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, 2005
                          Commission files 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, 2006 as reported by an independent market maker: $4,754,470

Number of shares outstanding of each of the registrant class of common stock as
of March 31,2006: 3,962,058.

<PAGE>


                       DOCUMENTS INCORPORATED BY REFERENCE
                                      NONE



                                       2
<PAGE>


                         DIAPULSE CORPORATION OF AMERICA
                                   FORM 10-KSB
                      FOR THE YEAR ENDED DECEMBER 31, 2005
                                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

Item 10.          Executive Compensation

Item 11.          Security Ownership of Certain Beneficial Owners and Management

Item 12.          Certain Relationships and Related Transactions

                                    PART IV.

Item 13.          Exhibits, Financial Statements, and Reports on Form 8-K

Item 14.          Principal accountant fees and services


Signatures
   Financial Statements

                                       3
<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, 2005.

                  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 2005 and 2004,
                  approximately 21 % and 47 %, respectively, of 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,
                  2004 and 2005.


                                       4
<PAGE>

                  Employees - The registrant has thirty-six 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 has operating leases for real estate through
                  December 31, 2006. Minimum rental payments are $140,309 for
                  2006.

ITEM 3.           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
                  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 $1,867.41. 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 a 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 is currently attempting to enforce the
                  judgment but is not aware of any assets owned by the judgment
                  debtor.



                                       5
<PAGE>

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.


                                     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
                  asked closing sales prices are listed below.

                                       Quarter Ended

                        2005                              2004
       -----------------------------------   ---------------------------------
        3/31     6/30     9/30     12/31     3/31      6/30      9/30    12/31
        ----     ----     ----     -----     ----      ----      ----    -----
Bid:    $1.50   $1.20    $1.20      $.90    $1.25     $1.25     $1.50    $1.75


                  As of December 31, 2005, there were approximately 1,328
                  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 CONDITIONS
                  AND RESULTS OF OPERATIONS

                  Overview - During the fiscal year ended December 31, 2005, the
                  Registrant has been establishing and expanding its
                  distribution network, sales force and sales and rental
                  programs. Controlled and double-blind studies demonstrating
                  the clinical value of the Registrant's product have been
                  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
                  Center for Medicare and Medicaid (CMS) granted approval for
                  coverage of the Diapulse(R) Wound Treatment System(TM) in
                  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.


                                       6
<PAGE>

                  Net Revenues - During the year ended December 31, 2005
                  revenues decreased by $47,588, or 4 % as compared to the year
                  ended December 31, 2004. 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 reconsideration and is awaiting
                  decision by CMS.

                  Cost of Sales - During the year ended December 31, 2005, cost
                  of sales increased by $238,201 as compared to the year ended
                  December 31, 2004 due primarily to an increase in the sales of
                  machines.

                  Operating Expenses - Operating expenses, exclusive of
                  interest, decreased by $301,385 in 2005 as compared with 2004
                  due to a reduction in salaries and commissions.

                  Interest Expense - Interest expense from 2004 to 2005
                  increased by $79,233 due to an increase 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, 2005, the Registrant had working capital of
                  $374,716. Working capital as of December 31, 2004 was $587,268

                  The Registrant considers, and currently uses for internal
                  management purposes, a number of measures of liquidity. The
                  Company is expanding its distribution network to facilitate
                  the movement of its parts, components, sub-assemblies and
                  finished goods inventory to generate revenues. Also the
                  president of the Company has periodically made loans to the
                  Company and has been reimbursed. .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,
                                          2005                     2004
                                          ------------             ------------
                  Working Capital          $374,716                 $587,268
                  Current ratio            1.6 to 1                 2.9 to 1
                  Quick ratio              .93 to 1                1.86 to 1




                                       7
<PAGE>


ITEM 7.           FINANCIAL STATEMENTS

                  The financial statements to be provided pursuant to this Item
                  are included under Items F1 - F17 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 control and procedure as of December 31,
                  2005, are effective in timely alerting to material information
                  relating to the company required to be included in our
                  periodic 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 effect these controls.

                                    PART III

ITEM 9.           DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

                  The executive officers and key employees of the Company as of
                  March 31, 2006 were as follows:

                  Name                  Age          Title
                  ----                  ---          -----
                  Jesse Ross            84           President, Director and
                                                     Chairman of the Board

                  David M. Ross         58           Director

                  Howard Mann           70           Director





                                       8
<PAGE>


                  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 Director of the
                  Company during 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.

