)**





b)
      The
      following table summarizes the changes in warrants outstanding and the related
      prices for the shares of the Company’s common stock issued to non-employees of
      the Company.





Warrants
                Outstanding
            
            
            
            Warrants
                ExercisableExercise
              Prices
            
            Number
              Outstanding
            
            Weighted
                Average Remaining Contractual Life
              (Years)
            
            Weighted
                Average Exercise
              Price
            
            Number
              Exercisable
            
            Weighted
                Average Exercise
              Price$
                0.195
            
            
            200,000
            
            
            3.00
            
            $
            0.195
            
            
            100,000
            
            $
            0.195$
                0.172
            
            
            785,257
            
            
            5.00
            
            $
            0.172
            
            
            785,257
            
            $
            0.172$
                0.195
            
            
            3,926,286
            
            
            3.00
            
            $
            0.195
            
            
            3,926,286
            
            $
            0.195$
                0.195
            
            
            1,875,001
            
            
            3.00
            
            $
            0.195
            
            
            1,875,001
            
            $
            0.195$
                0.195
            
            
            6,786,544
            
            
            3.11
            
            $
            0.194
            
            
            6,686,544
            
            $
            0.194





Non-
      Employee Stock Warrants (Continued)





Transactions
      involving stock warrants issued to non-employees are summarized as
      follows:





Number
                of Shares
            
            Weighted
                Average
              Price
                Per ShareOutstanding
                at April 30, 2003
            
            
            --
            
            $
            --Granted
            
            
            --
            
            
            --Exercised
            
            
            --
            
            
            --Outstanding
                at April 30, 2004
            
            
            --
            
            
            --Granted
            
            
            6,786,544
            
            $
            0.194Exercised
            
            
            --
            
            
            --Canceled
                or expired
            
            
            --
            
            
            --Outstanding
                at April 30, 2005
            
            
            6,786,544
            
            $
            0.194





The
      weighted-average fair value of stock warrants granted to non-employees during
      the years ended April 30, 2005 and 2004 and the weighted-average significant
      assumptions used to determine those fair values, using a Black-Scholes option
      pricing model are as follows:





2005
            
            2004Significant
                assumptions (weighted-average):Risk-free
                interest rate at grant date
            
            
            3
            %
            
            n/aExpected
                stock price volatility
            
            
            60
            %
            
            n/aExpected
                dividend payout
            
            
            --
            
            
            --Expected
                option life-years (a)
            
            
            3.11
                yrs
            
            
            n/a




(a)
      The
      expected option life is based on contractual expiration dates.





The
      amount of the expense charged to operations for compensatory warrants granted
      in
      exchange for services was $473,264 and $0 for the years ended April 30, 2005
      and
      2004, respectively.




F-21


45





**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**APRIL
      30, 2005 and 2004**








**NOTE
      M - COMMITMENTS AND CONTINGENCIES**





Operating
      Lease Commitments





In
      October 2004, the Company entered into a lease agreement with an unrelated
      party
      for office space in New York City from December 1, 2004 through November 30,
      2007. Total lease rental expense for the years ended April 30, 2005 and 2004,
      was $125,214 and $19,772, respectively.





Commitments
      for minimum rentals under non-cancelable leases at April 30, 2005 are as
      follows:





Year
                ended April 30,
            
            Amount2006
            
            $
            116,2242007
            
            
            177,0612008
            
            
            104,973$
            449,258








Employment
      and Consulting Agreements





The
      Company has employment agreements with all of its employees. In addition to
      salary and benefit provisions, the agreements include non-disclosure and
      confidentiality provisions for the protection of the Company's proprietary
      information.





The
      Company has consulting agreements with outside contractors to provide marketing
      and financial advisory services. The Agreements are generally for a term of
      12
      months from inception and renewable automatically from year to year unless
      either the Company or Consultant terminates such engagement by written
      notice.





On
      November 1, 2004, the Company entered into an employment agreement with Richard
      P. Trotter, pursuant to which the Company agreed to issue 125,000 shares of
      common stock during the course of the agreement. The grant of shares is subject
      to vesting and subject to continued employment. On November 1, 2004, 25,000
      shares vested and are yet to be issued, and the reminder of the shares are
      to
      vest, subject to proportionate adjustment in the event of employment termination
      for any incomplete vesting period, as follows: 25,000 shares on November 1,
      2005; 25,000 shares on November 1, 2006; 25,000 shares on November 1, 2007;
      12,500 shares on November 1, 2008; and 12,500 on November 1, 2009. During the
      year ended April 30, 2005, the Company has recorded $20,000 as expenses as
      per
      this employment agreement.





Litigation





The
      Company is subject to legal proceedings and claims which arise in the ordinary
      course of its business. Although occasional adverse decisions or settlements
      may
      occur, the Company believes that the final disposition of such matters should
      not have a material adverse effect on its financial position, results of
      operations or liquidity.







F-22


46





**SPARTA
      COMMERCIAL SERVICES, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**APRIL
      30, 2005 and 2004**








**NOTE
      N - SUBSEQUENT EVENTS**





In
      the
      period since April 30, 2005, the Company has received an additional $1,775,000
      related to the private placement transaction .
      In
      connection with these proceeds, the Company has issued 17,775 preferred shares
      at a stated value of $100 per share and warrants to purchase 6,312,505 shares
      of
      common stock, exercisable for three years at $0.195 per share, and as
      compensation to the placement agent warrants to 1,137,822 shares of common
      stock, exercisable for five years at $0.172 per share. A subscription received
      prior to April 30,2005 for 0.05 units was subsequently rescinded.





In
      the
      period since April 30, 2005, the Company also received an additional $5,000
      from
      a private investor with terms consistent with the private
      placement.








**NOTE
      O - GOING CONCERN MATTERS**





The
      accompanying financial statements have been prepared on a going concern basis,
      which contemplates the realization of assets and the satisfaction of liabilities
      in the normal course of business. As shown in the accompanying financial
      statements during the period October 1, 2001 (date of inception) through April
      30, 2005, the Company incurred a loss of $6,277,658. These factors among others
      may indicate that the Company will be unable to continue as a going concern
      for
      a reasonable period of time.





The
      Company's existence is dependent upon management's ability to develop profitable
      operations. Management is devoting substantially all of its efforts to
      developing its business and raising capital and there can be no assurance that
      the Company's efforts will be successful. However, the planned principal
      operations have not commenced and no assurance can be given that management's
      actions will result in profitable operations or the resolution of its liquidity
      problems. The accompanying statements do not include any adjustments that might
      result should the Company be unable to continue as a going concern.





In
      order
      to improve the Company's liquidity, the Company's management is actively pursing
      additional equity financing through discussions with investment bankers and
      private investors. There can be no assurance the Company will be successful
      in
      its effort to secure additional equity financin g.








F-23


47





**ITEM
      8.**  **CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING** **AND
      FINANCIAL DISCLOSURE**





**Former
      Principal Accountant**





On
      February 27, 2003, pursuant to an Agreement and Plan of Reorganization, we
      acquired substantially all of the outstanding membership interests in Sparta
      Commercial Services, LLC and issued shares representing approximately 91.75%
      of
      the registrant, resulting in a change in control of our company.





