UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB

        Annual Report Pursuant to Section 13 or 15 (d) of the Securities
            Exchange Act of 1934 for the Year Ended December 31, 2004
                          Commission file number 132-3

--------------------------------------------------------------------------------

                         DIAPULSE CORPORATION OF AMERICA
              ----------------------------------------------------
             (Exact name of registrant as specified on its charter)

         Delaware                                         13-5671991
---------------------------                       --------------------------
(State or other jurisdiction of                       (I.R.S. Employer
incorporation of organization                      Identification number)


         321 East Shore Road
         Great Neck, New York                                11023
------------------------------------              --------------------------
   (Address of principal offices)                         (Zip Code)


Registrant's telephone number
including area code                                      (516)-466-3030
                                                  --------------------------

--------------------------------------------------------------------------------
           Securities registered pursuant to Section 12(b) of the Act:
                                      NONE

          Securities registered pursuant to Section 12 (g) of the Act:
                    COMMON STOCK, PAR VALUE $0.025 PER SHARE
                                (Title of Class)

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

                        Yes  X          No
                           -----          -----

Check if there is no disclosure of delinquent  filers in response to Item 405 of
regulations 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]

Aggregate market value of the voting stock held by non-affiliates of the
registrant, based upon the mean of the bid and the ask prices of the common
stock on March 31, 2005 as reported by an independent market maker: $8,914.630

Number of shares  outstanding of each of the registrant class of common stock as
of March 31, 2005: 3,962,058.


<PAGE>

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      NONE


<PAGE>


                         DIAPULSE CORPORATION OF AMERICA
                                   FORM 10-KSB
                      FOR THE YEAR ENDED DECEMBER 31, 2004
                                TABLE OF CONTENTS
                                     PART I.

Item 1.           Business
Item 2.           Properties
Item 3.           Litigation
Item 4.           Submission of Matters to Vote of Security Holders

                                    PART II.

Item 5.           Market for Registrant's Common Equity and Related
                  Stockholder Matters
Item 6.           Management's Discussion and Analysis of Financial Condition
                  and Results of Operations
Item 7.           Financial Statements
Item 8.           Changes in and Disagreement with Accountants on Accounting
                  and Financial Disclosure
Item 8a.          Controls and Procedures

                                    PART III.

Item 9.           Directors and Executive Officers of the Registrant and
                  Compliance with Section 16(a) of the Exchange Act.
Item 10.          Executive Compensation
Item 11.          Security Ownership of Certain Beneficial Owners Management
Item 12.          Certain Relationships and Related Transactions

                                    PART IV.

Item 13.          Exhibits, Financial Statements, and Reports on Form 8-K,
                  Section 302, 906 Certifications
Item 14.          Principal accountant fees and services

Signatures
   Financial Statements


<PAGE>

                                     PART I

ITEM 1.           BUSINESS

                  Diapulse Corporation of America (the "Company" or the
                  "Registrant") is a Delaware corporation organized in 1957. The
                  Registrant develops, manufactures and markets Diapulse
                  Technology, a proprietary medical system which produces
                  non-thermal pulsed high frequency, high peak power
                  electromagnetic energy to treat post-operative edema and pain
                  in acute and chronic wounds. It is used in hospitals, nursing
                  facilities, outpatient clinics, physicians' practices and by
                  prescription in patients' homes. A number of insurance
                  companies reimburse for treatment. The Registrant has not
                  significantly varied the product or its service rendered since
                  the date of its Annual Report on Form 10KSB for the year ended
                  December 31, 2004

                  Suppliers - The Registrant purchases raw materials and
                  component parts of its units from various suppliers of
                  electronic products. A majority of the individual component
                  parts of the Diapulse units are standard and available from
                  many suppliers. Were the Registrant to change from its present
                  suppliers for any reason, it believes that no significant
                  difficulties would be experienced in the replacement of raw
                  materials from other suppliers, and there would be no
                  reduction in the quality or quantity of the material
                  purchased.

                  Sales and customers - Until October 1987, the Registrant
                  derived substantially all of its revenue from sales of the
                  Diapulse and related parts to customers in foreign countries.
                  Upon obtaining Food and Drug Administration approval to market
                  Diapulse in the United States in October 1987, the Registrant
                  began selling and renting the Diapulse nationally. The
                  Registrant is not dependent upon any single customer, but
                  sells and rents to numerous customers, the loss of any one of
                  which would not have a significant adverse effect on the
                  Registrant's results of operations. During 2004 and 2003,
                  approximately 47% and 79%, respectively, of total revenue was
                  from rentals to patients covered through Medicare (See Note
                  2).

                  The Registrant rents and sells Diapulse units to hospitals,
                  nursing homes and physicians, and rents its equipment to
                  individuals covered by Medicare and private insurance
                  companies whose claims have been assigned to the Registrant in
                  various parts of the country. Payment has been received from
                  private insurance and reimbursements have also been received
                  from Medicare following administrative procedures.

                  Backlog - The Registrant has sufficient inventory of completed
                  units and spare parts to manufacture additional units for the
                  foreseeable future to fill orders as they arrive. Because
                  orders are filled quickly, firm backlog at most points in time
                  is not significant. Orders received by the Registrant are not
                  seasonal and are routinely filled throughout the year.

                  Patents - The Registrant has patents whose rights thereunder
                  expired in 1999. New patents (patents pending) have been
                  applied for and issued in 1998, 1999, 2000, 2001, 2002, 2003
                  and 2004.


<PAGE>

                  EMPLOYEES - The registrant has thirty-seven full-time and
                  part-time employees and commission sales representatives.

                  FORWARD-LOOKING INFORMATION - The Private Securities
                  Litigation Reform Act of 1995 provides a "safe harbor" for
                  certain forward-looking statements made by the Company in its
                  disclosures to the public. There is certain information
                  contained herein in the Company's press releases and in oral
                  statements made by authorized officers of the Company which
                  are forward-looking statements, as defined by such Act. When
                  used herein, in the Company's press releases and in such oral
                  statements, the words "estimate", "project", "anticipate",
                  "expect", "intend", "believe", "plans", and similar
                  expressions are intended to identify forward-looking
                  statements. Because such forward-looking statements involve
                  risks and uncertainties, there are important factors that
                  could cause actual results to differ materially from those
                  expressed or implied by such forward-looking statements.


ITEM 2.           PROPERTIES

                  The Registrant leases approximately 6,000 square feet of
                  office space in Great Neck, New York for a term expiring
                  December 31, 2006. Minimum rental payments are $132,970 for
                  2005 and $136,959 for 2006. The premises are used as a
                  national and international headquarters for the Company as
                  well as for research and development.

ITEM 3.           LITIGATION

                  The Company was involved as plaintiff in litigation filed on
                  August 1994, alleging deceptive acts and practices, false
                  advertising, unfair competition, breach of fiduciary duty
                  under New York Law and under Federal Law. The complaint
                  demands damages in an unspecified amount for compensatory,
                  punitive and treble damages, profits and attorneys' fees
                  against corporate and individual defendants. In early 2000, a
                  settlement agreement was reached whereby all claims against
                  the Company were dismissed with prejudice and one of the
                  Corporate defendants agreed to pay the Company the sum of
                  $50,000 with interest at the rate of 9% per year, in level
                  monthly installment payments of $1,786.41. The agreement
                  further provided that in the event of failure to make the
                  installment payments when due, the entire balance would
                  immediately become due and payable and the Company would be
                  entitled to enter judgement for the balance. The agreement
                  also provides for the defendants to refrain from engaging in
                  certain marketing practices in the future. The defendants
                  failed to make any payments after the payment due on January
                  1, 2001 and in late 2001 a judgement for $39,215.61 was
                  entered against the corporate defendant who had agreed to the
                  monetary settlement. The Company is currently attempting to
                  enforce the judgement but is not aware of any assets owned by
                  the judgment debtor.

<PAGE>

                  A former employee of the Company, who was terminated in May
                  1999, filed five small claim actions against the Company and
                  other employees and an officer-shareholder of the Company.
                  Most of the cases alleged various employment contract and/or
                  labor violations; some alleged liability for property
                  allegedly held or used by the Company. All actions were
                  instituted after the employee was terminated from employment.
                  The claims were settled for the sum of $1,500.00 which was
                  paid in full in the year ended December 31, 2003.

