**U.S.
      Securities and Exchange Commission**


**Washington,
      D.C. 20549**









**FORM
      10-KSB/A**


**AMENDMENT
      NO. 1**










**[X]**
            **ANNUAL
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934
                for the fiscal year ended December 31,
                2004**





**[ 
                ]**
            **TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934
                for the transition period from _______ to
                _______**




**COMMISSION
      FILE NUMBER: 333-87992**







**DIAMOND
      POWERSPORTS, INC.**


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





******Florida**
              (State
                or other jurisdiction of
              incorporation
                or organization)
            **********65-0419601**
              (IRS
                Employer identification No.)




**5150
      NW 109th Ave., Suite 4, Sunrise, Florida 33351**


(Address
      of principal executive offices)





**(954)
      749-8606**


(Issuer's
      telephone number)







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





None.





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





None.







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





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or an
      amendment to this Form 10-KSB. [x]





State
      issuer's revenues for its most recent fiscal year: $1,491,929.





As
      of
      April 4, 2005, there were 14,868,344 common shares outstanding and the aggregate
      market value of the common shares (based upon the close price of $.16 reported
      by brokers) held by non-affiliates was approximately $2,378,935.





Transitional
      Small Business Disclosure Format (check one): Yes[ ] No[X]





Number
      of
      shares of common stock outstanding as of April 4, 2004: 14,868,344


Number
      of
      shares of preferred stock outstanding as of April 4, 2004: -0-














CAUTIONARY
      STATEMENT REGARDING FORWARD LOOKING INFORMATION





The
      discussion contained in this 10-KSB under the Securities Exchange Act of 1934,
      as amended, (the "Exchange Act") contains forward-looking statements that
      involve risks and uncertainties. The issuer's actual results could differ
      significantly from those discussed herein. These include statements about our
      expectations, beliefs, intentions or strategies for the future, which we
      indicate by words or phrases such as "anticipate," "expect," "intend," "plan,"
      "will," "we believe," "the Company believes," "management believes" and similar
      language, including those set forth in the discussion under "Description of
      Business," including the "Risk Factors" described in that section, and
      "Management's Discussion and Analysis or Plan of Operation" as well as those
      discussed elsewhere in this Form 10-KSB. We base our forward-looking statements
      on information currently available to us, and we assume no obligation to update
      them. Statements contained in this Form 10-KSB that are not historical facts
      are
      forward-looking statements that are subject to the "safe harbor" created by
      the
      Private Securities Litigation Reform Act of 1995.






Explanatory
      Note





We
      are
      filing this Amendment No. 1 to our Annual Report on Form 10-KSB for the year
      ended December 31, 2004 to respond to certain comments received by us from
      the
      Staff of the Securities and Exchange Commission ("SEC"). We have restated our
      balance sheet at December 31, 2004, and statements of income, stockholders'
      equity and cash flows for the year ended December 31, 2004. The restatement
      impacts the year ended December 31, 2004, but has no effect on the financial
      statements issued in prior fiscal years. The restatement corrects an error
      in
      recording 125,000 common shares retired and returned to the Company from an
      officer of the Company. The returned shares originally were recorded as a
      $37,000 decrease in consulting expenses and should have been recorded without
      a
      credit. The impact of the restatement increased net loss by $37,500, and had
      no
      effect on net loss per share for the year ended December 31, 2004.





For
      convenience and ease of reference we are filing this Annual Report in its
      entirety with the applicable changes. Unless otherwise stated, all information
      contained in this amendment is as of April 18, 2005, the filing date of our
      Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004.
      Accordingly, this Amendment No. 1 to the Annual Report on Form 10-KSB/A should
      be read in conjunction with our subsequent filings with the SEC.




2





**PART
      I**






**ITEM
      1.**  **Description
      of Business**





Our
      operations primarily involve motorcycle accessory and apparel manufacturing
      and
      distributing, specializing in affordable brand name and after-market products.
      Through our emphasis on budget pricing and high quality products, we have
      developed a market in the motorcycle accessory and apparel industry. We
      currently operate one office that is maintained by a management team of three
      individuals. The present geographic area we operate includes primarily the
      Dade
      County, Broward County, and South Palm Beach County areas of South Florida.
      Additional markets have also developed in the Caribbean islands.





Marketing
      for our products is accomplished through print ads in newspapers and magazines
      as well as wholesale referral. Additionally, we utilize a network of industry
      wholesale buyers to sell large product quantities.





The
      motorcycle accessory and apparel industry is highly competitive with respect
      to
      price, service, quality, and location. There are numerous competitors in the
      motorcycle accessory and apparel industry such as Dennis Kirk, Chaparral and
      Motorcycle Stuff that possess substantially greater financial, marketing,
      personnel and other resources than Diamond Powersports. There can be no
      assurance that we will be able to respond to various competitive factors
      affecting the business. We plan to gain a competitive advantage over our
      competitors in the motorcycle accessories and apparel industry by offering
      quality products and services at a low price.





Our
      services include international shipping and a thirty day refund policy, which
      many industry distributors do not currently offer. We believe our product
      prices, product quality and good customer service will differentiate our
      products from our competitors. For example, many of our listed prices currently
      match or are lower than the advertised prices of our major competitors. In
      addition, the aluminum metal alloy used in our lowering links and top clamps
      is
      a 7075 alloy that has been tested by Kaiser Aluminum, a non-affiliate, to be
      stronger than most traditional metal alloys. Our other products use a 6061
      alloy
      that is slightly less in strength than the 7075 alloy but remains stronger
      than
      most of our competitors products. There are some competitors currently using
      the
      6061 alloy in their products but we are not currently aware of any other
      companies using 7075 aluminum alloy in lowering links or top clamps. Also,
      we
      offer next day shipping on our products and our customer service professionals
      have an average of five years in the motorcycle industry which allows them
      to
      better serve our customers. However, since many of our competitors have greater
      brand loyalty and more capital resources than we do, there can be no assurance
      we will be successful in gaining that competitive advantage in our
      marketplace.





The
      main
      markets for Diamond Powersports are individual retail customers and wholesale
      buyers and no single customer makes up more than ten percent of the total
      revenues of Diamond Powersports, Inc. We do not expect that this will change
      in
      the future.





We
      have
      eight full-time employees and one part-time employee. We also have two
      management consultants that are each independently contracted with by Diamond
      Powersports, Inc. to service and provide financial consulting and services
      relating to our filings and compliance with the Securities and Exchange
      Commission.




3





Our
      product line consists primarily of the following:


·
            Air
                filtersFuel valvesThrottle assemblies·
            Air
                shiftersGasketsTires


·
            Carburetors
                IgnitionsTransmission and clutch parts·
            ChainsPiston
                kitsValves


·
            Chain
                GuardsRace engine valvesVelocity stacks·
            Exhaust
                systemsRPM limitersWheels


·
            Frame
                slidersSprocketsOther racing
                components





We
      currently manufacture and assemble the frame sliders, wheels, lowering links,
      adjustable kick stands and top clamps. Other products are purchased on a
      wholesale basis from manufacturers. We accomplish our manufacturing either
      in
      our warehouse facility or through our arrangement with Henderson Industrial
      Technology with whom we have an oral agreement to outsource certain alloy metal
      product manufacturing at fixed prices. Our agreement with Henderson Industrial
      technologies is non-exclusive and other companies may utilize their
      manufacturing services as well. This agreement can be cancelled by either party
      at any time. We do not typically provide installation services for our products.





Diamond
      Powersports does not expect that any single customer will account for more
      than
      ten percent of our business. At the present time there is no need for
      governmental approvals, though this may change in the future.





The
      Diamond Powersports, Inc. staff is projected at 4-5 new employees for the next
      twelve months. The three managers that are presently on staff will supervise
      these new employees.





**Manufacturing
      and Distributing**





Our
      inventory consists of products which we either purchase from wholesalers or
      manufacture under our brand name Diamond Powersports. Of our 4,500 total square
      feet of facility, 4,000 square feet is dedicated to manufacturing, assembly
      and
      packaging of our products. We also subcontract approximately fifty percent
      of
      our manufacturing to a local machine shop. Currently, we use Henderson
      Industrial Technology in Ft. Lauderdale, Florida to manufacture the majority
      of
      our racing components. We do not have any written agreements with respect to
      our
      manufacturing arrangements with Henderson Industrial Technology. Our oral
      agreement can be cancelled by either party at any time. Henderson Industrial
      Technology assists us with manufacturing of certain alloy metal products at
      fixed prices per unit. However, we still assemble, package and ship the products
      manufactured from their location. If Henderson Industrial Technology was unable
      to fulfill our product manufacturing, we could use other local machine shops
      with approximately the same terms.




4




**Environmental
      Law Compliance**




There
      are
      no current existing environmental concerns for our manufacturing or our products
      and services. If this changes in the future, we make every effort to comply
      with
      all such applicable regulations.





Additional
      Financing





The
      Company may need to raise additional funds to meet operating requirements in
      the
      future. If the Company raises additional funds through issuance of equity
      related or debt securities, such securities may have rights to the Company's
      common stock, such as warrants or options. Shareholders may experience
      additional dilution from exercise of these equity instruments. The Company
      cannot be certain that additional financing will be available when required
      or
      at all. (See 'Liquidity and Capital Resources' for further
      discussion).





**ITEM
      2. Properties**





We
      have
      two long-term non-cancelable operating leases for our warehouse and office
      space, the total area of which is 11,500 square feet, located at 5150 Northwest
      109 th Avenue,
      Suite 3 and Suite 4 - Sunrise, Florida 33351. We lease beginning in 2003 and
      ending in October 1, 2008 and December 31, 2006, respectively. Pursuant to
      the
      terms of our lease, rental payments and related expense for the years ending
      December 31, 2004 and 2003 were $84,907 and $41,231, respectively, which was
      approximately $7,076 per month in 2004. We also maintain a standard general
      comprehensive public liability insurance policy as part of our lease agreement.
      The warehouse space, which is approximately 70% of total, will be used for
      manufacturing of new products.





**ITEM
      3. Legal Proceedings**





We
      are
      not a party to any legal proceedings, nor, to the best of our knowledge, are
      any
      such proceedings threatened or contemplated.





**ITEM
      4. Submission of Matters to a Vote of Security Holders**





None.











PART
      II





**ITEM
      5. Market for the Registrant’s Common Stock and Related Security Holder
      Matters**





(a)
            Our
                Common Stock is quoted on the Over-the-Counter Bulletin Board, a
                service
                maintained by the NASDAQ Stock Market, Inc., under the symbol "DPWS".
                Trading in our Common Stock in the over-the-counter market has been
                limited and sporadic and the quotations set forth below are not
                necessarily indicative of actual market conditions. Further, these
                quotations reflect inter-dealer prices, without retail mark-up, markdown,
                or commission, and do not necessarily reflect actual transactions.
                Set
                forth below is the range low and high bid information for our Common
                Stock
                for each quarter of the years ended December 31, 2004.







