**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-KSB**





[X]
      Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
      of
      1934 for the fiscal year ended June 30, 2006


**Commission
      File Number: 333-119930**





**ALPHA
      MOTORSPORT, INC.**


(Name
      of
      Small Business Issuer In Its Charter)





Nevada  20-1063591


State
      or
      other
      jurisdiction                    
 (I.R.S. Employer


of
      incorporation or
      organization               
Identification No.)





40 12th Street


New
      Westminster, BC
      Canada V3M
      4H2


(Address
      of principal executive
      offices)                                                              (Zip
      Code)





604-525-3380


(Issuer's
      Telephone Number)





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 $0.001





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





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained herein, 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]




Gross
      revenues for the fiscal year ended June 30, 2006 were $302,171.





Indicate
      whether by mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). YES X NO
      __





As
      of
      June 30, 2006, there were a total of 30,000,000 shares of registrant's $0.001
      par value common stock (registrant's only outstanding class of voting
      securities) issued and outstanding, 20,000,000 of which were held by
      non-affiliates. The aggregate market value of the common stock held by
      non-affiliates, computed by reference to the closing price on September 26,
      2006
      ($0.51 per share), is **** $10,200,000.





Some
      exhibits required to be filed hereunder, are incorporated herein by reference
      to
      registrant's original Form SB-2 Registration Statement, filed under CIK No. 0001305748 on
      October 24, 2004, on the SEC website at www.sec.gov.





Transitional
      Small Business Disclosure Format: Yes No X





Large
      Accelerated Filer ____ Accelerated Filer ____ Non-Accelerated
      Filer X










1


**PART
      I**


**Item
      1. Business**





***General
      Information***





Alpha
      Motorsport, Inc. was incorporated in the State of Nevada on April 28, 2004.
      We
      are engaged in the business of wholesale and retail sales of used vehicles.
      On
      May 13, 2004, we formed Alpha Motorsport, Inc., a British Columbia corporation,
      which is our wholly-owned subsidiary and which is conducting all of our
      operations in Canada. At June 30, 2006, we had an accumulated deficit of $55,765
      since inception. We have been issued a "substantial doubt" going concern opinion
      from our auditors. We are continuing to purchase inventory, sell vehicles and
      generally expand our business operations.





We
      are a
      Nevada corporation and, as such, are subject to the jurisdiction of the State
      of
      Nevada and the United States courts for purposes of any lawsuit, action or
      proceeding by investors herein. An investor would have the ability to effect
      service of process in any action on the company within the United States. In
      addition, we are registered as a foreign corporation doing business in Canada
      and are subject to the local laws of Canada governing investors ability to
      bring
      actions in foreign courts and enforce liabilities against a foreign private
      issuer, or any person, based on U.S. federal securities laws. Generally, a
      final
      and conclusive judgment obtained by investors in U.S. courts would be recognized
      and enforceable against us in the Canadian courts having jurisdiction without
      reexamination of the merits of the case.





***Overview
      of Business Operations***





Having
      been in the automobile/truck sales industry for a combined total of over 30
      years, our Management feels there is a need in British Columbia for quality
      used
      cars and trucks at competitive prices. The population of British Columbia is
      rapidly increasing and that, combined with the increased cost of living expense,
      makes new cars unaffordable for many families. As a result, we feel quality
      used
      vehicles are in high demand. Our Management is relying on their previously
      established relationships with the following local dealers and auction houses
      in
      an effort to acquire reliable vehicles at a reasonable price and pass the
      savings on to our customers:





-
      -
      Langley Mazda (new car dealer)


-
      - Brown
      Bros. Ford (new and used car dealer)


-
      - S-232
      Holdings (wholesale vehicle broker)


-
      -
      Weymouth Enterprises (used car dealer)


-
      -
      Canadian Auction Group (used vehicle liquidator)





We
      feel
      that we offer something different and unique in the automobile industry to
      our
      customers - an easy, convenient car buying experience, which is not what is
      generally the case at automobile dealerships or used car lots. Rather than
      immediately converging on a potential customer, we allow the customers to walk
      around our lot and come to us if they wish to test drive or inquire about a
      vehicle. We do not implement any "hard sell" sales tactics. We also fully cater
      to our customers needs, thereby taking the hassle out of buying a used vehicle.
      As such, if a customer would like a specific type of vehicle or color, we make
      every attempt to locate that vehicle for them through our established dealer
      relationships, surrounding areas or via the internet.





We
      are
      confident our professional "worry free" service will bring customers back time
      and again, as well as allow them to confidently refer us to their friends and
      family members for their used car/truck buying needs. Our main goal is to keep
      customers satisfied so they return and refer their friends and family members
      to
      us. We provide a 30-day vehicle warranty on every used vehicle we sell that
      covers any mechanical problems that may arise during the first 30 days. Any
      vehicle with mechanical difficulty or failure within the 30 days is repaired
      at
      no charge to the customer.





2


It
        is
        well known that the automobile sales industry is cyclical, with the sales
        of
        certain types of vehicles peaking at certain times of the year. For example,
        SUV's and rugged, 4-wheel drive vehicles generally sell





In
      order
      to profitably succeed in this business, we feel we must:





-
      -
      Establish a network of wholesalers we can trust to purchase quality used cars
      and trucks from


-
      -
      Ensure customer satisfaction by encouraging the two most important values in
      our
      sales agents and policies: honor and integrity


-
      -
      Provide a "hassle free" experience for our customers


-
      - Stock
      a wide range of reliable vehicles and trucks





***Suppliers
      and Acquisition of Inventory***





We
      buy
      vehicles wholesale from other dealers and at auto auctions. We try to maintain
      a
      diverse stock of vehicles, providing a wide selection to our customers. Vehicles
      are purchased on an as-needed and as-available basis to add to our inventory.
      We
      have approximately 8-12 quality used vehicles available for resale on our lot
      at
      all times. Each vehicle we purchase for retail resale is inspected by a mechanic
      and we all repairs required to ensure the vehicle is road worthy prior to sale.
      We contract the services of a local auto shop to inspect our vehicles; however,
      once we have established our operations and funds allow, we intend to hire
      one
      or more mechanics, as needed, to perform our own inspections and repairs. The
      purchaser of our vehicles is given the opportunity to review our certified
      inspection records prior to purchasing a vehicle. Our wholesale vehicles do
      not
      require a mechanical inspection, as other dealers purchase the wholesale
      vehicles from us on an "As Is" basis.





We
      retail
      and wholesale all types of vehicles from small cars to big trucks. We try to
      cater to each customer individually, in order to satisfy their needs, meaning
      that if we do not have the type of vehicle in our inventory that a customer
      is
      looking for, we will go out and find that vehicle for them. We buy our vehicles
      at the wholesale level in order to be able to pass the savings on to our
      customers. Each vehicle we retail is inspected by a mechanic and the customer
      is
      given that inspection prior to purchase.





Our
      primary source for buying used vehicles are local dealers who wholesale some
      of
      their stock to reduce their large used car inventories. We purchase these
      vehicles, as well as vehicles from local auto auctions, to keep a surplus
      inventory. Our Management has established relationships with several local
      dealerships; however, we have not entered into any written or verbal agreements
      with any of them.





We
      continually search for and purchase additional vehicles to place on our lot
      for
      inventory and always attempt to purchase a wide variety of vehicles to attract
      all types of potential customers. The majority of our vehicles are priced
      between $2,500 and $8,000 per vehicle; however, we also have a few higher end
      vehicles on our lot. There is a far greater profit margin in the lower end
      vehicles rather than the higher end vehicles, so we attempt to purchase and
      keep
      lower price used vehicles in our inventory.





