UNITED
          STATES
 SECURITIES
          AND EXCHANGE COMMISSION
 Washington,
          D.C. 20549
 
 Form
          10-KSB/A
 Amendment
          No. 3
 
 
 x  ANNUAL
          REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
          1934
 
 For
          the
          fiscal year ended February 28, 2007
 
 
 o  TRANSITION
          REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
          1934
 
 For
          the
          transition period from ______________ to __________________
  Commission
          File No.: 333-129910
 
 TANK
          SPORTS, INC.
 (Name
          of
          small business issuer in its charter)
  
  California
                95-4849012(State
                    or other jurisdiction of incorporation or organization)
                (I.R.S.
                    Employer Identification No.)
    
 10925
          Schmidt Road
 El
          Monte, California 91733
 (Address,
          including zip code, of principal executive offices)
 
 
 Issuer’s
          telephone number : (626) 350-4039
 
 
 Securities
          registered under Section 12(b) of the Exchange Act: None
  Securities
          registered under Section 12(g) of the Exchange Act:
  Common
            Stock, Par Value $.001 Per Share
 (Title
            of
            class)
 1
  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.  x Yes  o 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
          any
          amendment to this Form 10-KSB. x
 
 Indicate
          by check mark whether the registrant is an accelerated filer (as defined
          in
          exchange A Rule 12b-2)
 
 Yes  ̈ No x
 
 Indicate
          by check mark whether the registrant is a shell company (as defined in
          Rule
          12b-2 of the Exchange Act).
 
 Yes  ̈ No x
 
 State
          issuer’s revenues for its most recent fiscal year. $9,588,238.
 
 As
          of
          February 28, 2007, we had 32,902,800 shares of our $0.001 par value common
          stock
          issued and outstanding.  On
          February 28, 2007, the aggregate market value of our common stock held
          by
          non-affiliates was approximately $ 16,451,400.
  DOCUMENTS
          INCORPORATED BY REFERENCE
 None
 
 Transitional
          Small Business Disclosure Form (Check one):   Yes o  No x
 
 To
          simplify the language in this Form 10-KSB, Tank Sports, Inc., a California
          corporation, is referred to herein as “Tank”, the "Company" or
          "We."
 2
  **Table
          of Contents**
  PagePART
                    IITEM
                    1
                DESCRIPTION
                    OF BUSINESS
                4ITEM
                    2
                DESCRIPTION
                    OF PROPERTY.
                8ITEM
                    3
                LEGAL
                    PROCEEDINGS
                8ITEM
                    4
                SUBMISSION
                    OF MATTERS TO A VOTE OF SECURITY HOLDERS
                8ITEM
                    5
                MARKET
                    FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
                8ITEM
                    6
                MANAGEMENT’S
                    DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
                9ITEM
                    7
                FINANCIAL
                    STATEMENTS
                15ITEM
                    8
                CHANGES
                    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                    DISCLOSURE
                34ITEM
                    8A
                CONTROLS
                    AND PROCEDURES
                34PART
                    IIITEM
                    9
                DIRECTORS,
                    EXECUTIVE OFFICERS. PROMOTERS AND CONTROL PERSONS; COMPLIANCE
                    WITH SECTION
                    16(a)
                34ITEM
                    9B
                COMPLIANCE
                    WITH SECTION 16(a) OF THE EXCHANGE ACT
                35ITEM
                    10
                EXECUTIVE
                    COMPENSATION
                35ITEM
                    11
                SECURITY
                    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
                36ITEM
                    12
                CERTAIN
                    RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
                36ITEM
                    13
                EXHIBITS
                    AND REPORTS ON FORM 8-K
                37ITEM
                    14
                PRINCIPAL
                    ACCOUNTANT FEES AND SERVICES
                37SIGNATURES
                38
  3
  PART
          I
 
 This
          report on Form 10-KSB and documents incorporated herein by reference contain
          certain “forward-looking statements” as defined by the Private Securities
          Litigation Reform Act of 1995 which involve substantial risks and uncertainties.
          When used in this report and in other reports filed by the Company, the
          forward-looking statements are often identified by the use of such terms
          and
          phrases as “anticipates,” “believes,” “intends,” “plans,” “expects,” “seeks,”
“scheduled,” “foreseeable future’ and similar expressions. Although the Company
          believes the understandings and assumptions on which the forward-looking
          statements in this report are based are reasonable, the Company’s actual
          results, performance and achievements could differ materially from the
          results
          in, or implied by, these forward-looking statements. Certain factors that
          could
          cause or contribute to such differences include those discussed in “Management’s
          Plan of Operations” and elsewhere herein.
 
 ITEM
          1.
          DESCRIPTION OF BUSINESS.
 
 Corporate
          History
 
 Tank
          Sports, Inc. was originally incorporated under the laws of the State of
          California on March 5, 2001, as Bi-Tank, Inc. On June 21, 2004, we amended
          our
          Articles of Incorporation changing our name to “Tank Sports, Inc.” Our principal
          office and warehouse is located at 10925 Schmidt Road, El Monte, California
          91733. We currently maintain a web site at http://www.tank-sports.com .
 
 Current
          Business Operations
 
 We
          market, sell and distribute recreational and transportation motorcycles,
          all-terrain vehicles (“ATVs”), dirt bikes, scooters and Go Karts in the United
          States and international markets. We complement each of product lines with
          an
          assortment of replacement parts and accessories, which are available at
          our
          dealerships. We market our products through Tank Sports, Inc., as well
          as a
          network of about 151 dealers and distributors worldwide, with over 100
          dealers
          in the United States. Outside of the United States, we sell our products
          through
          an international network of dealers and distributors serving countries
          such as
          Mexico, Ecuador, Jamaica and Finland.
 
 We
          offer
          a full product line consisting of four cruiser motorcycles, seven dirt
          bike
          motorcycles, eight scooters, and seven all-terrain vehicles. The cruiser
          motorcycles ranges in sizes from 50cc to 250cc, dirt bikes range in size
          from
          70cc to 250cc, scooter ranges in sizes from 50cc to 150cc and the ATVs
          models
          are 70cc to 250cc. We also offer a bicycle line consisting of “ ***Trials*** ”,
          bikes
          for skill oriented riders, “ ***Cruisers*** ”,
          for
          common use, “ ***BMX*** ”
and
          Mountain Bikes. Since we launched motorcycle and ATVs products in 2003,
          we have
          switched our focus from bicycles to the sales and distribution of motorcycles
          and ATVs.
  Our
          motorcycle and ATV products are manufactured in China. Our products are
          manufactured according to our proprietary designs and standards. **** We
          make
          purchases of motorcycle and ATV products from third party vendors in China
          by
          financing through Steady Star, a related party. With each purchase, Steady
          Star
          issues a letter of credit and Purchase Order (“P.O.”) according to specific
          instructions from us on Models, Quantity, Color(s), and terms and conditions
          on
          payments, shipment, packaging, import/export responsibilities and other
          remarks.
          All Purchase Orders are written in a standard format to all vendors. Following
          is an example of the standard format of terms and conditions written in
          our
          Purchase Orders:
  ·
                Vendor
                    shall provide Buyer 1% (or 2.5% for certain products) of the
                    easily
                    damageable parts as “Cost-free after sales items.” Buyer should provide
                    Vendor with a list of easily damageable parts.·
                Vendor
                    shall be responsible for any problem caused by packaging.
  ·
                Prior
                    to completion of packaging, Vendor shall notify Buyer to conduct
                    quality
                    inspections.
 
  4
  ITEM
          1.
          DESCRIPTION OF BUSINESS - continued
 
  ·
                All
                    engine marks for various models listed on the P.O. shall be “TANK”. All
                    engines must be stamped with proper marks. Vehicle shall be marked
“TK’ or
                    “TANK”. There shall not be any other Chinese / English marks or stamps
                    other than specified by the Buyer.·
                Vendor
                    shall not manufacturer any of the vehicle models or its parts
                    listed in
                    the P.O. to any company or individual other than the
                    Buyer.
 
 ·
                Vendor
                    shall not sell to the United States market using any method or
                    for any
                    reason.
  Each
          of
          our Purchase Orders are based on the market condition at the time of issuance.
          Thus the exact terms and conditions might vary from those listed above.
          SEE
          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
 
 Industry
          Background
  Motorcycles
  We
          are
          engaged in the sales and distribution of motorcycles, mainly off road vehicles,
          dirt bikes, scooters, ATVs and Go Karts. According to MIC (Motorcycle Industry
          Council, a not-for-profit, national trade association crated to promote
          and
          preserve motorcycling and the U.S. motorcycle industry.), new motorcycle
          retail
          sales equaled an estimated 8.2 billion dollars in 2003. On-highway motorcycles
          accounted for 86%, while off-highway motorcycles and dual motorcycles
          represented 12% and 2% respectively. There were 8.8 million motorcycles
          in
          operation in the United States, or 3 motorcycles for every 100 persons.
          Of
          those, 6.9 million were used on public roads and highways, and 2.4 million
          were
          used off-road; these figures include 500,000 dual-purpose bikes, which
          are
          designed for use on public roads and for off-highway recreational purposes.
 
 In
          the
          8.8 million motorcycles in use, 23.5 million people operated a motorcycle
          in
          2003. The MIC is the national trade association created to promote
          motorcycling and to enhance the U.S. Motorcycle industry. More than 300
          members
          represent manufacturers and distributors of motorcycles, scooters, parts
          and
          accessories, and interface with allied trades (such as publishing, insurance
          and
          consultants) that support the continued development of statistics, effective
          governmental efforts and industry relations. At the present time, according
          to
          MIC, 13,924 retail outlets sell motorcycles and related products in the
          United
          States. 45% of these retail outlets are authorized to sell new motorcycles,
          scooters or all-terrain vehicles based on MIC estimates.
  All-terrain
          Vehicles (“ATVs”)
  ATVs
          are
          four-wheel vehicles with balloon style tires designed for off-road use
          and
          traversing rough terrain, swamps and marshland. ATVs are used for recreation,
          in
          such sports as fishing and hunting, as well as for utility purposes on
          farms,
          ranches and construction sites. ATVs were introduced to the North American
          market in 1971 by Honda. Other Japanese motorcycle manufacturers including
          Yamaha, Kawasaki and Suzuki entered the North American ATV market in the
          late
          1970s and early 1980s. We entered the ATV market in 2003. Also in 2003,
          John
          Deere announced its planned entrance into the North American ATV market
          in early
          2004. In 1985, the number of three- and four-wheel ATVs sold in North America
          peaked at approximately 650,000 units per year, then dropped dramatically
          to a low of 148,000 in 1989. Since that time, the industry has grown
          consistently. According to Polaris, during the calendar year 2004 the industry
          grew seven percent (7%) with approximately 1,129,000 ATVs sold
          worldwide.
 5
  ITEM
          1.
          DESCRIPTION OF BUSINESS - continued
 
 Competition
 
 The
          ATV
          and motorcycle markets in the United States are highly competitive. A handful
          of
          competitors dominate the powersports industry in the United States. Our
          main
          competitors includes three North American competitors (Polaris, Arctic
          Cat and
          Bombardier) and four Japanese competitors (Honda, Kawasaki, Suzuki and
          Yamaha)
          Competition in such markets is based upon a number of factors, including
          price,
          quality, reliability, styling, product features and warranties. At the
          dealer
          level, competition is based on a number of factors including sales and
          marketing
          support programs (such as financing and cooperative advertising). Certain
          of our
          competitors are more diversified and have financial and marketing resources
          which are substantially greater than those of our company. Our products
          are
          competitively priced and management believes our sales and marketing support
          programs for dealers are comparable to those provided by its competitors.
          Our
          products compete with many other recreational products for the discretionary
          spending of consumers. The following discussion is brief overview of our
          main
          competitors:
 
 **Polaris:** Polaris
          Industries, Inc. engages in designing, engineering, manufacturing, and
          marketing
          motorized products for recreation and utility use, including all-terrain
          vehicles,, snowmobiles, and motorcycles together with related replacement
          parts,
          garments, and accessories. This company also markets a line of recreational
          apparel, including helmets, jackets, bibs and pants, leathers, and hats
          for its
          snowmobile, ATV, and motorcycle lines. It sells its products through dealers
          and
          distributors principally located in the United States, Canada, and Europe.
          Polaris Industries was formed in 1994 and is headquartered in Medina, Minnesota.
          Polaris competes in ATVs, snowmobiles, motorcycles, personal watercraft
          (“PWC”),
          and jet boats. Polaris is the market leader in snowmobiles with more than
          30%
          market share worldwide and is the No. 2 competitor in ATVs with more than
          20%
          market share worldwide. Sharing overlapping geographies and similar brand
          heritage, our company and Polaris compete for the American
          consumer.
 
