UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      DC  20549





**FORM
      10-QSB/A**


**Amendment
      # 1**





(Mark
      one)





x
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
                ACT OF
                1934





For
      the
      quarterly period ended March 31, 2006





**o**
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
                ACT OF
                1934





For
      the
      transition period from ______ to ______





Commission
      file number 000-50048





**MOTIVNATION,
      INC.**


(Exact
      name of small business issuer as specified in its charter)





Nevada
            82-6008492(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer I.D. No.)





18101
      Von Karman Avenue, Suite 330


Irvine,
      California 92612


(Address
      of Principal Executive Offices)




(888)
      258-6458


(Registrant’s
      telephone number)




Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.





(1)Yes
      xNo o (2) Yes
      xNo o




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).




Yes
o No
x




Indicate
      the number of shares outstanding of each of the issuer's classes of common
      stock, as of March 31, 2006.




Common
                Stock, Par Value $0.001
            3,545,464Title
                of Class
            Number
                of Shares Outstanding as of March 31,
                2006








**EXPLANATORY
        NOTE**




MotivNation,
        Inc. ("MOVT" or the "Company") filed its Quarterly Report on Form 10-QSB
        for
        period ending March 31, 2006 (the "Quarter Report") with the Securities and
        Exchange Commission (the "Commission") on May 22, 2006. On August 30, 2006,
        the
        Commission issued comments to the Quarterly Report. This Quarterly Report
        on
        Form 10-QSB/A, Amendment No. 1 ("Amendment No. 1") amends the Quarterly Report
        to incorporate certain revisions that have been made to MOVT’s disclosures and
        the presentation of MOVT’s financial statements, in response to the Commission’s
        comments.





Accordingly,
        changes have been made to the following sections of the Quarterly
        Report:




·
              Financial
                  StatementManagement
                  Discussion and Analysis or Plan of Operation.Legal
                  Proceedings





Although
        this Form 10-QSB/A contains all of the items required to be included in a
        Quarterly Report on Form 10-QSB, no other information in the original filing
        is
        amended hereby. In
        addition, in accordance with applicable SEC rules, this amended Quarterly
        Report
        on Form 10-QSB/A includes currently dated certifications from our Chief
        Executive Officer and Chief Financial Officer as Exhibits 31.1, 31.2, 32.1
        and
        32.2. This Form 10-QSB/A should be read in conjunction with the Company's
        filings made with the SEC subsequent to the Original Filing.




For
        the
        convenience of the reader, this amended Quarterly Report on Form 10-QSB/A
        sets
        forth the Original Filing in its entirety, as modified and superseded where
        necessary to reflect the restatement. The following items have been amended
        as a
        result of, and to reflect, the restatement described above and no other
        information in the Original Filing is amended hereby, as a result of the
        restatement:









**TABLE
      OF CONTENTS**




Part
                  IFinancial
                  Statement ItemFinancial
                  StatementsBalance
                  Sheet
              
              
              1Income
                  Statement
              
              
              2Cashflow
                  Statement
              
              
              3Financial
                  Footnotes
              
              
              4Management
                  Discussion & Analysis or Plan of Operations
              
              
              16Controls
                  and Procedures
              
              
              24Part
                  II
              
              
              25Legal
                  Proceedings
              
              
              25Changes
                  in Securities
              
              
              25Defaults
                  Upon Securities
              
              
              26Submission
                  to a Vote
              
              
              26Other
                  Information
              
              
              26Exhibits
                  and Reports
              
              
              27Signatures
              
              
              28




Exhibits




Index
                  to Exhibits
              
              
              29Exhibits




Except
      as
      otherwise noted in this report, “MotivNation,” the “Company,” “we,” “us” and
“our” collectively refer to MotivNation, Inc.







**MOTIVNATION,
          INC.**
 
 **CONSOLIATED
          BALANCE SHEET (Unaudited)**
 **March
          31, 2006**
  (Restated)**ASSETS**Current
                    AssetsCash
                
                $
                1,191,104Accounts
                    receivable
                
                
                111,795Prepaid
                    expenses and other current assets
                
                
                70,803Inventory
                
                
                227,645Total
                    Current Assets
                
                
                1,601,347Property
                    and equipment, net
                
                
                184,729Goodwill
                
                
                333,242Debt
                    issuance cost, net
                
                
                69,028Other
                    assets
                
                
                18,874**TOTAL
                    ASSETS**
                
                $
                2,207,220**LIABILITIES
                    AND STOCKHOLDERS' DEFICIT**Current
                    LiabilitiesAccounts
                    payable
                
                $
                202,847Accrued
                    liabilities
                
                
                286,443Unearned
                    revenue
                
                
                31,560Short-term
                    notes payable to related parties
                
                
                236,107Current
                    portion of long-term notes payable
                
                
                4,487Current
                    portion of capital lease obligations
                
                
                31,213Total
                    Current Liabilities
                
                
                792,657Long-term
                    debtLong-term
                    notes payable, excluding current portion
                
                
                6,521Capital
                    lease obligations, excluding current portion
                
                
                2,774Convertible
                    notes payable, net of unamortized discount of $1,942,735
                
                
                32,955Derivative
                    liabilities
                
                
                4,019,594Total
                    Long-Term Debt
                
                
                4,061,844Total
                    Liabilities
                
                
                4,854,501Stockholders'
                    DeficitPreferred
                    Stock, $0.001 par value; 100,000,000 shares authorized;none
                    issued and outstanding
                
                
                -Common
                    Stock, $0.001 par value; 300,000,000 shares authorized;3,545,464
                    shares issued and outstanding
                
                
                3,546Paid-in
                    Capital
                
                
                1,438,951Deferred
                    compensation and expenses
                
                
                (282,228
                )Accumulated
                    deficit
                
                
                (3,807,550
                )Total
                    Stockholders' Deficit
                
                
                (2,647,281
                )**TOTAL
                    LIABILITIES AND STOCKHOLDERS' DEFICIT**
                
                $
                2,207,220
  See
        notes
        to interim unaudited consolidated financial statements
  1





**MOTIVNATION,
      INC.**





**CONSOLIDATED
      STATEMENTS OF OPERATIONS (Unaudited)**




**For
                  Three Months ended March 31,**
              
              **2006**
              
              2005Sales:
              
              **(Restated)**Sales
                  - products
              
              **$**
              **588**
              
              $
              134,553Sales
                  - services
              
              
              **491,315**
              
              
              791,781Total
                  sales
              
              
              **491,903**
              
              
              926,334Cost
                  of salesCost
                  of products
              
              
              **4,182**
              
              
              116,637Cost
                  of services
              
              
              **501,110**
              
              
              616,874Total
                  costs of sales
              
              
              **505,292**
              
              
              733,511Gross
                  profit (deficit)
              
              
              **(13,389**
              **)**
              
              192,823Operating
                  Expenses:Selling,
                  general and administrative Expenses
              
              
              **275,296**
              
              
              296,911Loss
                  on disposal of assets
              
              
              **2,459**
              
              
              -Total
                  operating expenses
              
              
              **277,755**
              
              
              296,911Operating
                  loss
              
              
              **(291,144**
              **)**
              
              (104,088
              )Other
                  income(expenses)Interest
                  and other income
              
              
              **133**
              
              
              2Change
                  in derivative liabilities
              
              
              **1,899,113**
              
              
              -Interest
                  and other expense
              
              
              **(64,030**
              **)**
              
              (40,708
              )Financing
                  costs
              
              
              **(3,409,466**
              **)**
              
              -Total
                  other income(expenses)
              
              
              **(1,574,250**
              **)**
              
              (40,706
              )Net
                  loss before state franchise tax
              
              
              **(1,865,394**
              **)**
              
              (144,794
              )State
                  franchise tax
              
              
              **2,400**
              
              
              1,600Net
                  loss
              
              **$**
              **(1,867,794**
              **)**
              $
              (146,394
              )Net
                  loss per share-Basic and Diluted
              
              **$**
              **(0.66**
              **)**
              $
              (0.08
              )Weighted
                  Average Number of Shares
              
              
              **2,844,131**
              
              
              1,923,464




See
        notes
        to interim unaudited consolidated financial statements
  2


**MOTIVNATION,
        INC.**
 
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS (Unaudited)**




**For
                  Three Months ended March 31,**
              
              **2006**
              
              2005**(Restated)**CASH
                  FLOW FROM OPERATING ACTIVITIESNet
                  loss
              
              **$**
              **(1,867,794**
              **)**
              $
              (146,394
              )Adjustments
                  to reoncile net loss to net cash used in operating
                  activities:Depreciation
              
              
              **10,523**
              
              
              11,802Loss
                  on disposal of assets
              
              
              **2,459**
              
              
              -Noncash
                  expenses
              
              
              **11,253**
              
              
              45,240Noncash
                  interest expense and financing costs
              
              
              **3,409,466**
              
              
              -Change
                  in derivative liabilities
              
              
              **(1,899,113**
              **)**
              
              -(Increase)
                  Decrease in:Accounts
                  receivable
              
              
              **(19,390**
              **)**
              
              197,136Inventory
              
              
              **(61,791**
              **)**
              
              (326,292
              )Prepaids
                  and others
              
              
              **(41,069**
              **)**
              
              (53,339
              )Increase
                  (Decrease) in:Accounts
                  payable and accrued liabilities
              
              
              **26,324**
              
              
              31,537Unearned
                  revenue
              
              
              **(117,807**
              **)**
              
              196,515Net
                  cash flows used in operating activities
              
              
              **(546,939**
              **)**
              
              (43,795
              )CASH
                  FLOW FROM INVESTING ACTIVITIESProceeds
                  received from sale of property and equipment
              
              
              **200**
              
              
              -Purchase
                  of property and equipment
              
              
              **-**
              
              
              (6,200
              )Net
                  cash flows provided by (used in) investing activities
              
              
              **200**
              
              
              (6,200
              )CASH
                  FLOW FROM FINANCING ACTIVITIESRepayment
                  on long-term debt
              
              
              **(8,439**
              **)**
              
              (12,826
              )Net
                  proceeds from (repayments to) related parties
              
              
              **(28,804**
              **)**
              
              177,698Net
                  proceeds from convertible notes payable
              
              
              **1,678,500**
              
              
              -Net
                  cash flows provided by financing activities
              
              
              **1,641,257**
              
              
              164,872NET
                  INCREASE IN CASH
              
              
              **1,094,518**
              
              
              114,877CASH
                  AT BEGINNING OF PERIOD
              
              
              **96,586**
              
              
              6,020CASH
                  AT END OF PERIOD
              
              **$**
              **1,191,104**
              
              $
              120,897Supplemental
                  Disclosure of Cash Flow Information:Interest
                  Paid
              
