UNITED
STATES





SECURITIES
AND EXCHANGE COMMISSION





WASHINGTON,
D.C. 20549





_________________________________________





Form
10-Q




x
            QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE
      ACT OF 1934





For the
quarterly period ended June 30, 2009





o
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE
      ACT OF 1934





For the
transition period from ______ to ______







Commission
file number 000-25385








POWER
SPORTS FACTORY, INC..





(Exact
Name of Registrant as Specified in Its charter)





Minnesota
            41-1853993(State
      or Other Jurisdiction of
            (I.R.S.
      Employer Identification No.)Incorporation
      or Organization)6950
      Central Highway, Pennsauken, NJ
            08109(Address
      of principal executive offices)
            (Zip
      Code)








(856-488-9333)





(Registrant's
Telephone Number, Including Area Code)








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




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).    Yes o    No o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a smaller reporting company.  (Check
One):


Large
      accelerated filer  o
            Accelerated
      filer  oNon-accelerated
      filer    o
            Smaller
      reporting company  x


(Do not
check if a smaller reporting company)








Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  o Yes x No




The
number of shares outstanding the issuer's common stock, no par value, was
52,098,749 (not including shares of common stock representing conversion of
preferred stock where the preferred certificate has not been surrendered) as of
August 14, 2009.









Table of
Contents




PART
      I
              FINANCIAL
      INFORMATIONItem
      1.
              Financial
      Statements
              1Item
      2.
              Management's
      Discussion and Analysis or Plan of Operation
              22Item
      3.
              Quantitative
      and Qualitative Disclosures About Market Risk
              25Item
      4T.
              Controls
      and Procedures
              25PART
      IIItem
      6.
              Exhibits
              27EXHIBIT
      INDEX
              
              28


ii




Item
1.  Financial Statements





Power
Sports Factory, Inc.





I N D E
X




Page
      No.Consolidated
      Balance Sheets as at June 30, 2009 and December 31, 2008
      (Unaudited)
              2Consolidated
      Statements of Operations for the Six and Three Months
EndedJune
      30, 2009 and 2008 (Unaudited)
              3Consolidated
      Statements of Stockholders' DeficiencyFor
      the Period Ended June 30, 2009 (Unaudited)
              4Consolidated
      Statements of Cash FlowsFor
      the Six Months Ended June 30, 2009 and 2008 (Unaudited)
              5-6Notes
      to Unaudited Consolidated Financial Statements
              7-21




1




POWER
      SPORTS FACTORY, INC.CONSOLIDATED
      BALANCE SHEETS(Unaudited)ASSETS
  June
      30,
                
                
                December
      31,2009
                
                
                2008Current
      Assets:Cash
                
                $
                14,638
                
                
                $
                117Accounts
      receivable
                
                
                48,841
                
                
                
                67,749Inventory
                
                
                1,547,561
                
                
                
                1,735,181Prepaid
      expenses
                
                
                20,806
                
                
                
                97,363Total
      Current Assets
                
                
                1,631,846
                
                
                
                1,900,410Property
      and equipment-net
                
                
                20,898
                
                
                
                25,135Other
      assets
                
                
                8,800
                
                
                
                9,876TOTAL
      ASSETS
                
                $
                1,661,544
                
                
                $
                1,935,421Current
      Liabilities:Accounts
      payable
                
                $
                3,327,317
                
                
                $
                3,554,654Accounts
      payable to related party
                
                
                21,489
                
                
                
                28,383Notes
      payable to related party
                
                
                12,008
                
                
                
                22,863Current
      portion of long-term debt
                
                
                533,953
                
                
                
                387,882Convertible
      debt
                
                
                368,645
                
                
                
                501,356Accrued
      expenses
                
                
                1,683,563
                
                
                
                1,226,211Dividends
      Payable
                
                
                673,176
                
                
                
                673,176Customer
      deposit payable
                
                
                40,123
                
                
                
                52,774Total
      Current Liabilities
                
                
                6,660,274
                
                
                
                6,447,299Long
      term liabilites:Long-term
      debt - less current portion
                
                
                -
                
                
                
                7,370Convertible
      debt - less current portion
                
                
                -
                
                
                