On
      June
      9, 2004, we notified S. W. Hatfield, CPA, our independent public accountants,
      that we were terminating its services, effective as of that date. Our decision
      to change its principal accountant was recommended and approved by our Board
      of
      Directors.





The
      former principal accountants' report on our financial statements for the years
      ended April 30, 2002 and 2003 (prior to our reverse acquisition of Sparta),
      expressed substantial doubt with respect to our ability, at that time, to
      continue as a going concern. The former principal accountants' reports on our
      financial statements for the past two years did not contain an adverse opinion
      or disclaimer of opinion, and were not modified as to uncertainty, audit scope,
      or accounting principles, except as to going concern issues. Furthermore, during
      such period, there were no disagreements with the former principal accountants
      within the meaning of Instruction 4 to Item 304 of Regulation S-B under the
      Securities Exchange Act of 1934 on any matter of accounting principles or
      practices, financial statement disclosure, or auditing scope or procedure,
      which
      disagreements, if not resolved to the satisfaction of the former principal
      accountants, would have caused them to make reference in connection with their
      opinion to the subject matter of the disagreement in connection with any report
      they might have issued. We have authorized the former accountants to respond
      fully to all inquires of the successor accountant concerning any
      matter.





**New
      Principal Accountant**





On
      June
      9, 2004, we engaged Russell Bedford Stefanou Mirchandani LLP as our principal
      registered public accounting firm. Our Board of Directors approved the selection
      of Russell Bedford Stefanou Mirchandani LLP as our principal registered public
      accounting firm. We did not previously consult with Russell Bedford Stefanou
      Mirchandani LLP regarding any matter, including but not limited to:





·
            the
                application of accounting principles to a specified transaction,
                either
                completed or proposed; or


·
            the
                type of audit opinion that might be rendered on the Company's financial
                statements; or


·
            any
                matter that was either the subject matter of a disagreement (as defined
                in
                Item 304(a)(1)(iv) of Regulation S-B and the related instructions)
                or a
                reportable event (as defined in Item 304(a)(1)(v) of Regulation
                S-B).








48





**ITEM
      8A. CONTROLS AND PROCEDURES**





Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed by us in the reports that
      we
      file or submit under the Exchange Act is recorded, processed, summarized and
      reported, within the time periods specified in the Securities and Exchange
      Commission’s rules and forms. Disclosure controls and procedures include,
      without limitation, controls and procedures designed to ensure that information
      required to be disclosed by us in the reports that we file under the Exchange
      Act is accumulated and communicated to our management, including our principal
      executive and financial officers, as appropriate to allow timely decisions
      regarding required disclosure.








**Evaluation
      of Disclosure Controls and Procedures**





Our
      management, with the participation of our Chief Executive Officer and Chief
      Financial Officer, evaluated the effectiveness of our disclosure controls and
      procedures (as defined in Rule 13a-15(e) or Rule 15a-15(e) of the Exchange
      Act)
      as of the end of the period covered by this report. Based
      upon that evaluation, the Chief Executive Officer and Chief Financial Officer
      concluded that the Company's disclosure controls and procedures were effective,
      as of the date of their evaluation, for the purposes of recording, processing,
      summarizing and timely reporting
      material information required to be disclosed in reports filed by the Company
      under the Securities Exchange Act of 1934.





**Changes
      in Internal Control over Financial Reporting**








As
      required by Rule 13a-15(d), the Company’s Chairman and Chief Financial Officer,
      also conducted an evaluation of the Company’s internal controls over financial
      reporting to determine whether any changes occurred during the fourth fiscal
      quarter that have materially affected, or are reasonably likely to materially
      affect, the Company’s internal control over financial reporting. During the
      preparation of the Company’s financial statements as of and for the year ended
      April 30, 2005, the Company has concluded that the current system of disclosure
      controls and procedures was not effective because of the internal control
      weaknesses identified below. As a result of this conclusion, the Company has
      initiated the changes in internal control, to the extent possible given
      limitations in financial and manpower resources, also described below. It should
      be noted that any system of controls, however well designed and operated, can
      provide only reasonable, and not absolute, assurance that the objectives of
      the
      system will be met. In addition, the design of any control system is based
      in
      part upon certain assumptions about the likelihood of future
      events.








**Lack
      of Adequate Accounting Staff**





Because
      of the small size of our staff, the Chief Financial Officer processed virtually
      all of our financial activity. As such, there is an inherent lack of segregation
      of duties. The Company is developing procedures to address this situation which
      will improve the quality of future period financial reporting. With the
      exception of this weakness,, our Chief Executive Officer and Chief Financial
      Officer concluded that our disclosure controls and procedures as of the end
      of
      the period covered by this report were effective.








49





**ITEM
      8B.**  **OTHER
      INFORMATION**





In
      December 2004, we commenced a private placement to raise up to $3,000,000
      through the sale of up to 30 units of our securities at $100,000 per unit.
      Each
      unit consists of (i) 1,000 shares of series A convertible, redeemable preferred
      stock and (ii) warrants to purchase 320,513 shares of common stock, exercisable
      for three years at $0.195 per share. The preferred stock has a stated value
      of
      $100 per share, carries a 6% annual cumulative dividend, payable semi-annually
      in arrears, and is convertible into shares of common stock at the rate of one
      preferred share into 641 shares of common stock. The private placement is being
      conducted by a placement agent on a best efforts basis. The units are being
      offered solely to accredited investors. The units offered have not been
      registered under the Securities Act and may not be offered or sold in the United
      States absent registration or an applicable exemption from registration
      requirements. We agreed to file a registration statement, at our expense, for
      the resale of common stock underlying the units within 90 days of the final
      closing of the private placement. The placement agent is entitled to 10% of
      the
      cash proceeds from the private placement and reimbursement for expenses, and
      warrants to purchase such number of shares of common stock, exercisable for
      five
      years at $0.172 per share from the date of issuance, as equals 10% of the number
      of shares of common stock underlying the preferred stock sold. In transactions
      with accredited investors deemed exempt from registration pursuant to Section
      4(2) of the Securities Act, from December 2004 through April 30, 2005, we sold
      12.25 units for proceeds of $1,225,000, and issued 785,257 warrants to the
      placement agent. A subscription for 0.05 units was subsequently rescinded.
      Through July, 2005, we sold an aggregate of 29.95 units for proceeds of
      $2,995,000. We used the proceeds for working capital purposes.