              **$**
              **1,287**
              
              $
              5,074Noncash
                  Investing and Financing Activities:Equipment
                  purchased under capital lease obligations
              
              **$**
              **-**
              
              $
              4,700Issuance
                  of common shares for:Reduction
                  of accrued liabilities
              
              **$**
              **150,000**
              
              $
              50,000Convertible
                  notes payable
              
              
              **24,310**
              
              
              -Retirement
                  of related party debt
              
              
              **-**
              
              
              125,000Deferred
                  compensation
              
              
              **-**
              
              
              112,500**$**
              **174,310**
              
              $
              287,500Issuance
                  of warrants in connection with convertible debt
              
              **$**
              **1,678,507**
              
              $
              -Recorded
                  a beneficial conversion feature
              
              **$**
              **3,393,635**
              
              $
              -Transfer
                  unamortized discount to paid-in capital due to debt
                  conversion
              
              **$**
              **23,847**
              
              $
              -Transfer
                  derivative liabilities to paid-in capital due to debt
                  conversion
              
              **$**
              **48,530**
              
              $
              -
  See
        notes
        to interim unaudited consolidated financial statements
  3




**MOTIVNATION,
        INC.**
 
 **NOTES
        TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**




**NOTE
      1 - NATURE OF BUSINESS**





Nature
      of Business: MotivNation, Inc. (“the Company”) provides a full range of services through its
      business divisions that cater to the automotive, motorcycle, and armor
      protecting market. These services include the sale, manufacture, converting,
      customization, restoration, painting, repair and installation of accessories
      and
      parts. The business divisions of MotivNation are comprised of Damon’s,
      TrixMotive, and MotivSource. Damon’s is in the business of customizing
      motorcycles and automobiles. TrixMotive is in the business of converting
      automobile chassis into stretched limousines and other specialized automotives.
      MotivSource is an automotive supplier delivering advanced systems and components
      to the motor vehicle industry.





MotivNation
      was incorporated on April 26, 1946, under the laws of the State of Idaho. The
      Company was organized to explore for, acquire and develop mineral properties
      in
      the State of Idaho. The initial and subsequent efforts in the acquisition,
      exploration and development of potentially viable and commercial mineral
      properties were unsuccessful. The Company has since ceased its mining
      business.





In
      2003,
      the Company merged into its wholly-owned Nevada subsidiary, and changed its
      corporate domicile from the State of Idaho to the State of Nevada. The Company
      also changed its name from Aberdeen Idaho Mining Company to Aberdeen Mining
      Company.





On
      May
      11, 2004, the Company completed a “reverse acquisition” transaction with Damon’s
      Motorcycle Creations, Inc. (“DAMON”), from which the Company acquired
      substantially all the assets and assumed substantially all the liabilities
      of
      DAMON, in consideration for the issuance of a majority of the Company’s shares
      of common stock. The reverse acquisition was completed pursuant to the Asset
      Purchase Agreement, dated as of May 11, 2004. Concurrent with the closing of
      the
      reverse acquisition, DAMON agreed to transfer 45,000 of the 888,799 shares
      it
      acquired from the Company to a creditor in exchange for the cancellation of
      the
      trade debt and as payment for ongoing consultant services by such creditor.
      For
      accounting purposes, DAMON is the acquirer in the reverse acquisition
      transaction, and consequently the assets and liabilities and the historical
      operations reflected in the financial statements are those of DAMON and are
      recorded at the historical cost basis of DAMON. All shares and per share data
      prior to the acquisition have been restated to reflect the stock issuance as
      a
      recapitalization of DAMON. Since the reverse acquisition transaction is in
      substance a recapitalization of the Company and is not a business combination,
      pro forma information is not presented. Such pro forma statements of operations
      would be substantially identical to the historical statements of operations
      of
      the Company, which are presented in the accompanying consolidated statements
      of
      operations.





Following
      the reverse acquisition, the Company changed its name to MotivNation,
      Inc.





On
      October 11, 2004, the Company and its wholly owned subsidiary, TrixMotive Inc.
      (“TrixMotive”), a Nevada corporation, entered into an Asset Purchase Agreement
      with Moonlight Industries, Inc., a California corporation (“MOONLIGHT”), to
      acquire certain assets and liabilities of MOONLIGHT in exchange for 140,000
      shares of the Company’s common stock. The president of MOONLIGHT became the
      Secretary of TrixMotive. The Company’s president and secretary agreed to return,
      in the aggregate, 140,000 shares of the Company’s common stock held by them to
      the Company prior to the closing of this acquisition. The company will continue
      under the MOONLIGHT brand but will operate under the TrixMotive corporate
      entity.




4


**MOTIVNATION,
        INC.**
 
 **NOTES
        TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





Presentation
      of Interim Information: The
      financial information at March 31, 2006 and for the three months ended March
      31,
      2006 and 2005 are unaudited but includes all adjustments (consisting only of
      normal recurring adjustments) that the Company considers necessary for a fair
      presentation of the financial information set forth herein, in accordance with
      accounting principles generally accepted in the United States of America (“U.S.
      GAAP”) for interim financial information, and with the instructions to Form
      10-QSB. Accordingly, such information does not include all of the information
      and footnotes required by U.S. GAAP for annual financial statements. For further
      information refer to the Financial Statements and footnotes thereto included
      in
      the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2005.





The
      results for the three months ended March 31, 2006 may not be indicative of
      results for the year ending December 31, 2006 or any future periods.





Principle
      of Consolidation and Presentation: The
      accompanying consolidated financial statements include the accounts of
      MotivNation, Inc. and its subsidiaries after elimination of all intercompany
      accounts and transactions. Certain prior period balances have been reclassified
      to conform to the current period presentation. The accompanying financial
      statements have been retroactively adjusted to reflect the one-for-one hundred
      reverse stock split on September 9, 2005.





Use
      of
      Estimates: The
      preparation of the accompanying consolidated financial statements in conformity
      with accounting principles generally accepted in the United States (U.S. GAAP)
      requires management to make certain estimates and assumptions that directly
      affect the results of reported assets, liabilities, revenue, and expenses.
      Actual results may differ from these estimates.





Convertible
        Notes Payable and Derivative Liabilities: The
        Company accounts for convertible notes payable and warrants in accordance
        with
        Statement of Financial Accounting Standards (SFAS) No. 133, *"Accounting
        for Derivative Instruments and Hedging Activities."* This
        standard requires the conversion feature of convertible debt be separated
        from
        the host contract and presented as a derivative instrument if certain conditions
        are met. Emerging Issue Task Force (EITF) 00-19, *"Accounting
        for Derivative Financial Instruments Indexed to and Potentially Settled in
        a
        Company's Own Stock"* and EITF
        05-2, *"The
        Meaning of "Conventional Convertible Debt Instrument" in Issue No.
        00-19"* were
        also analyzed to determine whether the debt instrument is to be considered
        a
        conventional convertible debt instrument and classified in stockholders'
        equity.
        The convertible notes payable issued on November 30, 2005 and in January
        2006
        were evaluated and determined not conventional convertible and, therefore,
        because of certain terms and provisions including liquidating damages under
        the
        associated registration rights agreement the embedded conversion option was
        bifurcated and has been accounted for as a derivative liability instrument.
        The
        stock warrants issued in conjunction with the convertible notes payable were
        also evaluated and determined to be a derivative instrument and, therefore,
        classified as a liability on the balance sheet. The accounting guidance also
        requires that the conversion feature and warrants be recorded at fair value
        for
        each reporting period with changes in fair value recorded in the consolidated
        statements of operations.




5


**MOTIVNATION,
        INC.**
 
 **NOTES
        TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


A
        Black-Scholes valuation calculation was applied to both the conversion features
        and warrants at issuance dates and March 31, 2006. The issuance date valuation
        was used for the effective debt discount that these instruments represent.
        The
        debt discount is amortized over the three-year life of the debts using the
        effective interest method. The March 31, 2006 valuation was used to record
        the
        fair value of these instruments at the end of the reporting period with any
        difference from prior period calculations reflected in the consolidated
        statement of operations.




**NOTE
        2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (CONTINUED)**





Net
      Income (Loss) Per Share: Basic
      net income per share includes no dilution and is computed by dividing net income
      available to common stockholders by the weighted average number of common stock
      outstanding for the period. Diluted net income per share is computed by dividing
      net income by the weighted average number of common shares and the dilutive
      potential common shares outstanding during the period. Diluted net loss per
      common share is computed by dividing net loss by the weighted average number
      of
      common shares and excludes dilutive potential common shares outstanding, as
      their effective is anti-dilutive. Dilutive potential common shares consist
      primarily of stock warrants and shares issuable under convertible debt.




Stock-Based
      Compensation: The
      Company accounts for stock issued to non-employees in accordance with the
      provisions of SFAS No. 123 and the EITF Issue No. 00-18, *“Accounting
      for Equity Instruments That Are Issued to Other Than Employees for Acquiring,
      or
      in Conjunction with Selling, Goods or Services.”* SFAS No.
      123 states that equity instruments that are issued in exchange for the receipt
      of goods or services should be measured at the fair value of the consideration
      received or the fair value of the equity instruments issued, whichever is more
      reliably measurable. Under the guidance in Issue 00-18, the measurement date
      occurs as of the earlier of (a) the date at which a performance commitment
      is
      reached or (b) absent a performance commitment, the date at which the
      performance necessary to earn the equity instruments is complete (that is,
      the
      vesting date).





New
        Accounting Pronouncements :
        In
        February 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
        155, “ *Accounting
        for Certain Hybrid Financial Instrument-an amendment of FASB Statements No.
        133
        and 140.”* SFAS No.
        155 provides entities with relief from having to separately determine the
        fair
        value of an embedded derivative that would otherwise be required to be
        bifurcated from its host contract in accordance with SFAS No. 133. SFAS No.
        155
        allows an entity to make an irrevocable election to measure such a hybrid
        financial instrument at fair value in its entirety, with changes in fair
        value
        recognized in earnings. SFAS No. 155 is effective for all financial instruments
        acquired or issued after the beginning of an entity’s first fiscal year that
        begins after September 15, 2006. Management is evaluating the financial
        statement impact of the adoption of SFAS No. 155.