BidQuarter
                Ended
            Low
            High3/31/04
            .69
            .736/30/04
            .25
            .269/30/04
            .25
            .2612/31/04
            .14
            .17




(b)
            Holders.
                The approximate number of holders of record of the Registrant's Common
                Stock as of April 4, 2005 was 76.





(c)
            The
                Registrant has not paid dividends from inception to date and does
                not
                currently intend to do so.






5





Penny
      Stock Characterization





Our
      Shares are "penny stocks" within the definition of that term as contained in
      the
      Securities Exchange Act of 1934, which are generally equity securities with
      a
      price of less than $5.00. Our shares will then be subject to rules that impose
      sales practice and disclosure requirements on certain broker-dealers who engage
      in certain transactions involving a penny stock. These will impose restrictions
      on the marketability of the common stock.





Under
      the
      penny stock regulations, a broker-dealer selling penny stock to anyone other
      than an established customer or "accredited investor" must make a special
      suitability determination for the purchaser and must receive the purchaser's
      written consent to the transaction prior to the sale, unless the broker-dealer
      is otherwise exempt. Generally, an individual with a net worth in excess of
      $1,000,000 or annual income exceeding $200,000 individually or $300,000 together
      with his or her spouse is considered an accredited investor. In addition, unless
      the broker-dealer or the transaction is otherwise exempt, the penny stock
      regulations require the broker-dealer to deliver, prior to any transaction
      involving a penny stock, a disclosure schedule prepared by the Securities and
      Exchange Commission relating to the penny stock market. A broker-dealer is
      also
      required to disclose commissions payable to the broker-dealer and the Registered
      Representative and current bid and offer quotations for the securities. In
      addition a broker-dealer is required to send monthly statements disclosing
      recent price information with respect to the penny stock held in a customer's
      account, the account’s value and information regarding the limited market in
      penny stocks. As a result of these regulations, the ability of broker-dealers
      to
      sell our stock may affect the ability of selling security holders or other
      holders to sell their shares in the secondary market. In addition, the penny
      stock rules generally require that prior to a transaction in a penny stock,
      the
      broker-dealer make a special written determination that the penny stock is
      a
      suitable investment for the purchaser and receive the purchaser's written
      agreement to the transaction.





These
      disclosure requirements may have the effect of reducing the level of trading
      activity in the secondary market for a stock that becomes subject to the penny
      stock rules. These additional sales practice and disclosure requirements could
      impede the sale of our securities, if our securities become publicly traded.
      In
      addition, the liquidity for our securities may be adversely affected, with
      concomitant adverse affects on the price of our securities. Our shares may
      someday be subject to such penny stock rules and our shareholders will, in
      all
      likelihood, find it difficult to sell their securities.





We
      have
      no outstanding options and no outstanding warrants.





**ITEM
        6.**  **Management’s
        Discussion and Analysis**





Introduction





The
        discussion contained in this prospectus contains “forward-looking statements”
that involve risk and uncertainties. These statements may be identified by
        the
        use of terminology such as “believes”, “expects”, “may”, “will”, or “should”, or
“anticipates”, or expressing this terminology negatively or similar expressions
        or by discussions of strategy. The cautionary statements made in this prospectus
        should be read as being applicable to all related forward-looking statements
        wherever they appear in this prospectus. Our actual results could differ
        materially from those discussed in this prospectus. Important factors that
        could
        cause or contribute to such differences include those discussed under the
        caption entitled “risk factors,” as well as those discussed elsewhere in this
        prospectus.




6





We
        were
        incorporated in Florida on May 13, 1992 to engage in the business of
        distributing motorcycle parts and accessories primarily in the South Florida
        area. Our products and services are offered to both retail consumers and
        wholesale buyers. Orders for our products are typically shipped in one to
        three
        days from the time of order. All retail and wholesale orders are fulfilled
        from
        our warehouse location in Sunrise, Florida. Our retail customers typically
        locate Diamond Powersports through either our product catalog or print
        advertisements in industry publications. We do not have a retail showroom,
        but
        we opened a traveling showroom contained in a semi truck and tractor trailer
        in
        2004 so that we are able to profile and deliver our products throughout the
        United States.





We
        have
        developed a strategy to expand our operations. Currently, this business plan
        includes:





·
              Growing
                  our revenues through new product offerings. Started from 2001,
                  we released
                  several new products including frame sliders, wheels, lowering
                  links,
                  adjustable kick stands and top clamps.·
              Increase
                  the marketing of our products to additional geographical areas.
                  Although
                  we currently deliver our products on a national and international
                  basis,
                  we focus the majority of our marketing efforts domestically. We
                  plan to
                  increase our marketing efforts to other markets. For example, we
                  have
                  looked into marketing such areas as Canada and
                  Japan.





·
              Reducing
                  costs of sales through strategic vendor relationships. Many of
                  our vendors
                  have orally agreed to provide discounts or additional credit terms
                  if our
                  volume of buying increases. We believe an increase in our purchasing
                  will
                  reduce our cost of sales as a percentage of sales.·
              Obtain
                  additional funding. Currently, our assets and income are insufficient
                  to
                  fund our business plan. We may need to raise capital through debt
                  or a
                  follow on stock offering. We presently have no commitments for
                  either of
                  these sources of funding. Our business plan may be adversely affected
                  if
                  we are unable to raise additional
                  capital.





Selected
                  financial dataYear
                  Ended December 312004
              
              2003Net
                  Sales
              
              $
              1,491,929
              
              $
              888,047Net
                  Loss
              
              
              (680,244
              )
              
              (361,596
              )Net
                  Loss per Common Share
              
              
              (.05
              )
              
              (.04
              )Weighted
                  Average Common Shares Outstanding
              
              
              12,411,820
              
              
              9,904,700As
                  of December 31,2004
              
              
              2003Total
                  Assets
              
              $
              449,312
              
              $
              169,214Working
                  Capital
              
              
              (167,657
              )
              
              (157,798
              )Shareholders’
                  Equity
              
              
              87,191
              
              
              (129,584
              )No
                  dividends have been declared or paid for any of the periods
                  presented.




7




Results
        of Operations





Year
        Ended December 31, 2004 Compared to Year Ended December 31,
        2003





Sales.




Sales
        for
        the year ended December 31, 2004 were $1,491,929 versus sales of $888,047
        for
        the year ended December 31, 2003, an increase of 68%. We attribute the increase
        in sales to new and improved parts as well as a growing awareness of our
        products. Product sales consisted primarily of the following:





·
              Bar
                  end sliders IgnitionsSprockets·
              Clutch
                  cable kits Lowering
                  linksTires


·
              ChainsMaster
                  cylinder Mirror block-off capsTransmission and clutch parts·
              Flame
                  slidersOil pansValves


·
              Frame
                  sliders Piston kits Wheels·
              Fuel
                  valvesR1 swing arm sliders Other motorcycle
                  components


·
              Foot
                  peg sliders RPM limiters







All
        revenues were from unrelated third parties and were made to retail consumers
        and
        wholesale buyers.




Cost
        of
        Goods Sold.




The
        cost of
        goods sold includes the purchase price for our parts and accessories plus
        other
        direct costs associated with making the products available for resale. It
        is
        customary to experience variations in the cost of sales as a percentage of
        net
        sales based on the types of products sold. Our gross margins typically range
        between 30-60%.




The
        cost of
        goods sold for the year ended December 31, 2004 was $816,089 versus $446,680
        in
        the same period in 2003. Cost of sales as a percentage of sales was 55% for
        2004
        and was 50% in 2003. The increase in cost of sales as a percentage of sales
        was
        due to the increase in sales of the products which have lower gross
        margins.




We
        expect
        cost of sales as a percentage of sales to decrease to around 40% of total
        sales
        for fiscal year 2005 through increasing the sales of products with better
        margins. For example, our frame sliders, wheels, lowering links, adjustable
        kick
        stands and top clamps were introduced last year which have between a 90-300
        percent price markup, depending on whether they are sold wholesale or retail.
        If
        we can successfully grow our revenues through sales of these higher margin
        products, our cost of sales as a percentage of sales should be lower in future
        periods. In addition, volume discounts will be available to us if we are
        successful in achieving sales growth in the future, which will further reduce
        our cost of sales as a percentage of sales.





Expenses.




Selling,
        general and administrative expenses for the years ended December 31, 2004
        and
        2003 were $405,299 and $221,964, respectively, an increase of $183,335. The
        increase in expenses was primarily attributable to minimal fixed cost increases
        incurred in our lease, the increase in advertising expenses, board compensation,
        shipping expenses, and an allowance for doubtful account which has been
        established for estimated uncollectible accounts in the amount of $11,000.
        Also,
        we started our traveling showroom contained in a semi truck and tractor trailer
        in 2004, which caused the increase in travel expenses.




8




We
        expect
        increases in expenses through the year 2005 as we move towards developing
        our
        business plan. We expect the increase to be primarily in sales related expenses
        such as advertising and salespersons' salaries.





Income
        /
        Losses.




Net
        loss for
        the year ended December 31, 2004 was $680,244 versus $361,596 in 2003, an
        increase of $318,648. The increase was primarily attributable to an increase
        in
        payroll expenses and an increase on selling, general and administrative expenses
        for the period. We expect to continue to incur losses through the year 2005.
        In
        addition, there can be no assurance that we will achieve or maintain
        profitability or that our revenue growth can be sustained in the
        future.





Impact
        of
        Inflation.




We
        believe
        that inflation has had a negligible effect on operations since inception.
        We
        believe that we can offset inflationary increases in the cost of labor by
        increasing sales and improving operating efficiencies.





Liquidity
        and Capital Resources.




Cash
        flows
        used in operating activities were $181,497 for the year ended December 31,
        2004
        versus cash used in operating activities of $13,759 in 2003. The increase
        in
        cash flows used in operating activities for 2004 were primarily attributable
        to
        the increase in net loss and the retirement of common stock and options,
        which
        was $77,550 and $65,050, respectively, due to nonperformance of the consultants,
        partially offset by non-cash services and compensation expense for the period
        of
        $691,974.




Cash
        flows
        used in investing activities were $239,441 for the year ended December 31,
        2004
        versus $20,180 during the year ended in 2003. Cash flows used in investing
        activities for the 2004 were due primarily to purchases of property and
        equipments.




Cash
        flows
        provided by financing activities were $424,536 for the year ended December
        31,
        2004 versus $33,939 during the year ended in 2003. Cash flows for the 2004
        included $347,645 in proceeds from sales of common stock, and $31,718 in
        proceeds from stockholder loans and $45,173 in proceeds from notes payable.
        Notes payable at December 31, 2004 includes two unsecured non-interest bearing
        notes payable which will mature in 2005.