 **Arctic
          Cat:** Arctic
          Cat, Inc. engages in the design, engineering, manufacture, and marketing
          of
          snowmobiles and all-terrain vehicles. It produces snowmobiles in 56 models
          and
          ATVs in 26 models. The company also sells snowmobile and ATV parts, such
          as
          electric start and reverse kits, luggage racks and bags, backrests, machine
          covers, windshields, track studs, carbide runners, winch kits, snow plow
          kits,
          portable lights, and utility bags. In addition, Arctic Cat offers garments
          and
          accessories, including suits, jackets, pants, pull-overs, sweatshirts,
          T-shirts,
          riding gloves, hats, helmets, caps, boots, and gear bags. This company
          sells its
          products in the United States, Canada, Europe, the Middle East, and Asia
          through
          a network of independent dealers and distributors. Arctic Cat’s principal
          executive offices are located in Thief River Falls, Minnesota. Based in
          Thief
          River Falls, Minnesota, Arctic Cat is our rival. Arctic Cat competes directly
          with us in the ATV market. Sharing overlapping geographies and similar
          brand
          heritage, our company and Arctic Cat compete for the American consumer..
          Arctic
          Cat recently surpassed Bombardier to become the No. 2 competitor in snowmobiles
          in the United States (No. 3 worldwide) and is the No. 6 competitor in ATVs
          worldwide, in management’s estimation.
 
 **Bombardier:** Bombardier
          operates under the Sea-DooTM and Ski-DooTM names in the PWC and snowmobile
          markets, respectively, and recently entered the ATV market (1998) using
          the
          Bombardier name. Bombardier is the No. 1 competitor in PWC and is the No.
          2
          manufacturer of snowmobiles worldwide behind Polaris. In March 2001, Bombardier
          purchased Outboard Marine Corp., acquiring the Johnson and Evinrude brands
          of
          outboard motors along with the Fish-Hawk line of boats. Bombardier is also
          one
          of the largest producers of two- and four-stroke engines (called ROTAX),
          used
          primarily in snowmobile, watercraft, and ATV vehicles.
  6
  ITEM
          1.
          DESCRIPTION OF BUSINESS - continued
 
 **Honda:** Honda
          Motor Co., Ltd. engages in the development, production, and manufacture
          of motor
          products, ranging from small general purpose engines to specialty sports
          cars.
          Its motorcycle business includes motorcycles, all-terrain vehicles, and
          personal
          watercraft. This company produces motorcycles, ranging from the 50 cubic
          capacity (cc) class to the 1800cc class in cylinder displacement. Honda’s
          motorcycle line consists of sports, business, and commuter models. Honda
          also
          manufactures various power products, including power tillers, portable
          generators, general purpose engines, grass cutters, outboard engines, water
          pumps, snow throwers, power carriers, power sprayers, lawn mowers, and
          lawn
          tractors. In addition, it also provides financing for the sale of its
          motorcycles, automobiles, and power products. This company’s products are
          distributed primarily in Japan through outlets, including PROS authorized
          dealerships. Honda Motor Co. was incorporated in 1948 and is based in Tokyo,
          Japan. With combined ATV and motorcycle sales of approximately $8 billion
          annually, Honda is our largest competitor in the powersports industry.
          Honda is
          the pioneer and market leader in ATVs and holds the No. 2 position in
          motorcycles behind Harley-Davidson. Honda entered the PWC market last year
          with
          two 1,235cc models and has added an additional PWC model for its 2003 model
          year. Honda’s move into PWC marks its first entry into a new recreational
          products category since 1971, when it introduced the industry’s first
          ATV.
 
 **Yamaha:** Yamaha
          Motor Company manufacture and sales of motorcycles, scooters, electro-hybrid
          bicycles, boats, sail boats, Water Vehicles, pools, utility boats, fishing
          boats, outboard motors, diesel engines, 4-wheel ATVs, side-by-side vehicles,
          racing karts, golf cars, multi-purpose engines, generators, water pumps,
          snowmobiles, small-sized snow throwers, automotive engines, intelligent
          machinery, industrial-use remote control helicopters, electrical power
          units for
          wheelchairs, helmets. Yamaha competes in each of our major segments, including
          ATVs and motorcycles. Yamaha started out in the motorcycle business in
          1955 and
          is now a large producer of both on-highway motorcycles (cruisers, touring,
          and
          sport bikes) and off-highway dirt bikes. In 1968, Yamaha entered the snowmobile
          market. Yamaha produced its first ATV in 1979 and currently offers more
          than a
          dozen ATV models, including the 660cc sport performance Raptor.
 
 **Suzuki:** Suzuki
          Motor Corporation's principal activity is the design and manufacture of
          automobiles, motorcycles, outboard engines, general-purpose engines and
          other
          products. Operations are carried out through the following sectors: motorcycles:
          motor bikes, pushbikes; four-wheeled cars: light cars, small-sized cars,
          normal-sized cars and others: houses, dynamos. Four-wheeled cars accounted
          for
          79% of fiscal 2002 revenues; motorcycles and other two-wheelers, 19% and
          other
          operations, 2%. Oversea sales accounted for 52.8% of fiscal 2002 revenues.
          Suzuki competes in the motorcycle and ATV segments of the powersports industry.
          Suzuki introduced the first four-wheeled ATV in 1982, and maintains a small
          market share (7%) in ATVs. In March 2002, Suzuki and Kawasaki formed a
          strategic
          partnership for product development, engineering, and manufacturing of
          both ATVs
          and motorcycles. Suzuki is also a 34% owner of Arctic Cat, Inc. and provides
          Arctic Cat with engines used in its snowmobiles and ATVs.
 
 **Kawasaki:** Kawasaki
          Heavy Industries’ principal activities are the manufacture of a wide range of
          industrial products. Operations are carried out through the following divisions:
          General machinery (motorcycles, jet-skis, buggies and gasoline engines);
          Industrial plant (industrial machinery, boiler and environment equipment);
          Gas
          turbine (jet engines, general gas turbines and motors); Aerospace ( air
          planes);
          Transportation equipment (trains, construction machinery and precision
          machinery); Shipbuilder and Other. General machinery accounted for 25 %
          of
          fiscal 2002 revenues; industrial plant, 20%; gas turbine, 15%; aerospace;
          14%;
          transport equipment; 11%; shipbuilder, 8% and other, 7%. From the class
          leading
          Ninja® sportbikes and thundering VulcanTM cruisers to the rugged Brute ForceTM
ATVs, MuleTM utility vehicles and JET SKI® watercraft, Kawasaki products lead the
          powersports industry around the globe. Kawasaki's success is in designing
          and
          manufacturing products that offer balanced performance, high quality,
          reliability and excellent fit and finish. Kawasaki is the No. 3 competitor
          in
          PWC, the No. 4 competitor in heavyweight motorcycles, and the No. 4 competitor
          in ATVs. This company is also a market leader in the utility vehicle segment
          of
          the ATV market. Kawasaki has a full line of ATVs and introduced the first
          V-Twin
          700cc four-stroke “ultra high performance” sport ATV in the first quarter of
          2003.
  Employees
 
 We
            currently have a total of eighteen (18) full time
            employees.
  7
  ITEM
          2.
          DESCRIPTION OF PROPERTY.
 
 Our
          principal office and warehouse is located at 10925 Schmidt Road, El Monte,
          CA
          91733. On August 1, 2005, we entered into a lease agreement with Jing Jing
          Long
          and Jiang Yong Ji for the facilities in which we operate. The term of the
          lease
          is 60 months with monthly payments of $19,900. The landlords are also officers,
          directors and majority shareholders of the Company. **** SEE
          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
 
 ITEM
          3.
          LEGAL PROCEEDINGS.
 
 We
          were
          not a party to any legal proceedings during the reporting period, and we
          know of
          no legal proceedings pending or threatened or judgments entered against
          any
          director or officer of the Company in his or her capacity as such.
 
 ITEM
          4.
          SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
 None
 
 ITEM
          5.
          MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
 
 Principal
          Market or Markets
  Our
          common stock is not listed on any exchange and there is no public trading
          market
          for the common stock.
 
 Approximate
          Number of Common Stock Holders
 
 As
          of
          February 28, 2007, we had 200 shareholders of record. We have no
          outstanding warrants or options to purchase our securities.
 
 Dividend
          Policy
 
 We
          have
          never declared or paid cash dividends on our common stock and anticipate
          that
          future earnings, if any, will be retained for development of our
          business.
 
 Recent
          Sales of Unregistered Securities
 
 From
          October 10, 2005 through October 30, 2005, we conducted an offering of
          125,700
          shares of our common stock to 32 investors residing in China and Mexico
          at a
          price of $1.00 per share for an aggregate value to our company of
          $125,700.
 
 We
          relied
          upon Regulation S of the Securities Act of 1933, as amended (the "Act").
          Our
          officers and directors determined the sophistication of our investors,
          as the
          investors were all foreign accredited investors. Each investor completed
          a
          subscription agreement whereby the investors certified that they were purchasing
          the shares for their own accounts, with investment intent. This offering
          was not
          accompanied by general advertisement or general solicitation and the shares
          were
          issued with a Rule 144 restrictive legend. No shares were sold to investors
          residing within the United States of America. In addition, we complied
          with the
          applicable requirements of Rules 902 and 903 of the Act.
 8
  ITEM
        6.
        MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
 
 The
        following discussion is intended to provide an analysis of the Company’s Plan of
        Operation and financial condition after its acquisition of Lowprice.com,
        Inc. in
        conjunction with the Company’s financial statements and the notes thereto set
        forth herein. The matters discussed in this section that are not historical
        or
        current facts deal with potential future circumstances and developments.
        The
        Company’s actual results could differ materially from the results discussed in
        the forward-looking statements. Factors that could cause or contribute to
        such
        differences include those discussed below.
 
 Plan
        of
        Operation
 
 Since
        our
        inception, we have commenced the sale and distribution of motorcycles and
        ATV’s
        under the brand name of TANK, and RedCat, the brand which we obtained through
        the acquisition of Lowprice.com, Inc.
 
 Consolidation
        and Integration after Acquisition
 
 On
        January 30, 2007, Tank Sports Inc. successfully completed its acquisition
        of one
        hundred percent (100%) of the issued and outstanding common stock of
        Lowprice.com, Inc., an Arizona corporation d/b/a RedCat Motors (the
“Company”).
 
 The
        consolidation and integration measures that have been taken by the company
        to
        further strengthen its market position included, but not limited to,
        restructuring of management and operation team, consolidation of regional
        warehouse facility, ERP system integration, inventory control, development
        of
        marketing promotion and sales plan, improvement of customer service
        infrastructure. With all steps taken, the company believes that it will
        significantly increase Tank’s overall productivity and revenues, and reduce
        unnecessary costs and expenses. These measures Tank has been taking will
        help
        achieve a goal of high profit margin with the controlled budget.
  Since
        Tank has established stronger OEM manufacturing resources in China , its
        successful acquisition of Lowprice.com, Inc.has strengthened a complementary
        to
        regional dealership network and synergy in a wider product mix of on and
        Off-road power sports vehicles. After acquisition, the Redcat and Tank
        dealership network has a total of 580-combined dealers.
  The
        company has started the operation under the Tier I ERP system that obtained
        thru
        the acquisition to manage its sales through five warehouses nationwide. The
        system will allow the customers to place product and parts orders, make payment
        of the orders, and monitoring the order status 24/7 without personnel
        involvement. By using the system, the company is building up a largest parts
        center warehouse for the Chinese motorcycles and ATVS in the US territory
        in El
        Monte by combining parts departments in Tank and Redcat Motors, where more
        than
        3000 types of products and parts/accessories are in bar-coded and scanned
        into
        bin locations. Because of this, Tank/Redcat after-sell service platform will
        become a value-added product to its customers and bring additional
        profitability.
 Parts
          and
          accessories has become a major focus for our business expansion. Tank expects
          to
          supply its dealers with helmets, goggles, apparel and other personalized
          products to boost sales and profit. Tank intents to gain its brand identity
          and
          increase new sales and profit margin.
 
 Tank’s
          Operational Model
 
 Tank
          has
          been developing a global development plan to further integrate its ability
          in
          R&D, OEM sourcing and manufacturing, sales and service network.
 
 For
          further expansion of its sales network worldwide and capacity of OEM
          manufacturing of a variety product lines, Tank has been actively seeking
          for
          strategic investment and business partners and alliances through merger
          and
          acquisition. Tank has also planned to expand its market shares to the areas
          of
          South America, Middle East, Africa. For example, Tank is in the process
          of
          negotiating with a leading ATV products manufacturer in China to increase
          the
          distributorship of this product line in the U.S. and Mexico markets. In
          addition, Tank is negotiating a joint venture deal with a leading 600CC
          on-road
          motorcycle manufacturer in China to increase its larger capacity product
          lines.
 9
 ITEM
        6.
        MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION -
        continued
  Tank’s
        Operational and Sales Goal in 2007-2008
 
 Tank
        has
        planed to achieve a total number of dealership of 900, which includes 100
        exclusive dealers (dealers that only sell Tank products) with a sales objective
        of each dealer I amount of $150,000 - $500,000. Currently, Tank has a total
        number of 580 dealers in the US market .
 
 With
        partnership with leading manufacturers and suppliers and its joint R&D
        effort to develop new generation products, Tank intents to enhance its
        dealership standardization by adding more product lines to its dealers.
 