Our
      pricing strategy is based on competitive Canadian Gold Book values (between
      wholesale and retail prices). We do not exceed competitive retail prices, and
      attempt to sell at wholesale cost, plus a fair profit, generally around 20%.
      We
      feel the quality and price say a lot about our vehicles and hope to build a
      repeat business and good reputation based on these factors through word of
      mouth
      and advertising. Based on the experience of our Management in the used car/truck
      sales industry, the average industry mark-up for used vehicles has generally
      been 30-35%. Based on those assumptions, we are able to show our customers
      that
      they are saving a substantial amount when buying a vehicle from us.








3


***Website
      Development***





We
      have
      developed our website with the assistance of an outside website developer at
      a
      total cost of $800 US and the website is currently operational at
      http://www.alphamotorsportinc.com. Our prospective customers can view our
      inventory online and get detailed information about each vehicle, including
      price, mileage, accident history, mechanic reports and owner history. We are
      currently researching the costs to strategically place our website on several
      different search engines but have not yet entered into any contracts or
      agreements with any parties. We are also listing our website address in flyers
      and newspaper advertising in an attempt to more widely advertise our vehicles
      and business operations.





***Sales
      & Marketing***





We
      use
      several different avenues to introduce our business and market our
      inventory:





1.
      Newspaper advertisements in the local BC newspapers


2.
      Advertisements in the smaller, free newspapers that are delivered door to door
      and handed out at supermarkets and quick stores


3.
      Photo
      ads in the widely distributed Auto Trader magazine


4.
      Flyers
      on vehicles throughout the local areas


5.
      Larger
      newsprint ad in the local Buy & Sell paper





***Business
      Ethic and Warranties***





Used
      car
      dealers are notorious for unethical sales practices. As a result of this,
      customers are inherently cautious and untrusting. The more we can provide an
      honest, hassle free sales experience, the more successful we feel we will be.
      We
      follow up and ensure customer satisfaction because we rely on these customers
      for an excellent reference to other potential buyers. We fully understand the
      need for an excellent working relationship with our suppliers and customers
      and
      intend to continue to develop the same.





We
      provide each purchaser with a 30-day warranty on all parts and labor should
      any
      mechanical problems develop after purchase of a vehicle. All work is performed
      by third-party mechanics and paid for by us; however, because all vehicles
      are
      thoroughly inspected and tested prior to purchase, we don't anticipate and
      have
      not yet had any warranty claims.





***Competition***





The
      used
      car resale industry is intensely competitive with respect to quality, service
      and price. In addition, there are many well-established competitors in the
      areas
      we intend to do business, with greater financial and other resources, including
      but not limited to established businesses and loyal customers. Our closest
      similar competitors are Kabani Holdings, which is located in the same automobile
      compound area that we are and is our landlord. Prime Auto, Softy's Auto Sales,
      Key West Auto and My First Car Automotive, all situated and located relatively
      close to our new facility. The primary competitors will be Kabani Holdings
      and
      Key West Auto. Kabani Holdings is a well established used car dealer with over
      100 units in inventory at all times. Key West Auto is also very well
      established, but they tend to sell more trucks and vans as opposed to cars.
      The
      other dealers listed are small and tend to have a limited supply of vehicles
      for
      sale. In Canada, auto malls containing competitive auto dealers are common.
      Prospective buyers enjoy the experience of shopping in one "auto mall" area,
      rather than driving all over town to find the vehicle they are looking for.
      We
      try to specialize in quality used cars at competitive prices. Most of the other
      dealers in the auto mall area operate in are new car dealers, who carry some
      used vehicles at higher prices than we keep in our inventory.





***Raw
      Materials and Supplies***





We
      do not
      use, nor do we expect to use any raw materials in our business
      operations.


4





***Patents
      and Trademarks***





We
      do not
      have any patents or trademarks.





***Government
      and Industry Regulation***





Our
      business operations are subject to licensing and regulation by provincial and
      local authorities applicable to the sale of used cars. In October, 2004, we
      obtained our Motor Dealer's License and Business Permit. Because all of our
      inspections and mechanical work are currently done by outside third parties,
      we
      are not subject to any environmental or safety rules, regulations or licensing.
      No other licensing is required. However, if any additional licenses are required
      or are implemented in the future, we intend to fully comply with any such
      licensing and regulation applicable to the conduct of our business
      operations.





***Employees
      and Employment Agreements***





At
      present, we have no employees other than our three officers and directors.
      We
      have one independent contractor, Kel Phillips, who is our wholesale buyer and
      who works on an as-needed basis. Mr. Phillips is paid
      on a
      commission only basis, equal to 45% of the profits on any of his vehicles that
      are sold. Vincent Markovitch devotes full time to our business operations and
      John Markovitch Sr. and John Markovitch Jr. each devote part time, or
      approximately 20 hours per week to our business. None of our officers and
      directors are presently compensated for their services at this time, nor do
      we
      have employment agreements with them. We presently do not have pension, health,
      annuity, insurance, stock options, profit sharing or similar benefit plans;
      however, we may adopt such plans in the future. There are presently no personal
      benefits available to any officers, directors or employees.





***Risk
      Factors***




Our
      securities are highly speculative and involve a high degree of risk, including
      among other items the risk factors described below. You should carefully
      consider the following risk factors and other information in this 10-KSB before
      deciding to invest in us.




*Due
      to Our History of Operating Losses, We are Uncertain That We Will Be Able to
      Maintain Sufficient Cash to Accomplish Our Business
      Objectives*




The
      consolidated financial statements have been prepared assuming that we will
      continue as a going concern. During the fiscal years ended June 30, 2006 and
      2005 we suffered net losses of $24,952 and $26,404, respectively. At June 30,
      2006, our stockholders' equity was $54,578 and ($18,400), respectively. There
      is
      no assurance that we can successfully continue to compete in the used vehicle
      sales industry or that we will be able to successfully generate revenues to
      sustain future operations and become profitable.





*The
      used car/truck sales industry is highly competitive and if our vehicles are
      not
      well received and/or successful, we may be unable to generate revenues, which
      could result in a total loss of any investment you make in our securities.*





The
      used
      car/truck sales industry is highly competitive with respect to pricing, service,
      quality and location and, as a result, has a high failure rate. There are
      numerous well-established competitors, including national, regional and local
      established and reputable dealerships, possessing substantially greater
      financial, marketing, personnel and other resources than our company. There
      is
      no guarantee that we will be able to continue to successfully compete with
      the
      established used car/truck dealerships and generate revenues to sustain our
      business operations. In addition, the used car/truck sales industry is also
      generally affected by changes in consumer preferences, national, regional and
      local economic conditions, and demographic trends. If we are not successful
      in
      locating cars that will be well received and purchased by the public, we will
      be
      unable to generate any revenues and our business plans would fail. In any such
      event, you could suffer a loss of any investment you make in our
      securities.


5





*The
      loss of our current management would make it very difficult for us to continue
      our proposed business plans.*




Investors
      must rely upon the ability, expertise, judgment, discretion, integrity and
      good
      faith of our management and directors. Our success is highly dependent on our
      current management, key personnel and key consultants. The unexpected loss
      or
      departure of any of these parties could be detrimental to our future success.
      We
      do not maintain key man insurance on our management.