                  A former independent contractor sued the Company for an amount
                  in excess of $75,000 pursuant to a signed Commission
                  Salesperson Agreement. In January of 2003 the Company
                  deposited $75,000 in escrow with its attorney as directed by
                  an arbitration award. The Company commenced a second, separate
                  arbitration proceeding seeking the return of two machines held
                  by the independent contractor and claiming loss of revenue on
                  the two machines. The arbitrator granted the Company an award,
                  which was confirmed by the court which granted a money
                  judgment of $1,265.00 and ordered the independent contractor
                  to return the two machines and pay the Company an additional
                  $5,000. The contractor violated the court order and was held
                  in contempt. Judgment for $15,729.35 was entered against the
                  contractor. The Company is not aware of any assets owned by
                  the judgment debtor.

                  The Company filed a claim with one of its insurance carriers
                  for loss of and damage to, property that was being stored with
                  a storage company. The insurance carrier paid the Company
                  $25,000 for damages, removed and discarded the property. In
                  September 2001, the storage company sued the Company for
                  unpaid storage of approximately $80,000. The Company denies
                  liability on the merits of the case and also has raised the
                  statute of limitations as a partial defense. The Company
                  countersued the storage company for $80,000 for damages done
                  to their equipment. Since the Company recovered $25,000, the
                  balance of $55,000 is being sought through the courts for
                  reimbursement. Both the storage company's suit and the
                  company's countersuit were dismissed in 2004. The Company's
                  counsel has submitted additional papers to the court in an
                  attempt to reinsetate the countersuit.

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

                  No matters were submitted to a vote of security holders during
                  the period covered by this report.


<PAGE>




                                     PART II

 ITEM 5.          MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS
                  MATTERS

                  The Registrant's common stock has been traded on the NASDAQ
                  over-the-counter market, under the symbol DIAC. The bid and
                  ask closing sales prices are listed below.

                                      Quarter Ended
                         -------------------------------------------------------

                                    2004                      2003
                         --------------------------   -----------------------
                           3/31  6/30  9/30  12/31     3/31  6/30  9/30  12/31
                           ----  ----  ----  -----      ---  ----  ----  -----
                 Bid:      1.25  1.25  1.50   1.75      .25   .33   .30    .22

                  As of December 31, 2004 there were approximately 1,444
                  stockholders of record. The Company has not paid any cash
                  dividends during any of the periods indicated above. The
                  Company anticipates that it will continue to retain its
                  earnings to finance the growth of its business.


ITEM 6.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS

                  Overview - During the fiscal year ended December 31, 2004, the
                  Registrant established and expanded its distribution network,
                  sales force and sales and rental programs. Controlled, and
                  double-blind studies demonstrated the clinical value of the
                  Registrant's product published in peer review medical
                  journals, which continue to aid marketing. At the present time
                  there are 40 Diapulse publications on Medline.

                  Diapulse Corporation of America (OTC-DIAC) announced that the
                  Centers for Medicare and Medicaid (CMS) granted approval for
                  coverage of the Diapulse(R) Wound Treatment System(TM) in a
                  decision memorandum issued December 22, 2003 with an effective
                  date of July 1, 2004. This permits payment to hospitals,
                  nursing homes, physicians and physical therapists for patients
                  who have Stage III and Stage IV pressure ulcers, arterial
                  ulcers, diabetic ulcers and venous stasis ulcers.

                  Net Revenues - During the year ended December 31, 2004
                  revenues decreased by 11% as compared to the year ended
                  December 31, 2003. This decrease was due to a decision by The
                  Company to suspend new billings on Medicare home treatment for
                  wounds due to a decision by Medicare not to honor new in-home
                  Medicare accounts effective April 1, 2003. The Company has
                  requested a re-consideration and is awaiting a decision by
                  CMS.

<PAGE>

                  Cost of Sales - During the year ended December 31, 2004, cost
                  of sales increased by $19,815.00 as compared to the year ended
                  December 31, 2003 due primarily to an increase in sales of
                  machines.

                  Operating Expenses - Operating expenses, exclusive of
                  interest, decreased by $8,409.00 in 2004 as compared with 2003
                  due to a decrease in gross sales.

                  Interest Expense - Interest expense from 2003 to 2004
                  decreased by $3,741.00 due to a decrease in borrowing and pay
                  off of long-term debts.

                  Inflation - In the opinion of management, inflation has not
                  had a material effect on the operations of the Registrant.

                         LIQUIDITY AND CAPITAL RESOURCES

                  As of December 31, 2004, the Registrant had working capital of
                  $587,268. Working capital as of December 31, 2003 was
                  $531,097.

                  The Registrant considers, and currently uses for internal
                  management purposes, a number of measures of liquidity. These
                  measures include working capital and operating ratios, all of
                  which are set forth below.


                             WORKING CAPITAL RATIOS:

                  These ratios measure the Registrant's ability to meet its
                  short-term obligations.

                                       December 31,             December 31,
                                       2004                     2003
                                       ----                     ----
                  Working Capital      $587,268                 $531,097
                  Current ratio        2.90 to 1                2.31 to 1
                  Quick ratio          1.86 to 1                1.75 to 1

ITEM 7.           FINANCIAL STATEMENTS

                  The financial statements to be provided pursuant to this Item
                  are included under Items F1 - F24 of this report.

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

                  None

ITEM 8A.          CONTROLS AND PROCEDURES

                  We carried out an evaluation under the supervision and with
                  the participation of our management, including our Chief
                  Executive Officer and Chief Financial Officer, of the
                  effectiveness of the design and operation of our disclosure
                  controls and procedures pursuant to Securities Exchange Act
                  Rules 13a-15(e) and 15d-15(e). Based upon that evaluation, the
                  Chief Executive Officer and Chief Financial Officer concluded
                  that our disclosure controls and procedures as of December 31,
                  2004, are effective in timely alerting to material information
                  relating to the Company required to be included in our period
                  SEC Filings. The design of any system of controls is based in
                  part upon certain assumptions about the likelihood of future
                  events, and there can be no assurance that any design will
                  succeed in achieving its stated goals under all potential
                  future conditions, regardless of how remote. There were no
                  significant changes in our internal controls or in other
                  factors that could significantly affect these controls
                  subsequent to the date of their evaluation.

<PAGE>

                                    PART III

ITEM 9.           DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

                  The executive  officers and key employees of the Company as of
                  March 31, 2004 were as follows:

                      Name                Age        Title
                      ----                ---        ------
                      Jesse Ross          83         President, Director and
                                                     Chairman of the Board

                      David M. Ross       57         Vice President and Director

                      Howard Mann         69         Director

                  Jesse Ross has been actively engaged in the business of the
                  Registrant and has been its President since its incorporation.
                  He has devoted his full time services to the business of the
                  Registrant since 1957.

                  David M. Ross, son of Jesse Ross, became a Vice President of
                  the Company during 2003. He became a Director of the Company
                  in 1989. Mr. Ross was an independent sales representative and
                  consultant, and is now a full-time employee.

                  Howard Mann became a Director of the Company during 1996.

                               BOARD OF DIRECTORS

                  Directors are elected at the annual meeting of the Company's
                  stockholders to hold office until the next annual meeting and
                  until their successors are elected and qualified. Officers
                  serve at the discretion of the Board of Directors and may
                  receive such compensation for their services as is fixed from
                  time to time by resolution of the Board.

<PAGE>

                             DIRECTORS' COMPENSATION

                  Directors of the Company currently receive no compensation for
                  their service as such.

                  SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

                  Pursuant to Section 16(a) of the Securities Exchange Act of
                  1934 and the rules issued thereunder, the Company's directors
                  and executive officers are required to file with the
                  Securities and Exchange Commission and the National
                  Association of Securities Dealers Inc., reports of ownership
                  and changes in ownership of Common Stock and other equity
                  securities of the Company. Copies of such reports are required
                  to be furnished to the Company. Based solely on a review of
                  the copies of such reports furnished to the Company or written
                  representations that no other reports were required, the
                  Company believes that, during the Company's fiscal year ended
                  December 31, 2004, all of its executive officers and directors
                  complied with the requirements of Section 16(a).