 Tank
        is
        undertaking a redundancy cut-off plan for a cost effective operation . So
        far,
        Tank has reduced its total number of employees from 42 to 29 through the
        execution of the plan. Tank targets to achieve a goal of $1 million in sales
        per
        employee. An analysis of Tank’s basic operational expenses done by the company
        has found that the current level of staffing can still keep overall expenses
        under $4.30 million annually. This level of expense can support the company’s
        revenue up to between $23 and $30 million. This Plan hopefully will result
        in
        increased gross profit and net income. The average gross profit margin at
        and
        above 25% is likely achieved by the company, by estimation. The company is
        to
        achieve annual revenue of $23 millions with the goal of breaking through
        up to
        $30 millions. The net income is predicted to reach 6-9% or more. In other
        words,
        the company is expecting to have gross profit of $5.80 to $7.50 million with
        a
        net income of $1.50 to $3.20 million.


Reasons
        for Increase of Expenses for 2008 Fiscal Year
 
 The
        following factors have contributed to the increase of expenses for the 2008
        fiscal year:
 
 (1)
              Filing
                  and overhead expenses for auditing and reporting to OTCBB
                  board
 (2)
              Adjustment
                  of dealership structure (drop in dealership number due to standardizing
                  dealership selection criteria)
 (3)
              Fees
                  and requirements of filing and permitting for new product models’ entry to
                  the market
 (4)
              Increased
                  premium of insurance coverage (increase of insured
                  items)
 (5)
              Overpaid
                  dealership incentive and commission package (need to be
                  adjusted)
 (6)
              Break-even
                  of sales volume for maximum profit margin
 (7)
              Additional
                  compensation for staffing adjustments (release and
                  rehiring)
 (8)
              Additional
                  expenses for storage/sales facility relocation
  1.
              *Generate
                  Dealer Interest and Recruit Dealers.*We
                  have used our power sports vehicles to create awareness within
                  the power
                  sports industry. We have also displayed these vehicles at trade
                  shows and
                  events to generate dealer interest in TANK and RedCat products.
                  We intend
                  to continue our promotional efforts through public relations program,
                  attending and displaying our products at dealer trade shows, direct
                  mail
                  efforts and direct solicitations of prospective customers. We believe
                  our
                  dealer qualification criteria are strict and they include experience,
                  reputation, ability to serve the geographic territory and financial
                  strength.
  2.
              *Generate
                  Consumer Interest and Develop the TANK and Redecat Brand Awareness.*To
                  date, our products have appeared in over 10 publications. We believe
                  this
                  publicity is critical to creating awareness of the TANK and RedCat
                  brands.
                  We intend to continue our public relations efforts to create additional
                  consumer interest and to support our dealers in targeted advertising
                  and
                  marketing efforts in their geographic territories. We also plan
                  to
                  continue to attend trade shows and events targeted to consumers
                  to provide
                  them with opportunities to see, and in some cases ride, our products.
                  We
                  believe these efforts, as well as mailing information to persons
                  who have
                  inquired about our products, will generate the customer awareness
                  we
                  believe is necessary to sell our products, and to develop the TANK
                  and
                  RedCat brands.
 
 Our
        focus
        in the next 12 months has been to seek necessary working capital, and to
        further
        execute our marketing plan. Our marketing plan focuses on dealers and the
        retail
        market, through comprehensive print advertising, participation in trade shows
        and other direct marketing efforts. Our marketing strategy is based on a
        reliable product, consistent quality and the delivery of a unique name and
        image. We estimate the necessary proceeds to implement this marketing campaign
        to be $220,000. We do not plan to carry out these actions until we have secured
        funds from our cash flows to fully fund this marketing plan. At this time,
        it is
        uncertain as if we can secure necessary financing.
 10
  ITEM
        6.
        MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION -
        continued
 FOR
          THE
          FISCAL YEAR ENDED FEBRUARY 28, 2007
 
 We
          generated revenues of $ 9,588,238 for the fiscal year ending February 28,
          2007,
          as compared to $7,539,336 in revenues for the fiscal year ended February
          28,
          2006. The increase is primarily attributable to increased sales.
 
 Our
          net
          loss for fiscal year ended February 28, 2007 was approximately ($249,325)
          as
          compared to a net loss for fiscal year ended February 28, 2006 of approximately
          ($206,713). The increase in our net loss is primarily attributable to increase
          in operating expenses, especially in advertising, trade show, freight out
          and
          rents, and product liability and warranty insurances.
  During
        the fiscal year ended February 28, 2007, we recorded operating expenses of
        $
        3,197,979 , consisting primarily of (i) $2,157,498 in general and administrative
        expenses; and (ii) $1,040,481 in selling expenses. During the fiscal year
        ended
        February 28, 2006 , we recorded operating expenses of $ 2,194,385 ,
        consisting primarily of (i) $ 775,352 in general and administrative expenses;
        and (ii) $ 1,419,033 in selling expenses.
  General
        and administrative expenses generally include corporate overhead, financial
        and
        administrative services.
 
 Net
        cash
        flow provided by (used in) operating activities were ($385,751) and ($1,383,580)
        during the fiscal years ended February 28, 2007 and 2006 , respectively.
 
 Net
        cash
        flows (used in) investing activities were ($55,308) and ($78,188) during
        the
        fiscal years ended February 28, 2007 and 2006, respectively
 
 Net
        cash
        flow provided by financing activities were $3,088,541 and $1,584,355 during
        the
        fiscal years ended February 28, 2007 and 2006 , respectively. Our net cash
        flows
        used in financing activities consisted primarily of payment of loans borrowed
        from Steady Star, an S Corp in California and a related company. SEE CERTAIN
        RELATIONSHIPS AND RELATED TRANSACTIONS.
 
 LIQUIDITY
        AND CAPITAL RESOURCES
 
 At
        February 28, 2007 , our current assets were $6,080,066, current liabilities
        were
        $6,946,319, resulting in a working capital deficit of $866,253.
 
 At
        February 28, 2007, we had cash and cash equivalents of $2,876,915.
 
 The
        Company anticipates the future cash flow from revenue and existing financing
        facilities would be adequate to fund our operations over the next twelve
        (12)
        months. We have lines of credit from UCB bank and other financing arrangements.
        Generally, we have financed operations to date through cash flow and shareholder
        loans. In connection with our business plan, management anticipates additional
        increases in operating expenses and capital expenditures relating to
        advertisement and marketing of our brand names , the expansion of dealership
        networks, and Mergers & Acquisitions. We intend to finance these expenses
        from current and future revenues from operations and from other financing
        arrangement.
 
 OFF-BALANCE
        SHEET ARRANGEMENTS
 
 We
        have
        no off-balance sheet arrangements.
 
 MATERIAL
        COMMITMENTS
 
 We
        have
        no material commitments as at the date of this registration
        statement.
 
 11
 ITEM
        6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN
        OF OPERATION - continued
  PURCHASE
        OF SIGNIFICANT EQUIPMENT
 Tank
        has
        purchased an automatic vacuum packaging equipment line at cost of $28,000
        in the
        fiscal year of 2007.
 
 Tank
        also
        acquired a complete ERP systems.
 
 RECENT
        ACCOUNTING PRONOUNCEMENTS
 
 In
        May
        2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections."
        This statement applies to all voluntary changes in accounting principle and
        requires retrospective application to prior periods' financial statements
        of
        changes in accounting principle, unless this would be impracticable. This
        statement also makes a distinction between "retrospective application" of
        an
        accounting principle and the "restatement" of financial statements to reflect
        the correction of an error. This statement is effective for accounting changes
        and corrections of errors made in fiscal years beginning after December 15,
        2005.
 
 In
        February 2006, FASB issued SFAS No. 155, “Accounting for Certain Hybrid
        Financial Instruments”. SFAS No. 155 amends SFAS No 133, “Accounting for
        Derivative Instruments and Hedging Activities”, and SFAF No. 140, “Accounting
        for Transfers and Servicing of Financial Assets and Extinguishments of
        Liabilities”. SFAS No. 155, permits fair value remeasurement for any hybrid
        financial instrument that contains an embedded derivative that otherwise
        would
        require bifurcation, clarifies which interest-only strips and principal-only
        strips are not subject to the requirements of SFAS No. 133, establishes a
        requirement to evaluate interest in securitized financial assets to identify
        interests that are freestanding derivatives or that are hybrid financial
        instruments that contain an embedded derivative requiring bifurcation, clarifies
        that concentrations of credit risk in the form of subordination are not embedded
        derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
        qualifying special-purpose entity from holding a derivative financial instrument
        that pertains to a beneficial interest other than another derivative financial
        instrument. This statement is effective for all financial instruments acquired
        or issued after the beginning of the Company’s first fiscal year that begins
        after September 15, 2006.
 
 In
        December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment,
        an
        Amendment of FASB Statement No. 123" ("FAS No. 123R"). FAS No. 123R requires
        companies to recognize in the statement of operations the grant- date fair
        value
        of stock options and other equity-based compensation issued to employees.
        FAS
        No. 123R is effective beginning in the Company's first quarter of fiscal
        2006.
 
 In
        June
        2005, the EITF reached consensus on Issue No. 05-6, determining the Amortization
        Period for Leasehold Improvements ("EITF 05-6.") EITF 05-6 provides guidance
        on
        determining the amortization period for leasehold improvements acquired in
        a
        business combination or acquired subsequent to lease inception. The guidance
        in
        EITF 05-6 will be applied prospectively and is effective for periods beginning
        after June 29, 2005. EITF 05-6 is not expected to have a material effect
        on its
        consolidated financial position or results of operations.
  In
        March
        2006 FASB issued SFAS 156 ‘Accounting for Servicing of Financial Assets’ this
        Statement amends FASB Statement No. 140, *Accounting
        for Transfers and Servicing of Financial Assets and Extinguishments of
        Liabilities,* with
        respect to the accounting for separately recognized servicing assets and
        servicing liabilities. This Statement:
  12
  ITEM
        6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
        OPERATION - continued
  1.
              Requires
                  an entity to recognize a servicing asset or servicing liability
                  each time
                  it undertakes an obligation to service a financial asset by entering
                  into
                  a servicing contract.
  2.
              Requires
                  all separately recognized servicing assets and servicing liabilities
                  to be
                  initially measured at fair value, if practicable.
  3.
              Permits
                  an entity to choose ‘Amortization method’ or ‘Fair value measurement
                  method’ for each class of separately recognized servicing assets and
                  servicing liabilities.
  4.
              At
                  its initial adoption, permits a one-time reclassification of
                  available-for-sale securities to trading securities by entities
                  with
                  recognized servicing rights, without calling into question the
                  treatment
                  of other available-for-sale securities under Statement 115, provided
                  that
                  the available-for-sale securities are identified in some manner
                  as
                  offsetting the entity’s exposure to changes in fair value of servicing
                  assets or servicing liabilities that a servicer elects to subsequently
                  measure at fair value.
  5.
              Requires
                  separate presentation of servicing assets and servicing liabilities
                  subsequently measured at fair value in the statement of financial
                  position
                  and additional disclosures for all separately recognized servicing
                  assets
                  and servicing liabilities.
  APPLICATION
        OF CRITICAL ACCOUNTING POLICIES
 
 Our
        significant accounting policies are identified and described in Note 2 to
        the
        financial statements. The preparation of our financial statements in conformity
        with U.S. generally accepted accounting principles require management to
        make
        estimates and assumptions that affect the reported amounts of assets an
        liabilities and disclosures of contingent assets and liabilities at the date
        of
        the financial statements, and the reported amounts of revenue and expenses
        during the reporting period. Actual results could differ materially from
        those
        estimates. Tank continually evaluates its critical accounting policies and
        estimation procedures. Estimates are often based on historical experience
        and on
        assumptions that are believed to be reasonable under the circumstances, but
        which could change in the future. Some of Tank's accounting policies and
        estimation procedures require the use of substantial judgment, and actual
        results could differ materially from the estimates underlying the amounts
        reported in the consolidated financial statements. A summary of our significant
        accounting policies is included in Note 2 to our financial statements which
        are
        included in PART I. FINANCIAL INFORMATION of this Form 10 -
        KSB.
  In
        applying these policies, estimates and judgments affect the amounts at which
        accounts receivable, inventory, and certain liabilities are recorded and
        the
        useful lives of property and equipment. We apply our accounting policies
        on a
        consistent basis. Changes in circumstances are considered in our estimates
        and
        judgments. Future changes in circumstances could result in changes in amounts
        at
        which assets and liabilities are recorded. Future changes could also affect
        the
        estimated useful levels of property and equipment, which could result in
        changes
        in depreciation expense or write offs or write downs of such
        assets.
  Revenue
        Recognition. The Company's revenue recognition policies are in compliance
        with
        Staff Accounting Bulletion (SAB) 104. Sales revenue is recognized when the
        delivery to customers (independent dealers and distributors) is completed
        and
        ownership is transferred, the price is fixed and determinable, no other
        significant obligations of the Company exist and collectibility is reasonably
        assured. Payments received prior to completing all aforementioned criteria
        are
        recorded as unearned revenue. The Company's dealers enter into an annual
        renewable contract and are required to maintain status as an authorize dealer
        in
        order to continue selling company's products. Dealers are required to assemble
        and prep the vehicles before its sold, inform customer on warranties information
        and to repair and service the vehicles. The Company sets a fixed pricing
        structure each year. All dealers must follow the pricing structure or no
        more
        than 12% above or below the MSRP. Any additional discounts will need approval
        from the Company. The Company offers a limited and parts only warranties
        to all
        its dealers, distributors and retail customers. Tank requires its customer
        to be
        responsible for a 15% restocking fee for all unused return and shipping fees
        are
        non refundable. Used merchant cannot be returned without reason and the
        defective merchandise must be repaired. Tank has not historically recorded
        any
        significant sales return allowances because it has not been required to
        repurchase a significant number of units. However, should there be an adverse
        change in retail sales could cause this situation to change.
 