*We
      are subject to the many risks of doing business internationally ,including
      but
      not limited to the difficulty of enforcing liabilities in foreign
      jurisdictions.*





We
      are a
      Nevada corporation and, as such, are subject to the jurisdiction of the State
      of
      Nevada and the United States courts for purposes of any lawsuit, action or
      proceeding by investors herein. An investor would have the ability to effect
      service of process in any action on the company within the United States. In
      addition, we are registered as a foreign corporation doing business in Canada
      and are subject to the local laws of Canada governing investors ability to
      bring
      actions in foreign courts and enforce liabilities against a foreign private
      issuer, or any person, based on U.S. federal securities laws. Generally, a
      final
      and conclusive judgment obtained by investors in U.S. courts would be recognized
      and enforceable against us in the Canadian courts having jurisdiction without
      reexamination of the merits of the case. Since all of our officers and
      directors, and certain experts we use all reside outside the United States,
      substantially all or a portion of the assets of each are located outside the
      United States. As a result, it may not be possible for investors to effect
      service of process within the United States upon such persons or to enforce
      against them judgments obtained in United States courts predicated upon the
      civil liability provisions of the federal securities laws of the United
      States.





*Buying
      low-priced penny stocks is very risky and speculative.*





Shares
      of
      common stock in our company are defined as a “penny stock” under the Securities
      and Exchange Act of 1934, and rules of the Commission. The Exchange Act and
      such
      penny stock rules generally impose additional sales practice and disclosure
      requirements on broker-dealers who sell our securities to persons other than
      certain accredited investors who are, generally, institutions with assets in
      excess of $5,000,000 or individuals with net worth in excess of $1,000,000
      or
      annual income exceeding $200,000, or $300,000 jointly with spouse), or in
      transactions not recommended by the broker-dealer. For transactions covered
      by
      the penny stock rules, a broker-dealer must make a suitability determination
      for
      each purchaser and receive the purchaser's written agreement prior to the sale.
      In addition, the broker-dealer must make certain mandated disclosures in penny
      stock transactions, including the actual sale or purchase price and actual
      bid
      and offer quotations, the compensation to be received by the broker-dealer
      and
      certain associated persons, and deliver certain disclosures required by the
      Commission. Consequently, the penny stock rules may affect the ability of
      broker-dealers to make a market in or trade our common stock and may also affect
      your ability to resell any shares you may purchase in this offering in the
      public markets. As a result, you may never be able to sell any shares you
      purchase in this offering.





*Our
      officers and directors and their affiliates may continue to exercise significant
      control over our operations.*





Our
      executive officers and directors own approximately 33% of our issued and
      outstanding common stock. In addition, since we only sold shares of stock in our
      initial public offering to our friends, family members and acquaintances, we
      may
      have substantial influence in how those shareholders vote on future corporate
      matters. These stockholders may have individual interests that are different
      from other minority stockholders and if they vote with us on proposed matters,
      we would be able to exercise significant control over all matters


requiring
      stockholder approval, including the election of directors, approval of
      significant corporate transactions,
      a change in control of the company or other matters that could affect your
      ability to ever resell your
      shares.





*Future
      sales of our common stock may cause our stock price to
      decline.*





Our
      stock
      price may decline by future sales of our shares or the perception that such
      sales may occur. If we issue additional shares of common stock in any private
      financings under an exemption from the registration laws, then those shares
      will
      constitute "restricted shares" as defined in Rule 144 under the Securities
      Act
      of 1933 (the "Act"). The restricted shares may only be sold if they are
      registered under the Act, or sold under Rule 144, or another exemption from
      registration under the Act. Some of our outstanding restricted shares of common
      stock are either eligible for sale pursuant to Rule 144 or have been registered
      under the Act for resale by the holders. We are unable to estimate the amount,
      timing, or nature of future sales of outstanding common stock. Sales of
      substantial amounts of our common stock in the public market may cause the
      stock's market price to decline. See "Market for the Registrant's Common stock
      and Related Stockholder Matters - Market Information."




*We
      do not expect to pay dividends.*




We
      have
      not paid dividends since inception on our common stock, and we do not
      contemplate paying dividends in the foreseeable future in order to use all
      of
      our earnings, if any, to finance expansion of our business plans.





*Our
      stock price can be extremely volatile.*




Our
      common stock is traded on the OTC Bulletin Board. As a result, an investor
      may
      find it more difficult to dispose of, or to obtain accurate quotations as to
      the
      market value of, the common stock. There can be no assurance that an active
      public market will continue for the common stock, or that the market price
      for
      the common stock will not decline below its current price. Such price may be
      influenced by many factors, including, but not limited to, investor perception
      of us and our industry and general economic and market conditions. The trading
      price of the common stock could be subject to wide fluctuations in response
      to
      announcements of our business developments or those of our competitors,
      quarterly variations in operating results, and other events or factors. In
      addition, stock markets have experienced extreme price volatility in recent
      years. This volatility has had a substantial effect on the market prices of
      companies, at times for reasons unrelated to their operating performance. Such
      broad market fluctuations may adversely affect the price of our common
      stock.





6


**Item
      2. Properties**





We
      do not
      currently own any property. We have entered into a lease agreement with Kabani
      Holdings Ltd., an unrelated third party, to lease office space consisting of
      approximately 3000 sq. ft. in New Westminster B.C. The space is sufficient
      to
      hold a maximum of 15 vehicles, which is what we intend to keep on our lot for
      at
      least the first 12 months of operations. At such time as we outgrow the space
      and can afford to expand, we will begin looking for larger space; however,
      at
      this time, no such expansion is planned. The lease term is for a minimum period
      of six months at a monthly rental rate of approximately $1800 Cdn.($1,449 US)
      plus 10% utilities per month. The lease term commenced on October 1, 2004.
      We
      conduct all of our business operations from this location.





**Item
      3. Legal Proceedings**





We
      currently have no pending or threatened legal proceedings against
      us.





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





None.





**PART
      II**





**Item
      5. Market for Registrant's Common Equity, Related Stockholder Matters, and
      Issuer Purchases of Equity Securities.**





***Market
      Information***




The
      Issuer's Common stock is traded on the NASD OTC Bulletin Board under the symbol
      AAMS. The following table sets forth the high and low closing prices of the
      Common stock during the periods indicated (since a public trading market
      commenced) as reported by Nasdaq. The quotations below reflect inter-dealer
      prices, without retail mark-up, mark-down or commission and may not represent
      actual transactions.





OTC
                Bulletin Board®
            ***Quarterly
                Trade and Quote Summary Report******AAMS
                - ALPHA MOTORSPORT INC*****BID**
            **ASK**
            **PRICE****END
                DATE**
            **HIGH**
            **LOW**
            **CLOSE**
            **HIGH**
            **LOW**
            **CLOSE**
            **HIGH**
            **LOW**
            **CLOSE**
            **VOLUME**6/30/2006
            5.25
            0.06
            0.4
            2.00
            0.6
            0.6
            7.5
            0.4
            0.6
            
            3,374,2703/31/2006
            0.57
            0
            0.51
            2.00
            0
            5.00
            0
            0
            0
            
            012/30/2005
            0
            0
            0
            0
            0
            0
            0
            0
            0
            
            09/30/2005
            0
            0
            0
            0
            0
            0
            0
            0
            0
            
            0





Our
      securities were listed for trading on 9/19/05 under the stock symbol AA0R,
      but
      there was a limited market until we but did a 10 for 1 forward split on
      04/27/2006. At that time, the original trading symbol was changed to AAMS. The
      closing price of the common stock as reported by Nasdaq on September 26, 2006,
      was $0.51 per share.




***Holders***




As
      of
      September 26, 2006, there were 35 holders of common stock, who collectively
      held
      30,000,000 issued and outstanding shares of our common stock.





***Dividends***




We
      did
      not declare or pay cash or other dividends on our common stock during the last
      two fiscal years. We currently have no plans to pay any dividends, although
      we
      may decide to do so at some time in the future if our financial position
      changes.




