<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

[X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

       For the quarterly period ended June 30, 1999

       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1937

       For the transition period from _____________ to ______________


                        Commission file number: 000-22273

                           SONIC JET PERFORMANCE, INC.
        (Exact Name of Small Business Issuer as Specified in Its Charter)


         COLORADO                                       84-1383888
(State of Incorporation)                    (I.R.S. Employer Identification No.)


                               15662 COMMERCE LANE
                       HUNTINGTON BEACH, CALIFORNIA 92649
                    (Address of Principal Executive Offices)

                                 (714) 895-0944
                (Issuer's Telephone Number, including Area Code)

                                 NOT APPLICABLE
              (Former Name, Former Address and Former fiscal Year,
                         if Changed Since Last Report)

Check whether the issuer: (1) has 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 [ ]


As of June 30, 1999, the Issuer had 12,676,000 shares of Common Stock, no par
value, outstanding.



<PAGE>

                           SONIC JET PERFORMANCE, INC.

                                   FORM 10-QSB

                  FOR THE QUARTERLY PERIOD ENDED June 30, 1999

                                Table of Contents

                          PART I. FINANCIAL INFORMATION

Item 1.      Financial Statements

             Balance Sheet at June 30, 1999 (unaudited)

             Statement of operations for the Six months ended June 30, 1999 and
             1998 (unaudited)

             Statements of Cash Flows for the Six months ending June 30, 1999
             and 1998 (unaudited)

             Notes to Consolidated Financial Statements (unaudited)

Item 2.      Management's Discussion and Analysis or Plan of operations

             General

             Results of operations

             Liquidity and Capital Resources

                           PART 11. OTHER INFORMATION

Item 1.      Legal Proceedings

Item 2.      Changes in Securities

Item 3.      Defaults upon Senior Securities

Item 4.      Submission of Matters to a vote of Security Holders

Item 5.      Other Information

Item 6.      Exhibits and reports on Form 8-K



<PAGE>

SONIC JET PERFORMANCE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1999 (UNAUDITED)
--------------------------------------------------------------------------------

                                     ASSETS
CURRENT ASSETS
Cash                                                                $    66,083
Accounts receivable -trade                                               92,356
Inventories                                                           3,003,385
Due from related parties                                                577,480
Prepaid inventories                                                      61,595
Other receivables                                                        45,590
Other current assets                                                        750
                                                                    ------------
Total current assets                                                  3,847,239

PROPERTY AND EQUIPMENT, net                                           3,273,944
OTHER ASSETS
Organization cost, net                                                   23,500
Other                                                                    28,604

TOTAL ASSETS                                                        $ 7,173,287
                                                                    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable                                                    $   422,675
Other accrued liabilities                                                89,045
Loans payable -bank                                                     500,000
Due to shareholder                                                       92,500
                                                                    ------------
Total current liabilities                                             1,104,220

NOTE PAYABLE - STOCKHOLDER                                              788,870
ACCRUED INTEREST PAYABLE                                                123,759
                                                                    ------------
Total liabilities                                                     2,016,849
MINORITY INTEREST                                                       673,290
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, no par value
10,000,000 shares authorized
Series A Convertible Preferred stock
1,600 shares issued and outstanding                                   1,500,000
Common stock, no par value
100,000,000 shares authorized
12,676,000 shares issued and outstanding                              3,887,194
Accumulated comprehensive income                                         (3,655)
Deferred Compensation                                                  (287,500)
Accumulated deficit                                                    (612,891)
                                                                    ------------
Total stockholders' equity                                            4,483,148
                                                                    ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                          $ 7,173,287
                                                                    ============

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



<PAGE>
<TABLE>

SONIC JET PERFORMANCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30,
------------------------------------------------------------------------------------------------------------------------
<CAPTION>

                                                               3 Months Ended June 30,           6 Months Ended June 30,
                                                                 1999          1998                1999          1998
                                                             (unaudited)   (unaudited)         (unaudited)   (unaudited)
                                                             -----------   -----------         -----------   -----------

<S>                                                          <C>           <C>                 <C>           <C>
SALES                                                        $  196,321    $   26,823          $  766,021    $  102,888