ITEM 10.          EXECUTIVE COMPENSATION

                  Cash Compensation - For the year ended December 31, 2004, no
                  officer received or was entitled to receive more than $100,000
                  in compensation from the Registrant. No cash bonuses were
                  earned by any of the Registrant's officers during the year.

                  The following table sets forth the annual compensation paid to
                  executive officers of the Company for the three fiscal years
                  ended December 31, 2004. For the year ending December 31, 2004
                  the President deferred $100,000 of salary.


<PAGE>

<TABLE>
<CAPTION>

                                                                          Long Term
                                                                      Compensation Award
                                                          Other          -Securities
       Name and                                           Annual       Underlying Options      All Other
   Principal Position     Year    Salary($)  Bonus ($)  Compensation           (#)            Compensation($)
-------------------------------------------------------------------------------------------------------------
<S>                       <C>      <C>         <C>       <C>                    <C>                <C>
Jesse Ross , President,   2004     0           0            -                   0                  0
Director and              2003     0           0            -                   0                  0
Chairman of the Board     2002     0           0            -                   0                  0

</TABLE>




                  OPTIONS EXERCISES AND FISCAL YEAR-END VALUES

The following table sets forth information concerning option exercises and
option holdings for the fiscal year 2004 with respect to each of the named
executive officers. No named executive officer exercised any options during such
year.

                       AGGREGATE OPTION EXERCISES IN LAST
                  FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES


<TABLE>
<CAPTION>

                                                           Number  of Securities        Value of unexercised
                                                           Underlying Unexercised      In-the-money Options
                                                            Options at Fiscal Year     At Fiscal Year End ($)
                Shares Acquired                                     End (#)                Exercisable/
    Name         On Exercise (#)     Value Realized ($)    Exercisable/Unexercisable      Unexercisable
---------------------------------------------------------------------------------------------------------------
<S>                   <C>                <C>              <C>                     <C>
 Jesse Ross           0                    ---              __0___ exercisable/     $___0___exercisable/
                                                            __0___ unexercisable    $___0___unexercisable

</TABLE>




                Compensation pursuant to plans - The Registrant has no pension,
                retirement, stock or any other form of compensation plans.


ITEM 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                  Security ownership of certain beneficial owners - No
                  individual or group outside of management is known to the
                  Registrant to be the beneficial owner of more than five
                  percent of the Registrant's common stock.

                  Security ownership of management - The following table sets
                  forth certain information with respect to shares of the
                  Registrant's common stock beneficially owned by all officers
                  and directors of the Registrant as of December 31, 2004.

                        Name of                Amount and Nature of    Percent
                  Beneficial Owner             Beneficial Ownership   of Class
                  ----------------             --------------------   --------
                  Jesse Ross                        2,181,750 (i)       55.07%
                  All officers and directors
                  as a group (1 person)             2,181,750           55.07%

                  (i) Includes certain shares owned by the spouse and other
                  relatives of this individual.


<PAGE>

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

                  One of the Company's directors who is a son of the President,
                  previously served as an independent sales representative for
                  the Company and is now employed by the Company as a full time
                  employee. In addition, another son of the President also
                  serves as an independent sales representative for the Company
                  and is now employed by the Company as a full time employee.
                  Commissions and consulting fees earned by these individuals
                  during 2004 and 2003 were approximately $16,270 and $67,629
                  respectively.

                  As of December 31, 2004 and 2003, the accumulated advance
                  commissions to these individuals were $36,253 and
                  $41,697respectively. These advances are guaranteed by the
                  president of the Company who has agreed to subordinate
                  repayment of the amount due to him to the extent of the
                  advances.

                  As of December 31, 2004, and 2003 amounts of $73,962 and
                  $75,586, respectively, have been owed to an individual for
                  outstanding salaries. This individual who is related to the
                  president of the Company has incurred interest of $3,988 and
                  $3,904 during 2004 and 2003 respectively.

                                 COMPANY POLICY

                  The Company believes that each of the foregoing transactions
                  embodies terms no less favorable to the Company than those
                  that could have been obtained from unaffiliated parties. Any
                  ongoing or future transactions between the Company and its
                  officers, directors, principal stockholders, or other
                  affiliates will be on terms no less favorable to the Company
                  than could be obtained from unaffiliated third parties on an
                  arms-length basis and will be approved by a majority of the
                  Company's independent and disinterested directors. Any future
                  loans to officers, directors, principal stockholders, or
                  affiliates will be made for a bona fide business purpose, on
                  terms no less favorable than could be obtained from
                  unaffiliated third parties and will be approved by a
                  majority of the Company's independent and disinterested
                  directors.

                                     PART IV

ITEM 13.          EXHIBITS, FINANCIAL STATEMENTS, AND REPORTS ON FORM 8-K

                  During the year ended December 31, 2004, the Company did not
                  file any Form 8-K.

                  Financial Statements - The financial statements commence at
                  page F1 and are filed as part of this annual report on Form
                  10KSB.


<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

                  AUDIT FEES

                  The aggregate fees billed by Granick & Gendler, CPAs for
                  professional services rendered for the audits of the company's
                  annual financial statements on Form 10-KSB and the reviews of
                  the financial statements on Form 10-QSB for the fiscal year
                  ended December 31, 2004 were approximately $38,000 and for the
                  year ended December 31, 2003 were approximately $42,860.

                  AUDIT RELATED FEES

                  There were no audit related fees by the principal accountants
                  for the years ended December 31, 2004 and 2003.

                  TAX FEES

                  The aggregate fees billed for tax compliance, tax advice and
                  tax planning rendered by our independent auditors for the
                  fiscal year ended December 31, 2004 was $1,750 and for the
                  year ended December 31, 2003 was $1,900. The services
                  comprising these fees include tax consulting and submitting
                  tax returns.

                  ALL OTHER FEES

                  There were no other fees for professional services rendered by
                  the Company's independent auditors for the fiscal year ending
                  December 31, 2004 and 2003.

                  The Audit Committee approved 100% of the fees paid to the
                  principal accountant for audit-related, tax and other fees.
                  The Audit Committee pre-approves all non-audit services to be
                  performed by the auditor. The percentage of hours expended on
                  the principal accountant's engagement to audit the Company's
                  financial statements for the most recent year that were
                  attributed to work performed by persons other than the
                  principal accountant's full-time, permanent employees was 0%.

                                   SIGNATURES

                  Pursuant to the requirements of Section 13 or 15(d) of the
                  Securities Act of 1934 an amended, the Registrant had duly
                  caused this report to be signed on its behalf by the
                  undersigned, thereunto duly authorized.


<PAGE>


                                   SIGNATURES

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


                                            DIAPULSE CORPORATION OF AMERICA
                                                      Registrant

                                            By:      /s/ Jesse Ross
                                            -----------------------------------
                                            Jesse Ross - President



         Date: March 31, 2005


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

         Name of Capacity                                        Date
         ----------------------                                  --------
                                                                 March 31, 2005

         /s/ Jesse Ross
         -------------------------------------------
         Name:    Jesse Ross
         Title:   President, Director and
                  Chairman of the Board
                  (Principal Executive Officer
                  and Principal Financial and
                  Accounting Officer)





<PAGE>



                                      Part
                                       II



                         DIAPULSE CORPORATION OF AMERICA

                     YEARS ENDED DECEMBER 31, 2004 AND 2003

<PAGE>

                                    CONTENTS


                                                                        Page

Report of Independent Certified Public Accountants                      F-2


Financial statements:

             Balance sheets                                          F-3 - F-4

             Statements of operations                                   F-5

             Statements of stockholders' equity (deficiency)            F-6

             Statements of cash flows                                F-7 - F-8

             Notes to financial statements                          F-9 - F-24






                                       F-1

<PAGE>

Granick & Gendler
   CERTIFIED PUBLIC ACCOUNTANTS

                                                           60 EAST 42ND STREET
                                                           NEW YORK, NY 10165
                                                           (212) 697-1075


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of
Diapulse Corporation of America

We have audited the accompanying balance sheets of Diapulse Corporation of
America as of December 31, 2004 and 2003 and the related statements of
operations, stockholders' equity (deficiency) and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these statements
based on our audits.