***Equity
      Compensation Plans***




We
      have
      not adopted any equity compensation plans. There were no stock options issued
      or
      outstanding at June 30, 2006.





***Recent
      Sales of Unregistered Securities***




On
      August
      5, 2005, we completed out initial public offering of 2,000,000 (20,000,000
      post
      split) shares of our common stock for $0.05 per share. All shares were sold
      to
      friends, family members, business and personal acquaintances of our officers
      and
      directors. The offering was registered on Form SB-2 with the U.S. Securities
      and
      Exchange Commission and sold pursuant to the terms of the registration
      statement, which can be found in its entirety on the SEC website at www.sec.gov .





There
      were no other unregistered equity securities sold during the fiscal year ended
      June 30, 2006.




7


***Other***





On
      April
      11, 2006, the board of directors of our company approved a ten (10) for one
      (1)
      forward stock split (the "Forward Stock Split") of our authorized, issued and
      outstanding common stock. The Forward Stock Split was effective with the
      Secretary of State of Nevada on April 25, 2006. As a result, our authorized
      capital increased from 75,000,000 shares of common stock with a par value of
      $0.001 to 750,000,000 shares of common stock with a par value of $0.001. Our
      issued and outstanding share capital increased from 3,000,000 shares of common
      stock to 30,000,000 shares of common stock.





***Stock
      Transfer Agent***





The
      stock
      transfer agent for our securities is Holladay Stock Transfer, 2939 N. 67th
      Place, Scottsdale, Arizona 85251, telephone (480) 481-3940.





**Item
      6. Management's Discussion and Analysis of Financial Condition and Results
      of
      Operations**





***Forward-looking
      Statements***





This
      annual report, including the following management's discussion and analysis,
      and
      other reports filed by us from time to time with the Securities and Exchange
      Commission (collectively the "filings") may contain forward-looking statements
      which are intended to convey our expectations or predictions regarding the
      occurrence of possible future events or the existence of trends and factors
      that
      may impact our future plans and operating results. These forward-looking
      statements are derived, in part, from various assumptions and analyses we have
      made in the context of our current business plan; with information currently
      available to us; and in light of our experience and perceptions of historical
      trends, current conditions and expected future developments; as well as other
      factors we believe to be appropriate in the circumstances. You can generally
      identify forward-looking statements through words and phrases such as "seek",
      "anticipate", "believe", "estimate", "expect", "intend", "plan", "budget",
      "project", "may be", "may continue", "may likely result" and other similar
      expressions. When reading any forward-looking statement, you should remain
      mindful that all forward-looking statements are inherently uncertain, as they
      are based on current expectations and assumptions concerning future events
      or
      future performance of our company, and are subject to risks, uncertainties,
      assumptions and other factors relating to our industry and results of
      operations, including but not limited to the following factors:





·
            whether
                a market for our products will continue to grow and, if it does,
                the pace
                at which it may grow;


·
            our
                ability to attract and retain the personnel qualified to implement
                our
                growth strategies,


·
            our
                ability to obtain approvals from government authorities for our business
                operations, if and when needed;


·
            our
                ability to fund our short-term and long-term financing
                needs;


·
            our
                ability to compete against large competitors in a rapidly changing
                market;


·
            changes
                in our business plan sand corporate strategies;
                and


·
            other
                risks and uncertainties discussed in greater detail in various sections
                of
                this report.





Should
      one or more of these risks or uncertainties materialize, or should the
      underlying assumptions prove incorrect, actual results may differ significantly
      from those anticipated, believed, estimated, expected, intended or planned.
      Each
      forward-looking statement should be read in context with, and with an
      understanding of, the various other disclosures concerning our company and
      our
      business made in our filings. You should not place undue reliance on any
      forward-looking statement as a prediction of actual results or developments.
      We
      are not obligated to update or revise any forward-looking statement contained
      in
      this report to reflect new events or circumstances unless required by applicable
      law.











8


***Results
      of Operations***





For
      the
      fiscal year ended June 30, 2006, we generated total gross revenues of $302,171,
      less cost of sales in the amount of $245,527, for a gross margin of $56,644,
      as
      compared to a gross margin of $25,947 for the fiscal year ended June 30,
      2005.





For
      the
      fiscal year ended June 30, 2006, we incurred a net operating loss of $24,952,
      as
      compared to a net loss of $26,404 for the fiscal year ended June 30, 2005.
      The
      net loss for the year ended June 30, 2006 consisted of general and
      administrative expenses in the amount of $23,989, office and miscellaneous
      expenses in the amount of $23,572, professional and filing fees paid to
      non-related third parties in the amount of $12,193 and management fees in the
      amount of $21,842, paid to our President.





We
      incurred no research and development expenses during the fiscal years ended
      June
      30, 2006 or 2005.





***Liquidity
      and Capital Resources***





We
      expect
      our current cash in the bank of $42,496 at June 30, 2006, plus revenues we
      expect to continue to derive from business operations to satisfy cash
      requirements for at least the next 12 months without having to raise additional
      funds or seek bank loans.





We
      do not
      intend to purchase any significant property or equipment, nor incur any
      significant changes in employees during the next 12 months.





Net
      cash
      provided by financing activities for the year ended June 30, 2006 was $33,000,
      consisting of $9300 received from the sale of shares in our initial public
      offering, less repayment of an outstanding loan payable in the amount of $60,000
      from unrelated third parties used to implement our business plans.





There
      was
      no cash used in investing activities for the year ended June 30,
      2006.





Our
      net
      loss for the year ended June 30, 2006 was $24,952.





We
      anticipate no material commitments for capital expenditures in the near term,
      other than continuing to purchase inventory for resale. Management is not aware
      of any trend in its industry or capital resources, which
      may
      have an impact on its income, revenue or income from operations.




***Plan
      of Operation***





We
      plan
      to continue purchasing and selling used vehicles; however, the used car/truck
      sales industry is highly competitive with respect to pricing, service, quality
      and location and, as a result, has a high failure rate. There are numerous
      well-established competitors, including national, regional and local established
      and reputable dealerships, located in the area where we conduct business and
      there is no guarantee that we will be able to continue to successfully compete
      with the established used car/truck dealerships and generate revenues to sustain
      our business operations. In addition, the used car/truck sales industry is
      also
      generally affected by changes in consumer preferences, national, regional and
      local economic conditions, and demographic trends. If we are not successful
      in
      locating and selling vehicles, we may be unable to generate any revenues and
      our
      business plans would fail. In any such event, we may consider other business
      ventures to generate revenues.





***Off-Balance
      Sheet Arrangements***





We
      have
      no off-balance sheet arrangements or contractual or commercial
      commitments.





9


**Item
      7. Financial Statements.**





See
      our
      Financial Statements and Supplementary Data following the signature page of
      this
      Form 10-KSB.





**Item
      8. Disagreements with Accountants on Accounting and Financial
      Disclosures**





There
      have been no disagreements with our accountants on accounting or other financial
      disclosures since inception.





**Item
      8a. Accounting Controls and Procedures**





***Critical
      Accounting Policies***





The
      financial statements included herein have been prepared pursuant to the rules
      and regulations of the Securities and Exchange Commission. Management believes
      the disclosures made are adequate to make the information not misleading. The
      financial statements and accompanying notes are prepared in accordance with
      the
      United States generally accepted accounting principles. Preparing financial
      statements requires Management to make estimates and assumptions that affect
      the
      reported amounts of assets and liabilities and disclosure of contingent assets
      and liabilities at the date of the financial statements and the reported amounts
      of revenues and expenses during the reporting period. These estimates and
      assumptions are affected by Management's application of accounting policies.
      These important accounting policies include the successful efforts method of
      accounting for property and equipment, revenue recognition, accounting for
      income taxes and foreign currency translation.