6




**MOTIVNATION,
        INC.**
 
 **NOTES
        TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


The
        FASB
        has also issued SFAS No. 156, *“Accounting
        for Servicing of Financial Assets-an amendment of FASB Statement No.
        140”* but it
        will not have a relationship to the operations of the Company. Therefore
        a
        description and its impact on the Company’s operations and financial position
        have not been disclosed.





Restatement: The
        March 31, 2006 consolidated financial statements have been restated to record
        a
        beneficial conversion feature related to convertible notes payable issued
        by the
        Company in the amount of $3,393,635. The Company has also recorded an amount
        of
        $1,678,507 related to the fair value of warrants issued with the debt, which
        was
        recorded as a liability due to a registration rights agreement. The result
        is to
        record an aggregate discount on debt of $5,072,142 with any excess or $3,372,142
        charged to operations. Also, the fair values of the warrants and conversion
        feature have been recorded at $4,019,594 at March 31, 2006, and an income
        for
        the three months ended March 31, 2006 of $1,899,133 has been recorded. As
        a
        result of these corrections, net loss for the three months ended March 31,
        2006
        has increased by $1,504,409 to $1,861,765, and net loss per share increased
        to
        $0.66 from $0.13.





Changes
        to the balance sheet at March 31, 2006 resulting from these corrections are
        as
        follows:





As
                  reported
              
              RestatedUnamortized
                  debt discount
              
              $
              -
              
              $
              1,942,735Derivative
                  liabilities
              
              $
              -
              
              $
              4,019,594Paid-in
                  Capital
              
              $
              1,414,268
              
              $
              1,438,951Accumulated
                  deficit
              
              $
              1,706,008
              
              $
              3,807,550




**NOTE
      3 - GOING CONCERN**





The
        Company's consolidated financial statements have been prepared on a going
        concern basis, which contemplates the realization of assets and the settlement
        of liabilities and commitments in the normal course of business. The Company
        incurred operating losses totaling $1,867,794 and $146,394 for three months
        ended March 31, 2006 and 2005, respectively. In addition, the Company has
        an
        accumulated deficit of $3,807,550 and its total liabilities exceed its total
        assets by $2,647,281 as of March 31, 2006. In the near term, the Company
        expects
        operating costs to continue to exceed funds generated from operations. As
        a
        result, the Company expects to continue to incur operating losses and may
        not
        have enough money to grow its business in the future. The Company can give
        no
        assurance that it will achieve profitability or be capable of sustaining
        profitable operations. As a result, operations in the near future are expected
        to continue to use working capital.





Management's
        plans include raising additional working capital through debt or equity
        financing and increasing marketing efforts to increase revenues. On January
        30,
        2006, the Company completed the sale of $2 million aggregate principal amount
        of
        8% callable secured convertible notes due in 2009, and issued stock warrants
        purchasing up to 2.5 million shares of the Company’s common stock pursuant to a
        Security Purchase Agreement dated on November 30, 2005 (See Note 6 - Convertible
        Notes Payable and Derivative Liabilities). The ability of the Company to
        continue as a going concern is dependent its ability to meet its financing
        arrangement and the success of its future operations. The consolidated financial
        statements do not include any adjustments that might be necessary if the
        Company
        is unable to continue as a going concern.




7




**MOTIVNATION,
        INC.**
 
 **NOTES
        TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**




**NOTE** **4
      - BALANCE SHEET DETAILS**





The
      following tables provide details of selected balance sheet items at March 31,
      2006:





Accounts
                Receivable, netBilled
                -Completed
                jobs
            
            $
            81,469Unbilled
                -Completed
                jobs
            
            
            27,901Jobs
                in progress
            
            
            2,425Subtotal
            
            
            111,795Less
                allowance for bad debts
            
            
            -Accounts
                receivable, net
            
            $
            111,795InventoryPainted
                materials
            
            $
            85,534Mechanical
                materials
            
            
            21,994Body
                shop materials
            
            
            10,565Vehicles
            
            
            109,552Total
                inventory
            
            $
            227,645Property
                and Equipment, netAutomobiles
            
            $
            19,026Furniture
                and fixtures
            
            
            1,839Machinery
                and equipment
            
            
            224,389Office
                equipment
            
            
            700245,954Less:
                accumulated depreciation
            
            
            (61,225
            )Property
                and Equipment, net
            
            $
            184,729




**NOTE
      4 - BALANCE SHEET DETAILS (CONTINUED)**





Accrued
                LiabilitiesAccrued
                payroll and related taxes
            
            $
            74,988Credit
                cards payable
            
            
            26,796Accrued
                insurance
            
            
            22,448Accrued
                interest
            
            
            118,290Others
            
            
            43,921Total
                accrued liabilities
            
            $
            286,443






**NOTE
      5 - GOODWILL**





As
      of
      March 31, 2006, the Company had goodwill of $333,242 as a result of the
      acquisition of Moonlight Industries, Inc. in October 2004.




8


**MOTIVNATION,
        INC.**
 
 **NOTES
        TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**




During
      the three months ended March 31, 2006, the Company recorded no impairment
      charges under SFAS No. 142 “ *Goodwill
      and Other Intangible Assets* ”
(“SFAS
      142”).




NOTE 6
        -
        CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITIES




On
        January 30, 2006, the Company completed the sale of $2 million aggregate
        principal amount of 8% callable secured convertible notes due in 2009, and
        issued stock warrants purchasing up to 2.5 million shares of the Company’s
        common stock. Proceeds from the notes amounted to $1,903,500 after issuance
        costs, of which the first traunch of $300,000 (less issuance costs of $55,000
        and $20,000 for prepaid officers’ life insurance) was received on November 30,
        2005, the second traunch of $500,000 (less issuance costs of $6,000) was
        received on January 5, 2006, and the third and final traunch of $1,200,000
        (less
        issuance costs of $15,500) was received on January 30, 2006. During the first
        quarter of 2006, the Company has converted $24,310 principal amount into
        600,000
        shares of the Company’s common stock at the request of the note
        holders.





The
        Company filed a registration statement with the SEC on December 15, 2005
        and
        amended the registration statement on December 30, 2005, with respect to
        the
        sale of the notes and common stock issuable upon the conversion of the notes.
        The issuance costs incurred in connection with the convertible notes are
        deferred and being amortized to interest expense over the life of each debenture
        traunch.





The
        Company is accounting for the conversion option in the debentures and the
        associated warrants as derivative liabilities in accordance with SFAS 133,
        “ *Accounting
        for Derivative Instruments and Hedging Activities,”* EITF 00-19, “ *Accounting
        for Derivative Financial Instruments Indexed to and Potentially Settled in
        a
        Company’s Own Stock”* and EITF
        No. 05-2, “ *The
        Meaning of “Conventional Convertible Debt Instrument” in Issue No.
        00-19* .”
The
        Company attributed beneficial conversion features to the convertible debt
        using
        the Black-Scholes Option Pricing Model. The fair value of the conversion
        feature
        has been included as a discount to debt in the accompanying balance sheet
        up to
        the proceeds received from each traunch, with any excess charged to operations.
        The discount is being amortized over the life of each debenture traunch using
        the interest method.




9


**MOTIVNATION,
        INC.**
 
 **NOTES
        TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**




NOTE 6
        -
        CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITIES
        (CONTINUED)





The
        following tables describe the valuation of the conversion feature of each
        traunch of the convertible debenture, using the Black Scholes pricing
        model:





11/30/05
                Traunch
              
              1/4/06
                Traunch
              
              1/30/06
                TraunchApproximate
                  risk free rate
              
              
              4.41
              %
              
              4.28
              %
              
              4.47
              %Average
                  expected life
              
              
              3
                  years
              
              
              3
                  years
              
              
              3
                  yearsDividend
                  yield
              
              
              0
              %
              
              0
              %
              
              0
              %Volatility
              
              
              356.33
              %
              
              348.92
              %
              
              342.77
              %Estimated
                  fair value of conversion feature
              
              $
              599,200
              
              $
              998,346
              
              $
              2,395,289





The
        Company recorded the fair value of the conversion feature, aggregate of
        $3,992,835, as a discount to the convertible debt in the accompanying balance
        sheet up to the proceeds received from each traunch, with any excess or
        $1,992,835 charged to expense. Amortization expense related to the conversion
        feature discount for the three months ended March 31, 2006 was $31,380.
        Remaining unamortized discount as of that date was
        $1,942,735.





The
        Company also granted warrants to purchase 2,500,000 shares of common stock
        in
        connection with the financing. The warrants are exercisable at $1.50 per
        share
        for a period of five years, and were fully vested. The warrants have been
        valued
        at $1,978,482 using the Black-Scholes Option Pricing Model with the following
        weighted-average assumptions used.





11/30/05
                Trauch
              
              1/4/06
                Traunch
              
              1/30/06
                TraunchApproximate
                  risk free rate
              
              
              4.42
              %
              
              4.28
              %
              
              4.46
              %Average
                  expected life
              
              
              5
                  years
              
              
              5
                  years
              
              
              5
                  yearsDividend
                  yield
              
              
              0
              %
              
              0
              %
              
              0
              %Volatility
              
              
              356.33
              %
              
              348.92
              %
              
              342.77
              %Number
                  of warrants granted
              
              
              375,000
              
              
              625,000
              
              
              1,500,000Estimated
                  fair value of total warrants granted
              
              $
              299,975
              
              $
              493,692
              
              $
              1,184,815





In
        accordance with the EITF 00-19, the conversion feature of each convertible
        debenture and the stock warrants issued in conjunction with convertible
        debentures have been included as long-term liabilities and were originally
        valued at fair value at the date of issuance. As a liability, the convertible
        features and the stock warrants are revalued each period until and unless
        the
        debt is converted. As of March 31, 2006, the fair values of the conversion
        feature and the stock warrants aggregated to $4,019,594. The Company recorded
        a
        gain of $1,899,113 related to the change in fair value from the date of issuance
        of the convertible debt (or December 31, 2005 for the traunch received on
        November 30, 2005) to March 31, 2006. This amount is recorded as “Change in
        Derivative Liabilities” a component of other income in the accompanying
        consolidated statement of operations. If the debt is converted prior to
        maturity, the carrying value will be transferred to equity.