                24,323Total
      Long-Term Liabilities
                
                
                -
                
                
                
                31,693TOTAL
      LIABILITIES
                
                
                6,660,274
                
                
                
                6,478,992Stockholders'
      Deficiency:Preferred
      stock; no value - authorized50,000,000
      shares, Series B Convertible PreferredStock
      - outstanding  -0- shares at June 30, 2009
                
                
                -
                
                
                
                -and
      -0- shares at December 31, 2008Common
      stock, no par value - authorized100,000,000
      sharesoutstanding  52,774,339
      shares at June 30, 2009 and31,375,188  shares
      at December 31, 2008
                
                
                6,470,979
                
                
                
                5,476,228Additional
      paid-in capital
                
                
                456,000
                
                
                
                456,000Deposits
      on common stock to be issued
                
                
                44,122
                
                
                
                -Deficit
                
                
                (11,969,831
                )
                
                
                (10,475,799
                )Total
      Stockholders' Deficiency
                
                
                (4,998,730
                )
                
                
                (4,543,571
                )TOTAL
      LIABILITIES ANDSTOCKHOLDERS'
      Deficiency
                
                $
                1,661,544
                
                
                $
                1,935,421
 See Notes
to Unaudited Consolidated Financial Statements


2




POWER
SPORTS FACTORY, INC.
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 (Unaudited)
 
 Six
      Months Ended
              
              
              Three
      Months EndedJune
      30,
              
              
              June
      30,2009
              
              
              2008
              
              
              2009
              
              
              2008Net
      sales
              
              $
              350,367
              
              
              $
              1,410,135
              
              
              $
              218,177
              
              
              $
              917,047Costs
      and Expenses:Cost
      of sales
              
              
              322,743
              
              
              
              991,519
              
              
              
              171,150
              
              
              
              556,347Selling, general and
      administrative expenses
              
              
              1,280,380
              
              
              
              2,112,796
              
              
              
              393,993
              
              
              
              717,837Non-cash
      compensation
              
              
              73,321
              
              
              
              -
              
              
              
              -
              
              
              
              -Bad
      debt expense
              
              
              21,400
              
              
              
              1,499
              
              
              
              13,529
              
              
              
              1,4991,697,845
              
              
              
              3,105,814
              
              
              
              578,672
              
              
              
              1,275,683Loss
      from operations
              
              
              (1,347,478
              )
              
              
              (1,695,679
              )
              
              
              (360,494
              )
              
              
              (358,636
              )Other
      income and  expenses:Acretion
      of beneficial conversion feature
              
              
              (24,323
              )
              
              
              -
              
              
              
              (12,010
              )
              
              
              -Interest
      expense
              
              
              (122,230
              )
              
              
              (69,560
              )
              
              
              (50,477
              )
              
              
              (41,129
              )Interest
      income
              
              
              -
              
              
              
              802
              
              
              
              -
              
              
              
              792(146,553
              )
              
              
              (68,758
              )
              
              
              (62,488
              )
              
              
              (40,337
              )Loss
      before benefitfrom income taxes
              
              
              (1,494,032
              )
              
              
              (1,764,437
              )
              
              
              (422,982
              )
              
              
              (398,973
              )Income
      tax benefit
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Net  loss
              
              $
              (1,494,032
              )
              
              $
              (1,764,437
              )
              
              $
              (422,982
              )
              
              $
              (398,973
              )Loss
      per common share - basicand diluted
              
              $
              0.03
              
              
              $
              0.24
              
              
              $
              0.06
              
              
              $
              -Weighted
      average common shares -Basic
      and diluted
              
              
              43,888,258
              
              
              
              7,499,190
              
              
              
              7,292,723
              
              
              
              10,073,167






3




POWER
SPORTS FACTORY, INC.


CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
 (Unaudited)
  Common
      Stock
                
                
                Additional
                
                
                Deposits
      On StockPreferred
                
                
                Stated
                
                
                
                
                
                Stated
                
                
                Paid-In
                
                
                To
      BeStock
                
                
                Value
                
                
                Shares
                
                
                Value
                
                
                Capital
                
                
                Issued
                
                
                (Deficit)
                
                
                TotalBalance
      at January 1, 2008
                
                
                2,303,216
                
                
                $
                2,687,450
                
                
                
                4,925,213
                
                
                $
                2,216,485
                
                
                $
                355,000
                
                
                $
                -
                
                
                $
                (6,605,465
                )
                
                $
                (1,346,530
                )Effect
      of one for twenty reverse stock split
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Issuance
      of preferred stock for services (valued at $2.50 to
      $7.00  per share)
                
                
                39,103
                
                
                
                63,543
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                63,54380000
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                80,000Issuance
      of 200,000 warrantsConversion
      of preferred stock into  common stock
                
                
                (2,342,319
                )
                
                
                (2,750,993
                )
                
                
                23,423,190
                
                
                
                2,750,993
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Issuance
      of common stock for debt
                  (valued
      at $.08 per share)
                
                
                -
                
                
                
                -
                
                
                
                1,262,500
                
                
                
                -
                
                
                
                101,000
                
                
                
                -
                
                
                
                -
                
                
                
                101,000Issuance
      of common stock for services
                  (valued
      at $.10 to $.70)
                
                
                -
                
                
                
                -
                
                
                
                1,214,285
                
                
                
                178,750
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                178,750Conversion
      of debt for common stock
                  (valued
      at $.08 to $.45)
                
                
                -
                
                
                
                -
                
                
                
                550,000
                
                
                
                250,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                250,000Net
      loss for the twelve months ended
                  December
      31,2008
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (3,870,334
                )
                
                
                (3,870,334
                )Balance
      at December 31,2008
                
                
                -
                
                
                
                -
                
                
                
                31,375,188
                
                
                
                5,476,228
                
                
                $
                456,000
                
                
                
                -
                
                
                
                (10,475,799
                )
                
                
                (4,543,571
                )165,000Sale
      of common stock
                  (valued
      at $.04 to $.05 per share)
                
                
                -
                
                
                
                -
                
                
                
                3,428,570
                
                
                
                165,000
                
                
                
                -
                
                
                
                -
                
                
                
                -Deposit
      on stock to be issued
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                44,122
                
                
                
                -
                
                
                
                44,122Issuance
      of common stock for fees
                  (valued
      at $.02 to $.05 per share)
                
                
                -
                
                
                
                -
                
                
                
                260,000
                
                
                
                12,800
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                12,800Issuance
      of common stock for expenses
                  (valued
      at $.02 per share)
                
                
                -
                
                
                
                -
                
                
                
                526,000
                
                
                
                10,521
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                10,521Issuance
      of common stock for incentives
                  (valued
      at $.05 per share)
                
                
                -
                
                
                
                -
                
                
                
                1,000,000
                
                
                
                50,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                50,000Conversion
      of debt for common stock
                  (valued
      at $.02 to $.08 per share)
                
                
                -
                
                
                
                -
                
                
                
                16,184,581
                
                
                
                756,430
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                756,430Net
      loss for the six months ended June 30, 2009
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (1,494,032
                )
                
                
                (1,494,032
                )Balance
      at June 30, 2009
                
                
                -
                
                
                $
                -
                
                
                
                52,774,339
                
                
                $
                6,470,979
                
                
                $
                456,000
                
                
                $
                44,122
                
                
                $
                (11,969,831
                )
                
                $
                (4,998,730
                )






4
  POWER
SPORTS FACTORY, INC.
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (Unaudited)
 
 For
      the Six MonthsEnded
      June 30,2009
                  
                  
                  2008CASH
      FLOW FROMOPERATING
      ACTIVITIES:Net
      loss
                  
                  $
                  (1,494,032
                  )
                  
                  $
                  (1,764,437
                  )Adjustments
      to reconcile net loss  to net cash used in operating
      activities:Depreciation
      and amortization
                  
                  
                  4,238
                  
                  
                  
                  4,885Non
      cash compensation
                  
                  
                  73,321
                  
                  
                  
                  63,543Non
      -cash fair value of warrants
                  
                  
                  -
                  
                  
                  
                  80,000Accretion
      of beneficial conversion feature
                  
                  
                  24,323
                  
                  
                  
                  63,810Changes
      in operating assetsand liabilities
                  
                  
                  1,009,983
                  
                  
                  