In
      October and November 2004, pursuant to loan agreements, we issued promissory
      notes for the aggregate principal amount of $375,000. Pursuant to the loan
      agreements, the notes carried interest at the rate of 10% per year, and we
      agreed to grant 128,206 restricted shares of common stock to the note holders
      for each $100,000 loaned. The notes were to mature in April 2005. In the event
      of default on repayment of the promissory notes, as penalty, (i) the interest
      rate on the unpaid principal shall be increased to a rate of 20% per annum
      commencing from the date of default, (ii) the equity kicker shall be increases
      to a rate of 192,308 restricted shares of common stock for each $100,000 loaned,
      and (iii) the repayment after default of the promissory notes shall be
      collateralized by a subordinated security interest in the Company’s assets. The
      security interest shall be subordinate to the rights of any lending institution,
      any asset-based lending agreement, and any rights and preferences of any
      subscribers in the private placement of units that commenced in December 2004. Through April
      30,
      2005, we repaid notes with an aggregate principal amount of $75,000 and accrued
      interest thereon, and issued 96,155 shares of common stock to the note holders.
      On May 2, 2005 an additional $75,000 was repaid and 96,155 shares of common
      stock will be issued. In April
      2005, the four note holders of the remaining principal amount of $225,000 agreed
      to extend the maturity date of the loans from April 30, 2005 to May 31, 2005.
      In
      consideration of the extension, the interest rate on three notes were increased
      to the rate of 20% per year and the shares of common stock issuable to those
      note holders will be based on 192,308 restricted shares of common stock for
      each
      $100,000 loaned. On or about May 25, 2005 and May 27, 2005, the four note
      holders further agreed to extend the maturity date of the loans, so that one
      note in the principal amount of $50,000 was due June 15, 2005, and the three
      other notes in the aggregate principal amount of $175,000 were due June 30,
      2005. In June 2005, we repaid two notes with the principal amount of $75,000
      and
      issued 96,155 shares of common stock to the note holders. An additional 48,076
      shares is yet to be issued. **** In
      June
      2005, a holder of a $50,000 note due June 30, 2005 agreed to extend the maturity
      date to August 15, 2005, and another holder of a $100,000 note due June 30,
      2005
      agreed to extend the maturity date to September 1, 2005.





In
      July,
      2005, we sold to one accredited investor for the sum of $5,000, 50 shares of
      Series A convertible, redeemable preferred stock and warrants to purchase 16,026
      shares of common stock, exercisable for three years at $0.195 per share. The
      preferred stock has a stated value of $100 per share, carries a 6% annual
      cumulative dividend, payable semi annually in arrears, and is convertible into
      shares of common stock at a rate of one preferred share into 641 shares of
      common stock. We used the proceeds for working capital purposes.








50





**PART
      III**





**ITEM
      9.**  **DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;**


**COMPLIANCE
      WITH SECTION 16(a) OF THE EXCHANGE ACT**





**OUR
      MANAGEMENT**





The
      persons listed in the table below are our present directors and executive
      officers.





Name
            Age
            PositionAnthony
                L. Havens
            51
            Chief
                Executive Officer, President and ChairmanKristian
                Srb
            50
            DirectorJeffrey
                Bean
            51
            DirectorRichard
                P. Trotter
            62
            Chief
                Operating OfficerMichael
                J. Mele
            52
            Chief
                Financial OfficerSandra
                L. Ahman
            42
            Vice
                President, Secretary and Director








**MANAGEMENT
      PROFILE**





**ANTHONY
      L. HAVENS, CHIEF EXECUTIVE OFFICER, PRESIDENT AND CHAIRMAN.** On
      February 27, 2004, Mr. Havens became our Chief Executive Officer, President
      and
      Chairman of the Board. Mr. Havens has been the Managing Member and Chief
      Executive Officer of Sparta Commercial Services, LLC since its inception in
      2001. He is involved in all aspects of Sparta's operations, including providing
      strategic direction, and developing sales and marketing strategies. From 1994
      to
      2004, Mr. Havens has been Chief Executive Officer and a director of American
      Motorcycle Leasing Corp. He co-founded American Motorcycle Leasing Corp. in
      1994, and developed its operating platform and leasing program to include a
      portfolio which includes both prime and sub-prime customers. Mr. Havens has
      over
      20 years of experience in finance and investment banking.





**KRISTIAN
      SRB, DIRECTOR.** Mr. Srb
      joined our Board of Directors in December 2004. Mr. Srb has been a director
      of
      American Motorcycle Leasing Corp. from 1994 to the present. Mr. Srb was
      President of American Motorcycle Leasing Corp. from 1994 to 1999. Since 1999,
      Mr. Srb has engaged in private investment activities. He has over 16 years
      experience in international brand development and management, including for
      13
      years with Escada A.G.





**JEFFREY
      BEAN, DIRECTOR.** Mr.
      Bean
      joined our Board of Directors in December 2004. Mr. Bean is the founding partner
      of GoMotorcycle.com.  Formed in January 1999, GoMotorcycle.com is currently
      engaged in the sale of motorcycle parts and accessories over the Internet. 
      Prior to founding GoMotorcycle.com, Mr. Bean was an institutional broker and
      trader at Refco, Inc. from 1985 to 1997.  From 1977 to 1985, Mr. Bean
      was
      President of Thomaston Press, Ltd., a sales printing concern. He received a
      B.A.
      degree from the University of Virginia.





**RICHARD
      P. TROTTER, CHIEF OPERATING OFFICER.** Mr.
      Trotter has been our Chief Operating Officer since November 2004. From 2001
      to
      2004, Mr. Trotter was President, Chief Credit Officer, of American Finance
      Company, Inc., purchasing retail automobile installment contracts from
      independent automobile dealers nationwide. From 1996 to 2001, he was Senior
      Vice
      President of Originations for Consumer Portfolio Services, Inc., one of the
      nation's leading purchasers of non-prime retail automobile installment
      contracts. From 1994 to 1996, he was Senior Vice President of Marketing for
      Consumer Portfolio Services, Inc. His experience also includes positions as
      Chief Operating Officer, Executive Director and President, and Chief Credit
      Officer for banks and financial institutions in California. Mr. Trotter has
      over
      30 years experience in financial institutions and over 20 years experience
      specializing in the automobile lending, servicing, and collecting
      industry.








51





**MICHAEL
      J. MELE, CHIEF FINANCIAL OFFICER.** On
      April
      29, 2005, we named Michael J. Mele our Chief Financial Officer. Mr. Mele brings
      to Sparta over twenty-eight years of experience in diversified industries,
      holding executive positions throughout his career. Mr. Mele served as Senior
      Vice President of Finance and Administration of Aon Consulting, a human resource
      outsourcing group, from 2002 to 2004. From 2001 to 2002, Mr. Mele served as
      Executive Vice President and Chief Financial Officer of Hobart West Group,
      a
      legal and staffing services firm. From 1997 to 2001, Mr. Mele served as Senior
      Vice President and Chief Financial Officer of ASI Solutions, Inc., a human
      resource consulting and training services company. Mr. Mele’s also served as
      Vice President of Finance and Administration of Linotype- Hell Company, a
      printing equipment company, from 1993 to 1997, as Vice President of Finance
      and
      Administration at Daimler-Benz’s AEG Electronics North American unit from 1991
      to 1993, as Director of Business Planning and Analysis for a German petfood
      subsidiary of Mars, Inc. and Controller for the internal information technology
      division of Mars, Inc., and in various senior management capacities, including
      Director of Internal Audit, Marketing Manager, and Division Controller
      positions, at Thomas and Betts Corporation from 1979 to 1986. From 1976 to
      1979,
      Mr. Mele was a senior accountant at Peat, Marwick. Mr. Mele was graduated from
      Rutgers College in 1975 with an A.B. in Economics and from Rutgers University
      in
      1976 with a Masters of Business Administration.





**SANDRA
      L. AHMAN, VICE PRESIDENT, SECRETARY AND DIRECTOR.** On March
      1, 2004, Sandra Ahman became Vice President of Operations and Secretary of
      Sparta, and a Director on June 1, 2004. She has been a Vice President of Sparta
      Commercial Services, LLC since formation. From 1994 to 2004, she was Vice
      President of Operations of American Motorcycle Leasing Corp. Prior to joining
      American Motorcycle Leasing Corp., Ms. Ahman was with Chatham Capital Partners,
      Ltd. Before joining Chatham in 1993, she was Manager, Human Resources for Comart
      and Aniforms, a sales promotion and marketing agency in New York, where she
      worked from 1986 to 1993. For the past 10 years, Ms. Ahman has been an active
      volunteer with The Children's Aid Society in New York City. She is the
      Chairperson of its Associates Council, a membership of 500 committed
      volunteers.