                             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, 2005, 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, 2005, 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, 2005. For the year ending December 31, 2005
                  the President deferred $100,000 of salary.



                                       9
<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>
Jesse Ross , President,     2005     0          0             -                0                 0
Director and                2004     0          0             -                0                 0
Chairman of the Board       2003     0          0             -                0                 0

</TABLE>

                   OPTION EXERCISES AND FISCAL YEAR-END VALUES

The following table sets forth information concerning option exercises and
option holdings for the fiscal year 2005 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 deferred 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, 2005.

                        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.




                                       10
<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.

                  As of December 31, 2005, the accumulated advance commission to
                  this individual was $36,253. These advances are guaranteed by
                  the President of the Company and he has agreed to subordinate
                  repayment of amounts due to him to the extent of the advances.

                  As of December 31, 2005, the amount of $69,492 has been owed
                  to an individual for outstanding salaries. This individual,
                  who is related to the president of the Company, has incurred
                  interest of $5,103 during 2005.

                                 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, 2005, 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.


                                       11
<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 10KSB and the reviews of
                  the financial statements on Form 10-QSB for the fiscal year
                  ended December 31, 2005 were approximately $41,045, and for
                  the year ended December 31, 2004 were approximately $38,000.

                  AUDIT RELATED FEES

                  There were no audit related fees by the principal accountants
                  for the years ended December 31, 2005 and 2004.

                  TAX FEES

                  The fees billed by our audit firm for the preparation of our
                  Corporate tax return for the year ended December 31, 2005,
                  were $1,500 and for the year ended December 31, 2004 were
                  $1,750.

                  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, 2005 and 2004.

                  The audit committee approved 100% of the fees paid to the
                  principal accountant for audit-related, tax and other fees.
                  The audit Committee pre-approved all non-audit services to be
                  performed by the auditor.

                                       12
<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, 2006

In accordance with the Securities 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 and Capacity                              Date
-----------------                              ----

/s/ Jesse Ross                                 March 31, 2006
--------------                                 --------------
Name:  Jesse Ross
Title: President, Director and
       Chairman of the Board


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

A copy of the Diapulse Corporation of America code of Professional Ethics can be
obtained upon request from the company free of charge.



                                       13



<PAGE>


                                     PART II

                         DIAPULSE CORPORATION OF AMERICA

                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004



                                    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-17




                                                            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, 2005 and the related statements of operations,
stockholders' deficiency and cash flows for each of the two-year periods ended
December 31,2005.  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, 2005 and the results of its operations and its cash flows for
each of the two-year periods ended December 31, 2005 in conformity with
accounting principles generally accepted in the United States of America.



                                                    GRANICK & GENDLER
                                                    Certified Public Accountants



New York, New York
March 23, 2006

                                       F-2

<PAGE>

                         DIAPULSE CORPORATION OF AMERICA

                                  BALANCE SHEET

                             AS OF DECEMBER 31, 2005


                                     ASSETS

<TABLE>
<CAPTION>


<S>                                                                             <C>
Current assets:
            Cash and cash equivalents                                           $      479,794
            Current portion of accounts receivable, net of
               allowance for doubtful accounts of $206,500                             120,333
            Inventory                                                                  360,824
            Commission advance                                                          27,278
            Other current assets                                                        30,839
                                                                                --------------

                             Total current assets                                    1,019,068

Property and equipment, net                                                             14,330
                                                                                --------------

Other assets:
            Accounts receivable, net of current portion                               144,650
            Commission advances to related parties                                      36,253
            Security deposits                                                           26,053
                                                                                --------------

                             Total other assets                                        206,956
                                                                                --------------

                             Total assets                                       $    1,240,354
                                                                                ==============

</TABLE>






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



                                       F-3

<PAGE>

                         DIAPULSE CORPORATION OF AMERICA

                            BALANCE SHEET (CONTINUED)

                             AS OF DECEMBER 31, 2005

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY


<TABLE>
<CAPTION>

<S>                                                                             <C>
Current liabilities:
            Current portion of notes payable to officer/ stockholder            $         210,737
            Accounts payable and accrued liabilities
                     Including $76,863 to related parties                                 232,559
            Accrued income tax and related interest                                         1,005
            Loans payable                                                                 200,051
                                                                                   --------------
                     Total current liabilities                                            644,352