10




**MOTIVNATION,
        INC.**
 
 **NOTES
        TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      7 - STOCKHOLDERS’ EQUITY**





Shares
      for Debt Agreement




On
      February 2, 2006 the Board of Directors approved the issuance of 217,000
      unregistered shares of common stock to the Chief Financial Officer and Secretary
      of the Company, and the Company entered into Shares for Debt Agreement with
      the
      CFO on the same date. The consideration received by the Company consisted of
      $50,000 in services rendered by the CFO during the period from January 1, 2005
      through December 31, 2005, and a full release from any other claims for
      compensation relating to such period. The services had been accrued in prior
      year.




The
      Board
      has also approved the issuance of 435,000 unregistered shares of common stock
      to
      the Chief Executive Officer and Chairman of the Board of the Company, and the
      Company entered into Shares for Debt Agreement with the CEO on the same date.
      The consideration received by the Registrant consisted of $100,000 in services
      rendered by the CEO during the period from January 1, 2005 through December
      31,
      2005, and a full release from any other claims for compensation relating to
      such
      period. The services had been accrued in prior year.




Restricted
      Stock Agreements





The
      Company recognized $11,253 and $20,843 in compensation during the three months
      ended March 31, 2006 and 2005, respectively, based on the vesting conditions
      provided by the Restricted Stock Agreement dated February 15, 2005.





As
      of
      March 31, 2006, the remaining unvested shares under the Agreement amounted
      to
      109,714 shares or $27,428.





**NOTE
      8 - NET LOSS PER SHARE**





The
      following table sets forth the computation of basic and diluted net loss per
      share for the periods:





For
                  the three months ended
                March
                  31,2006
              
              2005Numerator:Net
                  Loss
              
              $
              (1,867,794
              )
              $
              (146,394
              )Denominator:Weighted
                  Average Number of Shares
              
              
              2,844,131
              
              
              1,923,464Net
                  loss per share-Basic and Diluted
              
              $
              (0.66
              )
              $
              (0.08
              )




11





**MOTIVNATION,
      INC.**





**NOTES
      TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**




As
      the
      Company incurred net losses for the three months ended March 31, 2006 and 2005,
      it has excluded from the calculation of diluted net loss per share approximately
      41,788,714 and 3,085 shares, respectively, related to its convertible debt
      in
      accordance with EITF Issue No. 04-8, *“The
      Effect of Contingently Convertible Debt on Diluted Earnings Per
      Share”* .





**NOTE
      9 - ELECTION OF DIRECTORS AND CHAIRMAN OF THE BOARD**





On
      January 6, 2006, the board of Directors of the Company elected George Lefevre,
      the Chief Executive Officer to the MotivNation Board of Directors as well as
      the
      Chairman of the Board.




**NOTE
      10 - BUSINESS AND CREDIT CONCENTRATIONS**





Two
      customers accounted for approximately $117,015 and $363,318 or 24.2% and 46.4%
      of the Customized Automotive segment revenues for the three months ended March
      31, 2006 and 2005, respectively. Three major customers accounted for
      approximately $6,638 or 49.8% of the Customized Motorcycle segment revenues
      for
      the three months ended March 31, 2006. Two major customers accounted for
      approximately $45,227 or 31.5% of the Customized Motorcycle segment revenues
      for
      the three months ended March 31, 2005.





The
      Company maintains its cash deposit accounts at commercial banks. At times,
      account balances may exceed federally insured limits. The Company has not
      experienced any losses on these accounts, and management believes the Company
      is
      not exposed to any significant risk on cash accounts.





**NOTE
      11 - GUARANTEES AND PRODUCT WARRANTIES**





The
      Company from time to time enters into certain types of contracts that
      contingently require the Company to indemnify parties against third party
      claims. These contracts primarily relate to: (i) divestiture agreements, under
      which the Company may provide customary indemnifications to purchasers of the
      Company’s businesses or assets; (ii) certain real estate leases, under which the
      Company may be required to indemnify property owners for environmental and
      other
      liabilities, and other claims arising from the Company’s use of the applicable
      premises; and (iii) certain agreements with the Company's officers, directors
      and employees, under which the Company may be required to indemnify such persons
      for liabilities arising out of their employment relationship.





The
      terms
      of such obligations vary. Generally, a maximum obligation is not explicitly
      stated. Because the obligated amounts of these types of agreements often are
      not
      explicitly stated, the overall maximum amount of the obligations cannot be
      reasonably estimated. Historically, the Company has not been obligated to make
      significant payments for these obligations, and no liabilities have been
      recorded for these obligations on its balance sheet as of March 31, 2006.





In
      general, Damon’s offers a five-year warranty on workmanship to original
      purchaser and a manufacturer’s warranty from 90 days to one year for most of its
      products sold. TrixMotive warrants to the first registered owner for a period
      of
      one year or twelve thousand miles from the date of original purchase, whichever
      comes first, that this conversion shall be free from defects in materials and
      workmanship, under normal use and service. The Company’s liability under this
      warranty is limited solely to the repair or replacement of defective parts
      and/or workmanship.




12




**MOTIVNATION,
        INC.**
 
 **NOTES
        TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


The
      following table summarizes the activity related to the product warranty
      liability during 2006 and 2005:





Three
                Months ended March 31,
            
            2006
            
            2005Beginning
                Balance
            
            $
            12,350
            
            $
            14,173Provision
                of warranties
            
            
            3,184
            
            
            2,803Payments
            
            
            (3,184
            )
            
            (2,803
            )Ending
                Balance
            
            $
            12,350
            
            $
            14,173




**NOTE
      12 - COMMITMENTS AND CONTINGENCIES**





Deferred
      Consulting Expense





The
      Company did not achieve certain benchmarks pursuant to the Business Consulting
      Agreement dated April 20, 2004 and has deferred consulting expense of $254,800
      as of March 31, 2006.





Legal
      Proceedings





A
      former
      employee of Moonlight Industries filed a workers compensation claim against
      the
      Company. The former employee is alleging that he was injured during the course
      of his employment with Moonlight Industries. The damages claimed by the former
      employee do not appear to be covered by insurance. Management is responding
      to
      the case vigorously defending it as they believe the claim is frivolous and
      potentially fraudulent. In the opinion of the Company’s legal counsel, the
      likelihood of an unfavourable outcome is low.




Damon’s
          historically leased four (4) units space in city of Brea, California under
          four
          separate non-cancelable operating lease agreements, which expires through
          November 30, 2007. Damon’s currently does not occupy the spaces. In July, the
          landlord filed claims against Damon’s for the past due rent and charges of all
          units, aggregate of $19,657, and the additional amounts due pursuant to
          the
          remaining terms of the lease agreements. The obligations under the remaining
          terms of the lease agreements are estimated at a total of $89,086. Subsequently,
          Damon’s and the landlord entered into a Surrender Agreement for one unit,
          providing that Damon’s agreed to forfeit a security deposit of $1,568 and to pay
          a sum of $3,822, representing the unpaid charges and rent through the date
          of
          agreement. In return, the landlord agreed to discharge and release Damon’s from
          all obligations under the lease agreement of that unit.




13


**MOTIVNATION,
        INC.**
 
 **NOTES
        TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**




No
          provision for any contingent liabilities has been made in the accompanying
          consolidated financial statements since management cannot predict the outcome
          of
          the claims or estimate the amount of any loss that may result. In addition,
          the
          Company has received an outside legal opinion from an attorney that states
          the
          outstanding liability is not the Company’s as the original lease was signed by
          the previous owners of Damon’s. However, the Company will continue to accrue the
          past due rent of $19,657 in the accompanying financial statements until
          this
          matter is resolved.




On
      December 7, 2005, a customer of TrixMotive filed a lawsuit in the Superior
      Court
      of Santa Clara County of California against TrixMotive claiming for breach
      of
      contract and warranty, intentional and negligence misrepresentation for a
      customized vehicle. The plaintiff seeks $98,827 in compensatory damages and
      other unspecified damages plus interest, attorneys’ fees and costs. Management
      believe they have meritorious defenses against the lawsuit, and will continue
      to
      vigorously defending it.





The
      Company may be party to various legal proceedings and claims, either asserted
      or
      unasserted, which arise in the ordinary course of business. While the outcome
      of
      these matters cannot be predicted with certainty, management do not believe
      that
      the outcome of any of these claims or any of the above mentioned legal matters
      will have a material adverse effect on the Company’s consolidated financial
      position, results of operations, or cash flows.





While
      the
      outcome of these matters is not determinable, the Company does not expect that
      the ultimate costs to resolve these matters will have a material adverse effect
      on the Company’s financial position, results of operations, or cash
      flows.




**NOTE
      13 - RELATED PARTY TRANSACTIONS**





The
      Company has a Revolving Line of Credit with a related party to finance the
      Company’s vehicle inventory chassis up to $250,000. Interest is payable at 9%
      for every inventory chassis financed below $48,000 and at 7% for every inventory
      chassis financed above $48,000. Principal and interest is due, no longer than
      ten weeks, upon the delivery and/or final payment made to the Company for the
      finished goods. As of March 31, 2006, the amount drawn against the line and
      the
      related accrued interest was $46,348 and $69,681, respectively. The line of
      credit is secured by the inventory chassis vehicle title.





The
      Company also has short-term notes payable to the officers and a related party,
      aggregate of $189,758 plus related accrued interest of $16,023 as of March
      31,
      2006. The notes carry interest at 10% per annum and are unsecured.





**NOTE
      14 - SEGMENT INFORMATION**





The
      Company evaluates its reporting segments in accordance with SFAS No. 131, *“Disclosures
      about Segments of an Enterprise and Related Information.”* The
      Chief Executive Officer has been identified as the Chief Operating Decision
      Maker as defined by SFAS No. 131. The Chief Executive Officer allocates
      resources to each segment based on their business prospects, competitive
      factors, net sales and operating results.





The
      Company currently reported two principal operating segments: (i) custom
      motorcycle, and (ii) custom automotive. The custom motorcycle segment provides
      a
      full range of services that cater to motorcycle enthusiast, including the sale,
      manufacture and installation of custom-built parts and accessories, the
      restoration, repair and servicing and the custom painting work. The custom
      automotive segment specializes in creating customized limousines to suit the
      tastes and needs of each individual customer.




14


**MOTIVNATION,
        INC.**
 
 **NOTES
        TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**




The
      Company reviews the operating companies’ income to evaluate segment performance
      and allocate resources. Operating companies' income for the reportable segments
      excludes income taxes, minority interest and amortization of goodwill. Provision
      for income taxes is centrally managed at the corporate level and, accordingly,
      such items are not presented by segment. The segments' accounting policies
      are
      the same as those described in the summary of significant accounting
      policies.





Intersegment
      transactions: Intersegment transactions are recorded at cost.