Going
        concern
        opinion. As shown in our accompanying financial statements, our independent
        auditors have raised substantial doubt about its ability to continue as a
        going
        concern. The ability of Diamond Powersports to continue as a going concern
        is
        dependent on developing operations, increasing revenues and obtaining new
        capital. Management has enacted the following plan to address these issues:
        (1)
        obtain funding from new investors to alleviate the Diamond Powersports' capital
        deficiency, (2) refinance existing debt on existing assets, (3) lease larger
        facilities in order to manufacture certain products thereby reducing costs
        and
        (4) market motorcycle accessories through significant, proven trade shows
        that
        produce individual orders in excess of $75,000.




Bank
        Line of
        Credit. Diamond Powersports has two unsecured bank lines of credit bearing
        interest between 10.25% and 17.9% at December 31, 2003. The credit line in
        the
        amount of $32,314 in 2003 was reclassified as short-term credit card debt,
        and
        included in accounts payable, the balance of the line of credit of $20,448
        was
        transferred to the Officer in exchange for our common stock.




We
        estimate
        we will need approximately $50,000 in additional capital during 2005. If
        revenues increase during 2005, we may have sufficient cash flow from operations.
        During 2004, we had a negative $181,497 from operations.




9




Overall,
        we
        have funded our cash needs from inception through December 31, 2004 with
        a
        series of debt and equity transactions, primarily with related parties. If
        we
        are unable to receive additional cash from our related parties, we may need
        to
        rely on financing from outside sources through debt or equity transactions.
        Our
        related parties are under no legal obligation to provide us with capital
        infusions. Failure to obtain such financing could have a material adverse
        effect
        on operations and financial condition.




We
        had cash
        of $3,598 on hand and a working capital deficit of $167,657 as of December
        31,
        2004. We had no cash on hand and a working capital deficit of $157,798 as
        of
        December 31, 2003. Our working capital deficit is primarily due to current
        obligations in accounts payable, accrued payroll for stockholders and loans
        from
        stockholders. We will substantially rely on the existence of revenue from
        our
        business; however, we have no current or projected capital reserves that
        will
        sustain our business for the next 12 months. Currently, we have enough cash
        to
        fund our operations for about six months. This is based on current cash flows
        from financing activities and projected revenues. Also, if the projected
        revenues fall short of needed capital we may not be able to sustain our capital
        needs. We will then need to obtain additional capital through equity or debt
        financing to sustain operations for an additional year. A lack of significant
        revenues in 2005 will significantly affect our cash position and move us
        towards
        a position where the raising of additional funds through equity or debt
        financing will be necessary. Our current level of operations would require
        capital of approximately $50,000 to sustain operations through year 2005
        and
        approximately $50,000 per year thereafter. Modifications to our business
        plans
        or a new retail location may require additional capital for us to operate.
        For
        example, if we are unable to raise additional capital in the future we may
        need
        to curtail our number of new product offers or limit our marketing efforts
        to
        the most profitable geographical areas. This may result in lower revenues
        and
        market share for Diamond Powersports. In addition, there can be no assurance
        that additional capital will be available to us when needed or available
        on
        terms favorable to Diamond Powersports.




On
        a
        long-term basis, liquidity is dependent on continuation and expansion of
        operations, receipt of revenues, and additional infusions of capital and
        debt
        financing Our current capital and revenues are insufficient to fund such
        expansion. If we choose to launch such an expansion campaign, we will require
        substantially more capital. The funds raised from this offering will also
        be
        used to market our products and services as well as expand operations and
        contribute to working capital. However, there can be no assurance that we
        will
        be able to obtain additional equity or debt financing in the future, if at
        all.
        If we are unable to raise additional capital, our growth potential will be
        adversely affected and we will have to significantly modify our plans. For
        example, if we unable to raise sufficient capital to develop our business
        plan,
        we may need to:





§
              Curtail
                  new product launches§
              Forego
                  or postpone opening new traveling showrooms,
                  or


§
              Limit
                  our future marketing efforts to areas that we believe would be
                  the most
                  profitable.




Demand
        for
        the products and services will be dependent on, among other things, market
        acceptance of our products, the motorcycle parts and accessories market in
        general, and general economic conditions, which are cyclical in nature. Inasmuch
        as a major portion of our activities is the receipt of revenues from the
        sales
        of our products, our business operations may be adversely affected by our
        competitors and prolonged recession periods.




Our
        success
        will be dependent upon implementing our plan of operations and the risks
        associated with our business plans. We operate a motorcycle parts and
        accessories distribution business to retail consumers and wholesale buyers.
        We
        plan to strengthen our position in these markets. We also plan to expand
        our
        operations through aggressively marketing our products and Company
        concept. ****




10




**ITEM
      7. Financial Statements**







REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








To
      the
      Board of Directors and Shareholders of


Diamond
      Powersports, Inc.





We
      have
      audited the accompanying balance sheet of Diamond Powersports, Inc. as of
      December 31, 2004 and the related statements of operations, stockholders'
      equity, and cash flows for the years ended December 31, 2004 and 2003. These
      financial statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audits.





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





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Diamond Powersports, Inc. as of
      December 31, 2004 and the results of its operations and its cash flows for
      the
      years ended December 31, 2004 and 2003 in conformity with accounting principles
      generally accepted in the United States of America.





The
      accompanying financial statements have been prepared assuming the Company will
      continue as a going concern. The Company has suffered recurring losses from
      operations, has negative working capital, has a stockholders’ deficit and
      certain debt is in default which raises substantial doubt about its ability
      to
      continue as a going concern. Management’s plans in regard to these matters are
      described in Note B. The financial statements do not include any adjustments
      that might result from the outcome of this uncertainty.




Perrella
      & Associates, P. A.




Pompano
      Beach, Florida


March
      31,
      2005




11


**DIAMOND
                      POWERSPORTS, INC.****Balance
                      Sheet*****For
                      the Year Ended December 31, 2004***ASSETS2004(As
                      Restated)CURRENT
                      ASSETSCash
                      and Cash Equivalents
                  
                  $
                  3,598Accounts
                      Receivable, net of allowance for doubtfulaccounts
                      of $11,000 in 2004 and $5,000 in 2003
                  
                  
                  30,522Inventories,
                      net
                  
                  
                  160,344TOTAL
                      CURRENT ASSETS
                  
                  
                  194,464PROPERTY
                      AND EQUIPMENTMachinery
                      and equipment
                  
                  
                  44,999Furniture
                      and fixtures
                  
                  
                  19,257Trade
                      show and transportation equipment
                  
                  
                  255,154Accumulated
                      Depreciation
                  
                  
                  (79,227
                  )Net
                      Property and Equipment
                  
                  
                  240,183OTHER
                      ASEETSPrepaid
                      expenses
                  
                  
                  6,711Deposits
                  
                  
                  7,95414,665TOTAL
                      ASSETS
                  
                  $
                  449,312LIABILITIES
                      AND STOCKHOLDERS' EQUITYCURRENT
                      LIABILITIESAccounts
                      payable and accrued expenses
                  
                  $
                  242,999Notes
                      payable
                  
                  
                  45,173Shareholder
                      loan
                  
                  
                  73,949TOTAL
                      CURRENT LIABILITIES
                  
                  
                  362,121STOCKHOLDERS'
                      EQUITYPreferred
                      Stock ($.001 par value, 5,000,000 authorized:none
                      issued and outstanding)Common
                      Stock ($.001 par value, 100,000,000 shares authorized:14,578,583
                      shares issued and outstanding)
                  
                  
                  14,579Additional
                      Paid-in-Capital
                  
                  
                  2,160,932Accumulated
                      Deficit
                  
                  
                  (2,088,320
                  )TOTAL
                      STOCKHOLDERS' EQUITY
                  
                  
                  87,191TOTAL
                      LIABILITIES AND STOCKHOLDERS' EQUITY
                  
                  $
                  449,312The
                      accompanying notes are an integral part of the financial
                      statements
  12
 **DIAMOND
                      POWERSPORTS, INC.****Statements
                      of Operations****For
                      the years ended December 31, 2004 and 2003**2004
                  
                  2003(As
                      Restated)SALES
                      AND COST OF SALES:Sales
                  
                  $
                  1,491,929
                  
                  $
                  888,047Cost
                      of Sales
                  
                  
                  816,089
                  
                  
                  446,680Gross
                      Profit
                  
                  
                  675,840
                  
                  
                  441,367OPERATING
                      EXPENSES:Consulting
                      fees
                  
                  
                  17,681
                  
                  
                  319,962Payroll
                      expenses
                  
                  
                  921,965
                  
                  
                  243,297Selling,
                      general and administrative
                  
                  
                  405,299
                  
                  
                  221,9641,344,945
                  
                  
                  785,223OPERATING
                      LOSS
                  
                  
                  (669,105
                  )
                  
                  (343,856
                  )OTHER
                      EXPENSE:Interest
                      Expense
                  
                  
                  11,139
                  
                  
                  17,740NET
                      LOSS
                  
                  $
                  (680,244
                  )
                  $
                  (361,596
                  )Net
                      Loss Per Common ShareBasic
                      & Fully Diluted
                  
                  $
                  (0.05
                  )
                  $
                  (0.04
                  )Weighted
                      Average CommonShares
                      Outstanding - Basic and Fully Diluted
                  
                  
                  12,411,820
                  
                  
                  9,904,700The
                      accompanying notes are an integral part of the financial
                      statements
  13
 **DIAMOND
                      POWERSPORTS, INC.****Statements
                      of Stockholders' Equity*****For
                      the Years Ended December 31, 2004 and
                      2003***Common
                      Stock toPreferred
                      Stock, no Par
                  
                  Common
                      Stock, $0.001 Par
                  
                  be
                      Delivered, $0.001 Par
                  
                  AdditionalNumber
                      of
                  
                  Number
                      of
                  
                  
                  
                  Number
                      of
                  
                  Paid-in
                  
                  AccumulatedShares
                  
                  Amount
                  
                  Shares
                  
                  Amount
                  
                  Shares
                  
                  Amount
                  
                  Capital
                  
                  Deficit
                  
                  TotalsBalances,
                      January 1, 2003
                  
                  
                  -
                  
                  $
                  -
                  
                  
                  9,495,700
                  
                  $
                  9,496
                  
                  
                  -
                  
                  $
                  -
                  
                  $
                  547,304
                  
                  $
                  (1,046,480
                  )
                  $
                  (489,680
                  )Issuances
                      of common stock and exercise of
                  
                  
                  -
                  
                  
                  -
                  
                  
                  190,277
                  
                  
                  190
                  
                  
                  -
                  
                  
                  -
                  
                  
                  48,384
                  
                  
                  -
                  
                  
                  48,574options
                      for cashIssuances
                      of common stock, for services
                  
                  
                  -
                  
                  
                  -
                  
                  
                  476,080
                  
                  
                  476
                  
                  
                  140,000
                  
                  
                  140
                  
                  
                  191,441
                  
                  
                  -
                  
                  
                  192,057Issuances
                      of common stock, for compensation
                  
                  
                  -
                  
                  
                  -
                  
                  
                  83,000
                  
                  
                  83
                  
                  
                  1,104,531
                  
                  
                  1,104
                  
                  
                  264,940
                  
                  
                  -
                  
                  
                  266,127Issuances
                      of common stock, for debt
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  385,586
                  