 Allowance
        for Doubtful Accounts. The Company maintains reserves for potential credit
        losses on accounts receivable. Management reviews the composition of accounts
        receivable and analyzes historical bad debts, customer concentrations, customer
        credit worthiness, current economic trends and change in customer payment
        patterns to evaluate the adequacy of these reserves. Reserves are recorded
        primarily on a specific identification basis.
 
 Inventory.
        Inventories are valued at the lower of cost (determined on a weighted average
        basis) or market. Machinery and equipment. Machinery and Equipment are stated
        at
        cost. Expenditures for maintenance and repairs are charged to earnings as
        incurred; additions, renewals and betterments are capitalized.
   13
  ITEM
        6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN
        OF OPERATION - continued
  Income
        taxes. The Company utilizes SFAS No. 109, "Accounting for Income Taxes,"
        which
        requires the recognition of deferred tax assets and liabilities for the expected
        future tax consequences of events that have been included in the financial
        statements or tax returns. Under this method, deferred income taxes are
        recognized for the tax consequences in future years of differences between
        the
        tax bases of assets and liabilities and their financial reporting amounts
        at
        each period end based on enacted tax laws and statutory tax rates applicable
        to
        the periods in which the differences are expected to affect taxable income.
        Valuation allowances are established, when necessary, to reduce deferred
        tax
        assets to the amount expected to be realized.
  Product
        warranties and insurance. Tank provides a limited warranty for parts only
        for a
        period of twelve months for its ATVs, Dirt bikes, Go Cars, and Scooters with
        a
        50cc engine, for a period of three years for its cruiser motorcycles with
        Trademark "VISION" and Scooters with 150cc and 250 cc engines. Tank's standard
        warranties require the Company or its dealers to repair or replace defective
        products during such warranty periods at no cost to the consumer. Major cost
        incurred in connection with warranty obligations is the cost of new parts
        replacing the damage/defective parts. We have not recorded a liability for
        warranty obligations because they were immaterial for the periods presented;
        and
        we have recorded expenses when the costs were actually incurred. Tank insures
        its product liability claims with ACORD Jordan and Jordan Insurance Agency,
        LLC.
        The product liability coverage are up to $1,000,000 limit per occurrence,
        $50,000 limits on damage to rented premises, $1,000,000 to personal injury,
        $2,000,000 to general aggregate and $2,000,000 limit to products comp/or
        aggregate. Historically, the Company has not experienced any threatened
        litigation or product liability claim. The Company believes that based on
        its
        historical product liability claim experience, the product liability insurance
        will be sufficient to cover any such claim.


14




ITEM
      7.
      FINANCIAL STATEMENTS


**Index
        to Financial Statements**
  Page**Report
                  of Independent Registered Public Accounting firm**
              16**Financial
                  Statements:****CONSOLIDATED
                  BALANCE SHEET AS OF FEBRUARY 28, 2007**
              17**CONSOLIDATED
                      STATEMENTS OF OPERATIONS FOR THE YEARS ENDED FEBRUARY 28, 2007
                      AND
                      2006**
              18**CONSOLIDATED
                S****TATEMENT OF CASH FLOWS FOR THE YEARS ENDED FEBRUARY
                28,
                2007 AND 2006**
              19**CONSOLIDATED
                  STATEMENT OF STOCKHOLDERS DEFICIT FOR THE YEAR ENDED FEBRUARY 28,
                  2007 AND 2006**
              20**NOTES
                  TO FINANCIAL STATEMENTS**
              21-33








15




**REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
  To
        the
        Board of Directors and Stockholders
 Tank
        Sports, Inc. and subsidiary
  We
        have
        audited the accompanying balance sheet of Tank Sports, Inc. (the Company)
        and
        its subsidiary as of February 28, 2007 and the related consolidated statements
        of operations, stockholders' deficit, and cash flows for each of the two
        years
        in the period ended February 28, 2007. 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 of these statements in accordance with the standards
        of the
        Public Company Accounting Oversight Board (United States). Those standards
        require that we plan and perform the audit to obtain reasonable assurance
        about
        whether the financial statements are free of material misstatement. An audit
        includes examining, on a test basis, evidence supporting the amounts and
        disclosures in the financial statements. An audit also includes assessing
        the
        accounting principles used and significant estimates made by management,
        as well
        as evaluating the overall financial statement presentation. We believe that
        our
        audits provide a reasonable basis for our opinion.
  In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of Tank Sports Inc. and its
        subsidiary, as of February 28, 2007, and the results of its operations and
        its
        cash flows for each of the two years ended February 28, 2007, in conformity
        with
        accounting principles generally accepted in the United States of
        America.
  The
        Company’s financial statements are prepared using the generally accepted
        accounting principles applicable to a going concern, which contemplates the
        realization of assets and liquidation of liabilities in the normal course
        of
        business. The Company has accumulated deficit of $1,043,992 at February 28,
        2007
        including a net loss of $249,325 during the year ended February 28, 2007.
        These
        factors as discussed in Note 3 to the financial statements, raises substantial
        doubt about the Company’s ability to continue as a going concern. Management’s
        plans in regard to these matters are also described in Note 3. The financial
        statements do not include any adjustments that might result from the outcome
        of
        this uncertainty.
  
 KABANI
        & COMPANY, INC.
 CERTIFIED
        PUBLIC ACCOUNTANTS
  Los
        Angeles, California
 May
        8,
        2007
  16
  **TANK
                    SPORTS, INC. AND SUBSIDIARY****CONSOLIDATED
                    BALANCE SHEET****AS
                    OF FEBRUARY 28, 2007****ASSETS****CURRENT
                    ASSETS:**Cash
                    and cash equivalents
                
                $
                2,876,915Accounts
                    receivable, net
                
                
                358,537Related
                    parties receivable
                
                
                195,301Prepaid
                    expenses
                
                
                236,218Inventory
                
                
                2,161,855Loans
                    receivable
                
                
                251,240Total
                    Current Assets
                
                
                6,080,066**PROPERTY,
                    PLANT AND EQUIPMENT, NET**
                
                
                509,876**DEPOSITS**
                
                
                51,470**GOODWILL**
                
                
                1,615,716$
                8,257,128**LIABILITIES
                    AND STOCKHOLDERS' DEFICIT****CURRENT
                    LIABILITIES:**Accounts
                    payable and accrued expenses
                
                $
                700,506Taxes
                    payable
                
                
                16,502Customer
                    deposits
                
                
                82,032Notes
                    payable
                
                
                4,937,279Related
                    party payable
                
                
                120,000Shares
                    to be issued
                
                
                1,090,000Total
                    Current Liabilities
                
                
                6,946,319**LONG-TERM
                    LIABILITIES:**Notes
                    payable
                
                
                280,987Related
                    party payable
                
                
                1,482,114Total
                    long-term liabilities
                
                
                1,763,101Total
                    Liabilities
                
                
                8,709,420**STOCKHOLDERS'
                    DEFICIT**Common
                    stock (authorized 200,000,000 shares, $0.001 par value,32,902,800
                    shares issued and outstanding)
                
                
                32,903Additional
                    paid in capital
                
                
                558,797Accumulated
                    deficit
                
                
                (1,043,992
                )Total
                    Stockholders' Deficit
                
                
                (452,292
                )$
                8,257,128The
                    accompanying notes are an integral part of these consolidated
                    financial
                    statements






17




**TANK
                  SPORTS, INC. AND SUBSIDIARY****CONSOLIDATED
                  STATEMENTS OF OPERATION****FOR
                  THE YEARS ENDED FEBRUARY 28, 2007 AND 2006****2007**
              
              
              **2006****NET
                  REVENUE**
              
              $
              9,588,238
              
              $
              7,539,336**COST
                  OF GOODS SOLD**
              
              
              6,803,322
              
              
              5,671,178**GROSS
                  PROFIT**
              
              
              2,784,916
              
              
              1,868,158**OPERATING
                  EXPENSES**Selling
                  expenses
              
              
              1,040,481
              
              
              1,419,033General
                  and administrative expenses
              
              
              2,157,498
              
              
              775,352Total
                  operating expenses
              
              
              3,197,979
              
              
              2,194,385**LOSS
                  FROM OPERATIONS**
              
              
              (413,063
              )
              
              (326,227
              )**NON-OPERATING
                  INCOME (EXPENSES)**Other
                  income
              
              
              203,143
              
              
              123,171Interest
                  incomes
              
              
              55,201
              
              
              -Interest
                  expenses
              
              
              (93,806
              )
              
              (3,657
              )Total
                  non-operating income
              
              
              164,538
              
              
              119,514**NET
                  LOSS BEFORE INCOME TAX**
              
              
              (248,525
              )
              
              (206,713
              )**PROVISION
                  FOR INCOME TAX**
              
              
              800
              
              
              -**NET
                  LOSS**
              
              $
              (249,325
              )
              $
              (206,713
              )**WEIGHTED
                  AVERAGE SHARES OF COMMON STOCK****OUTSTANDING,
                  BASIC AND DILUTED**
              
              
              32,525,814
              
              
              8,031,296**BASIC
                  AND DILUTED NET LOSS PER SHARE**
              
              $
              (0.01
              )
              $
              (0.03
              )The
                  accompanying notes are an integral part of these consolidated financial
                  statements






18




**TANK
                  SPORTS, INC. AND SUBSIDIARY****CONSOLIDATED
                  STATEMENT OF CASH FLOWS****FOR
                  THE YEARS ENDED FEBRUARY 28, 2007 AND 2006****CASH
                  FLOWS FROM OPERATING ACTIVITIES**
              
              
              **2007**
              
              
              **2006**Net
                  Loss
              
              $
              (249,325
              )
              $
              (206,713
              )Adjustments
                  to reconcile net loss to net cashused
                  in operating activities:Depreciation
                  and amortization
              
              
              36,570
              
              
              13,083(Increase)
                  / decrease in current assets:Accounts
                  receivable
              
              
              (123,542
              )
              
              (180,184
              )Others
                  receivable
              
              
              (160,221
              )
              
              (10,411
              )Prepaid
                  expenses
              
              
              (51,006
              )
              
              (60,646
              )Deposits
              
              
              (23,400
              )
              
              -Other
                  assets
              
              
              59,832
              
              
              12,523Inventory
              
              
              428,823
              
              
              (1,092,997
              )Increase
                  / (decrease) in current liabilities:Accounts
                  payable and accrued expenses
              
              
              (338,957
              )
              
              64,897Customer
                  deposits
              
              
              21,000
              
              
              76,870Tax
                  payable
              
              
              14,475
              
              
              -**Net
                  cash used in operating activities**
              
              
              (385,751
              )
              
              (1,383,580
              )**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Payment
                  on purchase of property and equipment
              
              
              (15,914
              )
              
              (62,960
              )Increase
                  of loans receivable
              
              
              (39,394
              )
              
              (15,228
              )**Net
                  cash used in investing activities**
              
              
              (55,308
              )
              
              (78,188
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES**Cash
                  received against common stocks to be issued
              
              
              1,090,000
              
              
              -Issuance
                  of common stocks
              
              
              456,000
              
              
              125,700Proceeds
                  from loans
              
              
              3,965,267
              
              
              30,922Receipt
                  (repayment)of loan from affiliates
              
              
              (1,111,514
              )
              
              1,427,733Repayments
                  of long-term notes payable
              
              
              (1,311,212
              )
              
              -**Net
                  cash provided by financing activities**
              
              
              3,088,541
              
              
              1,584,355**NET
                  INCREASE IN CASH AND CASH EQUIVALENTS**
              
              
              2,647,483
              
              
              122,587**CASH
                  AND CASH EQUIVALENTS, BEGINNING BALANCE**
              
              
              229,432
              
              
              40,941**CASH
                  AND CASH EQUIVALENTS, ENDING BALANCE**
              
              $
              2,876,915
              
              $
              163,528**SUPPLEMENTAL
                  DISCLOSURES:**
              
              
              0Interest
                  paid
              
              $
              38,108
              
              $
              3,657Income
                  tax paid
              
              $
              800
              
              $
              800The
                  accompanying notes are an integral part of these consolidated financial
                  statements
   19




**TANK
                  SPORTS, INC. AND SUBSIDIARY****CONSOLIDATED
                    STATEMENT OF STOCKHOLDERSDEFICIT****FOR
                  THE YEARS ENDED FEBRUARY 28, 2007 AND 2006****Common
                  Stock**
              
              
              
              
              
              
              
              
              **Total****Number
                  of**
              
              
              
              
              
              **Paid
                  in**
              
              
              **Accumulated**
              
              
              **stockholders'****shares**
              
              
              **Amount**
              
              
              **Capital**
              
              
              **Deficit**
              
              
              **deficit****Balance
                  at February 28, 2005**
              
              
              32,000,000
              
              $
              10,000
              
              $
              -
              
              $
              (587,953
              )
              $
              (577,953
              )Stock
                  issuance for cash
              
              
              502,800
              
              
              125,700
              
              
              -
              
              
              -
              
              
              125,700Net
                  loss for the year ended February 28, 2006
              
              
              -
              
              
              -
              
              
              -
              
              
              (206,713
              )
              
              (206,713
              )**Balance
                  at February 28, 2006**
              
              
              32,502,800
              
              
              135,700
              
              
              -
              
              
              (794,666
              )
              
              (658,966
              )Adjustment
                  to the par value
              
              
              -
              
              
              (103,197
              )
              
              103,197
              
              
              -
              
              
              -Stock
                  issuance for cash
              
              
              400,000
              
              
              400
              
              
              455,600
              
              
              -
              
              
              456,000Net
                  loss for the year ended February 28, 2007
              
              
              -
              
              
              -
              
              
              -
              
              
              (249,325
              )
              
              (249,325
              )**Balance
                  at February 28, 2007**
              
              
              32,902,800
              
              $
              32,903
              
              $
              558,797
              
              $
              (1,043,992
              )
              $
              (452,292
              )The
                  accompanying notes are an integral part of these consolidated financial
                  statements






20
 **TANK
            SPORTS, INC.**
 **NOTES
            TO FINANCIAL STATEMENTS**


**1.**
            **ORGANIZATION
                AND DESCRIPTION OF
                BUSINESS**





Tank
      Sports, Inc. (“Tank” or “the Company”) was incorporated on March 5, 2001. The
      Company is located in the city of El Monte, California, U.S.A. The Company
      is
      engaged in the sales and distribution of high quality recreational and
      transportation motorcycles, all-terrain vehicles (“ATVs”), dirt bikes, scooters,
      and Go Karts. The Company’s motorcycles and ATVs products are manufactured in
      China and Mexico.