**NOTE
      14 - SEGMENT INFORMATION (CONTINUED)**





Summarized
      financial information of the Company’s results by operating segment is as
      follows:





Three
                Months ended March 31,
            
            2006
            
            2005Net
                Revenue to External CustomersCustom
                Motorcycle
            
            $
            8,159
            
            $
            143,506Custom
                Automotive
            
            
            483,744
            
            
            782,828Total
                Net Revenue to External Customers
            
            $
            491,903
            
            $
            926,334Operating
                Loss:Custom
                Motorcycle
            
            $
            (47,618
            )
            $
            (12,684
            )Custom
                Automotive
            
            
            (142,357
            )
            
            (57,563
            )Operating
                loss by reportable segments
            
            
            (189,975
            )
            
            (70,247
            )All
                other operating loss
            
            
            (101,169
            )
            
            (33,841
            )Consolidated
                operating loss
            
            $
            (291,144
            )
            $
            (104,088
            )Net
                Loss before tax:Custom
                Motorcycle
            
            $
            (50,902
            )
            $
            (14,579
            )Custom
                Automotive
            
            
            (169,539
            )
            
            (79,902
            )Net
                loss by reportable segments
            
            
            (220,441
            )
            
            (94,481
            )All
                other net loss
            
            
            (1,644,953
            )
            
            (50,313
            )Consolidated
                net loss before Tax
            
            $
            (1,865,394
            )
            $
            (144,794
            )




At
                March 31,2006
            
            2005Total
                Assets:Custom
                Motorcycle
            
            $
            176,535
            
            $
            322,508Custom
                Automotive
            
            
            286,841
            
            
            1,295,711463,376
            
            
            1,618,219All
                other segment
            
            
            1,743,844
            
            
            333,688Consolidated
                assets
            
            $
            2,207,220
            
            $
            1,951,907





15





**ITEM
      2**





**MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
      OPERATION**




**Disclaimer
      Regarding Forward Looking Statements**




Certain
      statements contained in the following description of the business of MotivNation
      which are not statements of historical fact are what are known as
      "forward-looking statements," which are basically statements about the future,
      and which for that reason involve risk and uncertainty, since no one can
      accurately predict the future. Words such as "plans," "intends," "seeks,"
      "anticipates," "expects," "goal, "hopes" and "objective" often identify such
      forward-looking statements, but are not the only indication that a statement
      is
      a forward-looking statement. Such forward-looking statements include statements
      of the plans and objectives of the Company’s management with respect to its
      present and future operations, and statements which express or imply that such
      present and future operations will or may produce revenues, income or profits.
      Numerous factors and future events could cause the Company to change such plans
      and objectives, or to fail to successfully implement such plans or achieve
      such
      objectives, or to cause such present and future operations to fail to produce
      revenues, income or profits.




**Plan
      of Operation**





General




MotivNation,
      Inc. provides a full range of services through our business divisions that
      cater
      to the automotive, motorcycle, and armor protecting market. These services
      include the sale, manufacture, converting, customization, restoration, painting,
      repair and installation of accessories and parts. The business divisions of
      MotivNation are comprised of Damon’s, TrixMotive, and MotivSouce. Damon's is in
      the business of customizing motorcycles and automobiles. TrixMotive is in the
      business of converting automobile chassis into stretched limousines and other
      specialized automotives. MotivSource is an automotive supplier delivering
      advanced systems and components to the motor vehicle industry.




Our
      target clients fall into two categories: the individual custom automotive
      enthusiast or collectors of the “one of a kind” custom motorcycle and auto
      creations, and those of local fabricators, custom shops, and Original Equipment
      Manufacturers. Our primary market is the latter of two listed and these
      customers buy materials, supplies, and finished parts for their work in serving
      the growing market of custom or modified automobile and motorcycle creations.
      In
      addition to distributing several lines of materials and equipment, we plan
      to
      provide training through independent dealers and our own distribution
      infrastructure to our primary market clientele.




The
      services we provide vary based on the client type.




·
            Products
                and services provided to individual retail clients are sold directly
                to
                our retail clients and include restoration work, finish and paint
                for
                motorcycles and automobiles as well as signature paint and design
                applied
                to non automotive personal property.




·
            Products
                and services for independent dealers are sold directly to dealers
                and
                include custom and signature finish and design work on a dealer’s own
                restoration or manufactured work. Dealer products and services also
                include consultative work in the preparation of signature paint blends,
                techniques and design advice related to the dealer’s own project.




·
            Products
                and services for original equipment manufacturers include signature
                design
                and fabrication for manufactured parts and accessories which are
                part of a
                “designer” or “signature” series of products or design themes. These
                products and services are sold directly to the original equipment
                manufacturer.




16




Our
      manufacturing operations consist of in-house production of components and parts,
      assembly and finishing of components, painting, conversion and assembly of
      motorcycles and automobiles, and quality control, which includes performance
      testing of finished products under running conditions. The custom design,
      fabrication, finish and paint processes are moved into and out of each aspect
      of
      the manufacturing process.




We
      offer
      various products and services depending on which client we are catering to.
      For
      our individual retail clients we offer products and services direct and include
      restoration work, finish and paint for motorcycles and automobiles as well
      as
      signature paint and design applied to non automotive personal property. For
      our
      independent dealers we offer products and services direct to the dealers which
      include custom and signature finish and design work on a dealer’s own
      restoration or manufactured work. We also offer consultative work in the
      preparation of signature paints blends, techniques, and design advice related
      to
      the dealer’s own project. For our original equipment manufacturers we offer
      services and products that include signature design and fabrication for
      manufactured parts and accessories, which are a party of a “designer” or
“signature” series of products or design themes. These products and services are
      also sold direct to the original equipment manufacturers .




**Results
      of Operations**




**Quarter
      Ended March 31, 2006 Compared with Quarter Ended March 31,
      2005**




*Revenues*




We had total revenues of $491,903
      and $926,334 for the three month period ended March 31, 2006, and 2005
      respectively. TrixMotive and Damon’s contributed approximately $483,744 and
      $8,159 respectively in quarter ending 2005. The decrease in revenue of $434,431
      was primarily due to restructuring of Damon’s and the discontinuance of Damon’s
      mechanical division. This had a direct impact on Damon’s overall sales for the
      first quarter of 2006. In addition there have been delays in receiving our
      OEM
      contracts for 2006.  In
      addition we began a retooling of our TrixMotive subsidiary, to begin production
      of our in house models. This has caused a slow down in our custom production
      line.




*Cost of Sales*




We
      incurred total costs of $505,292 and $733,511 for the three month period
      ended March 31, 2006, and 2005, respectively. TrixMotive and Damon’s cost of
      sales were approximately $493,755 and $7,355 respectively. The decrease in
      our
      cost of sales of $228,219 was primarily due to decrease in overall sales. The
      Company’s cost of sales percentage increased and resulted in a gross loss of
      $13,389 for the three month period ending March 31, 2006 compared to a gross
      profit of 192,823 in same period of 2005. The TrixMotive gross loss resulted
      primarily from increases of approximately 10% in overall cost of sales related
      to revenue compared to same period last year. The increased percentage breakdown
      for parts, materials and direct labor were 2%, 2%, and 6%
      respectively.




*Operating Expenses*




Operating
        expenses for the three month period ended March 31, 2006 and 2005 were $277,755
        and $296,911, respectively. This resulted in an overall decrease in operating
        expenses of $19,156. The operating expenses incurred by the company that
        primarily attributed to the total operating expense were Staff Payroll and
        Rent
        expense of approximately $83,800 and $50,200 respectively. Payroll and Rent
        expense are approximately 30% and 18% of the company’s total operating expense
        respectively. Staff payroll are employees that are not involved in the labor
        of
        our products and services. Insurance expense was approximately $39,000 and
        makes
        up approximately 14% of the company’s total operating expense. Insurance expense
        primarily covers the company’s workers compensation and general liability
        insurance. Taxes and Depreciation expense of approximately $13,000 and $10,500
        respectively also contributed to the increase in operating expense. Taxes
        are
        composed of state and payroll taxes, and depreciation is related to our
        equipment. In addition there was a loss on disposal of assets of
        $2,459.




17




Other
        Income (Expenses)





Other
        expenses for the three months ended March 31, 2006 and 2005 were $1,574,250
        and
        $40,706 respectively. This resulted in an increase of approximately $1,533,544.
        The Other expenses incurred were financing costs and Interest/other expenses
        of
        $3,409,466 and $64,030 respectively. Finance cost increased primarily due
        to the
        Stock Purchase agreements signed January 4, 2006 and January 30, 2006. Interest
        expense increased primarily because of the increase in use of the credit
        line to
        finance in house chassis and interest due from long-term debt. This was offset
        by an increase in other income from Changes in derivative liabilities, and
        interest/other income of $1,899,113 and $133 respectively.





*Net Loss*




Our
        net
        loss for the three months ended March
        31,
        2006 was
        $ 1,867,794 as
        compared to a net loss of
        $ 146,394 for
        the
        comparative period in 200 5 . The
        increase in net loss was primarily due to the financing costs of $602,741,
        which
        is associated with the Company’s equity financing during the 1 st Quarter. Moreover
        our loss is also attributed to the discontinuance
        of the mechanical division of Damon’s and the slow re-growth from the new
        location. In addition we began a retooling of our TrixMotive subsidiary,
        to
        begin production of our in house models. This has caused a slow down in our
        custom production line.




**Liquidity
      and Capital Resources**




Historically, we have
      financed our operations through cash generated from the sale of equity
      securities and debt financing . At
      March
      31, 2006, we had working capital of $808,690 resulting primarily from the
      company’s two million dollar issuance of convertible notes .





Net
      cash
      provided by operating activities was a negative $546,939 for the first quarter
      of 2006, which resulted primarily from the decrease in unearned revenue of
      $117,807 and an increase in Inventory, prepaid/other assets, and A/R of $61,791,
      $41,069, and $19,390 respectively. An offset to this was an increase in Accounts
      Payable/Accrued Liabilities of $26,324. Other offsets were adjustments to
      depreciation, loss on disposal of assets, non-cash expenses, and amortization
      of
      debt issuance cost of $10,523, $2,459, $11,253, and $5,944 respectively.





Net
      cash
      provided in investing activities was $200 which was primarily due to the
      proceeds from the sale of property and equipment.





Net
      cash
      from financing activities was $1,678,257 for the first quarter of 2006 and
      resulted primarily from proceeds from a convertible note of $1,678,500. This
      was
      offset by repayments to related parties and long-term debt of $28,804 and $8,429
      respectively.