Management
      maintains disclosure controls and procedures designed to ensure that we are
      able
      to timely collect the information we are required to disclose in our reports
      filed with the U.S. Securities and Exchange Commission.





As
      of the
      end of the period covered by this report, we performed an evaluation, under
      the
      supervision and with the participation of our Management, of the effectiveness
      of the design and operation of our disclosure controls and procedures pursuant
      to Exchange Act Rule 13a-14. Based upon the evaluation, our Principal Executive
      Officer and Principal Accounting Officer concluded that the current disclosure
      controls are effective in timely alerting us to any material information
      required to be included in our periodic SEC filings.





We
      also
      maintain a system of internal controls designed to provide reasonable assurance
      that (i) transactions are executed in accordance with Management's general
      and
      specific authorization; (ii) transactions are recorded as necessary to permit
      preparation of financial statements in conformity with the United States
      generally accepted accounting principles and to maintain accountability for
      assets; (ii) access to assets is permitted only in accordance with Management's
      general or specific authorization; and (iv) the recorded accountability for
      assets is compared with the existing assets at reasonable intervals and
      appropriate action is taken with respect to any differences. We believe that
      our
      internal controls are effective to provide reasonable assurance that our
      financial statements are fairly presented in conformity with generally accepted
      accounting principals. Since our most recent evaluation, there have been no
      changes in our internal controls or in other factors that could significantly
      affect our internal controls, nor were any corrective actions required with
      regard to significant deficiencies and material weaknesses.





However,
      our auditors did not test the effectiveness of nor relied on our internal
      controls for the fiscal year ended June 30, 2006.








10





**PART
      III**




**Item
      9. Directors, Executive Officers, Promoters and Control Persons; Compliance
      with
      Section 16(a) of the Exchange Act**





The
      following table sets forth the names, positions and ages of the executive
      officers and directors. Directors are elected at the annual meeting of
      stockholders and serve for one year or until their successors are
      elected and qualify. Officers are elected by the Board of Directors and their
      terms of office are, except to the extent governed by employment contract,
      at
      the discretion of the Board of Directors.




Name           Age      Position(s)





Vincent
      Markovitch (1)(2)        30      President,
      CEO,
      Secretary


240
      12th
      Street and Chairman of the Board


New
      Westminster, BC of Directors


Canada
      V3M 4H2





John
      Markovitch (1)         28      Treasurer,
      CFO,
      Principal


240
      12th
      Street                
Accounting
      Officer and Director


New
      Westminster, BC


Canada
      V3M 4H2





John
      Markovitch Sr. (1)        56      Director


240
      12th
      Street


New
      Westminster, BC


Canada
      V3M 4H2





Kristian
      Kostovski          
35     
      Director


240
      12th
      Street


New
      Westminster, BC


Canada
      V3M 4H2





(1)
      Vincent and John Markovitch are brothers and are sons of JohnMarkovitch,
      Sr.





(2)
      Vincent Markovitch is the sole officer and director of Alpha Motorsport Inc.,
      a
      British Columbia corporation and our wholly-owned operating
      subsidiary.





Each
      of
      the persons named above have held their offices/positions since inception and
      are expected to hold said offices/positions until the next annual meeting of
      stockholders.





***Background
      of Officers and Directors***





Vincent
      Markovitch has been the President, CEO, Secretary and a Director of our company
      since inception. From March 1999 to April 2004, he was a self-employed
      automobile wholesaler in Vancouver, BC, Canada. As such, he purchased used
      vehicles, reconditioned and sold them. From November 1997 to March 1999, he
      was
      a salesman at Autowise Autosales in Vancouver, BC, Canada. Mr. Markovitch has
      been involved in the wholesaling and retailing of vehicles since 1990. In May
      2004, he received his Auto Dealers sales certificate in Vancouver, BC, Canada.
      Vincent Markovitch devotes full time to our business.





John
      Markovitch Jr. has been the Treasurer, CFO, Principal Accounting Officer and
      a
      Director of our company since inception. From January 2004 to the present,
      he
      has been working at the Pacific National Exhibition in Vancouver, BC as a
      parking foreman. His duties include overlooking parking attendants, as well
      as
      supervising breaks and schedules. From February 2003 to January 2004, he was
      a
      new vehicle inspector at Annacis Auto Terminals, a stream line company, located
      in Vancouver B.C. Canada. From February 1997 to December 2002, he was employed
      by Pacific Blue Cross, a ministry of social services, in Burnaby B.C. Canada.
      John Markovitch Jr. completed his essentials of marketing, marketing
      communication, and his trade and consumer marketing certificates at British
      Columbia Institute Of Technology in Burnaby B.C. Canada in 2003. John Markovitch
      Jr. devotes approximately 20 hours per week to our business.





11


John
      Markovitch Sr. has been a Director of our company since inception. For the
      past
      23 years, John Markovitch Sr. has been a self employed automobile salesman
      in
      the city of Burnaby B.C. Canada. During that time, he has owned three different
      used vehicle lots in British Columbia. He was a key partner in bringing the
      first Hyundai dealership to the city of Vancouver B.C. in 1984. He was top
      salesperson at that dealership from 1984 until it was sold in 1987. John
      Markovitch Sr. devotes approximately 20 hours per week to our
      business.





Kristian
      Kostovski has been a Director of our company since May 20, 2005. From July
      2001
      to the present, Mr. Kostovski has worked as a manager of Hit Casino in Dojran,
      Macedonia. Mr. Kostovski is currently enrolled in the second year at the
      American College of Thessaloniki in Thessaloniki, Greece, pursuing a Bachelor
      of
      International Business Degree. He intends to devote his time as required to
      our
      business.





***Section
      16(a) Beneficial Ownership Reporting Compliance***





Section
      16(a) of the Securities Exchange Act of 1934 requires our directors and
      executive officers, and persons who own more than ten percent of our Common
      stock, to file with the Securities and Exchange Commission initial reports
      of
      ownership and reports of changes of ownership of our Common stock. Officers,
      directors and greater than ten percent stockholders are required by SEC
      regulation to furnish us with copies of all Section 16(a) forms they file.





To
      the
      best of our knowledge, during the fiscal year ended June 30, 2006, all Section
      16(a) filing requirements applicable to our officers, directors and greater
      than
      ten percent beneficial owners were complied with. In making these disclosures,
      we have relied solely on a review of the copies of such reports furnished to
      us
      and written representations by our directors, executive officers and greater
      than ten percent stockholders.





***Code
      of Ethics***





At
      this
      time, we have not adopted a formal Code of Ethics that applies to the Chief
      Executive Officer and Chief Financial Officer; however, we do follow an informal
      Code of Ethics requiring Board of Director approval of any material transaction
      involving our Chief Executive Officer and/or Chief Financial Officer. We believe
      this procedure reasonably deters material wrongdoing and promotes honest and
      ethical conduct from our executive officers.





**Item
      10. Executive Compensation**





The
      following table sets out the compensation received for the fiscal years ended
      June 30, 2006 and 2005 with respect to each of the individuals who were the
      Company's chief executive officers at any time during the last two fiscal years
      and the Company's most highly compensated executive officers whose total salary
      and bonus exceeded $100,000.