                  
                  386
                  
                  
                  84,443
                  
                  
                  -
                  
                  
                  84,829Options
                      issued
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  130,105
                  
                  
                  -
                  
                  
                  130,105Net
                      loss for year
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (361,596
                  )
                  
                  (361,596
                  )Balances,
                      January 1, 2004
                  
                  
                  -
                  
                  
                  -
                  
                  
                  10,245,057
                  
                  $
                  10,245
                  
                  
                  1,630,117
                  
                  $
                  1,630
                  
                  $
                  1,266,617
                  
                  $
                  (1,408,076
                  )
                  $
                  (129,584
                  )Common
                      stock delivered
                  
                  
                  -
                  
                  
                  -
                  
                  
                  1,630,117
                  
                  
                  1,630
                  
                  
                  (1,630,117
                  )
                  
                  (1,630
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  -Issuances
                      of common stock, for cash
                  
                  
                  -
                  
                  
                  -
                  
                  
                  895,000
                  
                  
                  895
                  
                  
                  -
                  
                  
                  -
                  
                  
                  346,750
                  
                  
                  -
                  
                  
                  347,645Issuances
                      of common stock, for services
                  
                  
                  -
                  
                  
                  -
                  
                  
                  490,891
                  
                  
                  491
                  
                  
                  -
                  
                  
                  -
                  
                  
                  190,269
                  
                  
                  -
                  
                  
                  190,760Issuances
                      of common stock, for compensation
                  
                  
                  -
                  
                  
                  -
                  
                  
                  1,597,625
                  
                  
                  1,598
                  
                  
                  -
                  
                  
                  -
                  
                  
                  499,616
                  
                  
                  -
                  
                  
                  501,214Common
                      stock retired, from services
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (280,100
                  )
                  
                  (280
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  (77,270
                  )
                  
                  -
                  
                  
                  (77,550
                  )Options
                      retired
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (65,050
                  )
                  
                  -
                  
                  
                  (65,050
                  )Net
                      loss for year
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (680,244
                  )
                  
                  (680,244
                  )Balances,
                      December 31, 2004 (As Restated)
                  
                  
                  -
                  
                  $
                  -
                  
                  
                  14,578,590
                  
                  $
                  14,579
                  
                  
                  -
                  
                  $
                  (0
                  )
                  $
                  2,160,932
                  
                  $
                  (2,088,320
                  )
                  $
                  87,191The
                      accompanying notes are an integral part of these financial
                      statements
  14
 **DIAMOND
                      POWERSPORTS, INC.****Statements
                      of Cash Flows****For
                      the years ended December 31, 2004 and 2003**2004
                  
                  2003(As
                      Restated)CASH
                      FLOWS FROM OPERATING ACTIVITIES:Net
                      loss
                  
                  $
                  (680,244
                  )
                  $
                  (361,596
                  )Adjustments
                      to reconcile net loss to netcash
                      used in operating activities:Depreciation
                  
                  
                  20,057
                  
                  
                  3,135Non-cash
                      services and compensation expense
                  
                  
                  691,974
                  
                  
                  215,187Options
                      issued
                  
                  
                  -
                  
                  
                  130,105Options
                      retired
                  
                  
                  (65,050
                  )
                  
                  -Common
                      stock retired
                  
                  
                  (77,550
                  )
                  
                  -Noncash
                      interest on Loans from Stockholders
                  
                  
                  3,800
                  
                  
                  -(Increase)
                      decrease in operating assets:Accounts
                      receivable
                  
                  
                  (4,801
                  )
                  
                  (16,591
                  )Inventory
                  
                  
                  (45,065
                  )
                  
                  (57,714
                  )Other
                      assets
                  
                  
                  (7,250
                  )
                  
                  (7,115
                  )Increase
                      (decrease) in operating liabilities:Bank
                      overdraft
                  
                  
                  (6,716
                  )
                  
                  5,622Interest
                      accrued on note payable to bank
                  
                  
                  -
                  
                  
                  9,863Accrued
                      compensation
                  
                  
                  8,159
                  
                  
                  (16,700
                  )Accounts
                      payable and accrued expenses
                  
                  
                  (18,811
                  )
                  
                  82,045NET
                      CASH USED IN OPERATING ACTIVITIES
                  
                  
                  (181,497
                  )
                  
                  (13,759
                  )CASH
                      FLOWS FROM INVESTING ACTIVITIES:Purchases
                      of property and equipment
                  
                  
                  (239,441
                  )
                  
                  (20,180
                  )NET
                      CASH USED IN INVESTING ACTIVITIES
                  
                  
                  (239,441
                  )
                  
                  (20,180
                  )CASH
                      FLOWS FROM FINANCING ACTIVITIES:Proceeds
                      from sales of common stock
                  
                  
                  347,645
                  
                  
                  48,574Proceeds
                      from stockholder loans
                  
                  
                  31,718
                  
                  
                  17,679Proceeds
                      from notes payable
                  
                  
                  45,173
                  
                  
                  -Repayments
                      on bank line of credit
                  
                  
                  -
                  
                  
                  (32,314
                  )NET
                      CASH PROVIDED BY FINANCING ACTIVITIES
                  
                  
                  424,536
                  
                  
                  33,939NET
                      INCREASE (DECREASE) IN CASH ANDCASH
                      EQUIVALENTS
                  
                  
                  3,598
                  
                  
                  -CASH
                      AND CASH EQUIVALENTS:Beginning
                      of period
                  
                  
                  -
                  
                  
                  -End
                      of period
                  
                  $
                  3,598
                  
                  $
                  -SUPPLEMENTAL
                      CASH FLOW INFORMATION:Cash
                      paid during the year for interest
                  
                  $
                  11,139
                  
                  $
                  17,740Non-cash
                      investing and financing activities:Increase
                      in note payable due to interest accrued
                  
                  $
                  482
                  
                  $
                  9,863Common
                      stock issued in exchange for services, net
                  
                  $
                  113,210
                  
                  $
                  192,057Common
                      stock issued for compensation
                  
                  $
                  501,214
                  
                  $
                  23,130Conversion
                      of accrued compensation and debt into commonstock
                      by officer
                  
                  $
                  -
                  
                  $
                  327,826Options
                      issued and (retired)
                  
                  $
                  (65,050
                  )
                  $
                  146,869The
                      accompanying notes are an integral part of the financial
                      statements


15




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





*Business
      Activity* -
      Diamond Powersports, Inc. (the “Company”) was organized under the laws of the
      State of Florida on May 13, 1992 to manufacture and distribute motorcycle parts
      and accessories to dealers and retail customers worldwide. Manufacturing
      operations are conducted in Fort Lauderdale, Florida.





*Cash
      and Cash Equivalents* - For
      purposes of the Statements of Cash Flows, the Company considers liquid
      investments with an original maturity of three months or less to be cash
      equivalents.





*Management’s
      Use of Estimates* - The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States requires management to make estimates
      and assumptions that affect the reported amounts of assets and liabilities,
      disclosures of contingent assets and liabilities at the date of financial
      statements and the reported amounts of revenues and expenses during the
      reporting period. Actual results could differ from those estimates.





*Accounts
      Receivable* - The
      Company extends unsecured credit to its customers in the ordinary course of
      business but mitigates the associated credit risk by performing credit checks
      and actively pursuing past due accounts. An allowance for doubtful accounts
      has
      been established for estimated uncollectible accounts in the amount of $11,000.
      Bad debt expense is $6,000 for 2004 and $2,000 for 2003.





*Inventory* ** -
      Inventory, consisting of motorcycle parts and accessories, is valued at the
      lower of cost or market using the first-in, first-out (FIFO)
      method.





*Property
      and Equipment* -
      Property and equipment are recorded at cost and include expenditures that
      substantially increase the productive lives of the existing assets. Maintenance
      and repair costs are expensed as incurred. Depreciation is provided using the
      straight-line method. Depreciation of property and equipment is calculated
      over
      the management prescribed recovery periods, which range from 5 years for
      equipment to 10 years for transportation equipment. Depreciation expense is
      $20,057 for 2004 and $3,135 for 2003.





When
      a
      fixed asset is disposed of, its cost and related accumulated depreciation are
      removed from the accounts. The difference between undepreciated cost and
      proceeds from disposition is recorded as a gain or loss.




16




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





*Revenue
      Recognition*  -
      Revenue
      is recognized when goods are shipped provided collection of the resulting
      receivable is probable. If any material contingencies are present, revenue
      recognition is delayed until all material contingencies are eliminated.





*Long-Lived
      Assets* -The
      Company evaluates the recoverability of its property and equipment and other
      assets in accordance with Statement of Financial Accounting Standards No.144, *“Accounting
      for the Impairment or Disposal of Long-Lived Assets”(“SFAS 144”).* SFAS
      144
      requires recognition of impairment of long-lived assets in the event the net
      book value of such assets exceeds the estimated future undiscounted cash flows
      attributable to such assets or the business to which such assets relate. SFAS
      144 excludes goodwill and intangible assets. When an asset exceeds its expected
      cash flows, it is considered to be impaired and is written down to fair value,
      which is determined based on either discounted future cash flows or appraised
      values. The provisions of SFAS 144 are effective for financial statements issued
      for fiscal years beginning after December 15, 2001. The Company adopted the
      statement for the year ending December 31, 2002. No impairments were recognized
      during the years ended December 31, 2003 and 2004.





*Fair
      Value of Financial Instruments* -
      Accounting principles generally accepted in the United States require that
      fair
      values be disclosed for the Company’s financial instruments. The carrying
      amounts of the Company’s financial instruments, which include cash and cash
      equivalents, current liabilities and debt obligations, are considered to be
      representative of their respective fair values.





*Income
      Taxes*


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





Deferred
      tax assets are reduced by a valuation allowance when, in the opinion of
      management, it is more likely than not that some portion or the entire deferred
      tax asset will not be realized. Deferred tax assets and liabilities are adjusted
      for the effect of changes in tax laws and rates on the date of enactment.





*Advertising
      Costs* -
      Advertising costs are expensed as incurred. The Company does not incur any
      direct-response advertising costs. Advertising expense is $43,725 for 2004
      and
      $30,492 for 2003.





*Net
      Loss Per Share* - In
      accordance with accounting principles generally accepted in the United States,
      basic and diluted net loss per share has been computed using the
      weighted-average number of shares of common stock outstanding during the
      respective periods (excluding shares that are not yet issued). The effect of
      stock options, warrants and convertible preferred stock is antidilutive for
      all
      periods presented.





*Risk
      and Uncertainties* -
      The
      Company is subject to risks common to companies in the manufacturing industry,
      including, but not limited to, litigation, product liability, development of
      new
      technological innovations, dependence on key personnel and protections of
      proprietary technology.