COST OF SALES                                                    48,778        94,333             320,892       117,601
                                                             -----------   -----------         -----------   -----------
GROSS  PROFIT                                                   147,543       (67,510)            445,129       (14,713)

GENERAL AND ADMINISTRATIVE EXPENSES                            (378,691)     (385,590)           (559,633)     (573,410)
                                                             -----------   -----------         -----------   -----------

INCOME (LOSS)  FROM OPERATIONS                                 (231,148)     (453,100)           (114,504)     (588,123)
                                                             -----------   -----------         -----------   -----------

OTHER  (EXPENSE)                                                                4,058                  --            --
OTHER INCOME                                                      2,004        11,815               2,004         8,955
INTEREST INCOME                                                   3,632            --               4,525         5,815
INTEREST EXPENSE                                                 15,000            --              30,000            --
                                                             -----------   -----------         -----------   -----------

TOTAL OTHER INCOME (EXPENSE)                                     (9,364)       15,873             (23,471)       14,769
                                                             -----------   -----------         -----------   -----------

INCOME (LOSS) BEFORE MINORITY INTEREST                         (240,512)     (437,227)           (137,975)     (573,354)

MINORITY INTEREST                                                (2,585)        3,219              (1,825)        9,517
                                                             -----------   -----------         -----------   -----------

NET INCOME (LOSS)                                              (243,097)     (434,008)           (139,800)     (563,836)

BASIC EARNINGS (LOSS) PER SHARE                                   (0.02)        (0.04)              (0.01)        (0.05)

DILUTED EARNINGS (LOSS) PER SHARE                                 (0.02)        (0.04)              (0.01)        (0.05)

WEIGHTED AVERAGE COMMON SHARE OUTSTANDING
BASIC                                                        12,621,666    10,000,000          12,623,333    10,000,000

FULLY DILUTED                                                13,421,666    10,000,000          13,423,333    10,000,000

</TABLE>

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



<PAGE>
<TABLE>

SONIC JET PERFORMANCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>

                                       Preferred Stock              Common Stock            Accumulated
                                   -----------------------    -------------------------     Comprehensive   Accumulated
                                     Shares       Amount       Shares          Amount       Income          Deficit         Total
                                   ----------   ----------    ----------     ----------     -----------     -----------  -----------

<S>                                    <C>      <C>           <C>            <C>            <C>             <C>           <C>
BALANCE DECEMBER 31, 1998              1,600    $1,500,000    12,620,000     $3,599,694     $  (10,157)     $ (473,091)   4,616,446
Common Stock Issued                                               56,000        287,500                                     287,500
Accumulated Translation Adj.                                                                     6,502                        6,502

Net income (unaudited)                                                                                        (139,800)    (139,800)

Deferred Compensation                                                          (287,500)                                   (287,500)

                                   ----------   ----------    ----------     ----------     -----------     -----------  -----------
BALANCE JUNE 30, 1999(unaudited)       1,600    $1,500,000    12,676,000     $3,599,694     $   (3,655)       (612,891)   4,483,148

</TABLE>

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



<PAGE>
<TABLE>

SONIC JET PERFORMANCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
------------------------------------------------------------------------------------------------------------------
<CAPTION>
                                                                                 6 Months Ended  June 30,

                                                                            1999                           1998
                                                                        ------------                  ------------
                                                                        (unaudited)                    (unaudited)
<S>                                                                     <C>                           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net  Income (Loss)                                                      $  (139,800)                  $  (434,008)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities
Depreciation and amortization                                                11,577                        (4,565)
Minority interest                                                            (7,616)                      (25,145)
Foreign translation adjustment                                                6,502                             0
(Increase) decrease in inventories                                         (535,799)                     (507,137)
Due from related parties                                                   (104,944)                      (60,069)
Accounts Receivables                                                        (53,403)                       40,228
Other Receivables                                                           (12,176)                        9,613
Other current assets                                                         13,927                        (6,700)
Prepaid Inventory                                                           140,919                             0
Accrued Interest payable                                                     34,886                        55,667
Accrued Payroll taxes                                                        10,050                         6,466
Other accrued liabilities                                                    65,368                       (20,919)
Due to related parties                                                      (20,589)                       15,000
Accounts Payable                                                            292,221                       (41,825)
                                                                        ------------                  ------------
Net, cash provided by (used in) operating activities                        482,495                      (973,394)
                                                                        ------------                  ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment                                         (575,187)                   (1,730,497)
Proceeds from sale of property and equipment
Purchase of other assets                                                     25,641                             0
Proceeds from the sale of other assets
                                                                        ------------                  ------------
Net cash used in investing activities                                      (549,546)                   (1,730,497)
                                                                        ------------                  ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loan                                                     500,000
Issuance of  Capital                                                                                    2,059,329
Long Term Loans                                                             281,370
                                                                        ------------                  ------------
Net Cash provided by financing activities                                   781,370                     2,059,329
                                                                        ------------                  ------------
Net  (decrease) in cash                                                     (67,052)                     (644,562)