12








**FISCAL
                YEAR COMPENSATION**
            
            
            
            
            **LONG
                TERM COMPENSATION****Awards**
            
            **Payouts****Name
                and Principal**
            **Year**
            **Salary**
            **Bonus**
            **Other**
            **Securities**
            **Restricted
                Shares**
            **LTIP
                Payouts**
            **All
                other**
              **Compensation****Position**
            
            **($)**
            **($)**
            **Annual**
              **Compensation****(4)**
            **Underlying**
              **Option/SARs**
              Granted
            **or
                Restricted Share**
            **($)**
            **($)****Units**Vincent
                Markovitch, President, Principal Executive Officer, Secretary and
                Director
                (1)
            2006
              2005
            0
              0
            0
              0
            0
              0
            0
              0
            0
              0
            0
              0
            0
              0John
                Markovitch Jr,
                Treasurer, Principal Accounting Officer and Director
            2006
              2005
            0
              0
            0
              0
            0
              0
            0
              0
            0
              0
            0
              0
            0
              0John
                Markovitch Sr.,Director
            2006
            0
            0
            0
            0
            0
            0
            02005
            0
            0
            0
            0
            0
            0
            0Kristian
                Kostovski,
                Director
            2006
            0
            0
            0
            0
            0
            0
            02005
            0
            0
            0
            0
            0
            0
            0


(1)
      We
      entered into a verbal Management Agreement with Vincent Markovitch, our
      President, and paid him a total of $21,842 in management fees for the fiscal
      year ended June 30, 2006 and $7,202 for the fiscal year ended June 30,
      2005.





There
      are
      no employment agreements, other arrangements or understandings between any
      executive officer and any director or other person pursuant to which any person
      was selected as a director or an executive officer.





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





The
      following table sets forth certain information regarding Common Stock
      beneficially owned on the date of this filing for (i) each shareholder known
      by
      us to be the beneficial owner of five (5%) percent or more of our issued and
      outstanding Common stock, (ii) each executive officers and directors, and (iii)
      all executive officers and directors as a group. As of the date of the filing
      of
      this registration statement, there were 1,000,000 shares of our Common stock
      issued and outstanding.





Name
      and
      Address           Amount
      and Nature
      of


of
      Beneficial             Beneficial     Percent
      of


Owner              Ownership     Class




Vincent
      Markovitch            1,000,000         
      33%


4232
      Burke Street


Burnaby,
      BC, Canada V5H 1B4


________________________________


All
      Officers and Directors as a Group         1,000,000     33%





All
      shares of our wholly-owned Canadian subsidiary, Alpha Motorsport, Inc. are
      owned
      by Alpha Motorsport, Inc., a Nevada corporation.





There
      are
      currently no options, warrants, rights or other securities conversion privileges
      granted to our officers, directors or beneficial owners and no plans to issue
      any such rights in the future.





13


***Changes
      in Control***





There
      are
      no arrangements known to us, the operation of which may at a subsequent date
      result in a change of control of our company.





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





We
      entered into a verbal Management Agreement with Vincent Markovitch, our
      President, for management services and paid him a total of $21,842 and $7,202,
      respectively, in management fees for the fiscal years ended June 30, 2006 and
      2005.





We
      do not
      have any other related transactions and have not yet formulated a policy for
      the
      resolution of any related transaction conflicts, should they arise.





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





The
      following exhibits, marked with an asterisk and required to be filed hereunder,
      are incorporated herein by reference and can be found in their entirety in
      our
      original Form SB-2 Registration Statement, filed under our SEC File No.
      333-119930, on the SEC website at www.sec.gov:





**Exhibit
      No.** **Description
      of
      Exhibit**


*
      3(i) Articles
      of Incorporation


*
      3(ii) Bylaws


31.1 Sec.
      302
      Certification of Chief Executive Officer


31.2 Sec.
      302
      Certification of Principal Financial Officer


32.1 Sec.
      906
      Certification of Chief Executive Officer


32.2 Sec.
      906
      Certification of Principal Financial Officer





(b)
      There
      was one report on Form 8-K filed during the fiscal year ended June 30, 2006
      to
      report a forward split of the issued and outstanding common stock in April
      2006.
      The report can be found in its entirety on the SEC website at www.sec.gov under
      our SEC File Number 333-119930.





**Item
      14. Principal Accountant Fees and Services**





***Audit
      Fees***





The
      aggregate fees billed for professional services rendered by our principal
      accountant for the audit of our annual financial statements for the fiscal
      year
      ended June 30, 2006 were $4,093 and the review for the


financial
      statements included in our quarterly reports on Form 10-QSB during the year
      then
      ended, were $2,095.





***Audit
      Related Fees***





We
      incurred no fees for the year ended June 30, 2006 for assurance and related
      services by our principal accountant that were reasonably related to the
      performance of the audit or review of our financial statements, and not reported
      under Audit Fees above.





***Tax
      Fees***





The
      aggregate fees billed for professional services rendered by our principal
      accountant for tax compliance, tax advice, and tax planning for the year ended
      June 30, 2006 were $Nil.





***All
      Other Fees***





We
      incurred no other fees during the year ended June 30, 2006 for products and
      services rendered by our principal accountant.





14


**SIGNATURES**




Pursuant
      to the requirements of Section 13(a) 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.






**Alpha
      Motorsport,
      Inc., Registrant**





September
      27, 2006     By:
      /s/
      Vincent Markovitch, President,
      CEO, Secretary and Chairman of the Board





September
      27, 2006     By:
      /s/
      John Markovitch, Jr., Treasurer,
      Chief Financial Officer, Principal Accounting Officer
      and Director





September
      27, 2006     By:
      /s/
      John Markovitch, Sr., Director





September
      27, 2006     By:
      /s/
      Kristian Kostovski, Director








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 on
      the
      dates indicated.


****


**Alpha
      Motorsport,
      Inc., Registrant**





September
      27, 2006     By:
      /s/
      Vincent Markovitch, President,
      CEO, Secretary and Chairman of the Board





September
      27, 2006     By:
      /s/
      John Markovitch, Jr., Treasurer,
      Chief Financial Officer, Principal Accounting Officer
      and Director





September
      27, 2006     By:
      /s/
      John Markovitch, Sr., Director





September
      27, 2006     By:
      /s/
      Kristian Kostovski, Director














15



































**ALPHA
      MOTORSPORT, INC.**










**CONSOLIDATED
      FINANCIAL STATEMENTS**










**JUNE
      30, 2006 AND 2005**


**(Stated
      in U.S. Dollars)**


16




































**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**








To
      the
      Board of Directors and Stockholders of


Alpha
      Motorsport, Inc.





We
      have
      audited the accompanying consolidated balance sheets of Alpha Motorsport, Inc.
      as at June 30, 2006 and 2005, and the related consolidated statements of
      operations, cash flows, and stockholders’ equity (deficiency) for the years
      ended June 30, 2006, and 2005. These consolidated financial statements are
      the
      responsibility of the Company's management. Our responsibility is to express
      an
      opinion on these consolidated financial statements based on our
      audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform an audit to obtain reasonable assurance 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 audit provides a
      reasonable basis for our opinion.





In
      our
      opinion, these consolidated financial statements present fairly, in all material
      respects, the financial position of the Company as at June 30, 2006 and 2005,
      and the results of its operations and its cash flows for the periods indicated
      in conformity with accounting principles generally accepted in the United
      States.







The
      Company is not required to have, nor were we engaged to perform, an audit of
      its
      internal control over financial reporting. Our audits included consideration
      of
      internal control over financial reporting as a basis for designing audit
      procedures that are appropriate in the circumstances, but not for the purpose
      of
      expressing an opinion on the effectiveness of the Company’s internal control
      over financial reporting. Accordingly, we express no such opinion.