Long-term portion of notes payable to officers/stockholders                             2,861,562
                                                                                   --------------

                     Total liabilities                                                  3,505,914
                                                                                   --------------

Commitments

Stockholders' deficiency
            Common stock, $.025 par value per share
                     authorized 15,000,000 shares, issued
                     3,962,058 shares
                                                                                           99,051
            Additional paid-in capital                                                  2,293,272
            Accumulated deficit                                                        (4,655,555)
                                                                                   --------------
                                                                                       (2,263,232)

    Less treasury stock, 1,328 shares at cost                                              (2,328)
                                                                                   --------------

                     Total stockholders' deficiency                                    (2,265,560)
                                                                                   --------------


                     Total liabilities and stockholders' deficiency              $      1,240,354
                                                                                   ==============
</TABLE>






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

                                       F-4


<PAGE>



                         DIAPULSE CORPORATION OF AMERICA

                            STATEMENTS OF OPERATIONS

                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
<TABLE>
<CAPTION>

                                                                                         2005                   2004
                                                                                         ----                   ----
<S>                                                                              <C>                       <C>
Revenue
Rental income                                                                    $         477,381         $      679,630
Sales of machinery                                                                         573,575                418,914
                                                                                    ---------------         --------------
            Total revenue                                                                1,050,956              1,098,544

Cost of sales and rentals                                                                  270,428                 32,227
                                                                                    ---------------         --------------

             Gross margin                                                                  780,528              1,066,317
                                                                                    ---------------         --------------

Operating expenses:
             Selling, general and administrative                                           882,788              1,203,395
             Provision for doubtful accounts                                                74,931                134,942
             Interest expense (principally to related parties)                             224,707                145,474
                                                                                    ---------------

                     Total operating expenses                                            1,182,426              1,483,811
                                                                                    ---------------         --------------

Loss from operations                                                                       401,898                417,494
Interest and other income                                                                   39,113                208,512
                                                                                    ---------------         --------------

Loss before income taxes                                                                   362,785                208,982
Income taxes (benefit)                                                                       1,735               (100,898)
                                                                                    ---------------         --------------

Net  loss                                                                        $         364,520       $        108,084
                                                                                    ===============         ==============

Basic and diluted loss per share                                                 $          (0.09)       $         (0.03)
                                                                                    ===============         ==============

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' DEFICIENCY

                      FOR THE YEAR ENDED DECEMBER 31, 2005

<TABLE>
<CAPTION>




                                Common Stock       Additional                                           Total
                                   Issued           Paid-In-    Accumulated   Treasury     Stock    Stockholders'
                            Shares       Amounts    Capital       Deficit      Shares     Amounts     Deficiency
                           ---------     -------   ----------    -----------     -----      -------   -----------
<S>                        <C>           <C>       <C>           <C>             <C>        <C>       <C>
Balance, January 1, 2004   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)

  Net (loss)                                                       (364,520)                             (364,520)

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

Balance, December 31, 2005 3,962,058     $99,051   $2,293,272    (4,655,555)     1,328      ($2,328)  ($2,265,560)
                           ---------     -------   ----------    -----------     -----      -------   -----------

</TABLE>





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

                                       F-6
<PAGE>

                         DIAPULSE CORPORATION OF AMERICA

                            STATEMENTS OF CASH FLOWS

                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004


<TABLE>
<CAPTION>
                                                                                    2005                    2004
                                                                                    ----                    ----

<S>                                                                          <C>                      <C>
   Operating activities:
         Net  Loss                                                           $        (364,520)       $       (108,084)
                                                                                --------------         ---------------

   Adjustments to reconcile net (loss) to net cash Provided by (used in)
         operating activities:
         Depreciation                                                                   13,374                  28,166
         Provision for losses on accounts receivable                                   206,500                 497,192
         Deferred salaries and accrued interest to officer                           1,246,326                 944,945

         Changes in assets and liabilities:
             Accounts receivable                                                      (218,664)               (532,624)
             Note receivable                                                           148,170                  14,778
             Inventories                                                               (95,771)                (70,202)
             Commission advances                                                       (11,252)                 (6,888)
             Other current assets                                                       (5,535)                (19,547)
             Security deposits                                                          (3,791)                   (421)
             Accounts payable and accrued liabilities                                 (908,920)               (791,975)
                                                                                --------------         ---------------