CASH BEGINNING OF PERIOD                                                    133,135                       729,506
                                                                        ------------                  ------------
CASH END OF PERIOD                                                      $    66,083                   $    84,944

</TABLE>

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



<PAGE>

SONIC JET PERFORMANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
--------------------------------------------------------------------------------
NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Sonic Jet Performance, Inc. ("SJPI"), a Colorado corporation, and subsidiaries
(collectively, the "Company") are engaged in the design and production of
personal watercrafts, jet boats, trailers, and accessories. The principal
executive office is located in Huntington Beach, California.

Sonic Jet Performance, LLC (the "Predecessor Company") was organized in
California on May 8, 1997 as a limited liability company.

In June 1998, Boulder Capital Opportunities III, Inc. ("BCO"), a Colorado
Corporation organized on November 27, 1996, entered into a Share Exchange
Agreement with the Predecessor Company to acquire all of the assets and business
of the Predecessor Company and assume the liabilities. The acquisition was
consummated and effective as of June 30, 1998. The transaction was treated as a
"purchase transaction" and has been accounted as a reverse acquisition of BCO by
Sonic Jet Performance, LLC, resulting in a re-capitalization of Sonic Jet
Performance, LLC. Subsequently, the name of the new entity became Sonic Jet
Performance, Inc.

On August 9, 1997, SJPI entered into a joint venture agreement with China
Guangxi Nanning Shipyard of Nanning, Guangxi, China to form the Nanning Sonic
Jet, LLC, a contractual limited liability company organized under the laws of
the People's Republic of China. The joint venture was formed to design,
manufacture, and sell a series of watercraft jet products internationally and in
China. The Company is responsible for providing technical personnel and
training. The Company shall receive 70% of the profits and shall share 70% of
the risks and losses under the venture.

Principles of Consolidation

The consolidated financial statements include the accounts of SJPI and its
subsidiaries, Nanning Sonic Jet, LLC and Sonic Jet Performance, Inc - Florida
("SJPF"), a wholly-owned subsidiary of SJPI. All intercompany balances and
transactions are eliminated in consolidation. Minority interest represents the
minority's share of the initial capital contribution in Nanning Sonic Jet, LLC
and 30% of the results of its operations. SJPI manages the day-to-day operations
of the subsidiary and is represented by three of the five directors of the
subsidiary.

Estimates

The preparation of financial statements is in conformity with generally accepted
accounting principles. It 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, as
well as the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.



<PAGE>

SONIC JET PERFORMANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
--------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Loss per Share

Loss per share is computed by dividing income available to common stockholders
by the weighted-average number of common shares outstanding. Diluted earnings
per share is computed similar to basic earnings per share except that the
denominator is increased to include the number of additional common shares that
would have been outstanding if the potential common shares had been issued and
if the additional common shares were dilutive. Potentially dilutive securities
included in the computation of fully diluted earnings per share for the six
months ended June 30, 1999 consist of 800,000 shares of common stock reserved
for conversion of the Series A Preferred Stock. Because the company has incurred
net losses, basic and diluted loss per share are the same for the three months
ended June 30, 1998.