On
      January 30, 2007, the Company acquired Lowprice.com, Inc., an Arizona
      corporation d/b/a Redcat Motors (“Redcat”) as its wholly owned subsidiary (Refer
      to Note 23). Redcat was created in 2003 in New Orleans, Louisiana and
      subsequently relocated to Phoenix, Arizona in September 2005 after Hurricane
      Katrina. Redcat is engaged in importing ATVs and distributing those with brand
      name of RedCat nationwide through its Dealer Network.








**2.**
            **SUMMARY
                OF SIGNIFICANT ACCOUNTING
                POLICIES**





**Use
      of estimates**





The
      preparation of consolidated financial statements in conformity with generally
      accepted accounting principles requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure of contingent assets and liabilities at the date of the financial
      statements and the reported amounts of revenues and expenses during the
      reporting period. Actual results could differ from those estimates.





**Principles
      of Consolidation**





The
      consolidated financial statements for the fiscal year ended February 28, 2007
      include the financial statements of the Company (for the full period) and its
      wholly owned subsidiary Redcat (from the acquisition date). The consolidated
      financial statements for the fiscal year ended February 28, 2006 contained
      the
      financial statements of the Company as the Company did not own any subsidiary
      during that year. Additionally, all historical share count and per share
      information has been adjusted for the Company’s 4-for-1 forward stock split that
      became effective on November 6, 2006





The
      results of the subsidiary acquired during the year are consolidated from the
      effective date of acquisition.





All
      significant inter-company transactions and balances have been eliminated on
      consolidation.





**Cash
      and cash equivalents**





Cash
      and
      cash equivalents include cash on hand and cash in time deposits, certificates
      of
      deposit and all highly liquid debt instruments with original maturities of
      three
      months or less.





**Accounts
      receivable and other receivable**





Accounts
      receivable and other receivable are recorded at net realizable value consisting
      of the carrying amount less an allowance for uncollectible accounts, as
      needed.





The
      Company maintains reserves for potential credit losses on accounts receivable.
      Management reviews the composition of accounts receivable and analyzes
      historical bad debts, customer concentrations, customer credit worthiness,
      current economic trends and changes in customer payment patterns to evaluate
      the
      adequacy of these reserves. Terms of the sales vary from COD through a credit
      term up to 10 days and 30 days. Reserves are recorded primarily on a specific
      identification basis.




21
 
 **TANK
          SPORTS, INC.**
 **NOTES
          TO FINANCIAL STATEMENTS**





**2.**
              **SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES -
                  continued**
 **Inventory**





Inventories
      are valued at the lower of cost (determined on a weighted average basis) or
      market. Management compares the cost of inventories with the market value and
      an
      allowance is made for writing down the inventories to the market value, if
      lower.





**Property,
      Plant and Equipment**





Property,
      Plant and Equipment are stated at cost. Expenditures for maintenance and repairs
      are charged to earnings as incurred; additions, renewals and betterments are
      capitalized. When property and equipment are retired or otherwise disposed
      of,
      the related cost and accumulated depreciation are removed from the respective
      accounts, and any gain or loss is included in operations. Depreciation of
      property and equipment is provided using the straight-line method for
      substantially all assets with estimated useful lives of 5 to 39 years.





**Intangible
      Assets**





The
      Company evaluates intangible assets for impairment, at least on an annual basis
      and whenever events or changes in circumstances indicate that the carrying
      value
      may not be recoverable from its estimated future cash flows. Recoverability
      of
      intangible assets, other long-lived assets and, goodwill is measured by
      comparing their net book value to the related projected undiscounted cash flows
      from these assets, considering a number of factors including past operating
      results, budgets, economic projections, market trends and product
      development cycles.
      If the net book value of the asset exceeds the related undiscounted cash flows,
      the asset is considered impaired, and a second test is performed to measure
      the
      amount of impairment loss.





**Fair
      value of financial instruments**





Statement
      of financial accounting standard No. 107, Disclosures about fair value of
      financial instruments, requires that the Company disclose estimated fair values
      of financial instruments. The carrying amounts reported in the statements of
      financial position for current assets and current liabilities qualifying as
      financial instruments are a reasonable estimate of fair value.





**Revenue
      recognition**





The
      Company's revenue recognition policies are in compliance with Staff Accounting
      Bulletin (SAB) 104. Sales revenue is recognized when the delivery is completed,
      the price is fixed or determinable, no other significant obligations of the
      Company exist and collectability is reasonably assured. Payments received before
      all of the relevant criteria for revenue recognition are satisfied to be
      recorded as unearned revenue.





The
      Company determines title transfer based upon delivery date.  For the
      customers with FOB shipping term, the Company recognizes sales and determines
      title transferred when delivery of items takes place.  For the customers on
      CNF (cost and freight), the Company recognizes sales and determines title has
      passed when goods arrive in the port of destination.





**Segment
      reporting**





Statement
      of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure about
      Segments of an Enterprise and Related Information" requires use of the
      "management approach" model for segment reporting. The management approach
      model
      is based on the way a company's management organizes segments within the company
      for making operating decisions and assessing performance. Reportable segments
      are based on products and services, geography, legal structure, management
      structure, or any other manner in which management disaggregates a company.
      SFAS
      131 has no effect on the Company's consolidated financial statements as
      substantially all of the Company's operations are conducted in one industry
      segment.





22
 
 **TANK
          SPORTS, INC.**
 **NOTES
          TO FINANCIAL STATEMENTS**





**2.**
              **SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES -
                  continued**


**Advertising
      costs**





The
      Company expenses the cost of advertising as incurred or, as appropriate, the
      first time the advertising takes place.





**Stock-based
      compensation**





In
      October 1995, the FASB issued SFAS No. 123, “Accounting for Stock-Based
      Compensation”. SFAS No. 123 prescribes accounting and reporting standards for
      all stock-based compensation plans, including employee stock options, restricted
      stock, employee stock purchase plans and stock appreciation rights. SFAS No.
      123
      requires compensation expense to be recorded (i) using the new fair value method
      or (ii) using the existing accounting rules prescribed by Accounting Principles
      Board Opinion No. 25, “Accounting for stock issued to employees” (APB 25) and
      related interpretations with pro forma disclosure of what net income and
      earnings per share would have been had the Company adopted the new fair value
      method. The Company uses the intrinsic value method prescribed by APB 25 and
      has
      opted for the disclosure provisions of SFAS No.123. The Company did not issue
      any option during the fiscal years ended February 28, 2007 and
      2006.





**Income
      taxes**





The
      Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires
      the
      recognition of deferred tax assets and liabilities for the expected future
      tax
      consequences of events that have been included in the financial statements
      or
      tax returns. Under this method, deferred income taxes are recognized for the
      tax
      consequences in future years of differences between the tax bases of assets
      and
      liabilities and their financial reporting amounts at each period end based
      on
      enacted tax laws and statutory tax rates applicable to the periods in which
      the
      differences are expected to affect taxable income. Valuation allowances are
      established, when necessary, to reduce deferred tax assets to the amount
      expected to be realized.





**Basic
      and diluted net loss per share**





Net
      loss
      per share is calculated in accordance with the Statement of financial accounting
      standards No. 128 (SFAS No. 128), “Earnings per share”. SFAS No. 128 superseded
      Accounting Principles Board Opinion No.15 (APB 15). Net loss per share for
      all
      periods presented has been restated to reflect the adoption of SFAS No. 128.
      Basic net loss per share is based upon the weighted average number of common
      shares outstanding. Diluted net loss per share is based on the assumption that
      all dilutive convertible shares and stock options were converted or exercised.
      Dilution is computed by applying the treasury stock method. Under this method,
      options and warrants are assumed to be exercised at the beginning of the period
      (or at the time of issuance, if later), and as if funds obtained thereby were
      used to purchase common stock at the average market price during the period.





**Recent
      pronouncements**





In
      February 2007, FASB issued FASB Statement No. 159, The Fair Value Option for
      Financial Assets and Financial Liabilities. FAS 159 is effective for fiscal
      years beginning after November 15, 2007. Early adoption is permitted subject
      to
      specific requirements outlined in the new Statement. Therefore, calendar-year
      companies may be able to adopt FAS 159 for their first quarter 2007 financial
      statements.





The
      new
      Statement allows entities to choose, at specified election dates, to measure
      eligible financial assets and liabilities at fair value that are not otherwise
      required to be measured at fair value. If a company elects the fair value option
      for an eligible item, changes in that item's fair value in subsequent reporting
      periods must be recognized in current earnings. FAS 159 also establishes
      presentation and disclosure requirements designed to draw comparison between
      entities that elect different measurement attributes for similar assets and
      liabilities. The management is currently evaluating the effect of this
      pronouncement on financial statements.





23
 
 **TANK
          SPORTS, INC.**
 **NOTES
          TO FINANCIAL STATEMENTS**





**2.**
              **SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES -
                  continued**


In
      September 2006, FASB issued SFAS 158 ‘Employers’ Accounting for Defined Benefit
      Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87,
      88, 106, and 132(R)’ This Statement improves financial reporting by requiring an
      employer to recognize the over funded or under funded status of a defined
      benefit postretirement plan (other than a multiemployer plan) as an asset or
      liability in its statement of financial position and to recognize changes
      in that funded status in the year in which the changes occur through
      comprehensive income of a business entity or changes in unrestricted net assets
      of a not-for-profit organization. This Statement also improves financial
      reporting by requiring an employer to measure the funded status of a plan as
      of
      the date of its year-end statement of financial position, with limited
      exceptions. An employer with publicly traded equity securities is required
      to
      initially recognize the funded status of a defined benefit postretirement plan
      and to provide the required disclosures as of the end of the fiscal year ending
      after December 15, 2006. An employer without publicly traded equity securities
      is required to recognize the funded status of a defined benefit postretirement
      plan and to provide the required disclosures as of the end of the fiscal year
      ending after June 15, 2007. However, an employer without publicly traded equity
      securities is required to disclose the following information in the notes to
      financial statements for a fiscal year ending after December 15, 2006, but
      before June 16, 2007, unless it has applied the recognition provisions of this
      Statement in preparing those financial statements:




a.  A
      brief
      description of the provisions of this Statement




b.  The
      date
      that adoption is required




c.  The
      date
      the employer plans to adopt the recognition provisions of this Statement, if
      earlier.




The
      requirement to measure plan assets and benefit obligations as of the date of
      the
      employer’s fiscal year-end statement of financial position is effective for
      fiscal years ending after December 15, 2008. The management is currently
      evaluating the effect of this pronouncement on financial
      statements.





In
      September 2006, FASB issued SFAS 157 ‘Fair Value Measurements’. This Statement
      defines fair value, establishes a framework for measuring fair value in
      generally accepted accounting principles (GAAP), and expands disclosures about
      fair value measurements. This Statement applies under other accounting
      pronouncements that require or permit fair value measurements, the Board having
      previously concluded in those accounting pronouncements that fair value is
      the
      relevant measurement attribute. Accordingly, this Statement does not require
      any
      new fair value measurements. However, for some entities, the application of
      this
      Statement will change current practice. This Statement is effective for
      financial statements issued for fiscal years beginning after November 15, 2007,
      and interim periods within those fiscal years. The management is currently
      evaluating the effect of this pronouncement on financial
      statements.





**Reclassifications**





Certain
      comparative amounts have been reclassified to conform to the current year's
      presentation.