Our
          liquidity is dependent on our ability to continue to meet our obligations,
          to
          obtain additional financing as may be required and to obtain and maintain
          profitability. Our management continues to look for ways to reduce operating
          expenses and secure an infusion of capital through either public or private
          investment in order to maintain our liquidity. These steps include increasing
          operating revenues over last year through the growth of the business by
          expanding our product line to offer complete customized vehicles by financing
          our own chassis through our credit line and equity financing. In addition
          the
          company has been looking into, reducing costs by bringing certain projects
          in-house through possible acquisitions, and constantly testing the market
          for
          better pricing on our costs of goods sold. As well as making timely payments
          of
          our obligations, building our stock and debt sources to provide additional
          working capital, and continuing to review our business plan to assure we
          are
          moving the business forward in a cost-effective manner. The company will
          and
          continuing continue to examine the segments of our business that offer
          the most
          profitable opportunity for success and eliminating operations and practices
          which detract from our profitability. During the first quarter of 2006
          the
          company has focused on a production line of in-house custom vehicles to
          be sold
          as an end product, as well as continuing to do just automotive conversions.
 
 There
          can
          be no assurance that we will be successful in executing our plans to improve
          operations or obtain additional debt or equity financing. If the company
          is
          unable to have adequate cash from operations and is unsuccessful in obtaining
          financing, the company would have to cut back on operations. In addition
          there
          would be substantial doubt as mentioned in our financial footnotes about
          our
          ability to continue due to a decrease in our working capital and inability
          to
          obtain financing.


18




**Critical
      Accounting Policies and Estimates**




****** Our
      discussion and analysis of our financial condition and results of operations
      are
      based upon our consolidated financial statements, which have been prepared
      in
      accordance with accounting principles generally accepted in the United States
      of
      America. The preparation of these financial statements requires us to make
      estimates and judgments that affect the reported amount of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amount of revenues and expenses for
      each period. The following represents a summary of our critical accounting
      policies, defined as those policies that we believe are: (a) the most important
      to the portrayal of our financial condition and results of operations, and
      (b)
      that require management’s most difficult, subjective or complex judgments, often
      as a result of the need to make estimates about the effects of matters that
      are
      inherently uncertain.




****** *Impairment
        or Disposal of Long-Lived Assets.* The
        Company reviews long-lived assets for impairment annually, and whenever
        circumstances and situations change such that there is an indication that
        the
        carrying amounts may not be recovered. At March 31, 2006, the Company believes
        that there has been no major impairment of its long-lived assets.





*Use
      of estimates* :
      The
      preparation of the accompanying financial statements in conformity with
      accounting principles generally accepted in the United States (U.S. GAAP)
      requires our management to make certain estimates and assumptions that directly
      affect the results of reported assets, liabilities, revenue, and expenses.
      Actual results may differ from these estimates.




*Revenue
        Recognition:*  The
        Company’s primary source of revenue comes from the sales of customized
        automotive conversions. We recognize revenue based on the completed-contact
        method, whereas customer deposits and partial payments of the conversion
        are
        deferred and treated as current liabilities, until the vehicle is completed
        and
        recognized as revenue. Other services such as repairs minor alterations are
        recorded when the service is performed.




*Allowance
      for Doubtful Accounts* :
      We
      provide an allowance for doubtful accounts that is based upon our review of
      outstanding receivables, historical collection information, and existing
      economic conditions.




*Cash
      Equivalents* : For
      purposes of the statements of cash flows, we consider all highly liquid debt
      instruments with an original maturity of three months or less to be cash
      equivalents.




*Fair
      Value of Financial Instruments:* The
      carrying amounts of the financial instruments have been estimated by our
      management to approximate fair value.




*Inventories:*  Inventory
        includes parts and materials related to the vehicles in the process of being
        modified and converted. In addition the company will include the cost of
        the
        unmodified vehicle chassis if purchased in house. Shipping and handling costs
        are included in inventory. All inventories are valued at the lower of cost
        or
        market.





The
        Company performs periodic inventory procedures and at times identifies supply
        inventory that is considered excess inventory or obsolete. The Company writes
        the obsolete and excessive inventory down to the lower of cost or market
        and the
        amount is included in general and administrative expenses for the
        period.





*Property
      and Equipment* :
      Property and Equipment are valued at cost. Maintenance and repair costs are
      charged to expenses as incurred. Depreciation is computed on the straight-line
      method based on the following estimated useful lives of the assets: 3 to 7
      years
      for office equipment, and 7 years for furniture and fixtures, and 10 years
      for
      machinery and tools.





*Income
        Taxes.* The
        Company’s income tax expense involves using the deferred tax assets and
        liabilities included on the balance sheet. These tax assets and liabilities
        are
        recognized for the expected tax consequences of temporary differences between
        the tax bases of assets and liabilities and their reported amounts. Management
        judgment is required in determining the Company’s provision for income taxes,
        deferred tax assets and liabilities.




*Net
      Loss Per Common Share* :
      The
      Company accounts for income (loss) per share in accordance with Statement of
      Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128").
      SFAS
      No. 128 requires that presentation of basic and diluted earnings per share
      for
      entities with complex capital structures. Basic earnings per share includes
      no
      dilution and is computed by dividing net income (loss) available to common
      stockholders by the weighted average number of common stock outstanding for
      the
      period. Diluted earnings per share reflect the potential dilution of securities
      that could share in the earnings of an entity. Diluted net loss per common
      share
      does not differ from basic net loss per common share due to the lack of dilutive
      items in the Company.




19




**R** **isks
      and Uncertainties**




Our
      business, and the value of our common stock, is affected by certain risks and
      uncertainties, some of which include the following:




***We
      Have Historically Lost Money And Losses May Continue In The Future, Which May
      Cause Us To Curtail Operations.***




Since
      our
      inception, we have not been profitable and we may not be profitable in the
      future. We may continue to incur losses on a quarterly or annual basis for
      a
      number of reasons, some within and others outside our control. (See
“ *Our
      Limited Operating History Makes It Difficult To Forecast Our Future Results”* and
      “ *We
      Are Subject to Price Volatility Due to Our Operations Materially
      Fluctuating* .”)
      No
      assurances can be given that we will be successful in reaching or maintaining
      profitable operations. Accordingly, we may experience liquidity and cash flow
      problems. If our losses continue, our ability to operate may be severely
      impacted.




******  ***If
      We Are Unable To Secure Future Capital, We Will Be Unable To Continue Our
      Operations.***





The
      growth of our business will require the commitment of substantial capital
      resources. We have not been profitable in our operations. If funds are not
      available from operations, we will need additional funds. We may seek such
      additional funding through public and private financing, including debt or
      equity financing. Adequate funds for these purposes, whether through financial
      markets or from other sources, may not be available when we need them. Even
      if
      funds are available, the terms under which the funds are available to us may
      not
      be acceptable to us. Insufficient funds may require us to delay, reduce or
      eliminate some or all of our planned activities.





***Our
      Independent Auditors Have Noted In Their Opinion That We Have Suffered Recurring
      Losses, Which Raises Substantial Doubt About Our Ability To Continue As A Going
      Concern.***





To
      successfully execute our current strategy, we will need to improve our working
      capital position. The report of our independent auditors accompanying our
      financial statements for the year ended December 31, 2005 and the notes to
      our
      unaudited financial statements for the three months ended March 31, 2006,
      however, includes an explanatory paragraph indicating there is a substantial
      doubt about the Company’s ability to continue as a going concern due to
      recurring losses. We plan to overcome the circumstances that impact our ability
      to remain a going concern through a combination of increased revenues and
      decreased costs, with interim cash flow deficiencies being addressed through
      additional debt and/or equity financing. There can be no assurances that these
      plans will be successful.




***Our
      Limited Operating History Renders Makes It Difficult To Forecast Our Future
      Results.***





We
      had
      been a non-operating company for many years prior to the acquisition of Damon’s
      and Moonlight Industries. Therefore, we have a limited operating history and
      our
      business and prospects must be considered in light of the risks and
      uncertainties inherent in a development-stage venture, many of which are beyond
      our control, including:




·
            our
                ability to distribute, sell and market our services and
                products;




·
            our
                ability to develop and offer new services and
                products;




·
            the
                performance of our motorcycle and automotive products and
                accessories;




·
            the
                significant and ongoing funds needed to achieve our production, marketing
                and sales objectives;




·
            the
                appeal of our services and products to
                consumers;




20




·
            our
                ability to generate adequate revenue to support our
                operations;




·
            our
                ability to maintain positive cash flow resulting from extended periods
                of
                monetary responsibility in the form of labor for extensive custom
                works in
                progress;




·
            the
                loss or injury of our principal design or technical staff; and




·
            changes
                in environmental regulation and enforcementrelating
                to our operations, including those governing VOC
                emissions.




We
      cannot
      provide assurances that our business strategy will be successful or that we
      will
      successfully address those risks and the risks described herein.





In
      addition, as a result of our limited operating history, our historical financial
      and operating information is of limited value in predicting our future operating
      results. We may not accurately forecast customer behavior and recognize or
      respond to emerging trends, changing preferences or competitive factors facing
      us, and, therefore, we may fail to make accurate financial forecasts. Our
      current and future expense levels are based largely on our investment plans
      and
      estimates of future revenue. As a result, we may be unable to adjust our
      spending in a timely manner to compensate for any unexpected revenue shortfall,
      which could force us to curtail or cease our business operations.




***We
      Are Subject to Price Volatility Due to Our Operations Materially
      Fluctuating***




As
      a
      result of the evolving nature of the markets in which we compete, as well as
      the
      current nature of the public markets and our current financial condition, we
      believe that our operating results may fluctuate materially, as a result of
      which quarter-to-quarter comparisons of our results of operations may not be
      meaningful. If in some future quarter, whether as a result of such a fluctuation
      or otherwise, our results of operations fall below the expectations of
      investors, the trading price of our common stock would likely be materially
      and
      adversely affected. You should not rely on our results of any interim period
      as
      an indication of our future performance. Additionally, our quarterly results
      of
      operations may fluctuate significantly in the future as a result of a variety
      of
      factors, many of which are outside our control. Factors that may cause our
      quarterly results to fluctuate include, among others:




·
            our
                ability to retain existing
                customers;




·
            our
                ability to attract new customers at a steady
                rate;




·
            our
                ability to maintain customer
                satisfaction;




·
            the
                extent to which our products and services gain market
                acceptance;




·
            introductions
                of products and services by
                competitors;




·
            price
                competition in the markets in which we
                compete;




·
            our
                ability to attract, train, and retain skilled
                management,




·
            the
                amount and timing of operating costs and capital expenditures relating
                to
                the expansion of our business, operations, and infrastructure;
                and




·
            general
                economic conditions and economic conditions specific to the aftermarket
                motorcycle and automotive parts, service and accessories
                industry.