17




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





*Recent
      Accounting Pronouncements*


In
      January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB
      Interpretation No. 46, (“FIN 46’) “Consolidation of Variable Interest Entities”
which changes the criteria by which one company includes another entity in
      its
      consolidated financial statements. FIN 46 requires a variable interest entity
      to
      be consolidated by a company if that company is subject to a majority of the
      risk of loss from the variable interest entity’s activities or entitled to
      receive a majority of the entity’s residual returns or both. The consolidation
      requirements of FIN 46 apply immediately to variable interest entities created
      after January 31, 2003, and apply in the first fiscal period beginning after
      June 15, 2003, for variable interest entities created prior to February 1,
      2003.
      The implementation of the pronouncement did not have a material effect on our
      financial condition and cash flows.





In
      May
      2003, the FASE issued Statement of Financial Accounting Standard (“SFAS”) No.
      150, ‘Accounting for Certain Financial Instruments with Characteristics of both
      Liabilities and Equity’. The SFAS No.150 improves the accounting for certain
      financial instruments that, under previous guidance, issuers could account
      for
      as equity and requires that those instruments be classified as liabilities
      in
      statements of financial position. In addition to its requirements for the
      classification and measurement of financial instruments in its scope, SFAS
      No.
      150 also requires disclosures about alternative ways of settling the instruments
      and the capital structure of entities, all of whose shares are mandatorily
      redeemable. Most of the guidance in SFAS No. 150 is effective for all financial
      instruments entered into or modified after May 31, 2003, and otherwise is
      effective at the beginning of the first interim period beginning after September
      15, 2003. The implementation of the pronouncement did not have a material effect
      on our financial condition and cash flows.





In
      December 2003, the issued Staff Accounting Bulletin (“SAB”) No. 104, “Revenue
      Recognition,” rescinded the accounting guidance contained in SAB No. 101,
“Revenue Recognition in Financial Statements,” and incorporated the body of
      previously issued guidance related to multiple-element revenue arrangements.
      The
      Company’s adoption of SAB No. 104 did not have any impact on its financial
      statements.





*Recent
      Accounting Pronouncements*  *(continued)*


In
      March
      2004, the FASB ratified EITF Issue No. 03-1, “The Meaning of
      Other-Than-Temporary Impairment and its Application to Certain Investments”
(“EITF 03-1”), but delayed the recognition and measurement provisions of EITF
      03-1 in September 2004. For reporting periods beginning after June 15, 2004,
      only the disclosure requirements for available-for-sale securities and cost
      method investments are required. The Company’s adoption of the requirements did
      not have a significant impact on the Company’s disclosures.




In
      July
      2004, the FASB issued EITF Issue No. 02-14, “Whether an Investor Should Apply
      the Equity Method of Accounting to Investments Other than Common Stock” (“EITF
      02-14”). EITF 02-14 requires application of the equity method of accounting when
      an investor is able to exert significant influence over operating and financial
      policies of an investee through ownership of common stock or in-substance common
      stock. EITF 02-14 is effective for reporting periods beginning after September
      15, 2004. The adoption of EITF 02-14 will not have a significant impact on
      the
      Company’s financial statements.




On
      December 16, 2004, the FASB issued Statement No. 123R, “Share-Based Payment”
which requires companies to record compensation expense for stock options issued
      to employees at an amount determined by the fair value of the options. SFAS
      No.
      123R is effective for interim or annual periods beginning after June 15, 2005.
      As such, effective with the Company’s first fiscal quarter of 2006, SFAS No.
      123R will eliminate the Company’s ability to account for stock options using the
      method permitted under APB 25 and instead require us to recognize compensation
      expense should the Company issue options to its employees or non-employee
      directors. The Company is in the process of evaluating the impact adoption
      of
      SFAS No. 123R will have on the financial statements.




18





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





*Business
      Segments*


The
      Company operates in one segment and therefore segment disclosure is not
      presented. Operating segments are defined as components of an enterprise
      about which separate financial information is available that is evaluated on
      a
      regular basis by the chief operating decision maker, or decision making group,
      in deciding how to allocate resources to an individual segment and in assessing
      the performance of the segment.





**NOTE
      B - GOING CONCERN**





As
      shown
      in the accompanying financial statements, the Company has suffered recurring
      losses from operations, has negative working capital, has a stockholders’
deficit and certain debt is in default that raises substantial doubt about
      its
      ability to continue as a going concern. The ability of the Company to continue
      as a going concern is dependent on developing operations, increasing revenues
      and obtaining new capital. Management has enacted the following plan to address
      these issues: (1) obtain funding from new investors to alleviate the Company's
      capital deficiency, (2) refinance existing debt on existing assets, (3) lease
      larger facilities in order to manufacture certain products thereby reducing
      costs and (4) market motorcycle accessories through significant, proven trade
      shows that produce individual orders in excess of $75,000.





**NOTE
      C - INVENTORIES**





Inventories
      consisted of the following at December 31, 2004:







Raw
                materials
            
            $
            19,749Work-in-process
            
            
            40,869Finished
                goods
            
            
            99,726$
            160,344





**NOTE
      D - NOTES PAYABLE**





Notes
      payable at December 31, 2004 includes an unsecured non-interest bearing note
      payable for $28,380 to an unrelated individual dated July 30, 2004. An interest
      rate of 7% per annum is imputed. Payments on the note of $3,000 begin January
      1,
      2005 through October 1, 2005. The second note is an unsecured non-interest
      bearing note payable due on demand from a stockholder of the Company also dated
      July 30, 2004. An interest rate of 7% per annum is imputed. At December 31,
      2004, the note balance is $16,793 with imputed interest of $482 included in
      accrued expenses. Payments are $2,000 per month though September 30, 2005.
      Both
      notes payable mature in 2005.





In
      2003,
      the note payable to Bank, that was originally collateralized by certain
      transportation equipment and guaranteed by one of the Company’s officers, was
      transferred to the Officer. During 2002, the loan went into default whereby
      the
      bank repossessed the equipment. The amount transferred to the Officer in 2003
      was $64,381 in exchange for common stock of the Company.




19




**NOTE
      E - BANK LINE OF CREDIT**





At
      December 31, 2003, the Company’s bank line of credit in the amount of $32,314
      was reclassified as short-term credit card debt, and included in accounts
      payable. A separate line of credit was guaranteed by one of the Officers of
      the
      Company, and in 2003, the balance of the line of credit of $20,448 was
      transferred to the Officer in exchange for common stock of the
      Company.




**NOTE
      F - OPERATING LEASES**





As
      of
      December 31, 2004, the Company has two long-term non-cancelable operating leases
      for warehouse and office space. The initial lease terms expire December 31,
      2006
      and October 1, 2008, both with two year renewal options, as defined. The amount
      charged to rent expense is $84,907 in 2004 and $41,231 in 2003. Minimum future
      lease payments for the initial lease terms as of December 31, 2004 are as
      follows:




**Year
                ending December 31**,
            
            **Amount******2005
            
            $
            91,7702006
            
            
            96,3682007
            
            
            47,7872008
            
            
            37,167Total
                minimum future lease payments
            
            $
            273,092




**NOTE
        G - EQUITY**





During
        the year ended December 31, 2004, the Company issued 2,983,516 shares of
        common
        stock in exchange for cash, services and compensation and 1,630,117 shares,
        as
        approved in 2003 (see below), for a total of 4,613,633 shares of its common
        stock as follows:





During
        2004, the Company sold 770,000 shares to several unrelated investors under
        a
        Regulation D private placement offering and 125,000 shares to an officer.
        The
        Company received cash proceeds of $347,645 for 895,000 shares of common stock
        issued. In November, 2005, the 125,000 shares sold to the Officer were retired
        and returned to the Company without repayment in accordance with the Officer's
        termination agreement





The
        Company recorded $190,760 in service expenses, as the fair market value on
        the
        date of issue for 490,891 shares issued in 2004 for services.





In
        January and December, 2004, 1,597,625 shares of common stock were issued
        as
        bonus and compensation to Officers, employees and directors. Compensation
        expense of $501,214 was expensed at the fair market value on the date of
        the
        compensation agreement.





During
        the first quarter 2004, the Company retrieved and retired 155,100 shares
        of
        common stock issued in 2003 to an investor relations consultant due to
        nonperformance by the consultant and also decreased consulting expense $77,550
        in 2004. The shares and services were rendered and expensed in 2003. However,
        final resolution and agreement to return shares were not known until 2004.
        Regarding another consultant, the Company retired in the fourth quarter 2004,
        200,000 of free trading options expensed in 2003 using the Black-Scholes
        option
        pricing method as required under SFAS No, 123, see below, resulting in an
        additional decrease in consulting expense of $65,050 in 2004. The options
        were
        retired due to the termination of the consulting agreement in March 2004
        due to
        non performance.




On
        December 19, 2003, the Company adopted a non-qualified stock compensation
        plan
        to register 500,000 shares of common stock and 250,000 options to purchase
        shares the common stock at $.30 per share for a total registration and issuance
        of 750,000 shares of common stock (see Note I).




20





During
        the year ended December 31, 2003, the Company issued a total of 749,357 shares
        and approved the issuance of 1,630,117 shares of its common stock for a total
        of
        2,379,474 shares as follows:




In
        June,
        August and December, 2003, 83,000 shares of common stock were issued as bonus
        and compensation to employees. Compensation expense of $ 23,130 was expensed
        as
        the fair value of the shares on the date of issue.





During
        2003, a consultant provided services in exchange for 60,000 shares. Consulting
        expenses of $18,000 was expensed as the fair value for 2003
        services.





During
        2003, the Company issued 291,157 shares to several unrelated investors under
        a
        private placement offering. The Company received cash proceeds of $27,000
        for
        122,857 shares of common stock issued and, recorded $67,057 in consulting
        services for 168,300 shares of common stock issued.





On
        November 3, 2003, as amended on March 3, 2004, the Company entered into a
        consulting agreement to promote the Company in the investment community.
        The
        term of the agreement was initially for six months with an option to extend
        but
        was amended on March 13, 2004 to give the Company the right to terminate
        the
        contract after the first three months of the contract extension after the
        initial contract expires. The consultant shall be entitled to receive $25,000
        cash per month, with adjustments (after the initial month of the agreement
        at
        $40,000), or the equivalent in free trading stock. Based upon the terms of
        the
        agreement, the Company issued 247,780 shares in 2003 having a fair value
        of $
        65,000 for consulting services.




The
        consultant also has the option to purchase $240,000 worth of free trading
        options at 30% discount to market, up to a maximum of 799,999 shares and
        at a
        floor price of $.30 per share. The consultant exercised some of its purchase
        options in 2003 and the Company received cash proceeds of $21,574 for 67,420
        options exercised at a price of $.32 per share. The fair value of the options
        aggregating $130,105, was estimated on the grant date using the Black-Scholes
        option pricing method as required under SFAS No, 123 with the following weighted
        average assumptions: expected dividend yield 0%, volatility 166%, risk-free
        interest rate 0.93%, expected term, 6 months. The $130,105 was charged to
        consulting expense at the grant date.