We conducted our audits in accordance with auditing 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 Diapulse Corporation of America
as of December 31, 2004 and 2003, the results of its operations and its cash
flows for each of the two years ending December 31, 2004 and December 31, 2003
in conformity with accounting principles generally accepted in the United States
of America.




                                                 RANICK & GENDLER
                                                 CERTIFIED PUBLIC ACCOUNTANTS



New York, New York
February 11, 2005

                                       F-2

<PAGE>

                         DIAPULSE CORPORATION OF AMERICA

                                 BALANCE SHEETS

                           DECEMBER 31, 2004 AND 2003


                                     ASSETS

<TABLE>
<CAPTION>

                                                                                  2004            2003
                                                                                  ----            ----

<S>                                                                         <C>                <C>
Current assets:
            Cash and cash equivalents (Note 1)                                $     474,882     $   621,799
            Current portion of accounts receivable, net of
                     allowance for doubtful accounts of $497,192
                     and $485,873 in 2004 and 2003 (Note 2)                         101,128          86,955
            Note Receivable from related party, Current Portion (Note 6)             14,778          22,925
            Inventory (Note 3)                                                      265,053         194,851
            Commission advance (Note 4)                                              16,026           4,156
            Other current assets                                                     25,304           5,295
                                                                              --------------    ------------

                             Total current assets                                   897,171         935,981

Property and equipment, net (Note 7)                                                 26,206          44,521
                                                                              --------------    ------------

Other assets:
            Accounts receivable, net of current portion                             151,691         130,432
            Note Receivable from related parties, net of current portion
             (Note 6)                                                               133,392         140,023
            Commission advances to related parties (Note 6)                          36,253          41,697
            Security deposits                                                        22,262          21,841
                                                                              --------------    ------------

                             Total other assets                                     343,598         333,993
                                                                              --------------    ------------

                             Total assets                                         1,266,975     $ 1,314,495
                                                                              ==============    ============

</TABLE>




   The accompanying Notes are an integral part of these financial statements.





                                       F-3


<PAGE>


                         DIAPULSE CORPORATION OF AMERICA

                           BALANCE SHEETS (CONTINUED)

                           DECEMBER 31, 2004 AND 2003

                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

<TABLE>
<CAPTION>

                                                                                      2004                    2003
                                                                                      ----                    ----
<S>                                                                         <C>                                <C>
Current liabilities:
            Current portion of amounts due to officer/
                     stockholder (Note 6)                                     $          100,000       $         100,000
            Accounts payable and accrued liabilities
                     Including $73,962 and $75,586 to related
                        parties in 2004 and 2003 (Note 8)                                208,723                 303,929
            Accrued income tax and related interest (Note 10)                              1,180                     955
                                                                              -------------------      ------------------

                     Total current liabilities                                           309,903                 404,884

Long-term portion of amounts due to officer/stockholder                                2,858,112               2,702,567
                                                                              -------------------      ------------------

                     Total liabilities                                                 3,168,015               3,107,451
                                                                              -------------------      ------------------

Commitments (Note 9)

Stockholders' equity (deficiency)
            Common stock, $.025 par value per share
                     authorized 15,000,000 shares, issued
                     3,962,058 shares in 2004 and 2003                                    99,051                  99,051
            Additional paid-in capital                                                 2,293,272               2,293,272
            Accumulated deficit                                                       (4,291,035)             (4,182,951)
                                                                              -------------------      ------------------
                                                                                      (1,898,712)             (1,790,628)

    Less treasury stock, 1,328 shares in 2004
            and 2003 at cost                                                              (2,328)                 (2,328)
                                                                              -------------------      ------------------

                     Total stockholders' equity (deficiency)                          (1,901,040)             (1,792,956)
                                                                              -------------------      ------------------

                     Total liabilities and stockholders' equity
                             (deficiency)                                     $        1,266,975       $       1,314,495
                                                                              ===================      ==================
</TABLE>



The accompanying Notes are an integral part of these financial statements.

                                       F-4


<PAGE>


                         DIAPULSE CORPORATION OF AMERICA

                            STATEMENTS OF OPERATIONS

                     YEARS ENDED DECEMBER 31, 2004 AND 2003


<TABLE>
<CAPTION>

                                                                                         2004                   2003
                                                                                         ----                   ----
<S>                                                                              <C>                     <C>
Revenue
Rental income                                                                    $         679,630       $        900,981

Sales of machinery                                                                         418,914                331,000
                                                                                 ------------------      -----------------
            Total revenue                                                                1,098,544              1,231,981

Cost of sales and rentals                                                                   32,227                 12,412
                                                                                 ------------------      -----------------

             Gross margin                                                                1,066,317              1,219,569
                                                                                 ------------------      -----------------

Operating expenses:
             Selling, general and administrative                                         1,203,395              1,211,804
             Provision for doubtful accounts                                               134,942                133,740
             Interest expense (principally to related parties)                             145,474                149,215
                                                                                 ------------------      -----------------
                                                                                              --                      --

                     Total operating expenses                                            1,483,811              1,494,759
                                                                                 ------------------      -----------------

(Loss) from operations                                                                   (417,494)              (275,190)
Interest and other income                                                                  208,512                 10,413
                                                                                 ------------------      -----------------

(Loss) before income taxes                                                               (208,982)              (264,777)
Income taxes (benefit) (Note 10)                                                         (100,898)               (11,669)
                                                                                 ------------------      -----------------

Net  (loss)                                                                      $       (108,084)       $      (253,108)
                                                                                 ==================      =================

Basic and diluted (loss) per share (Note 11)                                     $          (0.03)       $         (0.06)
                                                                                 ==================      =================

Weighted average number of common shares
        Outstanding                                                                      3,960,730              3,960,730
                                                                                 ==================      =================

</TABLE>




   The accompanying Notes are an integral part of these financial statements.


                                       F-5


<PAGE>

                         DIAPULSE CORPORATION OF AMERICA

                 STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)

                     YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                         Common Stock                                                                 Total
                                                             Additional                                            Stockholders
                                            Issued            Paid-In-     Accumulated    Treasury      Stock         Equity
                                      Shares      Amounts      Capital       Deficit       Shares      Amounts     (Deficiency)


<S>                                <C>           <C>         <C>          <C>              <C>       <C>          <C>
Balance, January 1, 2003            3,962,058     $99,051     $2,293,272   ($3,929,843)     1,328     ($2,328)      ($1,539,848)

  Net (loss)                                                                  (253,108)                                (253,108)

                                   ----------------------------------------------------------------------------------------------

Balance, December 31, 2003          3,962,058     $99,051     $2,293,272    (4,182,951)     1,328     ($2,328)      ($1,792,956)

  Net (loss)                                                                  (108,084)                                (108,084)

                                   ----------------------------------------------------------------------------------------------

Balance, December 31, 2004          3,962,058     $99,051     $2,293,272   ($4,291,035)     1,328     ($2,328)      ($1,901,040)
                                    =========     =======     ==========   ===========      =====     =======       ===========


</TABLE>



   The accompanying Notes are an integral part of these financial statements.