                  1,157,697Net
      cash (used in) operating activities
                  
                  
                  (382,167
                  )
                  
                  
                  (394,502
                  )CASH
      FLOW FROMINVESTING
      ACTIVITIES:Securiy
      deposit
                  
                  
                  1,076
                  
                  
                  
                  -Purchase
      of equipment
                  
                  
                  -
                  
                  
                  
                  (1,312
                  )Net
      cash provided by investing activities
                  
                  
                  1,076
                  
                  
                  
                  (1,312
                  )CASH
      FLOW FROMFINANCING
      ACTIVITIES:Proceeds
      from notes payable related party
                  
                  
                  5,000
                  
                  
                  
                  -Payment
      to note payable related party
                  
                  
                  (15,855
                  )
                  
                  
                  (500
                  )Proceeds
      from loan payable
                  
                  
                  547,500
                  
                  
                  
                  379,667Payments
      on loan
                  
                  
                  (350,155
                  )
                  
                  
                  (168,797
                  )Deposits
      on common stock to be issued
                  
                  
                  44,122
                  
                  
                  
                  -Proceeds
      from sale of common stock
                  
                  
                  165,000
                  
                  
                  
                  -Proceeds
      from convertible debt
                  
                  
                  -
                  
                  
                  
                  250,000Net
      cash provided by financing activities
                  
                  
                  395,612
                  
                  
                  
                  460,370






5




POWER
SPORTS FACTORY, INC.
 CONSOLIDATED
STATEMENTS OF CASH FLOWS (continued)
 (Unaudited)
  For
      the Six MonthsEnded
      June 30,2009
              
              
              2008Net
      increase in cash
              
              
              14,521
              
              
              
              64,556Cash
      - beginning of year
              
              
              117
              
              
              
              11,146Cash
      - end of year
              
              $
              14,638
              
              
              $
              75,702Changes
      in operating assetsand liabilities consists
    of:Decrease
      (increase) in accounts receivable
              
              $
              18,907
              
              
              $
              (146,438
              )Decrease
      in inventory
              
              
              187,620
              
              
              
              411,894Decrease
      (increase) in prepaid expenses
              
              
              76,557
              
              
              
              71,011Increase
      in accounts payable
              
              
              215,767
              
              
              
              453,898Increase
      in accrued expenses
              
              
              523,782
              
              
              
              301,537(Decrease)  in
      customer deposits
              
              
              (12,651
              )
              
              
              65,795$
              1,009,983
              
              
              $
              1,157,697Supplementary
      information:Cash
      paid during the year for:Income
      taxes
              
              $
              -
              
              
              $
              -Interest
              
              $
              37,924
              
              
              $
              14,559Non-cash
      financing activitiesIssuance
      of preferred stock for services
              
              $
              -
              
              
              $
              63,543Issuance
      of warrants for services
              
              $
              -
              
              
              $
              80,000Issuance
      of common stock for services
              
              $
              73,321
              
              
              $
              -Issuance
      of common stock for debt
              
              $
              756,430
              
              
              $
              -






6
 
  Power
Sports Factory, Inc.
 Notes to
Unaudited Consolidated Financial Statements
 June 30,
2009


1.
            Description
      of Business and Summary of Significant Accounting
  Policies





ORGANIZATION





Power
Sports Factory, Inc. (formerly Purchase Point Media Corp.), (the “Company”) was
incorporated under the laws of the State of Minnesota.





The
Company, through a reverse acquisition described below is in the business of
marketing, selling, importing and distributing motorcycles and
scooters.  The Company principally imports products from
China.  To date the Company has marketed significantly under the
Yamati and Andretti brands.





On May 1,
2009, the Company formed an Alternative Transportation Division named
"BikeShareSource (TM)". This newly launched division will market bike
sharing systems to municipalities and transit agencies, property managers and
real estate developers, colleges and universities, hotels, parks and other
transportation related businesses.




BASIS OF
PRESENTATION





On
September 5, 2007, the Company entered into a share exchange agreement with the
shareholders of Power Sports Factory, Inc. (“PSF”).  In connection
with the share exchange, the Company acquired the assets and assumed the
liabilities of PSF (subsidiary) as the acquirer.  The financial
statements prior to September 5, 2007 are those of PSF and reflect the assets
and liabilities of PSF at historical carrying amounts.