NOTE 2 - INVENTORIES

Inventories at June 30, 1999 consisted of the following:
                                                                    (unaudited)
Raw materials and supplies                                         $ 1,899,943
Work in process                                                        504,616
Finished goods                                                         598,826
                                                                   ------------
TOTAL                                                              $ 3,003,385


NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment at June 30, 1999 consisted of the following:


                                                                    (unaudited)
                                                                    ------------
Building and improvements                                           $ 1,274,025
Furniture and fixtures                                                   18,237
Machinery and equipment                                                 478,115
Tooling and molds                                                       269,760
Tooling - new products                                                  470,219
Molds - watercrafts                                                     876,606
Vehicles                                                                 37,403
                                                                    ------------
                                                                      3,424,365
Less accumulated depreciation and amortization                         (150,421)
                                                                    ------------
TOTAL                                                               $ 3,273,944



<PAGE>

SONIC JET PERFORMANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
--------------------------------------------------------------------------------
NOTE 3 - PROPERTY AND EQUIPMENT (CONTINUED)

Tooling for new product and molds for watercrafts have not been depreciated
during the Six months ended June 30, 1999 as these will be used in production in
the following year.


NOTE 4 - NOTE PAYABLE - STOCKHOLDER
<TABLE>
<CAPTION>

Note payable - stock holder at June 30, 1999 consisted of the following:

<S>                                                                              <C>
Note payable, bearing interest at 10% per annum.  Annual                         (Unaudited)
payments are to commence July 18, 2000 in an, amount equal
to 60% of cash available for distribution, as defined, for
the nearest preceding accounting period. All unpaid
principal is due July 18, 2001. The note is secured by Company assets.            $600,000


Note payable to Mag Associates, a company owned by stock holder, payable
without interest at such time as Company raises additional capital.               $188,870

</TABLE>

NOTE 5 - LOANS PAYABLE - BANK

On February 8, 1999, SJPF entered into a $375,000 commercial loan agreement with
a financial institution. The loan bears interest at 7.5% per annum and is
payable on demand. The loan is collateralized by substantially all of SJPF's
tangible property.

On February 26, 1999, SJPF also entered into a mortgage loan agreement in the
amount of $125,000. The loan is collateralized by SJPF's land and building and a
pledge of 15,000 shares of SJPI's common stock. The loan bears interest at 8.5%
per annum and is due on February 26, 2000.

NOTE 6 - COMMITMENTS AND CONTINGENCIES

Lease

The Company leases its facility under an operating lease agreement.

Future minimum lease payments are as follows:

                                Year Ending
                                December 31,                         (unaudited)
                               ------------                         ------------
                                    1999                             $  60,750
                                    2000                                81,000
                                    2001                                81,000
                                    2002                                81,000
                                                                     -----------
                                    TOTAL                            $  303,750



<PAGE>

SONIC JET PERFORMANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1996 (UNAUDITED)
--------------------------------------------------------------------------------
NOTE 6 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

Lease (Continued)

Investment in Joint Venture - Dalian

The Company has entered into an agreement to invest in a joint venture in
Dalian, China for the design, manufacture, and selling of watercraft jet
products. The Company is committed to invest $1,000,000 in the form of molds,
tooling, and know-how. The Company will share 45% of the profits or loss from
this venture. This Joint venture has not yet commenced operation.

Employment Agreement

On June 19, 1998, the Company amended an employment agreement with its Design
Director and Chairman/Chief Executive Officer of International Operations that
originated with the Predecessor Company. The agreement calls for the Vice
President to be paid on a bimonthly basis the following annual salary:

             Year Ending
             December 31,
             ------------
                 1999                                  $ 120,000
                 2000                                  $ 140,000
                 2001                                  $ 175,000
                 2002                                  $ 200,000

Royalty Agreement

On August 3, 1998, the Company assumed royalty agreements with its Design
Director and Chairman/Chief Executive Officer of International Operations that
originated with the Predecessor Company. The royalty is for a maximum amount of
2% of Company sales for a period of five years commencing November 18, 1998.
Royalty amounts are to be paid on a quarterly basis with a minimum royalty of
$4,167 per month for the twelve-month period commencing January 18, 1999 and
increasing to $8,333 per month hereafter.