                                       F-6


<PAGE>

                         DIAPULSE CORPORATION OF AMERICA

                            STATEMENTS OF CASH FLOWS

                     YEARS ENDED DECEMBER 31, 2004 AND 2003


<TABLE>
<CAPTION>

                                                                                    2004                    2003
                                                                                    ----                    ----

<S>                                                                         <C>                   <C>
   Operating activities:
         Net  (Loss)                                                         $      (108,084)      $       (253,108)
                                                                             -----------------     -------------------

   Adjustments to reconcile net (loss) to net cash
         Provided by (used in) operating activities:
         Depreciation                                                                  28,166                  20,953
         Provision for losses on accounts receivable                                  497,192                 485,873
         Deferred salaries and accrued interest to officer                            944,945                 796,291

         Changes in assets and liabilities:
             Accounts receivable                                                     (532,624)               (174,620)
             Note receivable                                                           14,778                (162,948)
             Inventories                                                              (70,202)                (30,435)
             Commission advances                                                       (6,888)                    891
             Other current assets                                                     (19,547)                197,352
             Security deposits                                                           (421)                   (823)
             Accounts payable and accrued liabilities                                (791,975)               (673,445)
                                                                             -----------------     -------------------

             Total adjustments                                                         63,424                 459,089

         Net cash provided by (used in) operating activities                          (44,660)                205,981
                                                                             -----------------     -------------------

   Net cash provided by (used in) investing activities
              Capital expenditures                                                     (9,850)                 --
                                                                             -----------------     -------------------

           Net cash (used in) investing activities                                     (9,850)                 --
                                                                             -----------------     -------------------

</TABLE>


                                   (Continued)

   The accompanying Notes are an integral part of these financial statements.

                                       F-7


<PAGE>



                         DIAPULSE CORPORATION OF AMERICA

                      STATEMENTS OF CASH FLOWS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>


                                                                                  2004                 2003
                                                                                  ----                 ----

<S>                                                                        <C>                           <C>
Financing activities:
          Loans from officers                                                      100,000               100,000
          Repayments to officers                                                  (192,407)             (206,290)
                                                                           ----------------      ----------------

                 Net cash provided by (used in)  financing activities              (92,407)             (106,290)
                                                                           ----------------      ----------------
          Net increase (decrease) in cash                                         (146,917)               99,691

Cash and cash equivalents, beginning of year                                       621,799               522,108
                                                                           ----------------      ----------------

Cash and cash equivalents, end of year                                     $       474,882               621,799
                                                                           ----------------      ----------------



Cash paid during the years for:
                Interest                                                   $        28,712                21,571
                                                                           ----------------      ----------------

                Income taxes                                               $         2,984                 4,425
                                                                           ----------------      ----------------

</TABLE>


   The accompanying Notes are an integral part of these financial statements.



                                       F-8


<PAGE>


                         DIAPULSE CORPORATION OFAMERICA

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2004 AND 2003


1.       Description of Business and Summary of Significant Accounting Policies

         Description of Business and Concentrations

         Diapulse Corporation of America ("the Company") develops, manufactures
         and markets Diapulse (Registered Trademark) technology, a proprietary
         medical system which produces non-thermal pulsed high-frequency,
         high-peak power electromagnetic energy to treat post-operative edema
         and pain in acute and chronic wounds. For the years 2004 and 2003 there
         were no major suppliers of component parts or raw materials. The
         Company's product is sold and rented to hospitals, nursing facilities,
         outpatient clinics, physicians' practices and prescribed for use in
         patients' homes throughout the United States. A number of insurance
         companies reimburse for treatment. During 2004 and 2003, approximately
         47% and 79%, respectively, of revenue were from rentals to patients
         covered through Medicare (see Note 2). In 2004 and 2003 there were no
         major customers. The Company does not require collateral for its
         accounts receivable.

         Inventories

         Inventories are valued at the lower of cost or market. Cost is
         determined using the first-in, first-out (FIFO) method for parts and
         components and the specific identification method for finished goods.
         When equipment on rental is sold, the net book value of the equipment
         is included in the cost of sales and the proceeds are included in
         sales.

         The Company classifies machinery which is held for resale as inventory.

         Income Recognition

         Income from the sale of a machine is recognized upon shipping of the
         machine. Rental income is recognized on a monthly basis.


         Depreciation

         Depreciation is computed based on a straight-line method over the
         estimated useful lives of the related assets, ranging from five to
         fifteen years. Rental equipment is depreciated over a five-year life on
         a straight-line basis.



                                       F-9


<PAGE>


                         DIAPULSE CORPORATION OF AMERICA

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 2004 AND 2003


     1   Description of Business and Summary of Significant Accounting Policies
         (continued)

         Income Taxes

         The Company follows Statement of Financial Accounting Standards
         ("SFAS") No. 109, "Accounting for Income Taxes." This statement
         requires the use of the asset and liability approach in the recognition
         of deferred tax assets and liabilities for the expected future tax
         consequences of events that have been recognized in the Company's
         financial statements or tax returns. If it is more likely than not that
         some portion or all of a deferred tax asset will not be realized, a
         valuation allowance is recognized.

         Impairment of Long-lived Assets

         The Company reviews the carrying value of long-lived assets to
         determine if circumstances exist indicating whether there has been any
         impairment of the carrying values of property and equipment or whether
         the depreciation periods should be modified. Long-lived assets are
         reviewed for impairment whenever events or changes in business
         circumstances indicate that the carrying value of the assets may not be
         fully recoverable. The Company performs undiscounted cash flow analysis
         to determine if any impairment exists. If any impairment is determined
         to exist, any related impairment loss is calculated based on fair
         value. The Company does not believe that there are any current facts or
         circumstances indicating impairment of any long-lived assets.

         (Loss) Per Share

         The Company adopted SFAS No. 128, "Earnings Per Share". In accordance
         with SFAS No. 128, the Company is required to present both basic net
         loss per share and diluted net loss per share in the financial
         statements for all periods presented. However, the Company did not
         present the diluted net loss per share since all options outstanding
         were anti-dilutive and not considered (Note 11).

         Stock-Based Compensation

         The Company account for stock-based compensation utilizing the
         intrinsic value method in accordance with the provisions of Accounting
         Principles Board Opinion No.2 (APB 25), "Accounting for Stock Issued to
         Employees" and related Interpretations. Accordingly, no compensation
         expense is recognized because the exercise prices of these employee
         stock options equal or exceed the estimated fair market value of the
         underlying stock on the dates of grant.

                                      F-10

<PAGE>

                         DIAPULSE CORPORATION OFAMERICA

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 2004 AND 2003


1        Description of Business and Summary of Significant Accounting Policies
         (continued)

         Stock-Based Compensation (continued)

         In December 2004, the Financial Accounting Standards Board ("FASB")
         issued Statement of Financial Accounting Standards ("SFAS") No. 123R,
         "Share-Based Payment". SFAS No. 123R is a revision of SFAS No. 123,
         "Accounting for Stock Based Compensation", and supersedes APB 25. Among
         other items, SFAS 123R eliminates the use of APB 25 and the intrinsic
         value method of accounting, and requires companies to recognize the
         cost of employee services received in exchange for awards of equity
         instruments, based on the grant date fair value of those awards, in the
         financial statements. The effective date of SFAS 123R is the first
         reporting period beginning after June 15, 2005, which is third quarter
         2005 for calendar year companies, although early adoption is allowed.
         SFAS 123R requires companies to adopt its requirements using a
         "modified prospective" method. Under the "modified prospective" method,
         compensation cost is recognized in the financial statements beginning
         with the effective date, based on the requirements of SFAS 123R for all
         share-based payments granted after that date, and based on the
         requirements of SFAS 123 for all unvested awards granted prior to the
         effective date of SFAS 123R. The "modified retrospective" method also
         permits entities to restate financial statements of previous periods
         based on pro-forma disclosures made in accordance with SFAS 123.

         The Company currently utilizes a standard option pricing model (i.e.,
         Black-Scholes) to measure the fair value of stock options granted to
         employees. While SFAS 123R permits entities to continue to use such a
         model, the standard also permits the use of a "lattice" model. The
         Company has not yet determined which model they we will use to measure
         the fair value of employee stock options upon the adoption of SFAS
         123R.

         The Company currently expects to adopt SFAS 123R effective July 1,
         2005; however, they have not yet determined which of the aforementioned
         adoption methods we will use.


         Use of Estimates

         In preparing financial statements in conformity with generally accepted
         accounting principles, management is required to make estimates and
         assumptions that affect the reported amounts of assets and liabilities,
         the 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. Significant estimates are used in accounting for accounts
         receivable allowance, depreciation and amortization, inventory and
         income taxes.