**3.**
            **GOING
                CONCERN**





The
      accompanying financial statements have been prepared in conformity with
      generally accepted accounting principles which contemplate continuation of
      the
      Company as a going concern. However, the Company has accumulated deficit of
      $1,043,992 including a net loss of $249,325 during the year ended February
      28,
      2007. The continuing losses have adversely affected the liquidity of the
      Company. Losses might continue for the immediate future. The Company faces
      some
      business risks, which includes but not limited to, its ability to maintain
      vendor and supplier relationships by making timely payments when
      due.





In
      view
      of the matters described in the preceding paragraph, recoverability of a major
      portion of the recorded asset amounts shown in the accompanying balance sheet
      is
      dependent upon continued operations of the Company, which in turn is dependent
      upon the Company’s ability to raise additional capital, to increase more sales
      and to succeed in its future operations. The financial statements do not include
      any adjustments relating to the recoverability and classification of recorded
      asset amounts or amounts and classification of liabilities that might be
      necessary should the Company be unable to continue as a going
      concern.





24
 
 **TANK
          SPORTS, INC.**
 **NOTES
          TO FINANCIAL STATEMENTS**




**3.**
            **GOING
                CONCERN - continued**





Management
      has taken many steps to revise its operating and financial requirements, which
      it believes are sufficient to provide the Company with the ability to continue
      as a going concern. The acquisition and consolidation measures have strengthen
      its market position, included, but not limited to, restructuring of management
      and labor resources, consolidation of regional marketing facility, ERP system
      integration, inventory control, development of marketing promotion and
      sales network, and improvement of customer service infrastructure. With all
      steps taken, the Company believes that it will significantly increase its
      overall productivity and revenues, reduce unnecessary costs and expenses, and
      achieve a goal of high profit margin with the controlled budget. Management
      has
      devoted considerable effort towards (i) build “Tank” and “Redcat” brand names
      (ii) set up more dealers to increase sales (iii) liquidate less profitable
      products, and focus on selling more profitable motorcycles (iv) strive to reduce
      product costs and operating expenses, and (v) obtain additional
      equity.





Management
      believes that the above actions will allow the Company to continue operations
      through the next fiscal year.








**4.**
            **ACCOUNTS
                RECEIVABLE**





Accounts
      receivable was $358,537, net of allowance for doubtful debts amounted to $52,706
      as of February 28, 2007.





**5.**
            **RELATED
                PARTIES RECEIVABLE**





As
      of
      February 28, 2007 related parties receivable of the Company amounted to
      $195,301, which included $1,066 as receivable from officer, 5,798 as advance
      to
      employees, $180,670 as receivable from an affiliated company “LONG Sa De CV” and
      $7,767 receivable from former officers of Redcat . The receivables are
      unsecured, due on demand and interest free.





**6.**
            **PREPAID
                EXPENSES**





The
      total
      prepaid expenses amounted to $236,219 as of February 28, 2007. The composition
      of the prepaid expenses is reflected as follows:




Prepaid
              Purchases
            
            $
            163,914Prepaid
              Insurance
            
            
            72,304Total
            
            $
            236,218




**7.**
            **INVENTORIES**





Inventories
      consist of the following as of February 28, 2007:




ATV’s
&
Scooters
            
            $
            1,575,297Parts
            
            
            496,761Accessories
            
            
            128,143Less:
              Reservation for inventory obsolesce
              and slow-moving
            
            
            (38,346
            )Total
            
            $
            2,161,855





25
 
 **TANK
          SPORTS, INC.**
 **NOTES
          TO FINANCIAL STATEMENTS**





**8.**
            **LOANS
                RECEIVABLE**




On
                January 10, 2004, the Company loaned $146,451 to a non-related party
                at an
                interest rate of 6% per annum. The loan is unsecured, both principal
                and
                interest are payable on May 31, 2007. Interest income has been accrued
                and
                recorded in loan receivable.As
                of February 28, 2007, the loan receivable is
            
            $167,636




On
                December 20, 2004, the Company loaned $50,167 to a non-related party
                at
                interest rate of 6% per annum. The loan is unsecured, both principal
                and
                interest are payable on December 20, 2007. Interest income has been
                accrued and recorded in loan receivable.As
                of February 28, 2007, the loan receivable is
            
            56,765On
                July 27, 2004, the Company loaned $23,000 to a non-related party
                at
                interest rate of 5% per annum. The loan is unsecured, and both principal
                and interest are due on demand. Interest income has been accrued
                and
                recorded in loan receivable.As
                of February 28, 2007, the loan receivable is
            
            26,839Total
            $251,240





**9.**
            **PROPERTY,
                PLANT & EQUIPMENT**




Property,
      Plant & Equipment consist of the following as of February 28,
      2007:




Machinery
&
Equipment
            
            $
            187,885Furniture
&
Fixtures
            
            
            78,796Electronic
              Equipment
            
            
            399,
              031Automobile
            
            
            40,036Leasehold
              Improvement
            
            
            4,500Less:
              Accumulated Depreciation
            
            
            (200,372
            )Total
            
            $
            509,876




Depreciation
      expenses were $36,570 and $13,083 for the fiscal years ended February 28, 2007
      and 2006, respectively.





**10.**
            **DEPOSITS**





As
      of
      February 28, 2007, the Company had recorded a security deposit of $35,000 for
      a
      bank line-of-credit, and deposit for rent and utilities of $16,470. The security
      deposit was returned subsequently on the conclusion of the bank line-of-credit
      pursuit to the agreement.


26
 
 **TANK
          SPORTS, INC.**
 **NOTES
          TO FINANCIAL STATEMENTS**


**11.**
            **ACCOUNTS
                PAYABLE AND ACCRUED
                EXPENSES**







Following
      is the detail of accounts payable and accrued expenses as of February 28,
      2007:





Accounts
              Payable
            
            $
            389,057Accrued
              payroll expense
            
            
            100,152Accrued
              warranty claim expense
            
            
            11,322Accrued
              Expenses
            
            
            199,975Total
            
            $
            700,506




**12.**
            **CUSTOMER
                DEPOSIT**





Payments
      received before all of the relevant criteria for revenue recognition satisfied
      are recorded as customer deposit. Customer deposit amounted to $82,032 as of
      February 28, 2007.





**13.**
            **NOTES
                PAYABLE**





On
      June
      1, 2005, the company signed a five year note payable against auto loan. The
      loan
      was unsecured, with an interest of 5.90% with monthly payment of $743. As of
      February 28, 2007, this note payable was $26,928, of which $7,531 is current
      payable and $19,391 is non-current payable.





On
      March
      20, 2006, the company obtained a loan payable of $372,259 from a non-related
      party. The note is secured by various computer equipments and software purchased
      from Microsoft Capital, with an annual interest rate of 5.00%, and due on June
      1, 2011. As of February 28, 2007, the balance of the note payable was $332,862,
      of which $71,272 is current payable and $261,590 is non-current payable.
      Interest expense was $ 1,295 for the one month period ended February 28
      2007.





On
      July
      14, 2006, the company obtained a line of credit of $5,500,000 from a bank.
      The
      outstanding payable ends the earlier of July 31, 2007 or when the Company pays
      the note in full, including principal, interest, and all the expenses involved.
      The annual interest rate on the loan is 8.5%. The line of credit is secured
      by
      the Company’s business assets, real property, a certificate of deposit of
      $1,500,000 and guaranteed by the major shareholders and by the Company’s
      affiliate. As of February 28, 2007, $3,956,341 was used as banker’s acceptance
      and $38,040 was used as commercial letter of credit. The outstanding loan
      payable under this line of credit amounted to 1,450,653 as of February 28,
      2007.
      The interest expense for the year ended was $38,902.





As
      the
      Company did not meet the requirement of the line of credit to maintain the
      minimum Effective Tangible Net Worth (ETNW) to $1,000,000 as of February 28,
      2007, pursuit to the agreement, all the indebtedness immediately will become
      due
      and payable at the lender’s option.





On
      August
      14, 2006, the company borrowed $1,500,000 from a non-related party with an
      interest rate of 5.25%. This unsecured note payable is due on August 15, 2007.
      The note payable is subordinated to the line of credit of $5,500,000. As of
      February 28, 2007; the outstanding loan payable was 1,500,000. The interest
      expense for the year ended was $40,108.





On
      January 30, 2007 the company obtained a promissory note of $1,000,000 from
      a
      bank. The note payable ends the earlier of July 31, 2007 or when the Company
      pays the note in full, including principal, interest, and all the expenses
      involved. The interest on the note is subject to change based on the Wall Street
      Journal Prime Rate Index. The effective interest rate as of February 28, 2007
      was 8.5%. The line of credit is secured by a Certificate of Deposit of
      $1,000,000 that the Company had in the same bank. The interest of $7,083 has
      been accrued on the note as of February 28, 2007.





27
 
 **TANK
          SPORTS, INC.**
 **NOTES
          TO FINANCIAL STATEMENTS**




**13.**
            **NOTES
                PAYABLE - continued**




The
      scheduled payments on the notes are as follows:





Years
              ended2007-2008
            
            $
            4,937,2792009
            
            
            101,9442010
            
            
            66,2222011
            
            
            86,645Thereafter
            
            
            26,176Total
            
            
            5,218,266Current
              portion
            
            
            4,937,279Non-current
              portion
            
            $
            280,987








**14.**
            **SHARES
                TO BE ISSUED**




The
      Company classifies all amounts received for the issue of shares, against which
      shares have not been issued, as shares to be issued. Once the company issues
      shares, the amounts are classified as Common stock. As of February 28, 2007
      the
      Company has total shares to be issued balance of $1,090,000 pursuant to the
      Private Placement Memorandum dated December 28, 2006 (refer to Note
      15).





**15.**
            **INCOME
                TAXES**







Through
      February 28, 2007, the Company incurred net operating losses for tax purposes
      of
      approximately $249,325. Differences between financial statement and tax losses
      consist primarily of bad debts allowance of $22,706 at February 28, 2007. The
      net operating loss carry forward may be used to reduce taxable income through
      the year 2026. Net operating loss for carry forward for the State of California
      is generally available to reduce taxable income through the year 2011. The
      availability of the Company's net operating loss carry forward is subject to
      limitation if there is a 50% or more positive change in the ownership of the
      Company's stock. The provision for income taxes consists of the state minimum
      tax imposed on corporations.





The
      gross
      deferred tax asset balance, due to net operating loss carry forward and
      allowance for bad debts, as of February 28, 2007 was $530,000. A 100% valuation
      allowance has been established against the deferred tax assets, as the
      utilization of the loss carry forward cannot reasonably be assured. Components
      of deferred tax assets at February 28, 2007 are as follows:




2007
            
            
            2006Net
              operating loss
            
            $
            530,000
            
            $
            305,866Less
              Valuation allowance
            
            
            (530,000
            )
            
            (305,866
            )$
            -
            
            $
            -





The
      following is a reconciliation of the provision for income taxes at the U.S.
      federal and California state income tax rate to the income taxes reflected
      in
      the Statements of Operations:




February
                28,
            
            
            February
                28,2007
            
            
            2006Tax
              expense (credit) at statutory
              rate-federal
            
            
            (34
            )%
            
            (34
            )%State
              tax expense net of federal
              tax
            
            
            (
              6
            )
            
            (
              6
            )Changes
              in valuation allowance
            
            
            40
            
            
            40Tax
              expense at actual rate
            
            
            -
            
            
            -





28
 
 **TANK
          SPORTS, INC.**
 **NOTES
          TO FINANCIAL STATEMENTS**





**16.**
            **STOCKHOLDERS’
                EQUITY**





On
      November 6, 2006, the company’s board of directors approved a 4-for-1 forward
      stock split of the Company’s common shares. Each shareholder of record at the
      close of business on November 27, 2006 received three (3) additional shares
      for
      every outstanding share held as of the date hereof. The financial statements
      have been adjusted retroactively to reflect the stock split.





On
      December 4, 2006, the Company entered into an Investment Agreement with an
      investor, Dutchess Private Equities Fund, L.P. (“the Investor”). Pursuant to
      this Agreement, the Investor shall commit to purchase up to $10,000,000 of
      the
      Company’s common stock over the course of thirty-six (36) months. The amount
      that the Company shall be entitled to request from each purchase shall be equal
      to, at the Company’s election, either (i) $150,000 or (ii) 200% of the average
      daily volume (U.S. market only) of the common stock for the three (3) trading
      days prior to the applicable put notice date, multiplied by the average of
      the
      three (3) daily closing prices immediately preceding the put date. The put
      date
      shall be the date that the Investor receives a put notice of a draw down by
      the
      Company. The purchase price shall be set at ninety-five percent (95%) of the
      lowest closing Best Bid price of the common stock during the pricing period.
      The
      pricing period shall be the five (5) consecutive trading days immediately after
      the put notice date. There are put restrictions applied on days between the
      put
      date and the closing date with respect to that particular Put. During this
      time,
      the Company shall not be entitled to deliver another put notice. Further, the
      Company shall reserve the right to withdraw that portion of the Put that is
      below seventy-five percent (75%) of the lowest closing bid prices for the
      10-trading day period immediately preceding each put notice. As of February
      28,
      2007, the Company has not sold any shares to the investor.