**BOARD
      OF DIRECTORS, COMMITTEES AND MEETING**





Our
      directors are elected annually to serve for one year and hold office until
      the
      next annual meeting of the shareholders and until their successors are elected
      and qualified. Our Board of Directors may increase the size of the Board of
      Directors. Any director who fills a position created by the Board of Directors
      serves until the next annual meeting of the shareholders. Our officers are
      elected by the Board of Directors at the first meeting after each annual meeting
      of our shareholders, and hold office until their death, resignation or removal
      from office.





There
      are
      no family relationships among our executive officers or directors. None
      of
      the our directors or officers are directors of another reporting company. None
      of the directors and officers during the past five years have been: involved
      in
      a bankruptcy petition or a pending criminal proceeding; convicted in a criminal
      proceeding (excluding traffic and minor offenses); subject to any order,
      judgment, or decree, permanently or temporarily enjoining, barring, suspending
      or otherwise limiting his involvement in any type of business, securities or
      banking activities; or found by a court, the SEC or the CFTC to have violated
      a
      federal or state securities or commodities law.





During
      the fiscal year that ended on April 30, 2005, the Board of Directors did not
      hold any formal meetings, . Other matters were undertaken by written consent
      by
      the Board of Directors.





The
      Board
      of Directors does not currently maintain an audit, nominating or compensation
      committee, or similar committees, of the Board of Directors. We plan to appoint
      an audit, nominating and compensation committee in the near future.





The
      Board
      of Directors is responsible for matters typically performed by an audit
      committee. We do not have a separate audit committee, or any other committee,
      of
      the Board of Directors. No person serving on our Board of Directors qualifies
      as
      a financial expert. We seek to attract persons with financial experience to
      serve on our Board of Directors and we intend to form an audit committee of
      the
      Board of Directors during our fiscal year 2005.





**CODE
      OF ETHICS**





We
      have
      not yet adopted a code of ethics applicable to our directors, officers and
      employees. However, we expect to adopt a code of ethics during our fiscal year
      2005.








52





**CONFLICTS
      OF INTEREST**





Certain
      management employees of our company have worked for American Motorcycle and
      Leasing Corp. and will continue to do so on a limited basis for the near future
      as we transition from a development stage company and commence active
      operations. While our business plans differ from those of American Motorcycle
      and Leasing Corp., we operate in the same industry as American Motorcycle and
      Leasing Corp. Mr. Havens is an officer, director and significant equity owner
      of
      American Motorcycle and Leasing Corporation. Pursuant to a license agreement
      between Sparta Commercial Services and American Motorcycle and Leasing Corp.,
      Sparta Commercial Services issued 330,433 membership interests to American
      Motorcycle and Leasing Corp., which will be exchanged for 34,256,941 shares
      of
      our common stock after we increase our authorized capital. Officers and
      directors of Sparta who are also shareholders of American Motorcycle and Leasing
      Corp. disclaim ownership of, and entitled to, any of those shares. Issues could
      arise with respect to the taking of corporate opportunities of each other.
      Any
      competition with American Motorcycle and Leasing Corp. could adversely affect
      our business, operating results and financial condition. Accordingly, we may
      be
      subject to legal proceedings and claims, including claims of alleged
      infringement of the intellectual property, competition, conflict of interest,
      and other business governance related claims. Such claims, even if not
      meritorious, could result in the expenditure of significant financial and
      managerial resources.





**SECTION
      16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE**





Section
      16(a) of the Securities Exchange Act of 1934, as amended, requires Sparta’s
      executive officers, directors, and persons who beneficially own more than ten
      percent of the Company’s common stock to file with the Securities and Exchange
      Commission initial reports of beneficial ownership and reports of changes in
      beneficial ownership of Sparta’s common stock. Such persons are also required by
      Securities and Exchange Commission regulations to furnish Sparta with copies
      of
      all such Section 16(a) forms filed by such person. Based solely on a review
      of
      the copies of such reports furnished to Sparta, Sparta is not aware of any
      material delinquencies in the filing of such reports, except as follows: on
      June
      1, 2005, Michael J. Mele filed a Form 3 reporting his status as an officer
      as of
      April 29, 2005.








53





**ITEM
      10.**  **EXECUTIVE
      COMPENSATION**





**SUMMARY
      COMPENSATION TABLE**





The
      table
      below sets forth information concerning the annual and long-term compensation
      during our last three fiscal years of our Chief Executive Officer and all of
      our
      other officers (“Named Executive Officers”).





Prior
      to
      February 27, 2004, management spent less than five hours per month on company
      matters. Accordingly, no officer or director received any compensation other
      than reimbursement for out-of-pocket expenses incurred on behalf of the Company,
      and no cash compensation, deferred compensation, employee stock options, or
      long-term incentive plan awards were issued or granted to our management through
      February 27, 2004.





Annual
                  Compensation
              
              Long
                    Term
                  CompensationAwardsName
                  and
                Principal
                Position
              
              Year
              
              Salary
              
              Bonus
              
              Other
                Annual
                Compensation
              
              Restricted
                Stock
                Awards
              
              Securities
                Underlying
                Options/SARS
              
              All
                  Other
                CompensationAnthony
                  L. Havens (1)
                Chief
                  Executive Officer,
                President,
                  and Director
              
              
              2005
                2004
              
              $
                $
              233,333
                46,667
              
              $
                $
              0
                0
              
              $
                $
              0
                0
              
              
              0
                0
              
              
              0
                0
              
              $
                $
              0
                0Richard
                  P. Trotter (2)
                Chief
                  Operating Officer
              
              
              2005
              
              $
              80,000
              
              $
              0
              
              $
              0
              
              
              125,000(3
              )
              
              875,000(4
              )
              $
              0Michael
                  J. Mele (5)
                Chief
                  Financial Officer
              
              
              2005
              
              $
              3,125
              
              $
              0
              
              $
              0
              
              
              0
              
              
              0
              
              $
              0Daniel
                  J. Lanjewar (6)
                Former
                  Chief Financial Officer
              
              
              2005
              
              $
              105,001
              
              $
              0
              
              $
              0
              
              
              227,272(7
              )
              
              0
              
              $
              0Sandra
                  L. Ahman (8)
                Vice
                  President and Secretary
              
              
              2005
                2004
              
              $
                $
              75,000
                12,500
              
              $
                $
              0
                0
              
              $
                $
              0
                0
              
              
              0
                0
              
              
              0
                0
              
              $
                $
              0
                0





(1)
              Became an officer on February 27, 2004. His reported
                fiscal year 2004 compensation covers the period February 27, 2004
                through
                April 30, 2004.
 (2)
              Became an officer on November 1, 2004. His reported
                fiscal year 2005 compensation covers the period November 1, 2004
                through
                April 30, 2005.
 (3)
              Refers
                  to restricted stock, subject to vesting, granted. Pursuant to an
                  employment agreement, Mr. Trotter is entitled to up to 125,000
                  shares of
                  common stock. The grant of shares is subject to vesting and subject
                  to
                  continued employment. On November 1, 2004, 25,000 shares vested.
                  An
                  additional 100,000 shares are subject to vesting at a future date,
                  subject
                  to proportionate adjustment in the event of employment termination
                  for any
                  incomplete vesting period, as follows: 25,000 shares on November
                  1, 2005;
                  25,000 shares on November 1, 2006; 25,000 shares on November 1,
                  2007;
                  12,500 shares on November 1, 2008; and 12,500 on November 1,
                  2009.