<PAGE>

SONIC JET PERFORMANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
--------------------------------------------------------------------------------
NOTE 7 - RELATED PARTY TRANSACTIONS

Included in due from related parties are amounts due from the following related
parties as of June 30, 1999:

                                                                   (unaudited)
                                                                   ------------
Dalian Sonic Jet, Ltd.                                             $   349,223
Sonic Marketing International, LLC                                      35,172
Sonic Jet International, Inc.                                           63,956
Majed Al Rashid                                                         40,512
Michel Attias                                                              156
Sonic Jet (Florida)                                                     10,000
Sonic Jet (Nanning)                                                     78,461
                                                                   ------------
TOTAL                                                              $   577,480

Dalian Sonic Jet, Ltd. is a joint venture partner with SJPI, in which SJPI
shares 45% of the profit or loss of the joint venture. Sonic Marketing
International, LLC is owned by a stockholder of the Company. It used to market
the Company's products and has since ceased doing business. Sonic Jet
International, Inc. is owned by a stockholder and markets the Company's products
exclusively. Majed Al Rashid is a stockholder of the Company, and Michel Attias
is a stockholder of the Company.


NOTE 8 - SERIES A CONVERTIBLE PREFERRED STOCK

On June 17, 1998, the Company issued 1,600 shares of Series A Convertible
Preferred Stock ("Series A Preferred Stock") for $1,500,000, net of a discount
of $100,000. The holders of Series A Preferred Stock are not entitled to receive
dividends. The Series A Preferred Stock is convertible to common stock at the
option of the holders, subject to certain limitations, and is limited to a
formula of either a fixed conversion price of $4.00 per share or a variable
conversion price, as defined, not to exceed the fixed conversion price or at a
price that includes an unpaid premium if said premium is not paid in cash prior
to conversion. For conversion purposes, the Series A Preferred Stock
stockholders are entitled to an 8% premium from the day following the date of
issuance to the conversion date. If said premium is not paid in cash, the
premium is added to the face amount of $1,000 per share to determine the number
of common shares to be received on conversion. A total of 800,000 shares of
common stock have been reserved for the conversion of the Series A Preferred
Stock.

The Series A Preferred Stock is automatically convertible into common stock on
the fifth anniversary of the issuance date. If such conversion does not take
place at maturity, then the holders of the Series A Preferred Stock can require
the Company to purchase the shares for cash at a redemption amount as defined.

NOTE 9 - COMMON STOCK

On June 23, 1999 the Company issued 50,000 shares to JAG Enterprises as
consultant fee for services to be rendered in the 2nd and 3rd Quarter. The
shares have been valued at $5.75 per share which represent fair value at the
date of issue.



<PAGE>

                           SONIC JET PERFORMANCE, INC.
                                   FORM 10-QSB
                     FOR THE SIX MONTHS ENDED JUNE 30, 1999


           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

COMPARISON OF THE THREE AND SIX MONTHS ENDED 6/30/99 VS. THE THREE AND SIX
MONTHS ENDED 6/30/98

The following table sets forth the company's consolidated statements of
operations and the percentages that such items bear to net sales:
<TABLE>
<CAPTION>

                                                  THREE  MONTHS ENDED JUNE 30,                 SIX MONTHS ENDED JUNE 30,
                                          1999         %         1998          %         1999          %          1998         %

<S>                                    <C>          <C>       <C>         <C>         <C>            <C>       <C>          <C>
SALE                                    196,321      100.0      26,823       100.0    $ 766,021      100.0      102,888      100.0

Cost of Sales                            48,778       24.8      94,333       351.7      320,892       41.9      117,601      114.3

Gross profit (loss)                     147,543       75.2     (67,510)     (251.7)     445,129       58.1      (14,713)     (14.3)

Selling, General and Administrative     378,691      192.9     385,590     1,437.5      559,633       73.0      573,410       57.3

Gain/(Loss) from operations            (231,148)    (133.0)   (453,100)   (1,689.2)    (114,504)     (18.8)    (588,123)    (571.6)

Interest Income                           3,632        1.8      15,873        59.2        4,525        0.6       14,769       14.3

Interest expenses                        15,000        7.6          --          --       30,000        3.9           --         --

Other Income                              2,004        1.0          --          --         2004        0.3           --         --