On
        September 30, 2003, the Company’s chief executive officer and corporate
        secretary agreed to take and accept as payment 1,104,531 common shares for
        their
        accumulated accrued compensation through December 31, 2002 which amounted
        to
        $242,997 on September 30, 2003. In addition, on that date, they agreed to
        take a
        bank note payable and line of credit amounting to $84,829 that are personally
        guaranteed in exchange for 385,586 shares. These shares were issued January
        20,
        2004.





During
        2003, a consultant provided services in exchange for 140,000 shares of common
        stock. Consulting expense of $42,000 was expensed as the fair value for 2003.
        These shares were issued in 2004.




**NOTE
      H - INCOME TAXES**





The
      Company has approximately $266,000 of federal and state net operating losses
      that expire in various years through the year 2024.





Deferred
      income taxes reflect the net tax effects of temporary differences between the
      carrying amounts of assets and liabilities for financial reporting purposes
      and
      the amount used for federal and state income tax purposes.





The
      Company’s deferred tax asset at December 31, 2004 consists of net operating loss
      carry forwards calculated using federal and state effective tax rates. Because
      of the Company’s lack of earnings history, the deferred tax asset has been fully
      offset by a valuation allowance. The valuation allowance increased by
      approximately $103,500 and $12,000 for the years ended December 31, 2004 and
      2003, respectively.




The
      Company’s net deferred tax asset as of December 31, 2004 is as
      follows:


Net
      operating loss
      carryforwards                     
 $ 266,000


Valuation
      allowance (266,000)


Net
      deferred tax asset  $    
       --


========




21




**NOTE
      H - INCOME TAXES (Continued)**




The
                reconciliation of income taxes computed at the federal statutory
                income
                tax rate to total income taxes for the years ended December 31, 2004
                and
                2003 is as follows:




2004
            
            2003Income
                tax computed at the federal statutory rate
            
            
            34%
            
            
            34%State
                income taxes, net of federal tax benefit
            
            
            4%
            
            
            4%Valuation
                allowance
            
            
            (38%)
            
            
            (38%)Total
              deferred tax asset
            
            
            0%
            
            
            0%




**NOTE
      I - RELATED PARTY TRANSACTIONS**





On
      November 1, 1999, the Company entered into annual renewable employment
      agreements with its chief executive officer and president and its corporate
      secretary (“Officers”). The agreements provide for compensation to these two
      Officers beginning in 2000 with annual renewals upon the mutual agreement of
      the
      Company and Officers, for an incentive salary equal to one half of one percent
      (1/2%) of the adjusted net profits (as defined) and for other normal benefits.
      For 2004 and 2003, Officers’ compensation under the terms of the agreements are
      $186,219 and 400,000 shares of the Company’s common stock and $169,290 salary
      and 400,000 shares of the Company’s common stock respectively. The 800,000
      shares compensation for 2004 and 2003 was issued in 2004 at the fair market
      value of the shares on the date of agreement.





At
      December 31, 2002, $259,697 Officers’ compensation remained unpaid and was
      recorded as accrued compensation, shareholders. This accrued compensation was
      paid in common stock on September 30, 2003, See Note G.





The
      Company has a shareholder loan payable to these two Officers. The loan bears
      interest at 7%, is due on demand and at December 31, 2004, the balance,
      including accrued interest, is $73,949.





The
      Officers are guarantors of certain credit card debts of the
      Company.





**NOTE
      J - SUBSEQUENT EVENTS**





On
      February 16, 2005, 50,000 shares of common stock were issued to an outside
      consultant in exchange for services performed. Consulting services of $12,500
      were recorded, representing the fair market value ($.25) on that date.





In
      February and March 2005, the Company sold 239,761 shares of common stock to
      several unrelated investors under a private placement offering at prices varying
      from $.13 to $.20 per share, and received cash proceeds of $33,000.




22




**ITEM
      8. Changes with and Disagreements With Accountants on Accounting And Financial
      Disclosure**





None.





**Item
      8A. Controls and Procedures**





*Quarterly
      Evaluation of Controls* .
      As of
      the end of the period covered by this amendment to annual report on Form
      10-KSB/A, we evaluated the effectiveness of the design and operation of (i)
      our
      disclosure controls and procedures ("Disclosure Controls"), and (ii) our
      internal control over financial reporting ("Internal Controls"). This evaluation
      ("Evaluation") was performed by our President and Chief Executive Officer,
      Pierre Elliott ("CEO"), and by Lisa Elliott, our Chief Financial Officer
      ("CFO"). In this section, we present the conclusions of our CEO and CFO based
      on
      and as of the date of the Evaluation, (i) with respect to the effectiveness
      of
      our Disclosure Controls, and (ii) with respect to any change in our Internal
      Controls that occurred during the most recent fiscal quarter that has materially
      affected, or is reasonably likely to materially affect our Internal
      Controls.





*CEO
      and CFO Certifications* .
      Attached to this amendment to annual report, as Exhibits 31.1 and 31.2, are
      certain certifications of the CEO and CFO, which are required in accordance
      with
      the Exchange Act and the Commission's rules implementing such section (the
      "Rule
      13a-14(a)/15d-14(a) Certifications"). This section of the amendment to annual
      report contains the information concerning the Evaluation referred to in the
      Rule 13a-14(a)/15d-14(a) Certifications. This information should be read in
      conjunction with the Rule 13a-14(a)/15d-14(a) Certifications for a more complete
      understanding of the topic presented.





*Disclosure
      Controls and Internal Controls* .
      Disclosure Controls are procedures designed with the objective of ensuring
      that
      information required to be disclosed in our reports filed with the Commission
      under the Exchange Act, such as this amendment to annual report, is recorded,
      processed, summarized and reported within the time period specified in the
      Commission's rules and forms. Disclosure Controls are also designed with the
      objective of ensuring that material information relating to us is made known
      to
      the CEO and the CFO by others, particularly during the period in which the
      applicable report is being prepared. Internal Controls, on the other hand,
      are
      procedures which are designed with the objective of providing reasonable
      assurance that (i) our transactions are properly authorized, (ii) the Company's
      assets are safeguarded against unauthorized or improper use, and (iii) our
      transactions are properly recorded and reported, all to permit the preparation
      of complete and accurate financial statements in conformity with accounting
      principals generally accepted in the United States.





*Limitations
      on the Effectiveness of Controls* .
      Our
      management does not expect that our Disclosure Controls or our Internal Controls
      will prevent all error and all fraud. A control system, no matter how well
      developed and operated, can provide only reasonable, but not absolute assurance
      that the objectives of the control system are met. Further, the design of the
      control system must reflect the fact that there are resource constraints, and
      the benefits of controls must be considered relative to their costs. Because
      of
      the inherent limitations in all control systems, no evaluation of controls
      can
      provide absolute assurance that all control issues and instances so of fraud,
      if
      any, within the Company have been detected. These inherent limitations include
      the realities that judgments in decision-making can be faulty, and that
      breakdowns can occur because of simple error or mistake. Additionally, controls
      can be circumvented by the individual acts of some persons, by collusion of
      two
      or more people, or by management override of the control. The design of a system
      of controls also is based in part upon certain assumptions about the likelihood
      of future events, and there can be no assurance that any design will succeed
      in
      achieving its stated objectives under all potential future conditions. Over
      time, control may become inadequate because of changes in conditions, or because
      the degree of compliance with the policies or procedures may deteriorate.
      Because of the inherent limitations in a cost-effective control system,
      misstatements due to error or fraud may occur and not be detected.




23




*Scope
      of the Evaluation* .
      The CEO
      and CFO's evaluation of our Disclosure Controls and Internal Controls included
      a
      review of the controls' (i) objectives, (ii) design, (iii) implementation,
      and
      (iv) the effect of the controls on the information generated for use in this
      amendment to annual report. In the course of the Evaluation, the CEO and CFO
      sought to identify data errors, control problems, acts of fraud, and they sought
      to confirm that appropriate corrective action, including process improvements,
      was being undertaken. This type of evaluation is done on a quarterly basis
      so
      that the conclusions concerning the effectiveness of our controls can be
      reported in our quarterly reports on Form 10-QSB and annual reports on Form
      10-KSB. The overall goals of these various evaluation activities are to monitor
      our Disclosure Controls and our Internal Controls, and to make modifications
      if
      and as necessary. Our external auditors also review Internal Controls in
      connection with their audit and review activities. Our intent in this regard
      is
      that the Disclosure Controls and the Internal Controls will be maintained as
      dynamic systems that change (including improvements and corrections) as
      conditions warrant.





Among
      other matters, we sought in our Evaluation to determine whether there were
      any
      significant deficiencies or material weaknesses in our Internal Controls, which
      are reasonably likely to adversely affect our ability to record, process,
      summarize and report financial information, or whether we had identified any
      acts of fraud, whether or not material, involving management or other employees
      who have a significant role in our Internal Controls. This information was
      important for both the Evaluation, generally, and because the Rule
      13a-14(a)/15d-14(a) Certifications, Item 5, require that the CEO and CFO
      disclose that information to our Board (audit committee), and to our independent
      auditors, and to report on related matters in this section of the amendment
      to
      annual report. In the professional auditing literature, "significant
      deficiencies" are referred to as "reportable conditions". These are control
      issues that could have significant adverse affect on the ability to record,
      process, summarize and report financial data in the financial statements. A
      "material weakness" is defined in the auditing literature as a particularly
      serious reportable condition where the internal control does not reduce, to
      a
      relatively low level, the risk that misstatement cause by error or fraud may
      occur in amounts that would be material in relation to the financial statements
      and not be detected within a timely period by employee in the normal course
      of
      performing their assigned functions. We also sought to deal with other controls
      matters in the Evaluation, and in each case, if a problem was identified, we
      considered what revisions, improvements and/or corrections to make in accordance
      with our ongoing procedures.





*Conclusions* .
      Based
      upon the Evaluation, our disclosure controls and procedures are designed to
      provide reasonable assurance of achieving our objectives. Our CEO and CFO have
      concluded that our disclosure controls and procedures are effective at that
      reasonable assurance level to ensure that material information relating to
      the
      Company is made known to management, including the CEO and CFO, particularly
      during the period when our periodic reports are being prepared, and that our
      Internal Controls are effective at that assurance level to provide reasonable
      assurance that our financial statements are fairly presented inconformity with
      accounting principals generally accepted in the United States. Additionally,
      there has been no change in our Internal Controls that occurred during our
      most
      recent fiscal quarter that has materially affected, or is reasonably likely
      to
      affect, our Internal Controls.




24




**ITEM
      9. Directors and Executive Officers of the Registrant**





(a)
            Identification
                of Directors





Directors
      and Executive Officers.