                                      F-11


<PAGE>


                         DIAPULSE CORPORATION OFAMERICA

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 2004 AND 2003

1        Description of Business and Summary of Significant Accounting Policies
         (continued)

         Financial Instruments

         Fair values of financial instruments are estimates that, in many cases,
         may differ significantly from the amounts that could be realized upon
         immediate liquidation. In cases where market prices are not available,
         estimates of fair value are based on discounted cash flow analysis,
         which utilize current interest rates for similar financial instruments
         with comparable terms and credit equity.

         Cash and Cash Equivalents

         The Company considers all highly liquid debt instruments purchased with
         a maturity of three months or less to be cash equivalents.

2        Accounts Receivable

         At December 31, 2004 and 2003, accounts receivable included
         approximately $689,000 and $621,000 respectively, of Medicare claims
         for rentals of Diapulse's self-administered medical treatment at home.
         However, most claims for reimbursements from Medicare are denied when
         submitted. In such cases, the Company has to institute an
         administrative procedure of requesting a review of the claim and, if
         denied, a hearing with a Medicare hearing officer. If necessary, the
         Company can appeal the findings of the hearing officer to an
         Administrative Law Judge of the Social Security Administration. In view
         of the lack of significant collections and the age of both Medicare and
         private receivables, the Company increased the allowance for doubtful
         receivables to $497,192 and $485,873 of the remaining uncollected
         balance as of December 31, 2004 and 2003, respectively. Effective July
         1, 2004, as a result of a National Coverage decision, the Company has
         lost the ability to bill Medicare for its in-house treatments of wounds
         and is presently requesting a reconsideration of this decision. The
         Company has not recorded any sales of this type after July 1, 2004.

<TABLE>
<CAPTION>

                                                                   2004                    2003
                                                                   ----                    ----

<S>                                                     <C>                      <C>
         Gross receivables - Medicare                     $          688,915      $           621,050
         Gross receivables - Other                                    61,096                   82,210
         Less allowance for doubtful accounts                      (497,192)                (485,873)
                                                              ---------------         ----------------
         Net receivables                                  $          252,819      $           217,387
                                                              ===============         ================

         Current portion of accounts receivable                      101,128                   86,955
         Accounts receivable, net of current portion                 151,691                  130,432
                                                              ---------------         ----------------
                                                          $          252,819      $           217,387
                                                              ===============         ================
</TABLE>


                                      F-12


<PAGE>



                         DIAPULSE CORPORATION OFAMERICA

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 2004 AND 2003



3       Inventories

<TABLE>
<CAPTION>
                                                         2004                 2003
                                                         ----                 ----

<S>                                             <C>                   <C>
        Parts, components and sub-assemblies     $         110,749     $       60,188
        Finished goods                                     154,304            134,663
                                                 -----------------     --------------
                                                 $         265,053     $      194,851
                                                 =================     ==============
</TABLE>

         The Company is expanding its distribution network to try to facilitate
         the movement of its parts, components, sub-assemblies and finished
         goods inventory.


4        Commission Advances and Accrued Commissions

         Commission advances represent cash advances by the Company to several
         of its independent sales representatives, which are to be applied
         against future sales made by the representatives. These advances are
         non-interest bearing. See Note 6 for commission advances to related
         parties. Accrued commissions are generally paid upon receipt of
         accounts receivable.


5         Fair values of Financial Instruments

         The Company estimates that the fair value of all financial instruments
         at December 31, 2004 and 2003 does not differ materially from the
         aggregate carrying value of its financial instruments recorded in the
         accompanying Balance Sheet. Considerable judgment is necessarily
         required in interpreting market data to develop the estimate of fair
         value and, accordingly, the estimates are not necessarily indicative of
         the amount that the Company could realize in a current market exchange.



                                      F-13


<PAGE>

                         DIAPULSE CORPORATION OFAMERICA

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 2004 AND 2003


6         Related Party Transactions

         Due to Officer/Stockholder

         Due to officer, (President) stockholder at December 31, 2004 and 2003
         consists of the following:

<TABLE>
<CAPTION>
                                                 Accrued
                                               Interest and
                                                  Cash                     Accrued
                                                Advances                   Salaries                    Total

<S>                                       <C>                       <C>                        <C>
        December 31, 2004
        Officer/Stockholder               $          2,158,112      $            800,000       $          2,958,112
                                          --------------------      --------------------       --------------------
                                          $          2,158,112      $            800,000       $          2,958,112
                                          ====================      ====================       ====================

        December 31, 2003
        Officer/Stockholder               $          2,102,567      $            700,000       $          2,802,567
                                          --------------------      --------------------       --------------------
                                          $          2,102,567      $            700,000       $          2,802,567
                                          ====================      ====================       ====================

</TABLE>

         There are no formal agreements or written documentation with respect to
         the repayment of these amounts. For each of these years in the two-year
         period ended December 31, 2004, the President of the Company did not
         take any remuneration for the services he provided. The 2004 and 2003
         expenses have been accrued in these Financial Statements.

         In 2004 the President of the Company agreed not to demand repayment of
         $2,858,112 of the above amounts due him prior to January 1, 2006. In
         2003 the President of the Company agreed not to demand repayment of
         $2,702,567 prior to January 1, 2005 and, accordingly, such amounts have
         been classified as long-term liabilities.

         Accounts Payable and Accrued Liabilities

         Accounts payable and accrued liabilities as of December 31, 2004 and
         2003 included $73,962 and $75,586 (see Note 8), respectively,
         representing unpaid salaries and interest thereon to an individual
         related to the President of the Company. Interest incurred on the debt
         to this individual during 2004 and 2003 was $3,988 and $3,904,
         respectively.

                                      F-14


<PAGE>



                         DIAPULSE CORPORATION OFAMERICA

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 2004 AND 2003


6        Related Party Transactions (continued)

         Interest

         Interest is charged on all amounts due to officer and other related
         parties the bank's current prime rate of 4% to 5.25%, plus one per-cent
         compounded monthly.

         Due from Related Parties

         One of the Company's directors, a son of the President, previously
         served as an independent sales representative for the Company and is
         now employed by the Company as a full-time employee. In addition,
         another son of the President also serves as an independent sales
         representative for the Company and is now employed by the Company as a
         full-time employee. Commissions and consulting fees earned by these
         individuals during 2004 and 2003 were approximately $16,270 and $67,629
         respectively.

         As of December 31, 2004 and 2003, the accumulated advanced commissions
         to these individuals were $36,253 and $41,697 respectively. These
         advances are guaranteed by the President of the Company, who has agreed
         to subordinate repayment of the amount due to him to the extent of the
         advances.

         Note Receivable, from Related Parties

         As of December 31, 2004 and 2003 the President of the Company repaid
         $14,778 and $20,240 of the commission advances and has agreed to repay
         $148,170 over the next eight years. The President of the company has
         issued nine notes to repay the sum of $162,948 plus interest at 5
         per-cent. There are eight equal payments, including interest of $22,925
         from the year ending December 31, 2005 to the year ending December 31,
         2012. The total amounts of the eight payments are $183,401.




                                      F-15


<PAGE>




                         DIAPULSE CORPORATION OFAMERICA

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 2004 AND 2003




7        Property and Equipment

         Property and equipment, at cost, at December 31, 2004 and 2003
         consisted of the following:

                                                  2004                2003
                                                  ----                ----

        Rental equipment                  $          51,280   $         51,280
        Autos                                        73,297             73,297
        Furniture and fixtures                       58,262             58,262
        Machinery and equipment                      10,019             10,019
        Office equipment                             25,012             23,816
        Computer equipment                           20,755             12,101
                                              --------------      -------------

           Total property and equipment             238,625            228,775

        Less accumulated depreciation               212,419            184,254
                                              --------------      -------------
                                          $          26,206   $         44,521
                                              ==============      =============

         The above schedule reflects the retirement of obsolete assets.