Minority Interest                         2,585        0.4      (3,219)      (12.0)      (1,825)      (0.2)       9,517        9.0

Net Income/(Loss)                      (243,097)     (52.2)   (434,008)    (1630.0)   ($139,800)     (18.2)    (563,836)    (548.0)
</TABLE>

NET SALES

Net sales for the 3 months ended June 30,1999 increased by $169,498 or 631% to
$196,321 from 26,823 for 3 the months ended June 30, 1998 and for the 6 Month
ended June 30, 1999 by $663,133 or 644% to $766,021 from $102,888 for the 6
months ended June 30, 1998. Management attributes this increase to the sales of
parts to Dalian Sonic Jet, a joint venture partner of Sonic Jet Performance,
Inc. ("the Company"). Sales of parts amounted to $103,000 in the 3 months ended
June 30, 1999 as compared to zero in the 3 months ended June 30, 1998 and
$341,000 in the 6 months ended June 30, 1999 as compared to zero in the 6 months
ended June 30, 1998.



<PAGE>

COST OF SALES

Cost of Sales for the 3 months ended June 30, 1999 decreased by $45,555 or 48%
to $48,778 from $94,333 for the 3 months ended June 30, 1998 and for the 6
months ended June 30, 1999 increased by $203,291 or 172% to $320,892 from
$117,601 for the 6 months ended June 30, 1998. This is mainly attributed to the
increase of the raw material costs together with increased labor costs during 6
months ended June 30, 1999. The decrease during 3 months ended June 30, 1999 is
due to costs adjustment of goods transferred from Nanning operation. Further,
operations for the 3 months period ended June 30 1998 were at an early stage
compared to the scale of operations for the same period in 1999.

GROSS PROFIT

Gross profit for the 3 months ended June 30, 1999 increased by $215,053 to
$147,543 from ($67,510) for the 3 months ended June 30, 1998 and for the 6
months ended June 30, 1999 increased by $459,842 to $445,129 from (14,713) for
the 6 months ended June 30, 1998. Sales for the 6 months ended June 30, 1999
includes the sales of parts to Dalian Sonic Jet Ltd. The profit margin on sale
of parts to Dalian is higher during the three and six months period. Further,
the Company is mainly engaged in the production of personal watercraft and jet
boats on which the gross profit margin is higher.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses for the 3 months ended June 30,
1999 decreased by ($6,899) or 1.78% to $378,691 from (385,590) for the 3 months
ended June 30, 1998 and for the 6 months ended June 30, 1999 decreased by
($13,777) or 2.4% to $559,633 from ($573,410) for the 6 months ended June 30,
1998.

Insurance expenses for the 3 months ended June 30, 1999 decreased by $18,999 or
68% to $9,001 from $28,000 for the 3 months period ended June 30, 1998 and for
the 6 months ended June 30, 1999 expenses increased by $21,551 or 238% to $30572
from $9,021 for the 6 months ended June 30, 1998. Royalty expenses amounted to
$14,525 for the 3 months ended June 30, 1999 compared to $27,025 in 6 months
ended June 30, 1999. No royalty was payable for the 6 months ended June 30, 1998
as there were no sales of personal watercrafts. Research and development
expenses for 3 months ended June 30, 1999 decreased by $61,005 or 100% from
$61005 for the 3 months ended June 30, 1998 as compared to the 6 months ended
June 30, 1999 decreased by $196,780 or 100% from $196,780 for the 6 months ended
June 30, 1998. This was because research and development of products was
completed during the two quarters of 1998. Travel expenses for the 3 months
ended June 30, 1999 increased by $23,277 or 354% to $29,855 from $6,578 for the
3 months ended June 30, 1998 and for the 6 months ended June 30, 1999 increased
by $15,862 or 89% to $33,725 from $17,863 for the 6 months ended June 30, 1998.
Travel expenses were incurred for the Florida trip to set up the Company
subsidiary during the first and second quarter of 1999.