(4)
              Refers
                  to stock options, subject to vesting, granted. Pursuant to option
                  agreement dated April 29, 2005, Mr. Trotter is entitled to up to
                  875,000
                  stock options, subject to vesting. The stock options are exercisable
                  for
                  five years from the vesting date at $0.605 per share. On April
                  29, 2005,
                  stock options to purchase 175,000 shares vested, and the remaining
                  options
                  are to vest in equal installments over the next four anniversary
                  date of
                  the agreement.
 (5)
              Became an officer on April 29, 2005. His reported
                fiscal
                year 2005 compensation covers the period from April 29,
                2005.
 (6)
              Became an officer on August 2, 2004, and resigned
                on
                April 29, 2005. His reported fiscal year 2005 compensation covers
                the
                period August 2, 2004 through April 29,
                2005.
 (7)
              Refers to shares vested. Pursuant to an employment
                agreement, Mr. Lanjewar was entitled to up to 568,175 shares of common
                stock. The grant of shares was subject to vesting and subject to
                continued
                employment. On January 1, 2005, 113,635 shares vested, and the reminder
                of
                the shares were to vest in equal portions on July 1, 2005, July 1,
                2006,
                July 1, 2007, and July 1, 2008, subject to proportionate adjustment
                in the
                event of employment termination for any incomplete vesting period.
                In
                April 2005, Mr. Lanjewar resigned as our Chief Financial Officer,
                and was
                vested with an additional 113,637 shares of common
                stock.
 (8)
              Became an officer on March 1, 2004. Her reported
                fiscal
                year 2004 compensation covers the period March 1, 2004 through April
                30,
                2004.








54





**OPTION/SAR
      GRANTS IN LAST FISCAL YEAR**


**INDIVIDUAL
      GRANTS**





Name
              
              Number
                  of
                Securities
                  Underlying Options/SARs
                Granted(#)
              
              %
                  of Total Options/SARs
                Granted
                  to Employees in
                Fiscal
                  Year
              
              Exercise
                  or
                base
                  price
                ($/Sh)
              
              Expiration
                DateRichard
                  P. Trotter
              
              
              875,000
              (a)
              
              100
              %
              $
              0.605
              
              
              4-29-10
                  (b
              )





(a)
            Refers
                to stock options, subject to vesting, granted. Pursuant to option
                agreement dated April 29, 2005, Mr. Trotter is entitled to up to
                875,000
                stock options, subject to vesting. The stock options are exercisable
                for
                five years from the vesting date at $0.605 per share. On April 29,
                2005,
                stock options to purchase 175,000 shares vested, and the remaining
                options
                are to vest in equal installments over the next four anniversary
                date of
                the agreement.


(b)
            Refers
                to expiration date of vested
                options.








**AGGREGATED
      OPTION/SAR EXERCISES IN LAST FISCAL YEAR**


**AND
      FY-END OPTION/SAR VALUES**


Shares
                  Acquired on Exercise
              
              Value
                  Realized
              
              Number
                  of securities
                underlying
                  unexercised
                Options/SARs
                at
                  FY-end (#)
              
              Value
                  of unexercised
                in-the-money
                  options/SARs
                at
                  FY-end ($)(a)Name
              
              (#)
              
              ($)
              
              Exercisable
              
              Unexercisable
              
              Exercisable
              
              UnexercisableRichard
                  P. Trotter
              
              
              --
              
              
              --
              
              
              175,000
              
              
              600,000
              
              $
              0
              
              $
              0





(a)
            The
                dollar values were calculated by determining the difference between
                the
                fair market value at fiscal year-end of the common stock underlying
                the
                options and the exercise price of the options. The last sale price
                of a
                share of Sparta’s common stock on April 29, 2005 as reported by the OTC
                Bulletin Board was $0.605.








**DIRECTOR
      COMPENSATION**





Directors
      have not been compensated for their services on the Board of Directors. We
      may,
      in the future, establish a compensation plan for our independent directors.








**MANAGEMENT
      EMPLOYMENT AGREEMENTS**





We
      reserve the right to enter into written employment agreements with our executive
      officers and other employees for their services at competitive compensation
      rates, including bonuses and other benefits, including issuance of stock
      options, as may be determined by the Board of Directors.








55





Employment
      Agreement with CEO





We
      entered into an employment agreement, dated as of July 12, 2004, with Anthony
      L.
      Havens who serves as our Chief Executive Officer. The employment is for a term
      of five years. The employment term is to be automatically extended for one
      five-year period, and additional one-year periods, unless written notice is
      given three months prior to the expiration of any such term that the term will
      not be extended. His base salary is at an annual rate of $280,000. He is
      entitled to defer a portion of his base salary each year. He is entitled to
      annual increases in his base salary and other compensation as may be determined
      by the Board of Directors. He is entitled to a $1,000,000 term insurance policy.
      He is entitled to six weeks of paid vacation per year, and health insurance,
      short term and long term disability insurance, retirement benefits, fringe
      benefits, and other employee benefits on the same basis as is generally made
      available to other senior executives. He is entitled to reimbursement of
      reasonable business expenses incurred by him in accordance with company
      policies. If terminated, he is entitled to three months of severance for up
      to
      six months of service for each year of employment, plus full participation
      in
      all standard employee benefits during the period of severance payments. The
      employment agreement provides for termination for cause. If he resigns for
      good
      reason or is terminated without cause within twelve months after a change in
      control, he is entitled to receive an additional lump sum payment equal to
      the
      greater of the severance payment or the balance of his base salary for the
      remaining employment term, continued coverage under any welfare benefits plans
      for two years, and full vesting of any account balance under a 401(k)
      plan. **** For
      purposes of the employment agreement, a change in control refers
      to:





·
            a
                change in voting power, due to a person becoming the beneficial owner
                of
                50% or more of the voting power of our securities and our largest
                shareholder;


·
            during
                any period of two consecutive years, individuals who at the beginning
                of
                such period constitute the Board of Directors, including later approved
                directors, ceasing to consisted a majority of the Board of
                Directors;


·
            a
                merger or consolidation of our company with a third party, after
                which our
                shareholders do not own more than 50% of the voting power;
                or


·
            a
                sale of all or substantially all of our assets to a third
                party.





If
      we
      elect not to renew the employment agreement, he shall be entitled to receive
      severance equal to thirty months of his base salary plus standard employment
      benefits. If we fail to fully perform all or any portion of our post-termination
      obligations, we are be obligated to pay to him an amount equal to five times
      the
      value of the unperformed obligation.