***We
      May Not Be Able To Compete Effectively In Markets Where Our Competitors Have
      More Resources***




The
      motorcycle and automobile customization and accessories market is competitive
      and there are no substantial barriers to entry. We expect that competition
      will
      intensify and that new competitors may enter the market in the future. Increased
      competition may result in reduce profit margins on our products and services.
      In
      addition, many of our competitors have longer operating histories, larger
      customer bases, longer relationships with clients, and significantly greater
      financial, technical, marketing, and public relations resources than us. We
      may
      not successfully compete in any market in which we conduct currently or in
      the
      future. The fact that we compete with established competitors who have
      substantially greater financial resources and longer operating histories than
      us, enables them to engage in substantial advertising and promotion and attract
      a greater number of customers and business than we currently attract. While
      this
      competition is already intense, if it increases, it could have an even greater
      adverse impact on our revenues and profitability.




21





***We
      Could Fail To Attract Or Retain Key Personnel, Which Could Be Detrimental To
      Our
      Operations***




Our
      success is heavily dependent on the efforts, abilities and continued active
      participation of George Lefevre, Jay Isco, and Leslie McPhail, our CEO, CFO,
      and
      Chief Operating Officer respectively. In addition we are dependent on Richard
      Perez the co-founder of Damon’s Motorcycle Creation. The loss of the services of
      these individuals, and other principal design or technical staff, would diminish
      our ability to deliver signature work that our clients desire and otherwise
      severely harm our business because of their irreplaceable skills and experience.
      We do not maintain “key person” life insurance on Mr. Lefevre, Mr. Isco, Mrs.
      McPhail, or Mr. Perez. We also have other key employees who manage our
      operations and if we were to lose their services, senior management would be
      required to expend time and energy to replace and train their replacements.
      To
      the extent that we are smaller than our competitors and have fewer resources
      we
      may not be able to attract the sufficient number and quality of staff. There
      can
      be no assurance that we will be able to recruit or retain other qualified
      personnel, should it be necessary to do so.





***We
      are subject to federal, state and local government regulations affecting
      motorcycle and automotive customization and restoration that may affect our
      operations.***





Our
      business is subject to certain federal, state and local government regulations,
      including those of the Environmental Protection Agency (“EPA”) and comparable
      state agencies that regulate emissions of Volatile Organic Compounds (“VOC”) and
      other air contaminants, the Occupational Safety and Health Administration
      (“OSHA”), and regulations governing the disposal of oil, grease, tires,
      batteries and the prevention of pollution. Any changes in the laws or
      regulations imposed on us by these agencies could significantly increase our
      costs of doing business and could have a very negative effect on our
      business.





In
      particular, our business operations and facilities are subject to a number
      of
      federal, state and local environmental laws and regulations. These laws,
      regulations or the nature of our operations may require us to make significant
      additional capital expenditures to ensure compliance in the future. Our failure
      to comply with environmental laws could result in the termination of our
      operations, impositions of fines, or liabilities in excess of our capital
      resources.





***Product
      liability claims could severely damage our business and we may have insufficient
      insurance coverage.***





Given
      the
      nature of our products and services, we expect that we will be subject to
      potential product liability claims that could, in the absence of sufficient
      insurance coverage, have a material adverse impact on our business. There can
      be
      no assurance that our liability insurance coverage is adequate to cover all
      product liability claims. If such coverage is found to be insufficient, our
      business operations could be adversely affected.




***Our
      Principal Stockholders Control Our Business Affairs In Which Case You Will
      Have
      Little Or No Participation In Our Business Affairs.***





Currently,
      our principal stockholders, Thomas Prewitt, Richard Perez, Leslie McPhail and
      David McPhail own a controlling interest in our common stock. As a result,
      they
      will have significant influence over all matters requiring approval by our
      stockholders without the approval of minority stockholders. In addition, they
      will be able to elect all of the members of our Board of Directors, which will
      allow them to significantly control our affairs and management. They will also
      be able to affect most corporate matters requiring stockholder approval by
      written consent, without then need for a duly noticed and duly-held meeting
      of
      stockholders. As a result, they will have significant influence and control
      over
      all matters requiring approval by our stockholders. Accordingly, you will be
      limited in your ability to affect change in how we conduct our
      business.





***Our
      Success Is Dependent Upon The Popularity Of Harley-Davidson
      Motorcycles***  ***and
      Customized Automotives.***





Although
      our products and services are not limited to Harley-Davidson motorcycles, the
      success of our business is depended upon the popularity of Harley-Davidson
      motorcycles, and custom automotives. There can be no assurance, however, that
      the current popularity of Harley-Davidson motorcycles and custom automotives
      will continue. If such popularity declines, our business operations may be
      adversely affected.




22




***We
      do not own any patents or registered trademarks or trade names. Protecting
      our
      proprietary technology and other intellectual property may be costly and
      ineffective, and if we are unable to protect our intellectual property, we
      may
      not be able to compete effectively in our market.***




Our
      business success will depend materially on our ability to protect our trademarks
      and trade names, to preserve our trade secrets, and to avoid infringing the
      proprietary rights of third parties. In general, our proprietary rights will
      be
      protected only to the extent that protection is available and to the extent
      we
      have the financial and other resources to enforce any rights we hold.




We
      do not
      own any patents or registered trademarks or trade names. We may apply for
      federal and other governmental trademark registrations in the future, but we
      cannot assure you that any of our trademark applications will result in a
      registered and protectable trademark. Any registered or unregistered trademarks
      held or asserted by us may be canceled, infringed, circumvented or declared
      generic, or determined to be infringing on other marks owned by third parties.
      We intend to rely upon trade secrets, proprietary know-how and continuing
      technological innovation to become competitive in our market. We cannot assure
      you that others may not independently develop the same or similar technologies
      or otherwise obtain access to our technology and trade secrets.




Costly
      litigation might be necessary to protect our intellectual property or to
      determine the scope and validity of third-party proprietary rights. If an
      adverse outcome in litigation finds that we have infringed on proprietary rights
      of others, we may be required to pay substantial damages and may have to
      discontinue use of our products or re-design our products. Any claim of
      infringement may involve substantial expenditures and divert the time and effort
      of management.




***We
      Have Never Paid Dividends on Our Common Stock and You May Never Receive
      Dividends.***





We
      have
      not paid any cash dividends on our common stock to date and we do not anticipate
      paying cash dividends in the foreseeable future. We intend to retain earnings,
      if any, to finance the development and expansion of our business. Future
      dividend policy will be at the discretion of our Board of Directors and will
      be
      contingent upon future earnings, if any, our financial condition, capital
      requirements, general business conditions and other factors. There can be no
      assurance that cash dividends of any kind will ever be paid.





***Our
      Common Stock May Be Affected By Limited Trading Volume And May Fluctuate
      Significantly, Which May Affect Our Shareholders’ Ability To Sell Shares Of Our
      Common Stock***




There
      has
      been a limited public market for our common stock and there can be no assurance
      that a more active trading market for our common stock will develop. An absence
      of an active trading market could adversely affect our shareholders’ ability to
      sell our common stock in short time periods, or possibly at all. Our common
      stock has experienced, and is likely to experience in the future, significant
      price and volume fluctuations, which could adversely affect the market price
      of
      our common stock without regard to our operating performance. In addition,
      we
      believe that factors such as quarterly fluctuations in our financial results
      and
      changes in the overall economy or the condition of the financial markets could
      cause the price of our common stock to fluctuate substantially. These
      fluctuations may also cause short sellers to enter the market from time to
      time
      in the belief that we will have poor results in the future. We cannot predict
      the actions of market participants and, therefore, can offer no assurances
      that
      the market for our stock will be stable or appreciate over time. These factors
      may negatively impact shareholders’ ability to sell shares of our common
      stock.





***Because
      Our Stock Is Considered A Penny Stock, Any Investment In Our Stock Is Considered
      To Be A High-Risk Investment And Is Subject To Restrictions On
      Marketability.***





Trading
      of our common stock is conducted over-the-counter through the NASD Electronic
      Bulletin Board and covered by Rule 15g-9 under the Securities Exchange Act
      of
      1934. Under this rule, broker/dealers who recommend these securities to persons
      other than established customers and accredited investors must make a special
      written suitability determination for the purchaser and receive the purchaser’s
      written agreement to a transaction prior to sale. Securities are exempt from
      this rule if the market price is at least $5.00 per share.




23





The
      Securities and Exchange Commission adopted regulations that generally define
      a
“penny stock” as any equity security that has a market price of less than $5.00
      per share. Additionally, if the equity security is not registered or authorized
      on a national securities exchange or the NASDAQ and the issuer has net tangible
      assets under $2,000,000, the equity security also would constitute a “penny
      stock.” Our common stock does constitute a penny stock because our common stock
      has a market price less than $5.00 per share and our common stock is not quoted
      on NASDAQ. As our common stock falls within the definition of penny stock,
      these
      regulations require the delivery, prior to any transaction involving our common
      stock, of a disclosure schedule explaining the penny stock market and the risks
      associated with it. Furthermore, the ability of broker/dealers to sell our
      common stock and the ability of shareholders to sell our common stock in the
      secondary market may be limited. As a result, the market liquidity for our
      common stock is adversely affected. We can provide no assurance that trading
      in
      our common stock will not be subject to these or other regulations in the
      future, which may negatively affect the market for our common stock.
      Furthermore, this lack of liquidity also may make it more difficult for us
      to
      raise capital in the future.





***Future
      Acquisitions May Disrupt Our Business And Deplete Our Financial
      Resources***




Any
      future acquisitions we make could disrupt our business and seriously harm our
      financial condition. While we have no current agreements to do so, we may
      consider investments in complementary companies and products. In the event
      of
      any future acquisitions, we may:




·
            issue
                stock that would dilute our current stockholders’ percentage
                ownership;




·
            incur
                debt;




·
            assume
                liabilities;




·
            incur
                amortization expenses related to goodwill and other intangible assets;
                or




·
            incur
                large and immediate write-offs.