On
      December 22, 2006, the Company signed Web Site Development Agreement with a
      consultant and agreed to pay $17,500 worth of S-8 stock after the completion
      of
      the website. As of February 28, 2007, no S-8 stocks have been issued and $5,979
      consulting fee has been accrued.





On
      January 30, 2007, the Company completed the acquisition of one hundred percent
      (100%) of the issued and outstanding common stock of Lowprice.com, Inc., an
      Arizona corporation d/b/a RedCat Motors (the “Redcat”) pursuant to a Stock
      Purchase Agreement, as amended (the “Agreement”) by and among the Company, (the
      Shareholders), the Company and Hexagon. The Company purchased 100% of the common
      stock of Redcat from the Shareholders for an aggregate purchase price of $1.00.
      Further, the Company made a capital contribution to the Company consisting
      of
      $1,000,000 in cash, which was paid to the Company upon the Closing. The Company
      further issued to Hexagon 400,000 shares of the common stock of the Company
      which was valued at the fair market price and an additional $200,000 capital
      contribution in cash for the settlement of debt.





On
      December 28, 2006, the Company board of directors approved the Private Placement
      Memorandum and started to offer up to 500 units of the Company’s securities at
      $10,000 per unit. Each unit consists of 10,500 shares of the Company’s common
      stock (“Shares”) and 5,000 warrants (“Warrants”) to purchase one share of the
      Company’s common stock at an exercise price of $2.00 per share. The Warrants
      will be immediately exercisable and will remain exercisable for one year. The
      Unit offered including the Shares, Warrants and the common shares issuable
      exercise of the Warrants, are being issued as restricted securities under the
      federal securities laws, and investors’ right to sell, transfer, pledge or
      otherwise dispose of any of the shares will be limited by the 1933 Act and
      the
      rules and regulations and any applicable state securities laws. No sales
      commissions will be paid to the Company in connection with this offering. The
      offering was terminated on February 27, 2008 and the Company sold 1,144,500
      shares of common stock and granted 545,000 shares of Warrants in this offering.
      The cash proceeds for the issuance of shares amounted to $1,090,000. The fair
      value of the warrants was $27,567 and was calculated using the Black-Scholes
      option pricing model using the following assumptions: risk free rate of return
      of 4.75%, volatility of 103%, dividend yield of 0% and expected life of one
      year.





On
      February 1, 2007, the Company board of directors approved to issue $51,383
      worth
      of unrestricted shares to former RedCat employees as bonus for 90 days of
      employment starting February 1, 2007. As of February 28, 2008, no shares have
      been issued and $16,948 consulting fee has been accrued.





29
 
 **TANK
          SPORTS, INC.**
 **NOTES
          TO FINANCIAL STATEMENTS**




**17.**
            **WARRANTS**





Following
      is a summary of the warrant activity for the year ended February 28, 2007:





Outstanding,
                February 28, 2006
            
            
            -Granted
                during the year
            
            
            545,000Forfeited
                during the year
            
            
            -Exercised
                during the year
            
            
            -Outstanding,
                February 28, 2007
            
            
            545,000





Following
      is a summary of the status of warrants outstanding at February 28, 2007:





Outstanding
                Warrants
            
            Exercisable
                WarrantsExercise
              Price
            Number
            Average
                Remaining Contractual Life
            Average
                Exercise Price
            Number
            Intrinsic
                Value$2.00
            545,000
            1.00
            $2.00
            545,000
            $0
                .00





The
      assumptions used in calculating the fair value of options granted using the
      Black-Scholes option pricing model are as follows:




The
      545,000 warrants granted on February 27, 2007:





Risk-free
                interest rate
            
            
            4.75
            %Expected
                life of the options
            
            
            1.00
                yearExpected
                volatility
            
            
            103
            %Expected
                dividend yield
            
            
            0








**18.**
            **CURRENT
                VULNERABILITY DUE TO CERTAIN
                CONCENTRATIONS**





The
      Company had one major vendor that provided over 46% of the Company’s purchases
      for the fiscal year ended February 28, 2007. The Company had other two major
      vendors that each provided over 10% of the Company’s inventory for the fiscal
      year ended February 28, 2007. Total purchases from these three vendors were
      75%
      of the Company’s total inventory purchases for the fiscal year ended February
      28, 2007. The accounts payable to these vendors amounted to $611,841 as of
      February 28, 2007.





There
      were no major customers whose purchases accounted for over 10% of the Company’s
      total revenue for the fiscal years ended February 28, 2007 and 2006.





**19.**
            **SHIPPING
                AND HANDLING EXPENSES**





Tank
      has
      included $708,172 and $596,604 freight out shipping and handling expenses for
      the fiscal years ended February 28, 2007 and 2006 into selling
      expenses.





**20.**
            **RELATED
                PARTIES**





Lease





On
      August
      1, 2005, Tank entered into a lease agreement for the new facilities in which
      they operate. The lessors are Tank’s two main shareholders who are also Tank’s
      directors. The term of the lease is 60 months with monthly payments
      of $19,900. As of February 28, 2007, the amount due was $0. 
 Rent
        expenses were $250,800 and $189,873 for the fiscal years ended February 28,
        2007
        and 2006, respectively.





30
 
 **TANK
          SPORTS, INC.**
 **NOTES
          TO FINANCIAL STATEMENTS**





**20.**
            **RELATED
                PARTIES - continued**




Letter
      of credit charge





On
      August
      1, 2007, the Company signed a credit agreement with LONG Sa De CV (“Long
      Company”), whereas the Company agrees to let Long Company to utilize the line of
      credit of the Company up to $5,500,000 for the Letter of Credit issued to
      vendors in China for one year. In exchange, Long Company agrees to pay up to
      6%
      of service charges to the Company to cover the lending costs and service charges
      from its bank.  The
      Company’s Chairman and Director are also the officers of Long Company. As of
      February 28, 2007, total $180,670 was charged to Long Company for opening letter
      of credit and was recorded as other receivable in the accompanying financial
      statements.





Due
      to
      affiliate





The
      Company has an affiliated company Steady Star facilitated the Company to
      purchase merchandize from China. Steady Star obtains the international letter
      of
      credit from bank and then pay for the vendors in China for the merchandize
      purchased by the Company. After the Company receives the merchandise, the
      Company makes payment to Steady Star. The Company’s Chairman and Director and is
      the main shareholder of Steady Star Company. As of February 28, 2007, the amount
      due to this affiliate was $1,602,114, of which $120,000 is current payable
      and
      $1,482,114 is non-current payable. The amount is due on demand, interest free,
      and unsecured.








**21.**
            **COMMITMENTS**





On
      August
      1, 2005, Tank entered into a lease agreement with one of the Company’s director
      for a term of 60 months with monthly payments of $19,900.





Minimum
      annual rent expense for Tank for the next 4 years subsequent to February 28,
      2007 is as follows:




Period
            
            
            Amount1
              year after
            
            $
            238,8002
              year after
            
            $
            238,8003
              year after
            
            $
            238,8004
              year after
            
            $
            238,800





On
      December 25, 2005, the Company’s subsidiary Redcat entered into a lease
      agreement for a term of 36 months until January 31, 2009. The rent expense
      for
      one month ended February 28, 2007 was $20,271.





Minimum
      annual rent expense for Redcat for the next 3 years subsequent to February
      28,
      2007 is as follows:




Period
            
            
            Amount1
              year after
            
            $
            171,0122
              year after
            
            $
            175,392




On
      December 4, 2006, the Company entered into an Investment Agreement with an
      investor, Dutchess Private Equities Fund, L.P... Pursuant to this Agreement,
      the
      Investor shall commit to purchase up to $10,000,000 of the Company’s common
      stock over the course of thirty-six (36) months. The Company is obligated to
      file a registration statement with the Securities and Exchange Commission (SEC)
      covering 6,000,000 shares of the common stock underlying the Investment
      Agreement within 21 days after the closing date. In addition, the Company is
      obligated to use all commercially reasonable efforts to have the registration
      statement declared effective by the SEC within 90 days after the closing date.
      The Company shall have an ongoing obligation to register additional shares
      of
      common stock as necessary underlying the draw downs.





31
 
 **TANK
          SPORTS, INC.**
 **NOTES
          TO FINANCIAL STATEMENTS**




**22.**
            **SUPPLEMENTAL
                DISCLOSURE OF CASH FLOWS**





The
      Company prepares its statements of cash flows using the indirect method as
      defined under the Financial Accounting Standard No. 95.





The
      Company paid $38,108 and $3,657 for interest for the fiscal years ended February
      28, 2007 and 2006, respectively. The Company paid $800 each year for income
      tax
      for the fiscal years ended February 28, 2007 and 2006.





Supplemental
      schedule of non-cash investing and financing activities:





The
      Company purchased one hundred percent (100%) of the issued and outstanding
      common stock of RedCat for $1. In conjunction with the acquisition, assets
      and
      liabilities were assumed are as follows:




Fair
              value of Assets Acquired
            
            $
            1,891,576Fair
              value of Liabilities Assumed
            
            
            (3,507,291
            )




**23.**
            **BUSINESS
                COMBINATIONS**





On
      January 30, 2007, the Company completed the acquisition of one hundred percent
      (100%) of the issued and outstanding common stock of Lowprice.com, Inc., an
      Arizona corporation d/b/a RedCat Motors (the “Redcat”) pursuant to a Stock
      Purchase Agreement, as amended (the “Agreement”) by and among the Company, (the
      Shareholders), the Redcat and Hexagon Financial Group (as “Creditor”). The
      Company purchased 100% of the common stock of the Redcat from Shareholders
      for
      an aggregate purchase price of 1.00. Further, the Company made a capital
      contribution to the Redcat consisting of $1,000,000 in cash, which was paid
      to
      the Redcat upon the Closing. The Company further issued to Hexagon 400,000
      shares of the common stock of the Company for the settlement of debt and made
      an
      additional $200,000 capital contribution in cash.





The
      following table presents the allocation of the acquisition cost to the assets
      acquired and liabilities assumed:





Cash
                and cash equivalents
            
            $
            65,903Inventory
            
            
            1,164,586Other
                assets
            
            
            196,294Fixed
                assets
            
            
            464,793Total
                assets
            
            
            1,891,576Accounts
                payable
            
            
            769,638Others
                payable
            
            
            208,895Loans
                payable
            
            
            2,528,758Total
                Liabilities
            
            
            3,507,291Total
                cost of investment
            
            
            -1,615,715Total
                acquisition cost
            
            
            1Goodwill
            
            $
            1,615,716




The
      accompanying pro forma condensed consolidated financial statements are provided
      for informational purposes only.  The Pro Forma Combined Statement of
      Operations are unaudited and are not necessarily indicative of the consolidated
      financial position which actually would have occurred if the above transaction
      had been consummated on February 28, 2007 and 2006, nor does it purport to
      present the operating results that would be achieved for future
      periods.





32
 
 **TANK
          SPORTS, INC.**
 **NOTES
          TO FINANCIAL STATEMENTS**





**23.**
            **BUSINESS
                COMBINATIONS - continued**




The
      acquisition is to be recorded as a purchase acquisition.  The Pro Forma
      Consolidated Balance Sheet included herein reflects the use of the purchase
      method of accounting for the above transaction.





The
      following is the pro forma financial information of the Company assuming the
      transaction had been consummated at the beginning of the fiscal years ended
      February 28, 2007 and 2006:





**Statement
                of Operation Pro Forma:**For
                the year
            
            
            For
                the yearEnded
                February 28
            
            
            Ended
                February 282006
            
            
            2007Revenues
            $
            27,164,392
            
            $
            25,354,507Cost
                of Sales
            
            21,876,061
            
            
            20,744,920Gross
                Profit
            
            5,288,331
            
            
            4,609,587Operating
                Expenses
            
            4,102,626
            
            
            6,629,699Income
                (loss) from operations
            
            1,185,705
            
            
            (2,020,112
            )Total
                Non-operating income (expenses)
            
            (310,551
            )
            
            142,296Net
                Income (loss) before income taxes
            
            875,154
            
            
            (1,877,616
            )Provision
                for income taxes
            
            -
            
            
            800Net
                Income (loss)
            $
            875,154
            
            $
            (1,878,616
            )Earnings
                Per Share:Basic
                and diluted
            $
            0.027
            
            $
            (0.058
            )Weighted
                average number of shares outstanding
            
            32,125,184
            
            
            32,502,800





**24.**
            **SUBSEQUENT
                EVENTS (Unaudited)**





**Shares
      to be Issued**




Pursuant
      to the Private Placement Memorandum dated December 18, 2006 the Company has
      total 1,144,500 shares of common stocks to be issued in the amount of $1,090,000
      as of February 28, 2007. The 1,144,500 shares totaling $1,090,000 were actually
      issued at the price of $0.95 as of March 9, 2007.





**Shares
      issued to S-8 Employee**





On
      April
      3, 2007 the Company completed the filing of the Registration Statement relating
      to 3,000,000 shares of its common stock, par value $0.001 per share, issuable
      to
      eligible employees of the Company under its 2007 Employee/Consultant Common
      Stock Plan. The 81,914 shares were actually issued at the market prices to
      the
      eligible employees and consultants as of April 11, 2007.