Vancouver,
      Canada




August
      28, 2006 Chartered
      Accountants







17


**ALPHA
      MOTORSPORT, INC.**





**CONSOLIDATED
      BALANCE SHEETS**


**(Stated
      in U.S. Dollars)**











**JUNE
                30****2006**
            2005Restated
                (Note 1)**ASSETS****Current**Cash
            $
            **42,496**
            $
            38,108Accounts
                receivable
            
            **4,498**
            
            -Inventory
            
            **18,206**
            
            10,993Prepaid
                expenses
            
            **1,472**
            
            2,833$
            **66,672**
            $
            51,934**LIABILITIES****Current**Accounts
                payable and accrued liabilities
            $
            **9,121**
            $
            7,503Loan
                and accrued interest payable (Note 3)
            
            **2,973**
            
            62,831**12,094**
            
            70,334**STOCKHOLDERS’
                EQUITY (DEFICIENCY)****Capital
                Stock**Authorized:750,000,000
                common shares, par value $0.001 per shareIssued
                and outstanding:30,000,000
                common shares
            
            **30,000**
            
            5000**Additional
                Paid-In Capital**
            
            **75,000**
            
            -**Share
                Subscriptions**
            
            **-**
            
            7,000**Accumulated
                Deficit**
            
            **(55,765)**
            
            (30,813)**Accumulated
                Other Comprehensive Income**
            
            **5,343**
            
            413**54,578**
            
            (18,400)$
            **66,672**
            $
            51,934




















The
      accompanying notes are an integral part of these consolidated financial
      statements.


18


**ALPHA
      MOTORSPORT, INC.**





**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**(Stated
      in U.S. Dollars)**











**YEARS
                ENDED JUNE 30****2006**
            2005Restated
              (Note
                3)**Sales**
            **$**
            **302,171**
            $
            160,651**Cost
                Of Sales**
            
            **(245,527)**
            
            (134,704)**Gross
                Margin**
            
            **56,644**
            
            25,947**Expenses**General
                and administration
            
            23,989
            
            12,575Management
                fees (Note 5)
            
            21,842
            
            7,202Office
                and miscellaneous
            
            23,572
            
            20,604Professional
                and filing fees
            
            12,193
            
            11,97081,596
            
            52,351**Net
                Loss For The Year**
            **$**
            **(24,952)**
            **$**
            **(26,404)****Basic
                And Diluted Loss Per Share**
            **$**
            **(0.00)**
            **$**
            **(0.00)****Weighted
                Average Number Of Shares Outstanding**
            
            **28,027,397**
            
            **10,000,000**








**CONSOLIDATED
      STATEMENTS OF COMPREHENSIVE INCOME**


**(Stated
      in U.S. Dollars)**








**YEARS
                ENDED JUNE 30****2006**
            2005Restated
              (Note
                3)**Net
                Loss For The Year**
            **$**
            **(24,952)**
            $
            (26,404)**Other
                Comprehensive Income**Foreign
                Currency Adjustment
            
            **4,930**
            
            433**Comprehensive
                Income**
            $
            **(20,022)**
            $
            (25,971)





The
      accompanying notes are an integral part of these consolidated financial
      statements.


19


**ALPHA
      MOTORSPORT, INC.**





**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(Stated
      in U.S. Dollars)**











**YEARS
                ENDED JUNE 30****2006**
            2005Restated
              (Note
                1)**Cash
                Flows From Operating Activities**Net
                loss for the year
            **$**
            **(24,952)**
            $
            (26,404)**Adjustments
                To Reconcile Net Loss To Net Cash Used By Operating
                Activities**Accounts
                receivable
            
            **(4,498)**
            
            -Prepaid
                expenses and other
            
            **1,361**
            
            (2,833)Inventories
            
            **(7,213)**
            
            (10,993)Accounts
                payable and accrued liabilities
            
            **1,618**
            
            4,182Accrued
                interest payable
            
            **142**
            
            2,831**(33,542)**
            
            (33,217)**Cash
                Flows From Financing Activities**Issuance
                of common stock
            
            **93,000**
            
            -Share
                subscriptions received
            
            **-**
            
            7,000Loan
                payable
            
            **(60,000)**
            
            60,000**33,000**
            
            67,000**Unrealized
                Non-Cash Foreign Currency Translation Adjustment**
            
            **4,930**
            
            433**Increase
                In Cash**
            
            **4,388**
            
            34,216**Cash,
                Beginning Of Year**
            
            **38,108**
            
            3,892**Cash,
                End Of Year**
            **$**
            **42,496**
            $
            38,108**Supplemental
                Disclosure Of Cash Flow Information**Cash
                paid for:Interest
            **$**
            **-**
            $
            -Income
                taxes
            
            **-**
            
            -








The
      accompanying notes are an integral part of these consolidated financial
      statements.





20





**ALPHA
      MOTORSPORT, INC.**





**CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)**





**PERIOD
      FROM DATE OF INCEPTION, APRIL 28, 2004, TO JUNE 30, 2006,**





**COMMON
                STOCK**
            
            
            
            
            **ACCUMULATED****NUMBER**
            
            **ADDITIONAL**
            
            
            
            
            **OTHER****OF**
            
            **PAID-IN**
            **SHARE**
            **ACCUMULATED**
            **COMPREHENSIVE****SHARES**
            **AMOUNT**
            **CAPITAL**
            **SUBSCRIPTIONS**
            **DEFICIT**
            **INCOME
                (LOSS)**
            **TOTAL**Restated
              (Note
                3)
            Restated
              (Note
                3)Balance,
                April 28, 2004
              (Date
                of incorporation)
            -
            $
            -
            $
            -
            $
            -
            $
            -
            $
            -
            $
            -April
                28, 2004 - Shares issued for cash at $0.005
            1,000,000
            
            5,000
            
            -
            
            -
            
            -
            
            -
            
            5,000Loss
                for the period
            -
            
            -
            
            -
            
            -
            
            (4,409)
            
            -
            
            (4,409)Foreign
                Currency Adjustment
            -
            
            -
            
            -
            
            -
            
            -
            
            (20)
            
            (20)Balance,
                June 30, 2004
            1,000,000
            
            5,000
            
            -
            
            -
            
            (4,409)
            
            (20)
            
            571Share
                subscriptions
            -
            
            -
            
            -
            
            7,000
            
            -
            
            -
            
            7,000Net
                loss for the year
            -
            
            -
            
            -
            
            -
            
            (26,404)
            
            -
            
            (26,404)Foreign
                Currency Adjustment
            -
            
            -
            
            -
            
            -
            
            -
            
            433
            
            433Balance,
                June 30, 2005
            1,000,000
            
            5,000
            
            -
            
            7,000
            
            (30,813)
            
            413
            
            (18,400)August
                5, 2005 -Shares issued for cash at $0.05
            2,000,000
            
            2,000
            
            98,000
            
            (7,000)
            
            -
            
            -
            
            93,000April
                11, 2006 Stock Split Adjustment
            27,000,000
            
            23,000
            
            (23,000)
            
            -
            
            -
            
            -
            
            -Net
                loss for the year
            -
            
            -
            
            -
            
            -
            
            (24,952)
            
            -
            
            (24,952)Foreign
                Currency Adjustment
            -
            
            -
            
            -
            
            -
            
            -
            
            4,930
            
            4,930Balance,
                June 30, 2006
            30,000,000
            $
            30,000
            $
            75,000
            $
            -
            $
            (55,765)
            
            5,343
            $
            54,578








The
      accompanying notes are an integral part of these consolidated financial
      statements.