Our
      Bylaws provide that we shall have that number of directors determined by the
      majority vote of the board of directors. Currently we have five directors.
      Each
      director will serve until our next annual shareholder meeting. Directors are
      elected for one-year terms. Our Board of Directors elects our officers at the
      regular annual meeting of the Board of Directors following the annual meeting
      of
      shareholders. Vacancies may be filled by a majority vote of the remaining
      directors then in office. Our directors and executive officers are as
      follows:




**Name**
            **Age**
            **Position**Pierre
                Elliott
            43
            President
                and CEO for Diamond Powersports; DirectorLisa
                Elliott
            41
            Controller;
                DirectorMargaret
                Hurley
            46
            DirectorDavid
                A. Lewis, PH.D
            50
            Marketing
                Director; Director






*Pierre
      Elliott* has
      been
      President & CEO and Chairman of Diamond Powersports since its inception in
      1992. Mr. Elliott has over 25 years experience in various aspects of the
      motorcycle industry including: manufacturing, wholesaling, inventory management,
      quality control, service and retail sales. During Diamond Powersports’ history,
      Mr. Elliott developed and implemented all operations and developments creating
      a
      company that started with less than 50 customers, and today retails and
      wholesales products over 1,500 customers worldwide. Prior to this, Mr. Elliott
      also owned several local ventures during a time span of five years including
      a
      restaurant, a grocery store, and home cleaning service. During this time, Mr.
      Elliott gained experience modifying racing bikes on a part-time basis. Prior
      to
      this, Mr. Elliott had approximately 10 years of other industry experience in
      employment with various local motorcycle sales and service offices. Mr. Elliott
      is a member of the Diamond Racing team and the National Hot Rod Association.
      Pierre Elliott is married to Lisa Elliott.





*Lisa
      Elliott* has
      served as Secretary and Director of Diamond Powersports since its inception
      in
      1992. During her tenure she has been in charge of staffing, customer relations,
      and assists the accounting department. Mrs. Elliott served previously as a
      financial accountant for Colorfilm Video and Mobo Enterprises. During her tenure
      there, Mrs. Elliott was responsible for Diamond Powersports’ daily accounting
      transactions including accounts receivable and accounts payable. Lisa Elliott
      is
      married to Pierre Elliott.





*Margaret
      Hurley* serves
      in the capacity as a Marketing Director and Director of Diamond Powersports
      since September of 1999. Prior to joining Diamond Powersports, Mrs. Hurley
      was a
      team manager for State Farm Insurance Co. for over 19 years. Mrs. Hurley’s
      background experience consists of defining a market and managing the marketing
      process. Mrs. Hurley’s responsibilities include managing market penetration and
      product quality control. Mrs. Hurley holds a bachelor’s degree in Criminal
      Justice from the University of Central Florida.





*Dr.
      David A. Lewis* serves
      in the capacity as Director of Marketing of Diamond Powersports since September
      of 1999. Dr. Lewis was previously the Director of Pastoral care at Covenant
      Life
      Christian Church in Ft. Lauderdale, Florida where he was been employed for
      the
      last 12 years. Prior to this, Dr. Lewis owned Tropical Clima-Coat, Inc., which
      provided construction services to commercial and residential buildings. As
      the
      Owner/ President, Dr. Lewis managed all aspects of the business including
      construction operations, marketing, and accounting. Dr. Lewis has traveled
      to
      several countries outside the U.S., including Mexico, Kenya, Ecuador, Belize,
      and Haiti, to give seminars on organizational and corporate structure and
      provide corporate assistance to charitable organizations. Dr. Lewis holds his
      PH.D from So. Fla. Bible College and is licensed in the State of Florida as
      a
      counselor.




25




Audit
      Committee Financial Expert





The
      Company does not have a separately designated standing audit committee. Pursuant
      to Section 3(a)(58)(B) of the Exchange Act, the entire Board of Directors acts
      as an audit committee for the purpose of overseeing the accounting and financial
      reporting processes, and audits of the financial statements of the Company.
      The
      Commission recently adopted new regulations relating to audit committee
      composition and functions, including disclosure requirements relating to the
      presence of an "audit committee financial expert" serving on its audit
      committee. In connection with these new requirements, the Company's Board of
      Directors examined the Commission's definition of "audit committee financial
      expert" and concluded that the Company does not currently have a person that
      qualifies as such an expert. The Company has had minimal operations for the
      past
      two (2) years. Presently, there are only four (4) directors serving on the
      Company's Board, and the Company is not in a position at this time to attract,
      retain and compensate additional directors in order to acquire a director who
      qualifies as an "audit committee financial expert", but the Company intends
      to
      retain an additional director who will qualify as such an expert, as soon as
      reasonably practicable. While neither of our current directors meets the
      qualifications of an "audit committee financial expert", each of the Company's
      directors, by virtue of his past employment experience, has considerable
      knowledge of financial statements, finance, and accounting, and has significant
      employment experience involving financial oversight responsibilities.
      Accordingly, the Company believes that its current directors capably fulfill
      the
      duties and responsibilities of an audit committee in the absence of such an
      expert.





Code
      of
      Ethics





The
      Company is presently working with its legal counsel to prepare and adopt a
      code
      of ethics that applies to the Company’s principal chief executive officer,
      principal financial officer, principal accounting officer or controller, or
      persons performing similar functions (the "Code of Ethics"). A draft of the
      Code
      of Ethics is attached hereto as Exhibit
      14.1 .
      The
      Code of Ethics is being designed with the intent to deter wrongdoing, and to
      promote the following:





·
            Honest
                and ethical conduct, including the ethical handling of actual or
                apparent
                conflicts of interest between personal and professional
                relationships




·
            Full,
                fair, accurate, timely and understandable disclosure in reports and
                documents that a small business issuer files with, or submits to,
                the
                Commission and in other public communications made by the small business
                issuer




·
            Compliance
                with applicable governmental laws, rules and
                regulations




·
            The
                prompt internal reporting of violations of the code to an appropriate
                person or persons identified in the
                code




·
            Accountability
                for adherence to the code





Section
      16(a) Beneficial Ownership Reporting Compliance




Under
      Section
      16(a) of the Exchange Act, all executive officers, directors, and each person
      who is the beneficial owner of more than 10% of the common stock of a company
      that files reports pursuant to Section 12 of the Exchange Act, are required
      to
      report the ownership of such common stock, options, and stock appreciation
      rights (other than certain cash-only rights) and any changes in that ownership
      with the Commission. Specific due dates for these reports have been established,
      and the Company is required to report, in this Form 10-KSB, any failure to
      comply therewith during the fiscal year ended December 2003. The Company
      believes that all of these filing requirements were satisfied by its executive
      officers, directors and by the beneficial owners of more than 10% of the
      Company’s common stock. In making this statement, the Company has relied solely
      on copies of any reporting forms received by it, and upon any written
      representations received from reporting persons that no Form 5 (Annual Statement
      of Changes in Beneficial Ownership) was required to be filed under applicable
      rules of the Commission.




26




**ITEM
      10. Executive Compensation**





Summary
      Compensation Table





No
      compensation in excess of $150,000 was awarded to, earned by, or paid to any
      executive officer of Diamond Powersports during the years 2004, 2003 and 2002.
      The following table and the accompanying notes provide summary information
      for
      each of the last three fiscal years concerning cash and non-cash compensation
      paid or accrued by Pierre Elliott and Lisa Elliott, Diamond Powersports' chief
      executive officer and secretary for the past three years.





**SUMMARY
      COMPENSATION TABLE**


Annual
                CompensationAwards
            PayoutsName
                and Principal Position
            Year
            Salary
              ($)
            Bonus
              ($)
            Other
                Annual Compensation
              ($)
            Restricted
                Stock Award(s)
              ($)
            Securities
                Underlying Options
              SARs(#)
            LTIP
                payouts
              ($)
            All
                Other Compensation
              ($)Pierre
                Elliott
              Chief
                Executive Officer
              
              Lisa
                Elliott
              Secretary
            2004
              2003
              2002
              
              
              2004
              2003
              2002
            121,000
              110,000
              100,000
              
              
              65,219
              59,290
              38,500
            -
              -
              -
              
              
              -
              -
              -
            -
              -
              -
              
              
              -
              -
              -
            $144,000(2)
              $98,000(1)
              -
              
              
              $144,000(3)
              -
              -
            -
              -
              -
              
              
              -
              -
              -
            -
              -
              -
              
              
              -
              -
              -
            -
              -
              -
              
              
              -
              -
              -





Diamond
      Powersports has entered into an employment agreement with Pierre Elliott.
      Pursuant to the agreement, Mr. Elliott serves as President, Director and General
      Manager for a term of 1 year, ending on December 31, 2004. Mr. Elliott shall
      receive an annualized base salary of $121,000 and is entitled to an incentive
      bonus of .5% of the gross profits. Mr. Elliott is also entitled to receive
      200,000 shares of restricted common stock for 2004.





Diamond
      Powersports has also entered into an employment agreement with Lisa Elliott
      for
      a term of 1 year, ending on December 31, 2004. Pursuant to the agreement, Mrs.
      Elliott serves as Secretary, Controller and Director. Mrs. Elliott shall receive
      an annualized salary of $65,219, payable in installments according to the
      Employer’s regular payroll schedule. Mrs. Elliott is also entitled to an
      incentive bonus of .5% of the gross profits. Mrs. Elliott is also entitled
      to
      receive 200,000 shares of restricted common stock for 2004.





Both
      agreements provide for reimbursement of Diamond Powersports' expenses and may
      be
      terminated with 30 days written notice by the employee. The agreements carry
      a
      two-year non-competition agreement from the time of termination.





(1)
            Includes
                380,000 shares of common stock issued under our non-qualified 2003
                compensatory plan.(2)
            Includes
                200,000 shares of restricted common stock for
                2003.


(3)
            Includes
                200,000 shares of restricted common stock for
                2003.





27




**Compensation
      of Directors**





Diamond
      Powersports committed itself to compensate each of its Board of Directors with
      7,000 shares of its common stock per annum. Board members typically meet on
      a
      quarterly basis.





**Stock
      Option Awards**





There
      were no options granted to the Company’s Chief Executive Officer during
      2004.





**Aggregated
      Option Exercises and Fiscal Year End Option Values**





There
      were no options exercised by the Company’s Chief Executive Officer during
      2004.





**ITEM
      11. Security Ownership of Certain Beneficial Owners and Management**





The
      following table sets forth certain information concerning the ownership of
      Diamond Powersports’ Common Stock as of December 31, 2004, with respect to: (i)
      each person known to Diamond Powersports to be the beneficial owner of more
      than
      five percent of Diamond Powersports’ Common Stock, (ii) all directors; and (iii)
      directors and executive officers of Diamond Powersports as a group. The notes
      accompanying the information in the table below are necessary for a complete
      understanding of the figures provided below. As of April 4, 2005, there were
      14,868,344 shares of common stock outstanding. As of April 4, 2005, there were
      no preferred shares outstanding.