As
provided for in the share exchange agreement, the stockholders of PSF received
60,000,000 shares of the Company’s common stock and 1,650,000 of Series B
Convertible Preferred Stock (“Preferred Stock”) of the Company (each share of
preferred stock is convertible into 10 shares of common stock) representing 77%
of the outstanding stock after the acquisition, in exchange for the outstanding
shares of PSF common stock they held, which was accounted for as a
recapitalization.  The financial statements show a retroactive
restatement of the Company’s historical stockholders’ deficiency to reflect the
equivalent number of shares of common stock issued in the
acquisition.




GOING
CONCERN





The
Company’s consolidated financial statements for the six months ended June 30,
2009 have been prepared on a going concern basis which contemplates the
realization of assets and the settlement of liabilities in the normal course of
business.  Management recognizes that the Company’s continued
existence is dependent upon its ability to obtain needed working capital through
additional equity and/or debt financing and revenue to cover expenses as the
Company continues to incur losses.





The
Company presently does not have sufficient liquid assets to finance its
anticipated funding needs and obligations.  The Company’s continued
existence is dependent upon its ability to obtain needed working capital through
additional equity and/or debt financing and achieve a level of revenue and
production adequate to support its cost structure.  Management is
actively seeking additional capital to ensure the continuation of its current
operations, complete its proposed activities and fund its current debt
obligations.  However, there is no assurance that additional capital
will be obtained.  These uncertainties raise substantial doubt about
the ability of the Company to continue as a going concern.  The
accompanying consolidated financial statements do not include any adjustments
that might result from the outcome of these uncertainties should the Company be
unable to continue as a going concern.




7




Power
Sports Factory, Inc.
 Notes to
Unaudited Consolidated Financial Statements
 June 30,
2009


SIGNIFICANT
ACCOUNTING POLICIES





PRINCIPLES
OF CONSOLIDATION





The
Company’s consolidated financial statements include the accounts of the Company
and its wholly-owned and majority-owned subsidiaries.  All
inter-company transactions and balances have been eliminated.





USE OF
ESTIMATES





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 period. Actual results could differ from those
estimates.





CONCENTRATION
OF CREDIT RISK





Financial
instruments which potentially subject the Company to concentration of credit
risk consist principally of accounts receivable.  The Company grants
credit to customers based on an evaluation of the customer’s financial
condition, without requiring collateral.  Exposure to losses on the
receivables is principally dependent on each customer’s financial
condition.  The Company controls its exposure to credit risk through
credit approvals.





INVENTORIES





Inventories
are stated at the lower of cost or market.





REVENUE
RECOGNITION





The
Company recognizes revenue in accordance with the guidance contained in SEC
Staff Accounting Bulletin No. 104 "Revenue Recognition Financial Statements"
(SAB No. 104). Revenue is recognized when the product has been delivered and
title and risk of loss have passed to the customer, collection of the
receivables is deemed reasonably assured by management, persuasive evidence of
an agreement exist and the sale price is fixed and determinable.





EARNINGS
PER SHARE





Basic
loss per share is computed by dividing net loss by the weighted average number
of common shares outstanding during the specified period.  Diluted
loss per common share is computed by dividing net loss by the weighted average
number of common shares and potential common shares during the specified
period.  All potentially dilutive securities at June 30, 2009 and 2008
which include stock purchase warrants and convertible debt, are convertible into
8,150,000 and 1,000,000 common shares, respectively have been excluded from the
computation as their effect is antidilutive.





EVALUATION
OF LONG-LIVED ASSETS





The
Company reviews property and equipment and finite-lived intangible assets for
impairment whenever events or changes in circumstances indicate the carrying
value may not be recoverable in accordance with guidance in Statement of
Financial Accounting Standards (SFAS) No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets." If the carrying value of the long-lived asset
exceeds the present value of the related estimated future cash flows, the asset
would be adjusted to its fair value and an impairment loss would be charged to
operations in the period identified.





DEPRECIATION
AND AMORTIZATION





Property
and equipment are stated at cost. Depreciation is provided for by the
straight-line method over the estimated useful lives of the related
assets.