Employment
      Agreement with COO





We
      entered into an employment agreement, effective November 1, 2004, with Richard
      P. Trotter, to serve as our Chief Operating Officer. The term of employment
      is
      one year. The employment term is to be automatically extended for one two-year
      period, and an additional two-year period, unless written notice is given three
      months prior to the expiration of any such term that the term will not be
      extended. His initial base salary is at an annual rate of $160,000. On May
      1,
      2005, his base salary increases to $200,000. He is entitled to annual increases
      in his base salary and other compensation as may be determined by the Board
      of
      Directors. He is entitled to a grant of 1,000,000 shares of our common stock.
      The grant of shares is subject to vesting and subject to continued employment.
      On November 1, 2004, 25,000 shares vested. An additional 100,000 shares are
      subject to vesting at a future date, subject to proportionate adjustment in
      the
      event of employment termination for any incomplete vesting period, as follows:
      25,000 shares on November 1, 2005, 25,000 shares on November 1, 2006; 25,000
      shares on November 1, 2007; 12,500 shares on November 1, 2008; and 12,500 on
      November 1, 2009. He is entitled to three weeks of paid vacation during the
      first year of employment, and four weeks per year thereafter. He is entitled
      to
      health insurance, short term and long term disability insurance, retirement
      benefits, fringe benefits, and other employee benefits on the same basis as
      is
      made generally available to other employees. He is entitled to reimbursement
      of
      reasonable business expenses incurred by him in accordance with company
      policies. The employment agreement provides for termination for cause. If
      terminated without cause, he is entitled to severance. As severance, he shall
      be
      entitled to one week's base salary as of the date of termination for the first
      full year of service, and thereafter, two weeks' base salary for each succeeding
      year of service, up to an aggregate of four months of such base
      salary.











56





**ITEM
      11.**  **SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**





**SECURITIES
      AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS**





Plan
                category
            
            Number
                of securities to be issued upon exercise of outstanding options,
              warrants
                and rights
            
            Weighted-average
                exercise price of outstanding options,
              warrants
                and rights
            
            Number
                of securities remaining available for
              future
                issuance under
              equity
                compensation planEquity
                compensation plans approved by securities holders
            
            
            0
            
            
            N/a
            
            
            8,500,000Equity
                compensation plans not approved by security holders
            
            
            1,075,000
            
            $
            0.529
            
            
            N/aTotal
            
            
            1,075,000
            
            $
            0.529
            
            
            8,500,000








In
      July
      2004, we adopted a **** stock
      incentive compensation plan. The plan authorized the Board to grant securities,
      including stock options, to employees, directors and others, in the aggregate
      amount of 8,500,000 shares of common stock. Securities issued under the plan
      may
      be stock awards, non-qualified options, incentive stock options, or any
      combination of the foregoing. **** In
      general, stock options granted under the plan have a maximum duration of ten
      years from the date of the grant and are not transferable. The per share
      exercise price of any incentive stock option granted under the plan may not
      be
      less than the fair market value of the common stock on the date of grant.
      Incentive stock options granted to persons who have voting control over ten
      percent or more of our capital stock are granted at 110% of fair market value
      of
      the underlying common stock on the date of grant and expire five years after
      the
      date of grant. No options may be granted after July 1, 2014. During the year
      ended April 30, 2005, no securities were granted under this plan.





On
      April
      29, 2005, pursuant to an option agreement with Richard Trotter, our Chief
      Operating Officer, we issued stock options to purchase up to 875,000 shares
      of
      our common stock. Subject to vesting, the stock options are exercisable for
      five
      years from the vesting date at $0.605 per share. On April 29, 2005, stock
      options to purchase 175,000 shares vested, and the remaining options are to
      vest
      in equal installments over the next four anniversary date of the agreement.





In
      April
      2005, we issued warrants to purchase 200,000 shares of our common stock to
      Jaffoni & Collins Incorporated pursuant to a consulting agreement for public
      relations services. The warrants are exercisable for three years at $0.195
      per
      share.








**COMMON
      STOCK OWNERSHIP**





The
      following table sets forth information regarding the number of shares of the
      common stock beneficially owned as of July 11, 2005, by each person who is
      known
      by us to beneficially own 5% or more of our common stock, each of our directors
      and executive officers, and all of our directors and executive officers as
      a
      group. This information was determined in accordance with Rule 13(d)-3 under
      the
      Securities Exchange Act of 1934, and is based upon the information provided
      by
      the persons listed below. As of July 11, 2005, we had 86,293,879 shares of
      common stock issued and outstanding.





All
      persons named in the table have the sole voting and dispositive power with
      respect to common stock beneficially owned. Beneficial ownership of shares
      of
      common stock that are acquirable within 60 days upon the exercise or conversion
      of stock options, warrants or other rights are listed separately. For each
      person named in the table, the calculation of percent of class gives effect
      to
      those acquirable shares.








57





Except
      as
      otherwise set forth below, the business address of each of the persons listed
      below is c/o the Company, 462 Seventh Ave, 20 th Floor,,
      New York, NY 10018





Name
            
            Amount
                and Nature
              Of
                Beneficial
              Ownership
            
            Additional
                Shares Acquirable
              Within
                60 days
            
            Percent
                of
              Class
                (1)Anthony
                L. Havens (a)(1)
            
            
            32,983,262
            
            
            0
            
            
            38.2
            %Kristian
                Srb (a)(2)
            
            
            33,056,562
            
            
            0
            
            
            38.3
            %Jeffrey
                Bean (a)
            
            
            0
            
            
            0
            
            
            *Richard
                P. Trotter (a)
            
            
            25,000
                (3
            )
            
            175,000
                (4
            )
            
            *Michael
                J. Mele (a)
            
            
            0
            
            
            0
            
            
            *Sandra
                L. Ahman (a)
            
            
            580,865
            
            
            0
            
            
            *Glenn
                A. Little
              211
                West Wall
              Midland,
                TX 79701
            
            
            5,000,000
            
            
            0
                (5
            )
            
            5.8
            %Leo
                William Long
              9109
                Loiret Blvd
              Lenexa,
                KS 66215
            
            
            1,241,600
            
            
            11,057,695
                (6
            )
            
            12.6
            %All
                Directors and Executive Officers (6 persons)
            
            
            66,645,689
            
            
            175,000
            
            
            77.2
            %





*
              Represents less than 1%.
 (a)
              Refers
                  to an officer or director of the
                  Company.


(1)
            Mr.
                Havens' minor son owns 62,500 shares of common stock in a trust account.
                Mr. Havens is not the trustee for his son's trust account, and does
                not
                have direct voting control of such shares. Mr. Havens does not have
                the
                sole or shared power to vote or direct the vote of such shares, and,
                as a
                result, Mr. Havens disclaims beneficial ownership of such shares
                held in
                his son's trust account.


(2)
            Includes
                62,500 shares of common stock held by Mr. Srb's minor daughter, for
                which
                Mr. Srb may be deemed to have beneficial ownership of such
                shares.


(3)
            Refers
                to vested shares. Pursuant to an employment agreement, Mr. Trotter
                is
                entitled to up to 125,000 shares of common stock. The grant of shares
                is
                subject to vesting and subject to continued employment. On November
                1,
                2004, 25,000 shares vested. An additional 100,000 shares are subject
                to
                vesting at a future date, subject to proportionate adjustment in
                the event
                of employment termination for any incomplete vesting period, as follows:
                25,000 shares on November 1, 2005; 25,000 shares on November 1, 2006;
                25,000 shares on November 1, 2007; 12,500 shares on November 1, 2008;
                and
                12,500 on November 1, 2009.