             Total adjustments                                                         370,437                  63,424

         Net cash provided by (used in) operating activities                             5,917                 (44,660)
                                                                                --------------         ---------------

   Net cash (used in) investing activities
              Capital expenditures                                                      (1,498)                 (9,850)
                                                                                --------------         ---------------

           Net cash (used in) investing activities                                      (1,498)                 (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)

                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004

<TABLE>
<CAPTION>

                                                                              2005                    2004
                                                                              ----                    ----

<S>                                                                               <C>                     <C>
Financing activities:
          Loans from officers                                                     110,737                 100,000
          Repayments of loans  to officers                                       (310,295)               (192,407)
          Loan from Bank                                                          200,051                     -
                                                                         ----------------       -----------------

          Net cash provided by (used in)  financing activities                        493                 (92,407)
                                                                         ----------------       -----------------
          Net increase (decrease) in cash                                           4,912                (146,917)

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

          Cash and cash equivalents, end of year                        $         479,794     $           474,882
                                                                         ================       =================



Cash paid during the years for:
           Interest                                                     $          31,816     $            28,712
                                                                                    1,694                   2,984
                                                                         ----------------       -----------------

</TABLE>



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


                                       F-8


<PAGE>

                         DIAPULSE CORPORATION OFAMERICA

                          NOTES TO FINANCIAL STATEMENTS


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 2005 and 2004 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 2005 and 2004, approximately
         21% and 47%, respectively, of revenue were from rentals to patients
         covered through Medicare (see Note 2). In 2005 and 2004 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>


     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.

         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.


                                      F-10


<PAGE>

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

<TABLE>
<CAPTION>

                                                       For The Year Ended 2004
                                                       -----------------------
                                            (Loss)               Shares               Per-Share
                                         (Numerator)         (Denominator)              Amount
<S>                                  <C>                          <C>                <C>
         (Loss) Per Share            $     (108,084)              3,960,730          $      (0.03)
                                     -------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                        For The Year Ended 2005
                                                        -----------------------
                                            (Loss)                Shares               Per-Share
                                          (Numerator)          Denominator)              Amount
<S>                                  <C>                          <C>                <C>
         (Loss) Per Share            $     (364.520)              3,960,730          $      (0.09)
                                     --------------------------------------------------------------
</TABLE>

         All options outstanding during 2005 and 2004 were anti-dilutive and
         therefore not considered in the above computation.

         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.

         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 full
         adoption of SFAS 123R will have no material impact on the financial
         statements.


                                      F-11

<PAGE>

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

         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.

         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.

         New Authoritative Pronouncements

         The Company does not anticipate the adoption of recently issued
         accounting pronouncements to have a significant impact on the Company's
         results of operations, financial position, or cash flows.

2.       Accounts Receivable

         Accounts receivable as of December 31, 2005, are summarized as follows:


         Gross receivables - Medicare                      $        354,120
         Gross receivables - Other                                  117,363
         Less allowance for doubtful accounts                      (206,500)
                                                            ---------------
         Net receivables                                   $        264,983
                                                            ===============

         Current portion of accounts receivable                     120,333
         Accounts receivable, net of current portion                144,650
                                                            ---------------
                                                           $        264,983
                                                            ===============


                                      F-12

<PAGE>

         The Company evaluates the accounts receivable by reviewing historic
         percentages of collections against billings. The historic percentage is
         used to determine the allowance for uncollectible accounts. When an
         account is deemed uncollectible, it is charged against the allowance.
         Additions to the allowance are charged against operations.


3         Inventories

         The components of inventories as of December 31, 2005 are summarized as
         follows:



         Parts, components and sub-assemblies                 $    307,750
         Finished goods                                             53,074
                                                               -----------
                                                              $    360,824
                                                               ===========

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, 2005 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.

6        Related Party Transactions

         Due to officer, (President) stockholder at December 31, 2005 are as
         follows:

         Current Portion
                Salaries                                  $      100,000

                Notes payable-due on demand                      110,737
                                                           --------------
                                                                 210,737

         Long term portion of notes payable               $    2,861,299
                                                           --------------

         Total                                            $    3,072,299
                                                           ==============

                                      F-13

<PAGE>

   6     Related party transactions (continued)

         These notes bear interest at a rate of prime plus 1%. The non current
         portion of these notes become due on January 2, 2007.