NET INCOME/(LOSS)

Net (Loss) for 3 the month ended June 30, 1999 was ($243,097) as compared to a
(loss) of $(434,008) for the 3 months ended June 30, 1998 and net (loss) for the
6 months ended June 30, 1999 was ($139,800) as compared to ($563,836) for 6 the
months ended June 30, 1998. This decease in loss is mainly attributable to
increase in sales and the fact that selling, general and administrative expenses
were relatively the same for the two periods, thereby causing such expenses to
be amortized over a greater sales base in the two quarters of 1999 as compared
to the two quarters of 1998.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal sources of capital have been cash flow from its
operations, the sale of Series A Convertible Preferred Stock and loans on an
as-needed basis.



<PAGE>

On June 17, 1998, the Company issued 1,600 shares of Series A Convertible
Preferred Stock ("Series A Preferred Stock") for $1,500,000, net of a discount
of $100,000. The holders of Series A Preferred Stock are not entitled to receive
dividends. The Series A Preferred Stock is convertible to common stock at the
option of the holders, subject to certain limitations, and is limited to a
formula of either a fixed conversion price of $4.00 per share or a variable
conversion price, as defined, not to exceed the fixed conversion price or at a
price that includes an unpaid premium if said premium is not paid in cash prior
to conversion. For conversion purposes, the holders of Series A Preferred Stock
stockholders are entitled to an 8% premium from the day following the day of
issuance to the conversion date. If said premium is not paid in cash, the
premium is added to the face amount of $1,000 per share to determine the number
of common shares to be received on conversion. A total of 800,000 shares of
common stock have been reserved for the conversion of the Series A Preferred
Stock.

The Series A Preferred Stock is automatically convertible into common stock on
the fifth anniversary of the issuance date. If such conversion does not take
place at maturity, then the holders of the Series A Preferred Stock can require
the Company to purchase the shares for cash at a redemption amount as defined.

Subsequent to December 31, 1998, Sonic Jet International, Inc., which currently
has exclusive rights to market the Company's products in North and South
America, Europe, some Pacific Rim countries and the Middle East, loaned the
company approximately $400,000.

Based on its current operating plan, the Company anticipates that additional
financing will be required to finance its operations and capital expenditures.
The Company's currently anticipated levels of revenues and cash flow are subject
to many uncertainties and cannot be assured. Further, unforeseen events may
occur causing the Company to raise additional funds. The amount of funds
required by the Company will depend upon many factors, including without
limitation, the extent and timing of sales of the Company's products, future
product costs, the timing and costs associated with the establishment and/or
expansion, as appropriate, of the Company's manufacturing, development,
engineering and customer support capabilities, the timing and cost of the
Company's product development and enhancement activities and the Company's
operating results. Until the Company generates cash flow from operations which
will be sufficient to satisfy its cash requirements, the Company will need to
seek alternative means for financing its operations and capital expenditures
and/or postpone or eliminate certain investments or expenditures. Potential
alternative means for financing may include leasing capital equipment, obtaining
a line of credit, or obtaining additional debt or equity financing. There can be
no assurance that, if and when needed, additional financing will be available,
or available on acceptable terms. The inability to obtain additional financing
or generate sufficient cash from operations could require the Company to reduce
or eliminate expenditures for capital equipment, research and development,
production or marketing of its products, or otherwise curtail or discontinue its
operations, which could have a material adverse effect on the Company's
business, financial condition and results of operations. Furthermore, if the
Company raises funds through the sale of additional equity securities, the
Common Stock currently outstanding may be further diluted.



<PAGE>

PART II. OTHER INFORMATION

Item 1.      Legal Proceedings.                                           None.

Item 2.      Changes in Securities.          50,000 Shares were issued to Jag
                                             enterprises on 6/23/99 in  exchange
                                             for services. See note 9 to the
                                             consolidated financial statement.

Item 3.      Defaults Upon Senior Securities.                             None.

Item 4.      Submission of Matters to a Vote of Security Holders.         None.

Item S.      Other Information.                                           None.

Item 6.      Exhibits and Reports on Form 8-K.   (a) Exhibits:            None.

                                                 (b) Reports on Form 8-K. None.








SIGNATURES

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

Date: August 18, 1999                   SONIC JET PERFORMANCE, INC.


                                                 By: /s/ VATCHE KHEDESIAN
                                                 -------------------------------
                                                 Name: Vatche Khedesian
                                                 Title: Treasurer