(4)
            Refers
                to vested stock options. Pursuant to option agreement, Mr. Trotter
                is
                entitled to up to 875,000 stock options to purchase shares of our
                common
                stock, subject to vesting. The stock options are exercisable for
                five
                years from the vesting date at $0.605 per share. On April 29, 2005,
                stock
                options to purchase 175,000 shares vested, and the remaining options
                are
                to vest in equal installments over the next four anniversary date
                of the
                agreement.


(5)
            Does
                not include approximately 128,206 shares of common stock issuable
                in
                connection a $100,000 promissory note, due September 1, 2005. Does
                not
                include subscriptions for 1,000 shares of series A onvertible preferred
                stock, convertible into approximately 641,026 shares of common stock,
                and
                warrants to purchase 320,513 shares of common stock subscribed after
                July
                11, 2005.


(6)
            Refers
                to approximately 7,371,795 shares of common stock underlying 11,500
                shares
                of series A convertible preferred stock, and warrants to purchase
                3,685,000 shares of common stock. Does not include subscriptions
                for 5,245
                shares of series A convertible preferred stock, convertible into
                approximately 3,362,179 shares of common stock and warrants to purchase
                1,681,091 shares of common stock subscribed after July
                11,2005.








**CHANGES
      IN CONTROL**





We
      do not
      have any arrangements that may result in a change in control.








58





**ITEM
      12.**  **CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS**





On
      February 27, 2004, pursuant to an Agreement and Plan of Reorganization with
      Sparta Commercial Services, LLC and its members, we acquired all of the
      membership interests of Sparta in exchange for the agreement for the issuance
      of
      such number of shares of our common stock as would represent approximately
      91.75% of our outstanding shares. At February 26, 2004, we had an authorized
      capital of 200,000,000 shares and 56,637,228 shares issued and outstanding,
      and
      we issued the remaining balance of authorized capital of 143,362,772 shares
      (pre-split) to Sparta members. The remaining unissued balance of 486,511,854
      shares (pre-split) due to the Sparta members were subsequently issued upon
      completion of an increase in our authorized capital. Pursuant to the
      acquisition, all of our former directors and officers resigned, and nominated
      Anthony Havens, the designee of Sparta, as the officer and director. Present
      officers of the company, Anthony Havens and Sandra Ahman, acquired their
      respective ownership interest in our common stock pursuant to their exchange
      of
      membership interests of Sparta. Glenn A. Little, the former principal
      stockholder of the company, prior to the completion of acquisition owned
      40,000,000 shares, or 71%, of our then issued and outstanding shares of common
      stock. Sparta also entered into a consulting agreement for business and
      financial services with Glenn A. Little. The agreement is for a term of one
      year. Mr. Little received a fee of $100,000 pursuant to the consulting
      agreement.





We
      entered into a license agreement, dated as of June 1, 2002, and as amended
      on
      December 3, 2003, with American Motorcycle Leasing Corp. Under the agreement,
      we
      have a non-exclusive, perpetual right to use American Motorcycle Leasing Corp.’s
      proprietary operating systems related to consumer credit underwriting
      procedures, vehicle and vehicle lease value evaluation methods, rental stream
      collection and insurance tracking policies and procedures. The license fee
      consisted of $300,000 and 330,433 membership interests of Sparta Commercial
      Services, LLC, which will be exchanged for 34,256,941 shares of Tomahawk upon
      an
      increase in our authorized capital.





We
      entered into a services agreement, dated as of March 1, 2004, with American
      Motorcycle Leasing Corp. For a period of three years, American Motorcycle
      Leasing Corp. is to provide personnel, computer equipment and software, and
      facilities, in connection with our credit and underwriting activities and our
      use of the operating systems that we had licensed from American Motorcycle
      Leasing Corp. In return for such services, we agreed to pay $100,000 by March
      1,
      2005 **,** and for
      the time of the personnel utilized at their salary rate at American Motorcycle
      Leasing Corp.





On
      August
      2, 2004, pursuant to an employment agreement with Daniel J. Lanjewar, our former
      Chief Financial Officer, we agreed to issue 568,175 shares of our common stock
      in a transaction deemed exempt from registration pursuant to Section 4(2) of
      the
      Securities Act. The grant of shares was subject to vesting and subject to
      continued employment. On January 1, 2005, 113,635 shares vested, and the
      reminder of the shares were to vest in equal portions on July 1, 2005, July
      1,
      2006, July 1, 2007, and July 1, 2008, subject to proportionate adjustment in
      the
      event of employment termination for any incomplete vesting period. In April
      2005, Mr. Lanjewar resigned as our Chief Financial Officer, and was vested
      with
      an additional 113,637 shares of common stock.





We
      entered into a purchase option agreement with American Motorcycle Leasing Corp.
      on November 2, 2004 at a cost to Sparta Commercial Services of $250,000.. This
      agreement granted Sparta Commercial Services the right, for a two year period,
      to purchase portions of a certain portfolio of equipment leases that American
      Motorcycle Leasing Corp. owns. The portfolio is secured by a first priority
      security interest in favor of Citibank, N.A. or its assigns. The cost of
      $250,000 has been charged to operations in fiscal 2005. As of April 30, 2005,
      payments against this obligation of $81,000 were made. In June, 2005, an
      additional $20,000 was paid.





In
      January 2005, the Company received a loan of $25,000 from Kristian Srb, a
      director of the Company.. This loan is non-interest bearing and is payable
      on
      demand.





On
      April
      29, 2005, pursuant to an option agreement with Richard Trotter, our Chief
      Operating Officer, we agreed to issue options to purchase up to 875,000 shares
      of our common stock. Subject to vesting, the stock options are exercisable
      for
      five years from the vesting date at $0.605 per share. Twenty percent of the
      options vested on April 29, 2005, and the remaining options are to vest in
      equal
      installments over the next four anniversary date of the agreement.





In
      June
      2005, Kristian Srb, a director of the Company, purchased on various dates,
      an
      aggregate of 10,800 shares of our common stock at prices of $0.45 to $0.55
      per
      share in the open market, as follows: on 6/13/2005, purchased 3,062 shares
      at
      $0.51 per share; on 6/13/2005, purchased 1,938 shares at $0.55 per share; on
      6/14/2005, purchased 800 shares at $0.55 per share; and on 6/20/2005, purchased
      5,000 shares at $0.45 per share.