Beneficial
      Owners of 5% or more of our Common Stock


(1)
              Title
                of Class
            (2)
              Name
                and Address of Beneficial Owner(s)
            (3)
              Amount
                and Nature of Beneficial Ownership
            (4)
              Percent
                of classCommon
                Stock
              ($.001
                par value)
            Pierre
                Elliott
              Lisa
                Elliott
              5150
                NW 109th Ave., Suite 4
              Sunrise,
                FL 33351
            10,441,135
                (1)
            70.2%





The
      following table sets forth the number of shares owned beneficially on April
      5,
      2004, by each Director and by all Officers and Directors as a group. Information
      as to the beneficial ownership is based upon statements furnished to the Company
      by such persons.





Ownership
      of Directors and Officers


(1)
              Title
                of Class
            (2)
              Name
                and Address of Beneficial Owner(s)
            (3)
              Amount
                and Nature of Beneficial Ownership
            (4)
              Percent
                of classCommon
                Stock
              ($.001
                par value)
              
              
              
              Common
                Stock
              ($.001
                par value)
              
              
              Common
                Stock
              ($.001
                par value)
              
              Common
                Stock
              ($.001
                par value)
            Pierre
                Elliott
              Lisa
                Elliott
              5150
                NW 109th Ave., Suite 4
              Sunrise,
                FL 33351
              
              Margaret
                Hurley
              5150
                NW 109th Ave., Suite 4
              Sunrise,
                FL 33351
              
              Dr.
                David A. Lewis
              5150
                NW 109th Ave., Suite 4
              Sunrise,
                FL 33351
              
              All
                Directors & Officers
            10,441,135
                (1)
              
              
              
              
              6,000
              
              
              171,000
              
              
              
              10,618,135
            70.2%
              
              
              
              
              **%
              
              
              **%
              
              
              
              73.3%





(1)
            Pierre
                and Lisa Elliott are the beneficial owners of the above securities
                and
                hold them as Joint Tenancy with Rights of
                Survivorship.





**
      Less
      than 1%





(a)
            Changes
                in Control





The
      Company knows of no arrangements that may at a subsequent date result in a
      change of control in the Company.




28





**ITEM
      12. Certain Relationships and Related Transactions**





During
      the year ended December 31, 2004, the Company issued 3,183,516 shares of common
      stock in exchange for cash, services and compensation and 1,630,117 shares,
      as
      approved in 2003 (see below), for a total of 4,813,633 shares of its common
      stock as follows:





During
      2004, the Company issued 895,000 shares to several unrelated investors under
      a
      Regulation D private placement offering. The Company received cash proceeds
      of
      $346,645 for 895,000 shares of common stock issued and recorded $20,759 in
      consulting services, as the fair market value on the date of issue for 57,420
      shares.




In
      January and December, 2004, 1,797,625 shares of common stock were issued as
      bonus and compensation to Officers, employees and directors. Compensation
      expense of $555,214 was expensed at the fair market value on the date of the
      compensation agreement. In December 2004, 200,000 of these shares were retired
      resulting in a decrease in compensation expense of $54,000.





Services
      were rendered by a public relations company in exchange for 433,471 shares.
      Consulting expenses of $170,001 was charged as the fair value of services
      rendered. In December 2004, 125,000 of these shares were retired resulting
      in a
      decrease in consulting expenses of $37,500.





During
      the first quarter 2004, the Company retired 155,100 shares of common stock
      issued in 2003 to a consultant due to nonperformance resulting in a decrease
      in
      consulting expense of $77,550. In the fourth quarter, the Company retired
      200,000 of free trading options previously expensed using the Black-Scholes
      option pricing method as required under SFAS No, 123, see below, resulting
      in an
      additional decrease in consulting expense of $65,050. The options were retired
      due to the termination of the consulting agreement.





On
      September 30, 2003, the Company’s chief executive officer and corporate
      secretary agreed to take and accept as payment 1,104,531 common shares for
      their
      accumulated accrued compensation through December 31, 2002 and amounted to
      $242,997 on September 30, 2003. In addition, on that date, they agreed to take
      a
      bank note payable and line of credit amounting to $84,829 that are personally
      guaranteed in exchange for 385,586 hares. These shares were issued January
      20,
      2004.





During
      2003, a consultant provided services in exchange for 140,000 shares of common
      stock. Consulting expense of $42,000 was expensed as the fair value for 2003.
      These shares were issued in 2004.




29





**ITEM
      13. Exhibits and Reports on Form 8-K**





(a)
            Financial
                Statements


1.
      The
      following financial statements of Diamond Powersports, Inc. are included in
      Part
      II, Item 7:





Independent
      Auditors’ Report.......................................    14


Balance
      Sheet-December 31, 2004....................................15-16


Statements
      of Operations - years ended


December
      31, 2004 and 2003.........................................  17-18


Statements
      of Cash Flows - years ended


December
      31, 2004 and 2003.........................................  19-20


Statements
      of Stockholders’ Equity - years ended


December
      31, 2004 and 2003.......................................     21


Notes
      to
      Financial Statements..........................................22-28




2.
      Exhibits




3.
      Articles of incorporation, bylaws and related amendments are incorporated by
      reference to Exhibit No. 1 of Form 10-SB filed November 1999.




14.1. Code
      of Ethics


31.1. Rule
      13a-14(a)/15d-14(a) Certifications of Chief ExecutiveOfficer


31.2. Rule
      13a-14(a)/15d-14(a) Certifications of Chief FinancialOfficer


32.1. Section
      1350 Certifications of Chief Executive
      Officer


32.2. Section
      1350 Certifications of Chief Financial
      Officer





(b)
            Reports
                on Form 8-K




There were no reports on Form 8-K for the three months ended December 31,
      2004.




**ITEM
      14. Controls and Procedures**





**Fees
      Billed For Audit and Non-Audit Services**





The
      following table represents the aggregate fees billed for professional audit
      services rendered to Perrella & Associates, P.A., our current independent
      auditor ("Perrella") for the audit of the Company's annual financial statements
      for the years ended December 31, 2003.





Year
                Ended December 31
            
            2004
            
            
            
            2003Audit
                Fees(1)
            
            $
            28,495
            
            
            (3
            )
            $
            25,000
            
            
            (2
            )Audit-Related
                Fees(4)
            
            
            --
            
            
            
            
            
            --Tax
                Fees(5)
            
            
            --
            
            
            
            
            
            --All
                Other Fees(6)
            
            
            --
            
            
            
            
            
            --Total
                Accounting Fees and Services
            
            $
            28,495
            
            
            
            
            $
            25,000




30




(1)
            *Audit
                Fees*.
                These are fees for professional services for the audit of the Company's
                annual financial statements, and for the review of the financial
                statements included in the Company's filings on Form 10-QSB, and
                for
                services that are normally provided in connection with statutory
                and
                regulatory filings or engagements.




(2)
            The
                amounts shown for Perrella in 2003 relate to (i) the audit of the
                Company's annual financial statements for the fiscal year ended December
                31, 2002, and (ii) the review of the financial statements included
                in the
                Company's filings on Form 10-QSB for the first, second and third
                quarters
                of 2003.




(3)
            The
                amounts shown for Perrella in 2004 relate to (i) the audit of the
                Company's annual financial statements for the fiscal year ended December
                31, 2003, and (ii) the review of the financial statements included
                in the
                Company's filings on Form 10-QSB for the first, second and third
                quarters
                of 2004.




(4)
            *Audit-Related
                Fees*.
                These are fees for the assurance and related services reasonably
                related
                to the performance of the audit or the review of the Company's financial
                statements.




(5)
            *Tax
                Fees*.
                These are fees for professional services with respect to tax compliance,
                tax advice, and tax planning.




(6)
            *All
                Other Fees*.
                These are fees for permissible work that does not fall within any
                of the
                other fee categories, i.e., Audit Fees, Audit-Related Fees, or Tax
                Fees.








**Pre-Approval
      Policy For Audit and Non-Audit Services**





The
      Company does not have a standing audit committee, and the full Board performs
      all functions of an audit committee, including the pre-approval of all audit
      and
      non-audit services before the Company engages an accountant. All of the services
      rendered to the Company by Perrella & Associates after December 2004 were
      pre-approved by the Board of Directors of the Company.





The
      Company is presently working with its legal counsel to establish formal
      pre-approval policies and procedures for future engagements of the Company's
      accountants. The new policies and procedures will be detailed as to the
      particular service, will require that the Board or an audit committee thereof
      be
      informed of each service, and will prohibit the delegation of pre-approval
      responsibilities to management. It is currently anticipated that the Company's
      new policy will provide (i) for an annual pre-approval, by the Board or audit
      committee, of all audit, audit-related and non-audit services proposed to be
      rendered by the independent auditor for the fiscal year, as specifically
      described in the auditor's engagement letter, and (ii) that additional
      engagements of the auditor, which were not approved in the annual pre-approval
      process, and engagements that are anticipated to exceed previously approved
      thresholds, will be presented on a case-by-case basis, by the President or
      Controller, for pre-approval by the Board or audit committee, before management
      engages the auditors for any such purposes. The new policy and procedures may
      authorize the Board or audit committee to delegate, to one or more of its
      members, the authority to pre-approve certain permitted services, *provided
      that* the
      estimated fee for any such service does not exceed a specified dollar amount
      (to
      be determined). All pre-approvals shall be contingent on a finding, by the
      Board, audit committee, or delegate, as the case may be, that the provision
      of
      the proposed services is compatible with the maintenance of the auditor's
      independence in the conduct of its auditing functions. In no event shall any
      non-audit related service be approved that would result in the independent
      auditor no longer being considered independent under the applicable rules and
      regulations of the Securities and Exchange Commission.




(a)
      On
      December 31, 2004, our Chief Executive Officer and Chief Financial Officer
      made
      an evaluation of our disclosure controls and procedures. In our opinion, the
      disclosure controls and procedures are adequate because the systems of controls
      and procedures are designed to assure, among other items, that 1) recorded
      transactions are valid; 2) valid transactions are recorded; and 3) transactions
      are recorded in the proper period in a timely manner to produce financial
      statements which present fairly the financial condition, results of operations
      and cash flows for the respective periods being presented. Moreover, the
      evaluation did not reveal any significant deficiencies or material weaknesses
      in
      our disclosure controls and procedures.





(b)
      There
      have been no significant changes in our internal controls or in other factors
      that could significantly affect these controls since the last
      evaluation.




31




**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned, thereunto
      duly authorized.




**DIAMOND
                POWERSPORTS, INC..**
              (Registrant)Date: February
                17, 2006
            By:
            /s/ Pierre
                ElliottName:
                Pierre ElliottTitle: Chief
                Executive Officer





/s/
      Pierre Elliott


Pierre
      Elliott


Chief
      Executive Officer


Director





/s/
      Lisa Elliott


Lisa
      Elliott


Secretary,
      Treasurer,


Director





/s/
      David Lewis


David
      Lewis


Director






32