21


**ALPHA
      MOTORSPORT, INC.**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**JUNE
      30, 2006 AND 2005**


**(Stated
      in U.S. Dollars)**








**1.**  **NATURE
      OF OPERATIONS AND RESTATEMENTS**





Alpha
      Motorsport, Inc. (the “Company”) was incorporated in the State of Nevada on
      April 28, 2004, and was in the development stage through September 30, 2004.
      The
      year ended June 30, 2005 was the first fiscal year during which it is considered
      an operating company.





The
      Company operates a pre-owned vehicle automotive dealership and an auto detailing
      facility in British Columbia, Canada.





On
      April
      11, 2006, the Board of Directors authorized a 10 for 1 stock split of the
      Company’s common stock.








**2.
      SIGNIFICANT ACCOUNTING POLICIES**





The
      consolidated financial statements of the Company have been prepared in
      accordance with generally accepted accounting principles in the United States
      of
      America. Because a precise determination of many assets and liabilities is
      dependent upon future events, the preparation of consolidated financial
      statements for a period necessarily involves the use of estimates which have
      been made using careful judgement. Actual results may vary from these
      estimates.





The
      consolidated financial statements have, in management’s opinion, been properly
      prepared within reasonable limits of materiality and within the framework of
      the
      significant accounting policies summarized below:





a)  Consolidated
      Financial Statements





The
      consolidated financial statements include the accounts of the Company and its
      wholly owned Canadian subsidiary, Alpha Motorsport, Inc. All inter-company
      transactions have been eliminated in consolidation.





b)  Use
      of
      Estimates





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


22


**ALPHA
      MOTORSPORT, INC.**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**JUNE
      30, 2006 AND 2005**


**(Stated
      in U.S. Dollars)**











**2.
      SIGNIFICANT ACCOUNTING POLICIES (Continued)**





c)  Inventories





Inventories
      of pre-owned vehicles are stated at the lower of cost or net realizable value
      determined on a specific item basis.





d)  Revenue
      Recognition





The
      Company recognizes revenue when the earnings process is complete, as evidenced
      by an agreement with the customer, transfer of title and acceptance, and
      probable collectibility.





e)  Impairment
      of Long-Lived Assets





Capital
      assets are reviewed for impairment in accordance with SFAS No. 144 - “Accounting
      for the Impairment or Disposal of Long-Lived Assets”, which was adopted
      effective January 1, 2002. Under SFAS No. 144, these assets are tested for
      recoverability whenever events or changes in circumstances indicate that their
      carrying amounts may not be recoverable. An impairment charge is recognized
      for
      the amount, if any, which the carrying value of the asset exceeds the fair
      value.





f)  Foreign
      Currency Translation





The
      Company’s functional currency is in Canadian dollars as substantially all of the
      Company’s operations are in Canada. The Company used the United States dollar as
      its reporting currency for consistency with registrants of the Securities and
      Exchange Commission (“SEC”) and in accordance with the SFAS No. 52 - “Foreign
      Currency Translation”.





Assets
      and liabilities denominated in a foreign currency are translated at the exchange
      rate in effect at the period end and capital accounts are translated at
      historical rates. Income statement accounts are translated at the average rates
      of exchange prevailing during the period.





Transactions
      undertaken in currencies other than the functional currency of the entity are
      translated using the exchange rate in effect as of the transaction
      date.




















23


**ALPHA
      MOTORSPORT, INC.**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**JUNE
      30, 2006 AND 2005**


**(Stated
      in U.S. Dollars)**











**2.
      SIGNIFICANT ACCOUNTING POLICIES (Continued)**





g)  Basic
      and
      Diluted Loss Per Share





The
      Company reports basic loss per share in accordance with SFAS No. 128 - “Earnings
      Per Share”. Basic loss per share is computed using the weighted average number
      of common stock outstanding during the period. Diluted loss per share is
      computed using the weighted average number of common and potentially dilutive
      common stock outstanding during the period. As the Company generated net losses
      in the period presented, the basic and diluted loss per share is the same,
      as
      any exercise of options or warrants would be anti-dilutive.





h)  Income
      Taxes





The
      Company uses the asset and liability method of accounting for income taxes
      in
      accordance with SFAS No. 109 - “Accounting for Income Taxes”. This standard
      requires the use of an asset and liability approach for financial accounting
      and
      reporting on income taxes. 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.





i)  Fair
      Value of Financial Instruments





The
      carrying value of the Company’s financial instruments, consisting of cash,
      accounts payable, and loan payable, approximate their fair value due to the
      short term nature of such instruments. Unless otherwise noted, it is
      management’s opinion that the Company is not exposed to significant interest,
      currency or credit risks arising from these financial instruments.





j)  New
      Accounting Standards





Management
      does not believe that any recently issued, but not yet effective accounting
      standards, if currently adopted, could have a material effect on the
      accompanying financial statements.


24


**ALPHA
      MOTORSPORT, INC.**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**JUNE
      30, 2006 AND 2005**


**(Stated
      in U.S. Dollars)**








**3.
      PRIOR YEAR RESTATEMENT**





The
      unrealized foreign currency translation consolidation adjustments on conversion
      of the Company’s functional foreign currency to it’s reporting currency have
      been restated to reflect the amounts in The unrealized foreign currency
      translation consolidation adjustments on conversion of the Company’s functional
      foreign currency to it’s reporting currency have been restated to reflect the
      amounts in accumulated other comprehensive income (loss).








**4.
      LOAN PAYABLE**





Loan
      payable is unsecured, bears interest at 6% per annum and consists of $40,000
      of
      principal due on August 23, 2005, $20,000 of principal due on November 1, 2005.
      If the loan and accrued interest is not paid within 30 days of the due date,
      the
      Company will be required to pay a late charge equal to 5% of the overdue
      payment. At the option of the holder, after the maturity date, or upon any
      default, the loan will bear interest at 15% per annum. The principal balance
      of
      $60,000 was repaid in full in August 2005.





The
      loan
      payable balance includes $2,831 of accrued interest payable and an accrued
      $142
      late payment charge.








**5.**  **SHARE
      CAPITAL**





On
      April
      28, 2004, the Company issued 1,000,000 (10,000,000 after the stock split) shares
      of its common stock at $0.005 per share for cash to its founder.





On
      August
      5, 2005 the Company issued 2,000,000 (20,000,000 after the stock split) shares
      of its common stock at $0.05 per share.








**6.**  **RELATED
      PARTY TRANSACTIONS**





The
      President of the Company provides management services to the Company. During
      the
      year ended June 30, 2006, the Company incurred $21,842 (2005 - $7,202) for
      management services, which were charged to operations.





25


**ALPHA
      MOTORSPORT, INC.**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**JUNE
      30, 2006 AND 2005**


**(Stated
      in U.S. Dollars)**








**7.**  **INCOME
      TAXES**





The
      Company’s provision for income taxes differs from the amounts computed by
      applying the statutory income tax rates to the loss as a result of the
      following:





2006
            2005Statutory
                rates
            
            35%
            
            35%Recovery
                of income taxes at statutory rates
            $
            7,000
            $
            9,000Tax
                benefit not recognized on current year’s losses
            
            (7,000)
            
            (9,000)$
            -
            $
            -





The
      following table summarizes the significant components of the Company’s deferred
      tax assets:





2006
            2005Statutory
                tax rates
            
            35%
            
            35%Deferred
                tax assetsNon-capital
                losses carried forward
            $
            17,600
            $
            10,600Less:
                Valuation allowance
            
            (17,600)
            
            (10,600)$
            -
            $
            -





The
      Company has provided an allowance of 100% against all available income tax
      losses carried forward as it is more likely than not that the deferred tax
      assets will not be realized as at June 30, 2006 and 2005.





At
      June
      30, 2006, the Company has net operating losses carried forward, which expire
      commencing in 2024, totaling approximately $50,000.