8        Accounts  Payable and Accrued Liabilities

         Accounts payable and accrued liabilities at December 31, 2004 and 2003
<TABLE>
<CAPTION>

                                                                2004                2003
                                                                ----                ----
<S>                                                     <C>                 <C>
        Accrued expenses and interest to related
                    party (see Note 6)                   $        73,962     $        75,586
        Accounts payable and other accrued liabilities           134,761             228,343
                                                             ------------        ------------
                                                         $       208,723     $       303,929
                                                             ============        ============

</TABLE>



                                      F-16


<PAGE>



                         DIAPULSE CORPORATION OFAMERICA

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 2004 AND 2003

9        Commitments

         The Company has a two-year operating lease on its premises located in
         Great Neck, New York through December 31, 2006 with an option to renew
         for two additional years. Minimum payments under the terms of the lease
         are listed below.

         Rent expense for the years ended December 31, 2004 and 2003 was
         $131,017 and $131,545 respectively.

                 Minimum rental payments are as follows:

                 Year Ending
                 December 31, 2005                   $       132,970
                 December 31, 2006                           136,959
                                                         ------------
                 Total commitment                    $       269,929
                                                         ============

10             Income taxes

         The annual provision (benefit) for income taxes for the years ended
         December 31, 2004 and 2003 consisted of the following:

                                                  2004                2003
                                                  ----                ----
         Federal
                        Current           $       (91,484)     $      (15,607)
                        Deferred                   (6,553)                --

         State
                        Current                       (52)               3,938
                        Deferred                   (2,809)                --
                                              -------------        ------------
                                          $      (100,898)     $      (11,669)
                                              =============        ============

         The reasons for the difference between the total tax provision and the
         amounts computed by applying the statutory Federal income tax rate to
         the income (loss) before income taxes are as follows:
<TABLE>
<CAPTION>

                                                                    2004                     2003
                                                                    ----                     ----
<S>                                                          <C>                       <C>
         Expected tax (benefit) including the effect of
           State taxes                                       $         (167,866)       $        (77,846)
         Deferred interest to officer and spouse                         36,968                  35,757
         Deferred salary payable to officer                              30,000                  30,420
                                                               ----------------         ---------------
                                                             $         (100,898)       $        (11,669)
                                                               ================         ===============
</TABLE>

                                      F-17


<PAGE>

                         DIAPULSE CORPORATION OFAMERICA

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 2004 AND 2003



10       Income Taxes (continued)


         Deferred tax assets at December 31, 2004, consisted of the following:

                                                                    2004
                                                                    ----
               Deferred tax assets:
                          Accrued salaries                $            240,000
                          Accrued interest                             250,547
                          Net operating loss                             1,862
                                                               ----------------
                Gross deferred tax assets                              492,409
                                                               ----------------

               Deferred tax assets valuation allowance                (492,409)
                                                               ----------------
                                                          $                  0
                                                               ================

         The Company has a Federal net operating loss carryforward of
         approximately $ 39,000 that expires in 2024.

         The Company has provided a valuation allowance of 100% of the deferred
         tax assets based on the uncertainty of realizing such benefit in the
         future.



                                      F-18


<PAGE>




                          DIAPULSE ORPORATION OFAMERICA

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 2004 AND 2003



 11      (Loss) Per Share

         The Company uses SFAS No. 128, "Earnings Per Share" ("EPS"). (Loss) per
         share is computed by dividing the (loss) by the weighted average number
         of common shares outstanding during the period.

<TABLE>
<CAPTION>

                                                       For The Year Ended 2003
                                 ---------------------------------------------------------------------
                                         (Loss)                Shares                     Per-Share
                                      (Numerator)           (Denominator)                  Amount

<S>                         <C>                                   <C>              <C>
        (Loss) Per Share    $              (253,108)              3,960,730        $          (0.06)
                                 ====================    =====================        ================


                                                       For The Year Ended 2004
                                 ---------------------------------------------------------------------
                                         (Loss)                Shares                     Per-Share
                                      (Numerator)           (Denominator)                  Amount

        (Loss) Per Share    $              (108,084)              3,960,730        $          (0.03)
                                 ====================      ===================        ================
</TABLE>

         All options outstanding during 2004 and 2003 were anti-dilutive and
         therefore not considered in the above computation.


12       Bank Line of Credit

         The Company has a line of credit with Bank of America for $200,000 due
         on demand. This line of credit charges interest at a rate of 1% above
         prime on all outstanding balances. There was no balance due as of
         December 31, 2004 or 2003. The President of the Company has guaranteed
         the line and has agreed to subordinate $977,350 of his loans to the
         Company. The bank also has a security interest in substantially all of
         the assets of the Company.


                                      F-19


<PAGE>



                         DIAPULSE CORPORATION OFAMERICA

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 2004 AND 2003



13       Advertising and Promotions

         Advertising and promotion expenses were approximately $17,298 and
         $3,117 in 2004 and 2003, respectively. Such costs are expensed as
         incurred.


14       Stock Options

         On March 27, 1997 the Company granted to the President an option to
         purchase an aggregate of 1,000,000 shares of common stock of the
         Company at the exercise price of $.50 per share for one year from March
         27, 1997, and if not exercised during that period, at $.65 per share
         from March 27, 1998 for the balance of the term of the option. The
         expiration date of the option is March 27, 2006.

         On March 29, 1997, the Company entered into an equipment purchase and
         stock agreement ("the agreement") with an independent sales
         representative whereby the Company sold $1,125,000 of equipment and
         granted the representative a stock option to purchase 100,000 shares of
         the Company's common stock at $1.00 per share, and 100,000 shares at
         $1.50 per share. These stock options must be exercised within 120 days
         after the market price of the stock is maintained for 30 days at a
         price of $5.00 per share for 100,000 shares, and $6.00 per share for
         the next 100,000 shares. The applicable rights are lost if the options
         are not exercised before the expiration of 120 days after the above
         prices are maintained for 30 days.






                                      F-20


<PAGE>

                         DIAPULSE CORPORATION OFAMERICA

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 2004 AND 2003


15       Litigation

         The Company was involved as plaintiff in litigation filed in August
         1994, alleging deceptive acts and practices, false advertising, unfair
         competition, breach of fiduciary duty under New York Law and under
         Federal Law. The complaint demanded damages in an unspecified amount
         for compensatory, punitive and treble damages, profits and attorneys'
         fees against corporate and individual defendants. In early 2000, a
         settlement agreement was reached whereby all claims against the Company
         were dismissed with prejudice and one of the Corporate defendants
         agreed to pay the Company the sum of $50,000 with interest at the rate
         of 9% per year, in level monthly installment payments of $1,786.41. The
         agreement further provided that in the event of failure to make the
         installment payments when due, the entire balance would immediately
         become due and payable and the Company would be entitled to enter
         judgment for the balance. The agreement also provided for the
         defendants to refrain from engaging in certain marketing practices in
         the future. The defendants failed to make any payments after the
         payment due on January 1, 2001 and in late 2001 a judgment for
         $39,215.61 was entered against the corporate defendant who had agreed
         to the monetary settlement. The Company attempted to enforce the
         judgment but was not aware of any assets owned by the judgment debtor.

         A former employee of the Company, who was terminated in May 1999, filed
         five small claim actions against the Company and other employees and an
         officer-shareholder of the Company. Most of the cases alleged various
         employment contract and or labor violations; some alleged liability for
         property allegedly held or used by the Company. All actions were
         instituted after the employee was terminated from employment. The
         claims were settled for the sum of $1,500 which was paid in full in the
         year ended December 31, 2003.

         A former independent contractor sued the Company for an amount in
         excess of $75,000 pursuant to a signed Commission Salesperson
         Agreement. In January 2003 the Company deposited $75,000 in escrow with
         its attorney as directed by an arbitration award. The company commenced
         a second, separate arbitration proceeding seeking the return of two
         machines held by the independent contractor and claiming loss of
         revenue on the two machines. The arbitrator granted the Company an
         award, which was confirmed by the court, which granted a money judgment
         for $1,265 and ordered the independent contractor to return the two
         machines and pay the Company an additional $5,000. The contractor
         violated the court order and was held in contempt. Judgment for
         $15,729.35 was entered against the contractor. The Company is not aware
         of any assets owned by the judgment debtor.