59





**ITEM
      13. EXHIBITS**





The
      following exhibits are filed with this report:




Exhibit Number
              Description of
                Exhibit
 
 Exhibit 2
              Agreement and Plan of Reorganization, dated as
                of
                February 27, 2004 (Incorporated by reference to Exhibit 2 of Form
                10-KSB
                filed on August 13, 2004)
 Exhibit 3(i)(1)
              Articles of Incorporation of Tomahawk Oil and
                Minerals,
                Inc. (Incorporated by reference to Exhibit 3(i)(1) of Form 10-KSB
                filed on
                August 13, 2004)
 Exhibit 3(i)(2)
              Certificate of Amendment of Articles of Incorporation,
                November 1983 (Incorporated by reference to Exhibit 3(i)(2) of Form
                10-KSB
                filed on August 13, 2004)
 Exhibit 3(i)(3)
              Certificate of Amendment of Articles of Incorporation
                for
                name change, August 2004 (Incorporated by reference to Exhibit 3(i)
                of
                Form 8-K filed on August 27, 2004)
 Exhibit 3(i)(4)
              Certificate of Amendment of Articles of Incorporation
                for
                increase in authorized capital, September 2004 (Incorporated by reference
                to Exhibit 3(i) of Form 8-K filed on September 17,
                2004)
 Exhibit 3(i)(5)
              Certificate of Amendment of Articles of Incorporation
                for
                decrease in authorized capital, December 2004 (Incorporated by reference
                to Exhibit 3(i) of Form 8-K filed on December 23,
                2004)
 Exhibit 3(i)(6)
              Certificate of Designation for Series A Redeemable
                Preferred Stock, December 2004 (Incorporated by reference to Exhibit
                3(i)
                of Form 8-K filed on January 4, 2005)
 Exhibit 3(ii)(1)
              By-laws (Incorporated by reference to Exhibit
                3(ii)(1) of
                Form 10-KSB filed on August 13, 2004)
 Exhibit 3(ii)(2)
              By-laws Resolution (Incorporated by reference
                to Exhibit
                3(ii)(2) of Form 10-KSB filed on August 13,
                2004)
 Exhibit 3(ii)(3)
              Board of Directors Resolutions amending By-laws
                (Incorporated by reference to Exhibit 3(ii) of Form 10-QSB filed
                on
                December 15, 2004)
 Exhibit
                  4
              2005
                  Stock Incentive Compensation Plan (Incorporated by reference to
                  Exhibit 4
                  of Form 10-KSB filed on August 13,
                  2004)


Exhibit
                10.1
            Service
                Agreement with American Motorcycle Leasing Corp.(Incorporated by
                reference
                to Exhibit 10.1 of Form 10KSB filed on August 13,
                2004)


Exhibit
                10.2
            License
                Agreement with American Motorcycle Leasing Corp. (Incorporated by
                reference to Exhibit 10.1 of Form 10KSB filed on August 13,
                2004)


Exhibit
                10.3
            Amended
                License Agreement with American Motorcycle Leasing Corp. (Incorporated
                by
                reference to Exhibit 10.1 of Form 10KSB filed on August 13,
                2004)


Exhibit
                10.4
            Form
                of Employment Agreement with Anthony Havens (Incorporated by reference
                to
                Exhibit 10.4 of Form 10-KSB filed on August 13,
                2004)


Exhibit
                10.5
            Employment
                Agreement with Danny Lanjewar (Incorporated by reference to Exhibit
                10.5
                of Form 10-KSB filed on August 13,
                2004)


Exhibit
                10.6
            Consulting
                Agreement with Glenn Little (Incorporated by reference to Exhibit
                10.6 of
                Form 10-KSB filed on August 13,
                2004)


Exhibit
                  10.7
              Employment
                  Agreement with Richard Trotter (Incorporated by reference to Exhibit
                  10 of
                  Form 8-K filed on October 29, 2004)
 Exhibit 10.8*
              Purchase Option Agreement with American Motorcycle
                Leasing Corp., dated November 2,
                2004.


Exhibit
                10.9
            Lease
                for office facilities (Incorporated by reference to Exhibit 10 of
                Form
                10-QSB filed on December 15, 2004)


Exhibit
                10.10
            Option
                Agreement with Richard Trotter (Incorporated by reference to Exhibit
                10.1
                of Form 8-K filed on May 5, 2005)


Exhibit
                11
            Statement
                re: computation of per share earnings is hereby incorporated by reference
                to “Financial Statements” of Part I - Financial Information, Item 1 -
                Financial Statements, contained in this Form
                10-QSB.


Exhibit
                21
            List
                of Subsidiaries (Incorporated by reference to Exhibit 21 of Form
                10-KSB
                filed on August 13, 2004)


Exhibit
                31.1*
            Certification
                of Chief Executive Officer Pursuant to Securities Exchange Act Rule
                13a-14(a)/15d-14(a)


Exhibit
                31.2*
            Certification
                of Chief Financial Officer Pursuant to Securities Exchange Act Rule
                13a-14(a)/15d-14(a)


Exhibit
                32.1*
            Certification
                of Chief Executive Officer Pursuant to Securities Exchange Act Rule
                13a-14(b) and 18 U.S.C. Section 1350


Exhibit
                32.2*
            Certification
                of Chief Financial Officer Pursuant to Securities Exchange Act Rule
                13a-14(b) and 18 U.S.C. Section
                1350


___


*
      Filed
      herewith.





60





**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**





**Audit
      Fees**





Fees
      for
      audit services provided by our principal accountant during the years ended
      April
      30, 2004 and 2005 were $23,769 and $39,746 **,** respectively. Audit services consisted primarily of the annual audits, review
      of
      our financial statements, and services that are normally provided by our
      accountants in connection with statutory and regulatory filings or engagements
      for those fiscal years.





**Audit-Related
      Fees**





There
      were no fees billed for services reasonably related to the performance of the
      audit or review of our financial statements outside of those fees disclosed
      above under the caption Audit Fees for fiscal years ended April 30, 2004 and
      2005.





**Tax
      Fees**





Fees
      for
      tax services provided by our principal accountant during the years ended April
      30, 2004 and 2005 were $2,500 and $1,500 **,** respectively. Tax services related primarily to the preparation of company
      tax
      filings with regulatory agencies.





**All
      Other Fees**





There
      were no other fees billed for services.





**Audit
      Committee Procedure**





The
      Board
      of Directors is responsible for matters typically performed by an audit
      committee. We do not presently have a separate audit committee of the Board
      of
      Directors. The Board of Directors considered whether, and determined that,
      the
      auditor's provision of non-audit services was compatible with maintaining the
      auditor's independence. All of the services described above for fiscal years
      ended April 30, 2004 and 2005 were approved by the Board of Directors. We intend
      to continue using our principal registered public accounting firm, solely for
      audit and audit- related services, tax consultation and tax compliance services,
      and, as needed, for due diligence in acquisitions and similar
      transactions.





**Pre-Approval
      Policies and Procedures**





The
      Board
      of Directors approved all of the services described above, and all fees paid.
      The Board of Directors did not have pre-approval policies and procedures in
      place during our fiscal years ended April 30, 2004 and 2005. In fiscal year
      2006, we intend to implement a policy whereby, we will, prior to engaging our
      accountants to perform a particular service, obtain an estimate for the service
      to be performed and begin pre-approving all services.








61





**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.





SPARTA COMMERCIAL SERVICES, INC.By:
            /s/
              Anthony L. HavensAnthony
              L. HavensChief
              Executive OfficerDate:
                July 22, 2005





In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities indicated
      and on the dates indicated:






Date:
              July 22, 2005
            By:
            /s/
              Anthony L. HavensAnthony
              L. HavensChief
                Executive Officer, and
              Chairman
                of the Board


Date:
                July 22, 2005
              By:
              /s/
                Michael J. MeleMichael
                J. MeleChief
                  Financial Officer
 Date:
                  July 22, 2005
                By:
                /s/
                  Sandra L. AhmanSandra
                  L. AhmanVice
                  President and Director
 Date:
                    July 22, 2005
                  By:
                  /s/
                    Kristian SrbKristian
                    SrbDirector







62