         The total interest charged to operations was $213,744 for 2005 and
         $148,654 for 2004

         Accounts payable and accrued liabilities as of December 31, 2005
         included $76,863 (see Note 8), 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 2005
         was $5,103.

  7      Property and Equipment

         Property and equipment, at cost, as of December 31, 2005 consisted of
         the following:



         Rental equipment                                 $           51,280
         Autos                                                        73,297
         Furniture and fixtures                                       58,262
         Machinery and equipment                                      10,019
         Office equipment                                             25,012
         Computer equipment                                           22,589
                                                             ---------------

            Total property and equipment                             240,459

         Less accumulated depreciation                               226,129
                                                             ---------------
                                                          $           14,330
                                                             ===============

           The above schedule reflects the retirement of obsolete assets.


8        Accounts Payable and Accrued Liabilities

         Accounts payable and accrued liabilities at December 31, 2005.


         Accrued expenses and interest to related
                     party (see Note 6)                   $           76,863
         Accounts payable and other accrued liabilities              155,696
                                                              --------------
                                                          $          232,559
                                                              ==============



                                      F-14


<PAGE>

9        Commitments

         The Company has operating leases for real estate through December 31,
         2006. Minimum payments under the terms of these leases are listed
         below.

         Rent expense for the years ended December 31, 2005 and 2004 were
         $140,719 and $131,070, respectively.

              Minimum rental payments are as follows:
              Year Ending
              December 31, 2006                              $     141,309
                                                              ------------
              Total commitment                               $     141,309
                                                              ============

10       Income taxes

         The annual provision (benefit) for income taxes for the years ended
         December 31, 2005 and 2004 consisted of the following:

                                          2005                   2004
                                          ----                   ----
         Federal
                 Current           $             0          $       (91,484)
                 Deferred                    1,215                   (6,553)

         State
                 Current                         0                      (52)
                 Deferred                      520)                  (2,809)
                                   ---------------          ---------------
                                   $         1,735          $      (100,898)
                                   ===============          ===============

         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:

                                                     2005             2004
                                                     ----             ----
          Expected tax (benefit) including
            the effect of State taxes          $       (85,128) $      (167,866)
          Deferred interest to officer                  56,863           36,968
          Deferred salary payable to officer            30,000           30,000
                                               ---------------  ---------------
                                               $         1,735  $      (100,898)
                                               ===============  ===============



                                      F-15

<PAGE>

10       Income Taxes (continued)

         Deferred tax assets at December 31, 2005, consisted of the following:


                Deferred tax assets:
                          Accrued salaries                 $       270,000
                          Accrued interest                         303,420

                                                            --------------
                Gross deferred tax assets                          573,420
                                                            --------------

                Deferred tax assets valuation allowance           (573,420)
                                                            --------------
                                                           $            0
                                                            ==============

         The Company has a Federal net operating loss carry forward of
         approximately $11,000 that expires in 2025.

         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.

11       Bank Line of Credit

         The Company has a line of credit with Bank of America for $200,000 for
         which the Company owes the full amount with interest of 1% above prime.
         The President of the Company has guaranteed the line and has agreed to
         subordinate a portion of his loans to the Company. The bank also has a
         security interest in substantially all of the assets of the Company.


12       Advertising and Promotions

         Advertising and promotion expenses were approximately $ 3,497 and
         $17,298 in 2005 and 2004, respectively. Such costs are expensed as
         incurred.


                                      F-16
<PAGE>


13       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, 2008.

         On March 29, 1997, in connection with the sale of equipment, 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
         options lapse if they are not exercised before the expiration of 120
         days after the above prices are maintained for 30 days.

14       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 complainant 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.



                                      F-17

<PAGE>





                         DIAPULSE CORPORATION OFAMERICA

                     YEARS ENDED DECEMBER 31, 2005 AND 2004



                                   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, 2006


         In accordance with the Securities 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, 2006
         /s/ Jesse Ross
         -------------------------------------------
         Name:    Jesse Ross
         Title:   President, Director and
                  Chairman of the Board
                  (Principal Executive Officer
                  and Principal Financial and
                       Accounting Officer)