                                    F-21


<PAGE>

                         DIAPULSE CORPORATION OFAMERICA

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 2004 AND 2003


15       Litigation (continued)

         The Company filed a claim with one of its insurance carriers for loss
         of, and damage to, property that was being stored with a storage
         company. The insurance carrier paid the Company $25,000 for damages,
         removed and discarded the property. In September 2001, the storage
         company sued the Company for unpaid storage of approximately $80,000.
         The Company denies liability on the merits of the case and also has
         raised the statute of limitations as a partial defense. The Company
         countersued the storage company for $80,000 for damages done to their
         equipment. Since the Company recovered $25,000, the balance of $55,000
         was being sought through the courts for reimbursement. Both the storage
         company's suit and the Company's countersuit were dismissed in 2004.
         The Company's counsel has submitted additional papers to the court in
         an attempt to reinstate the countersuit.

16       New Authoritative Pronouncements

         In April, 2002, the Financial Accounting Standard Board issued FASB No.
         145 that modifies and rescinds various accounting statements, such as,
         a) rescinds FASB No. 4, which requires all gains and losses from
         extinguishment of debt to be classified as an extraordinary item, net
         of the tax effect, b) eliminates FASB No. 44, dealing with motor
         carriers covered by the Motor Carrier Act of 1980 and c) amends FASB No
         13 to require that certain lease modifications that have economic
         effects similar to sale-leaseback transactions be accounted for in the
         same manner as sale-leaseback transactions. In June 2002 the Financial
         Accounting Standard Board issued FASB No. 146. This statement applies
         to costs associated with an exit activity that does not involve an
         entity newly acquired in a business combination or with a disposal
         activity covered by FASB No. 144, accounting for the Impairment or
         Disposal of Long-Lived Assets.

         In January, 2003, the Financial Accounting Standards Board (FASB)
         issued interpretation No. 46, which clarifies when a company should
         consolidate in its financial statements the assets, liabilities and
         activities of a variable interest entity. FIN 46 provides general
         guidance as to the definition of a variable interest entity and
         requires a variable interest entity to be consolidated if a company
         absorbs the majority of the variable interest entity's expected losses,
         or is entitled to receive a majority of the variable interest entity's
         residual returns, or both.



                                      F-22


<PAGE>

                         DIAPULSE CORPORATION OFAMERICA

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 2004 AND 2003

16       New Authoritative Pronouncements (continued)

         In December 2003, FASB issued a revised interpretation of FIN 46 (FIN
         -R), which supercedes FIN 46 and clarifies and expands current
         accounting guidance for variable interest entities. FIN 46 and FIN 46-R
         are effective immediately for all variable interest entities created
         after January 31, 2003, and for variable interest entities prior to
         February 1, 2003, no later than the end of the first reporting period
         after March 15, 2004 We have performed a review of any entities created
         subsequent to January 31, 2003, and determined the adoption of FIN46
         and FIN 46-R did not have a material impact on the Company's financial
         reporting and disclosure.

         In April, 2003, FASB issued SFAS No. 149, "Amendment of Statement 133
         on Derivative instruments and Hedging Activities." SFAS No. 149 amends
         and clarifies accounting for derivative instruments including certain
         derivative instruments embedded in certain contracts, and for hedging
         activities under SFAS No.133. In particular, this statement clarifies
         under what circumstances a contract with a net investment meets the
         characteristic of a derivative and when a derivative contains a
         financing component that warrants special reporting in the statement of
         cash flows. The statement is generally effective for contracts entered
         into or modified after June 30, 2003. The adoption of SFAS No. 149 did
         not have a material impact on the Company's financial reporting and
         disclosures.

         In May, 2003, FASB issued SFAS No. 150, "Accounting for Certain
         Financial Instruments with Characteristics of Both Liabilities and
         Equities." SFAS No. 150 changes the accounting for certain financial
         instruments that, under previous guidance, could be classified as
         equity or "Mezzanine" equity by now requiring those instruments to be
         classified as liabilities (or assets in some circumstances) in the
         statement of financial position. Further, SFAS No. 150 requires
         disclosure regarding the items of those instruments and settlement
         alternatives. The guidance of SFAS No. 150 generally is effective for
         all financial instruments entered into or modified after May 31, 2003,
         and otherwise effective at the beginning of the first interim period
         beginning after June 15, 2003. We have evaluated SFAS No. 150 and
         determined that it does not have an impact on the Company's financial
         reporting and disclosures.

         In December, 2003, the Staff of the Securities and Exchange Commission
         (SEC) issued Staff Accounting Bulletin (SAB) No. 104, "Revenue
         Recognition," which supercedes SAB No. 101, "Revenue Recognition in
         Financial Statements." SAB No. 104's primary purpose is to rescind
         accounting guidance contained in SAB No.101 related to multiple element
         revenue arrangements and revises SEC's "Revenue Recognition in
         Financial Statements Frequently Asked Questions and Answers" that have
         been Codified in Topic 13. SAB No. 104 was effective immediately and
         did not have a material impact on the Company's financial reporting and
         disclosure.

                                      F-23


<PAGE>


                         DIAPULSE CORPORATION OFAMERICA

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 2004 AND 2003


16       New Authoritative Pronouncements (continued)

         In November 2004, the FASB issued SFAS No. 151, "Inventory Costs - an
         amendment to ARB No. 43." This statement provides guidance to clarify
         the accounting for abnormal amounts of idle facility expense, freight
         handling costs, and wasted material (spoilage), among other production
         costs. Provisions of ARB No. 43 stated that under some circumstances,
         items such as idle facility expense, excessive spoilage and other costs
         may be so abnormal as to require treatment as current period charges.
         This statement requires that those items be recognized as current
         period charges regardless of whether they meet the criterion of "so
         abnormal." In addition, SFAS No. 151 requires that allocation of fixed
         production overheads to the costs of conversion be based on the normal
         capacity of the production facilities. The provisions of this Statement
         will be applied prospectively during our fiscal year beginning after
         June 15, 2005. Adoption of the Statement is not expected to have a
         material impact on our financial statements.

         In November 2004, the FASB issued SFAS No. 152 "Accounting for Real
         Estate time-Sharing Transactions - An amendment of SFAS No. 66 and 67.
         This Statement amends SFAS No. 66. "Accounting for Sales of Real
         Estate," to reference the financial accounting and reporting guidance
         for real estate time-sharing transactions that is provided in AICPA
         Statement of Position (SOP) 04-2, Accounting for Real Estate
         Time-Sharing Transactions." This Statement also amends SFAS No. 67,
         "Accounting for Costs and Initial Rental Operations of Real Estate
         Projects," to state the guidance for (a) incidental costs and (b) costs
         incurred to sell real estate projects does not apply to real estate
         time-sharing transactions. The accounting for those operations and
         costs is subject to guidance in SOP 04-2. SFAS No. 152 is effective for
         financial statements for fiscal years beginning after June 15, 2005.
         Adoption of this Statement is not expected to have a material impact on
         our financial statements.

         In November 2004, the FASB issued SFAS No. 153, "Exchanges of
         Non-monetary Assets - an amendment to APBO No. 29." This Statement
         amends Accounting Principles Board Opinion ("APBO") No. 29 to eliminate
         the exception for non-monetary exchanges of similar productive assets
         and replaces it with a general exception for exchanges of non-monetary
         assets that do not have commercial substance. A non-monetary exchange
         has commercial substance if the future cash flows of the entity are
         expected to change significantly as a result of the exchange. This is
         effective for fiscal periods beginning after June 15, 2005. Adoption of
         this statement is not expected to have a material impact on our
         financial statements.





                                      F-24


<PAGE>



                                   SIGNATURES

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

                                            DIAPULSE CORPORATION OF AMERICA
                                                      Registrant

                                            By:      /s/ Jesse Ross
                                            -----------------------------------
                                            Jesse Ross - President



         Date: March 31, 2005


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

         Name of Capacity                                        Date
         ----------------------                                  --------
                                                                 March 31, 2005

         /s/ Jesse Ross
         -------------------------------------------
         Name:    Jesse Ross
         Title:   President, Director and
                  Chairman of the Board
                  (Principal Executive Officer
                  and Principal Financial and
                  Accounting Officer)