**Shares
      issued to Dutch Fund**


Pursuant
      to the Investment Agreement with the investor of Dutchess Private Equities
      Fund,
      L.P. dated December 4, 2006, the 27,000 shares were actually issued to the
      investor at the market price of $0.52 on April 9, 2007.




33




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





There
      have been no changes in and/or disagreements with Kabani & Company, Inc. on
      accounting and financial disclosure matters.





ITEM
      8A.
      CONTROLS AND PROCEDURES





Evaluation
      of Disclosure Controls and Procedures





Disclosure
      controls and procedures are designed to ensure that information required to
      be
      disclosed in the reports filed or submitted under the Exchange Act of 1934
      is
      recorded, processed, summarized and reported, within the time periods specified
      in the rules and forms of the Securities and Exchange Commission. Disclosure
      controls and procedures include, without limitation, controls and procedures
      designed to ensure that information required to be disclosed in the reports
      filed under the Securities Exchange Act of 1934 is accumulated and communicated
      to management, including our Chief Executive Officer, as appropriate, to allow
      timely decisions regarding required disclosure.





At
      end of
      the period covered by this report, we carried out an evaluation of the
      effectiveness of the design and operation of our disclosure controls and
      procedures pursuant to Exchange Act Rule 13a-15 and 15d-15(e). This evaluation
      was done under the supervision and with the participation of our Principal
      Executive Officer. Based upon that evaluation, he concluded that our disclosure
      controls and procedures are effective in gathering, analyzing and disclosing
      information needed to satisfy our disclosure obligations under the Exchange
      Act.





Changes
      in Internal Controls





There
      were no changes in our internal controls or in other factors during the last
      fiscal year that materially affected, or was reasonably likely to materially
      affect, internal control over financial reporting.





PART
      II





ITEM
      9.
      DIRECTORS, EXECUTIVE OFFICERS. PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
      SECTION 16(a)





The
      following table sets forth the names and ages of the directors and executive
      officers of the Company through the date of this Report, as well as the current
      officers and directors; the principal offices and positions with the Company
      held by each person and the date such person became a director or executive
      officer of the Company. Each serves until the next annual meeting of the
      stockholders.







NAME
            AGE
            POSITION
                WITH THE COMPANYJiangyong
                Ji
              10925
                Schmidt Road
              El
                Monte, CA 91733
            50
            ChairmanJing
                Jing Long
              10925
                Schmidt Road
              El
                Monte, CA 91733
            53
            President,
                Treasurer and DirectorJim
                Ji
              10925
                Schmidt Road
              El
                Monte, CA 91733
            25
            Secretary
                and Director


34
  ITEM
      9.
      DIRECTORS, EXECUTIVE OFFICERS. PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
      SECTION 16(a) - continued




The
      following is a brief account of the education and business experience of each
      director, executive officer and key employee during at least the past five
      years, indicating each person's principal occupation during the period, and
      the
      name and principal business of the organization by which he or she was employed.





**Jiangyong
      Ji, age 50** ,
      has
      served as CEO and director of Tank Sport, Inc. from March 2001 to present;
      served as co-founder of Steady Star, Inc, a California Corporation from 1994
      to
      present; served as President, CEO and director of LONG Sa De CV from September
      1998 to present; served as President, CEO and director of KTMMEX SA DE CV from
      February 2002 to present. Mr. Ji was the accounting manager for Beijing Group
      Wuzhou Hotel, a hotel management company, from Sep 1987 to Dec 1992. Mr. Ji
      has
      a bachelor degree from the Air Force Medical School of People’s Republic of
      China.





**Jing
      Jing Long, age**  **53** ,
      has
      served as treasurer and director of Tank Sport, Inc. from March 2001 to present;
      served as President and co-founder of Steady Star, Inc., a California
      Corporation from 1994 to present; served as Manager of Panama Hua Mei Group,
      Co.
      from 1988 to 1991. Ms. Long received a bachelor degree from First Army Medical
      School of People’s Republic of China.





**Jim
      Ji, age**  **25** ,
      has
      served as general manager, secretary and director of Tank Sports, Inc. since
      September, 2003; served as Technical Support department supervisor of Giga
      Fast
      Ethernet, Inc., a California Corporation, from September 1999 to September
      2003.
      Mr. Ji has received a bachelor’s degree from ITT Technical College.





Ms.
      Jing
      Jing Long is the spouse of Mr. Jiangyong Ji, and  Mr.
      Jim
      Ji is the son of Mr. Jiangyong Ji.





ITEM
      9B:
      COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT





Section
      16(a) of the Securities Exchange Act of 1934 requires our officers, directors
      and person who own more than 10% of our Common Stock to file reports of
      ownership and changes in ownership with the Securities and Exchange Commission.
      All of the aforesaid persons are required by SEC regulation to furnish us with
      copies of all Section 16(a) forms they file. No changes in the holdings of
      any
      officer, director or other person took place and therefore, no other reports
      were required to be filed.





ITEM
      10.
      EXECUTIVE COMPENSATION





None
      of
      our executive officers received an annual salary and bonus that exceeded
      $100,000 during the fiscal year ending February 28, 2007. The following table
      sets forth the compensation received by Jiangyong Ji, Jing Jing Long and Jim
      Ji.
      We currently do not have any compensation or employment agreements with any
      of
      our executive officers, and we do not anticipate entering into any such
      agreements in the foreseeable future.




ANNUAL
                COMPENSATION
            LONG
                TERMCOMPENSATIONFISCAL
            SALARY
            OTHER
            SECURITIESPRINCIPAL
                POSITION
            YEAR
            OPTIONS
            UNDERLYINGJiangyong
                Ji
              Chairman
            2006
              2005
              2004
              2003
            15,600.00
              12,506.88
              17,964.23
              25,932.80
            -0-
              -0-
              -0-
              -0-
            -0-
              -0-
              -0-
              -0-Jing
                Jing
              President,
                Treasurer
              Director
            2006
              2005
              2004
              2003
            13,200.00
              10,856.40
              16,481.15
              24,674.00
            -0-
              -0-
              -0-
              -0-
            -0-
              -0-
              -0-
              -0-Jim
                Ji
              Secretary
                and  Director
            2006
              2005
              2004
              2003
            31,200.00
              27,527.52
              24,113.04
              1,541.30
            -0-
              -0-
              -0-
              -0-
            -0-
              -0-
              -0-
              -0-




35




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





The
      following table sets forth, as of February 28, 2007, certain information with
      respect to the beneficial ownership of our common stock by each stockholder
      known by us to be the beneficial owner of more than 5% of our common stock
      and
      by each of our current directors and executive officers. All shares included
      in
      the table represent all shares that could be obtained by the individuals listed
      within sixty (60) days from the date of this Registration Statement. Each person
      has sole voting and investment power with respect to the shares of common stock,
      except as otherwise indicated. Beneficial ownership consists of a direct
      interest in the shares of common stock, except as otherwise indicated.




NAME
                AND ADDRESS OF
              BENEFICIAL
                OWNER
            AMOUNT
                AND NATURE OF
              BENEFICIAL
                OWNERSHIP
            PERCENT
                OF
              BENEFICIAL
                OWNERSHIPJiangyong
                Ji
              Chairman
            10,716,800
            32.97%Jing
                Jing Long
              President,
                Treasurer
              and
                Director
            16,000,000
            49.23%Jim
                Ji
              Secretary
                and Director
            0
            0.00%All
                Officers, Directors
              And
                5% Shareholders
            26,716,800
            81.20%





ITEM
      12.
      CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS.





In
      April
      2001, Steady Star, Inc., an S Corp, owned by Mr. Ji and Ms. Long (each 50%)
      (“Steady Star”) loaned a total of $90,000 to Tank. Steady Star also invested
      $10,000 in “paid in capital” into Tank.  Steady Star then become the 100%
      shareholder of Tank. Steady Star received 10,000 shares of common stock of
      Tank
      for its $10,000 investment. The $90,000 was no interest bearing loan with
      maturation date of April 2002. We were able to fund our start up operations
      with
      this loan. As of April 30, 2002, both Steady Star and the Company reached mutual
      agreement on the loan. The Company had paid principal in full as of July 21,
      2002.




On
      January 30, 2005, the board of Steady Star consented to a non-liquidation
      dividend of its ownership of the 10,000 shares of Tank to its only 2
      shareholders, Mr. Ji and Ms. Long, each 5,000 shares.




On
      March
      15, 2005, Mr. Ji gifted a total of 1,501 shares to 8 individuals.




On
      August
      16, 2003, Tank and Steady Star, a related company, jointly entered into a lease
      agreement for the term of 36 months with a monthly payment of $7,840, of which
      $4,075 was allocated to Tank. The leased space was located at 1718 Floradale
      Ave, South El Monte, CA 91733 with 15,404 square feet for warehouse and office
      use. As we expanded, the space lacked efficient warehouse space and office
      presentation required for us to further our business development.




On
      August
      1, 2005, Tank entered into another lease agreement for the new facilities in
      which they operate. The lessors are Tank’s 2 shareholders who are also Tank’s
      directors. The term of the lease is 60 months with monthly payments of $19,900.
      As of February 28, 2007, the amount due was $0. The amount is due on demand,
      interest free and unsecured.





36


ITEM
      12.
      CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS - continued




Minimum
      annual rent expense for Tank for the year subsequent to February 28, 2007 is
      as
      follows:




Period
            Amount2007
            $
                238,800




Tank
      and
      its affiliated company share one credit card. The credit card is a commonly
      held
      card under Tank’s 2 shareholders who are also Tank’s directors. The credit card
      is for business related purposes only. Tank and its affiliated company will
      make
      payments for each company’s share of the expenses accordingly directly to the
      credit card company. As of February 28, 2007, the amount due was $9905.00.
      The
      amount is due on demand, interest free and unsecured.


The
      Company issues purchase orders to third party vendors in China. However, the
      third party vendors are paid by a US company owned by some of the shareholders
      of the Company. This affiliated company issues letter of credit in favor of
      vendors when the Company issues purchase order to the vendors. The Company
      makes
      payment to this affiliated company, which in turn pays to the vendors. As of
      February 28, 2007, the amount due to this affiliate was $ 1,602,141. There
      are
      long term of $1,482,114, and short term of $120,000. The amount is due on
      demand, interest free and unsecured.





The
      company has earned $100,000 for providing motorcycle designs for the affiliated
      company in the year ended February 28, 2007. This $100,000 has been recorded
      as
      other income.




ITEM
      13.
      EXHIBITS AND REPORTS ON FORM 8-K.




(a)
      Exhibits





Exhibit
      No.  Description
      and Method of Filing




31.1
            Certificate
                of Principal Executive Officer as Required by Rule
                13a-14(a)/15d-14





31.2
            Certificate
                of Principal Accounting Officer as Required by Rule
                13a-14(a)/15d-14





32.1
            Certificate
                of Principal Executive Officer as Required by Rule 13a-14(b) and
                Rule 15d-
                14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title
                18 of
                the United States Code





32.2
            Certificate
                of Principal Accounting Officer as Required by Rule 13a-14(b) and
                Rule
                15d-14(b) (17 CFR 240.15d-14(b) and Section 1350 of Chapter 63 of
                Title 18
                of the United States Code




(b)
      Reports On Form 8-K




8-K/A
      filed 4/12/2007


8-K
      filed
      4/11/2007


8-K/A
      filed 4/10/2007


8-K
      filed
      2/02/2007


8-K/A
      filed 1/03/2007


8-K
      filed
      1/03/2007




ITEM
      14.
      PRINCIPAL ACCOUNTANT FEES AND SERVICES





Our
      Board
      of Directors reviews and approves audit and permissible non-audit services
      performed by its independent accountants, as well as the fees charged for such
      services. In our review of non-audit service fees and its appointment of Kabani
      & Company, Inc., as our independent accountants, our Board of Directors
      considered whether the provision of such services is compatible with maintaining
      independence. All of the services provided and fees charged by Kabani &
Company, Inc., in fiscal year ended February 28, 2007, were approved by our
      board of directors.





Audit
      Fees





The
      aggregate fees billed by Kabani & Company, Inc. for professional services
      for the audit of our annual financial statements for our fiscal year ended
      February 28, 2007 were $7,500 net of expenses.




Audit-Related
                  Fees
                
                $
                3,000Tax
                  Fees
                
                $
                0


37




SIGNATURES





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




TANK
      SPORTS, INC.





Date:
                June 13, 2007
            
            
            Date:
                June 13, 2007/s/ Jing
                Jing Long
            
            
            /s/ Jing
                Jing LongJing
                Jing Long
              Principal
                Executive Officer
            
            
            Jing
                Jing Long
              Principal
                Accounting Officer
              Principal
                Financial Officer




Pursuant
      to the requirements of the Securities Exchange Act of 1934, this Report has
      been
      signed by the following persons on behalf of the Registrant and in the
      capacities and on the dates indicated.




Date: June
                13, 2007
            By:
            /s/ Jing
                Jing LongDirectorDate:
                June 13, 2007
            By:
            /s/ Jiangyong
                JiDirectorDate: June
                13, 2007
            By:
            /s/ Jim
                JiDirector





38