The
      use
      of debt or leverage to finance our future acquisitions should allow us to make
      acquisitions with an amount of cash in excess of what may be currently available
      to us. If we use debt to leverage up our assets, we may not be able to meet
      our
      debt obligations if our internal projections are incorrect or if there is a
      market downturn. This may result in a default and the loss in foreclosure
      proceedings of the acquired business or the possible bankruptcy of our
      business.




Our
      operation of any acquired business will also involve numerous risks,
      including:




·
            integration
                of the operations of the acquired business and its
                products;




·
            unanticipated
                costs;




·
            diversion
                of management’s attention from our core business;




·
            adverse
                effects on existing business relationships with suppliers and customers;




·
            risks
                associated with entering markets in which we have limited prior
                experience; and




·
            potential
                loss of key employees, particularly those of the purchased
                organizations.




**ITEM
      3. CONTROLS AND PROCEDURES**




(a)  Evaluation
      of Disclosure Controls and Procedures. Our Chief Executive Officer and Interim
      Chief Financial Officer have evaluated the effectiveness of our disclosure
      controls and procedures (as such term is defined in Rules 13a-15 and 15d-15
      under the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
      as
      of the end of the period covered by this quarterly report (the "Evaluation
      Date"). Based on such evaluation, such officers have concluded that, as of
      the
      Evaluation Date, our disclosure controls and procedures are effective in
      alerting them on a timely basis to material information relating to our Company
      (including our consolidated subsidiaries) required to be included in our reports
      filed or submitted under the Exchange Act.




24




(b)  Changes
      in Internal Controls over Financial Reporting. During the most recent fiscal
      quarter, there have not been any significant changes in our internal controls
      over financial reporting or in other factors that have materially affected,
      or
      are reasonably likely to materially affect, our internal controls over financial
      reporting.




**PART
      II**




**ITEM
      1.**  **LEGAL
      PROCEEDINGS**




Damon’s
          historically leased four (4) units space in city of Brea, California under
          four
          separate non-cancelable operating lease agreements, which expires through
          November 30, 2007. Damon’s currently does not occupy the spaces. In July, the
          landlord filed claims against Damon’s for the past due rent and charges of all
          units, aggregate of $19,657, and the additional amounts due pursuant to
          the
          remaining terms of the lease agreements. The obligations under the remaining
          terms of the lease agreements are estimated at a total of $89,086. Subsequently,
          Damon’s and the landlord entered into a Surrender Agreement for one unit,
          providing that Damon’s agreed to forfeit a security deposit of $1,568 and to pay
          a sum of $3,822, representing the unpaid charges and rent through the date
          of
          agreement. In return, the landlord agreed to discharge and release Damon’s from
          all obligations under the lease agreement of that unit.
 
 No
          provision for any contingent liabilities has been made in the accompanying
          consolidated financial statements since management cannot predict the outcome
          of
          the claims or estimate the amount of any loss that may result. In addition,
          the
          Company has received an outside legal opinion from an attorney that states
          the
          outstanding liability is not the Company’s as the original lease was signed by
          the previous owners of Damon’s. However, the Company will continue to accrue the
          past due rent of $19,657 in the accompanying financial statements until
          this
          matter is resolved.


On
      December 7, 2005 a customer of TrixMotive filed a lawsuit against TrixMotive
      in
      the Superior Court of Santa Clara County of California. The claim is for a
      breach of contract and warranty, intentional and negligence misrepresentation
      for a customized vehicle. The plaintiff seeks $98,827 in compensatory damages
      and other unspecified damages plus interest, attorney fees, and costs.
      Management believes they have meritorious defenses against the lawsuit, and
      will
      vigorously defend it.




**ITEM
      2.**  **CHANGES
      IN SECURITIES**




On
      January 4, 2006 and January 30, 2006, MotivNation issued both $500,000 and
      $1,200,000 in Convertible Debentures respectively, at an 8% annual interest
      rate, pursuant to a Securities Purchase Agreement (the “Agreement”). Interest
      shall commence accruing on the Issue Date, shall be computed on the basis of
      a
      365-day year and the actual number of days elapsed and shall be payable
      quarterly provided that no interest shall be due and payable for any month
      in
      which the Trading Price (as such term is defined below) is greater than $1.00
      for each Trading Day (as such term is defined below) of the month.




The
      convertible debentures can be converted into shares of common stock under the
      following calculation: the Applicable Percentage (as defined herein) multiplied
      by the Market Price (as defined herein). “Market Price” means the average of the
      lowest three (3) Trading Prices (as defined below) for the Common Stock during
      the twenty (20) Trading Day period ending one Trading Day prior to the date
      the
      Conversion Notice is sent by the Holder to the Borrower via facsimile (the
      “Conversion Date”). “Applicable Percentage” shall mean 50.0%. “Trading Price”
means, for any security as of any date, the intraday trading price on the
      Over-the-Counter Bulletin Board (the “OTCBB”) as reported by a reliable
      reporting service (“Reporting Service”) mutually acceptable to Borrower and
      Holder and hereafter designated by Holders of a majority in interest of the
      Notes and the Borrower or, if the OTCBB is not the principal trading market
      for
      such security, the intraday trading price of such security on the principal
      securities exchange or trading market where such security is listed or traded
      or, if no intraday trading price of such security is available in any of the
      foregoing manners, the average of the intraday trading prices of any market
      makers for such security that are listed in the “pink sheets” by the National
      Quotation Bureau, Inc. If the Trading Price cannot be calculated for such
      security on such date in the manner provided above, the Trading Price shall
      be
      the fair market value as mutually determined by the Borrower and the holders
      of
      a majority in interest of the Notes being converted for which the calculation
      of
      the Trading Price is required in order to determine the Conversion Price of
      such
      Notes. “Trading Day” shall mean any day on which the Common Stock is traded for
      any period on the OTCBB, or on the principal securities exchange or other
      securities market on which the Common Stock is then being traded.




25




The
      above
      notes were issued to the following on January 4, 2006: AJW Partners, LLC a
      $59,500 secured convertible debenture, AJW Qualified Partners, LLC a $163,000
      secured convertible debenture, New Millennium Capital Partners II, LLC a $7,500
      secured convertible debenture, and AJW Offshore, LTD a $270,000 secured
      convertible debenture.




The
      above
      notes were issued to the following on January 30, 2006: AJW Partners, LLC a
      $142,800 secured convertible debenture, AJW Qualified Partners, LLC a $391,200
      secured convertible debenture, New Millennium Capital Partners II, LLC a $18,000
      secured convertible debenture, and AJW Offshore, LTD a $648,000 secured
      convertible debenture.




In
      connection with the convertible notes issued on January 4, 2006, the following
      common stock issuable upon the exercise of warrants at $1.50: 74,375 shares
      of
      common stock issuable to AJW Partners, LLC, 203,750 shares of common stock
      issuable to AJW Qualified Partners, LLC, 9,375 shares of common stock issuable
      to New Millennium Capital Partners II, LLC and 337,500 to AJW Offshore,
      LTD




In
      connection with the convertible notes issued on January 30, 2006, the following
      common stock issuable upon the exercise of warrants at $1.50: 178,500 shares
      of
      common stock issuable to AJW Partners, LLC, 489,000 shares of common stock
      issuable to AJW Qualified Partners, LLC, 22,500 shares of common stock issuable
      to New Millennium Capital Partners II, LLC and 810,000 to AJW Offshore,
      LTD




The
      holders of the 8% convertible debentures may not convert its securities into
      shares of MotivNation’s common stock if after the conversion such holder would
      beneficially own over 4.99% of the outstanding shares of MotivNation’s common
      stock. Since the number of shares of MotivNation’s common stock issuable upon
      conversion of the debentures will change based upon fluctuations of the market
      price of MotivNation’s common stock prior to a conversion, the actual number of
      shares of MotivNation’s common stock that will be issued under the debentures
      owned by the holders is based on a reasonable good faith estimate of the maximum
      amount needed.




On
      January 10, 2006, the Company entered into Shares for Debt Agreement with each
      George Lefevre, the CEO and director of Motivnation, and Jay Isco, the CFO,
      and
      Secretary of MotivNation, The company issued 435,000 and 217,000 restricted
      shares to George Lefevre and Jay Isco respectively, pursuant to the terms
      described in the Shares for Debt Agreements.




**ITEM
      3.**  **DEFAULTS
      UPON SENIOR SECURITIES**





None.





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




None.




**ITEM
      5.**  **OTHER
      INFORMATION**





None.




26





**ITEM
      6.**   **EXHIBITS
      AND REPORTS ON FORM 8-K**





*(a)
       Exhibits*





Exhibit
      31.1 - Certification by our President required by Rule 13a-14(a) or Rule
      15d-14(a).





Exhibit
      31.2 - Certification by our Interim Chief Financial Officer required by Rule
      13a-14(a) or Rule 15d-14(a).





Exhibit
      32.1 - Certification by our President required by Rule 13a-14(b) or Rule
      15d-14(b) and section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
      1350.





Exhibit
      32.2 - Certification by our Interim Chief Financial Officer required by Rule
      13a-14(b) or Rule 15d-14(b) and section 906 of the Sarbanes-Oxley Act of 2002,
      18 U.S.C. Section 1350.





*(b)
       Reports on Form 8K.*





On
      January 10, 2006, we filed a Form 8-K with the Commission announcing the
      election of George Lefevre, the CEO of Motivnation to the board of Directors
      and
      subsequently was elected Chairman of the Board. (Item 5.02)





On
      February 7, 2006, we filed a Form 8-K with the Securities and Exchange
      Commission, or the Commission announcing that the board of Directors entered
      into material definitive agreements with Officers and a Director issuing
      unregistered shares. (Items 1.01, 3.02, and 9.01)




27





**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(b) of the Securities and Exchange Act
      of
      1934, the registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized.




Dated:
                November 3,
                2006
              MotivNation, Inc.By:George
                  Lefevre CEO





28




INDEX
                TO EXHIBITSExhibit
                31.1 - Certification required by Rule 13a-14(a) or Rule
                15d-14(a).
              
              Exhibit
                31.2 - Certification required by Rule 13a-14(a) or Rule
                15d-14(a).
              
              Exhibit
                32.1 - Certification Required by Rule 13a-14(b) or Rule 15d-14(b)
                and
                section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
                1350.
              
              Exhibit
                32.1 - Certification Required by Rule 13a-14(b) or Rule 15d-14(b)
                and
                section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
                1350.
            27
              
              28
              
              
              29
              
              
              30





29