8


Power
Sports Factory, Inc.
 Notes to
Unaudited Consolidated Financial Statements
 June 30,
2009





STOCK
BASED COMPENSATION





For the
six months ended June 30, 2009 and 2008, the Company issued -0- and 200,000
warrants and recorded consulting expense of $-0- and $80,000, respectively, the
fair value of the warrants at the time of issuance.





For the
six months ended June 30, 2009 and 2008, the Company issued 1,786,000
and -0- shares of its common stock and recorded consulting expenses of
$73,321 and $-0-, respectively, the fair value of the shares at the
time of issuance.









INCOME
TAXES





The
Company accounts for income taxes using an asset and liability approach under
which deferred taxes are recognized by applying enacted tax rates applicable to
future years to the differences between financial statement carrying amounts and
the tax basis of reported assets and liabilities. The principal item giving rise
to deferred taxes are future tax benefits of certain net operating loss
carryforwards.





BENEFICIAL
CONVERSION FEATURE





When debt
or equity is issued which is convertible into common stock at a discount from
the common stock market price at the date the debt or equity is issued, a
beneficial conversion feature for the difference between the closing price and
the conversion price multiplied by the number of shares issuable upon conversion
is recognized.  The beneficial conversion feature is presented as a
discount to the related debt, with an offering amount increasing additional
paid-in capital.





FAIR
VALUE OF FINANCIAL INSTRUMENTS





For
financial instruments including cash, accounts payable, accrued expenses, and
loans payable, it was assumed that the carrying amount approximated fair value
because of the short maturities of such instruments.





RECLASSIFICATIONS





Certain
reclassifications have been made to prior period amounts to conform to the
current year presentation.  We made changes to dividends payable but
it had no effect on the statement of operations.





NEW
FINANCIAL ACCOUNTING STANDARDS





In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”, which
enhances existing guidance for measuring assets and liabilities using fair
value.  This Standard provides a single definition of fair value,
together with a framework for measuring it, and requires additional disclosure
about the use of fair value to measure assets and
liabilities.    In February 2008, the FASB issued FASB
Staff Position SFAS 157-1, “Application of SFAS No. 157 to SFAS No. 13 and Its
Related Interpretative Accounting Pronouncements that Address Leasing
Transactions” (“FSP SFAS 157-1”) and FASB Staff Position SFAS 157-2, “Effective
Date of SFAS No. 157” (“FSP SFAS 157-2”). FSP SFAS 157-1 excludes SFAS No.
13 and its related interpretive accounting pronouncements that address leasing
transactions from the requirements of SFAS No. 157, with the exception of fair
value measurements of assets and liabilities recorded as a result of a lease
transaction but measured pursuant to other pronouncements within the scope of
SFAS No. 157. FSP SFAS 157-2 delays the effective date of SFAS No. 157 for
all nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually). FSP SFAS 157-1 and FSP SFAS 157-2 became effective
for the Company upon adoption of SFAS No. 157 on January 1, 2008. See Note 4 of
Notes to Condensed Consolidated Financial Statements for disclosures related to
the Company’s financial assets accounted for at fair value on a recurring or
nonrecurring basis.  The Company completed its implementation of SFAS
No. 157 effective January 1, 2009 and it did not have a material impact on its
financial statements.




9




Power
Sports Factory, Inc.
 Notes to
Unaudited Consolidated Financial Statements
 June 30,
2009


In
December 2007, the FASB issued SFAS No. 141(R), which replaces SFAS No. 141
“Business Combinations”.  This Statement is intended to improve the
relevance, completeness and representational faithfulness of the information
provided in financial reports about the assets acquired and the liabilities
assumed in a business combination.  This Statement requires an
acquirer to recognize the assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree at the acquisition date, measured at
their fair values as of that date, with limited exceptions specified in the
Statement.  Under SFAS No. 141(R), acquisition-related costs,
including restructuring costs, must be recognized separately from the
acquisition and will generally be expensed as incurred.  That replaces
SFAS No. 141’s cost-allocation process, which required the cost of an
acquisition to be allocated to the individual assets acquired and liabilities
assumed based on their estimated fair values.  SFAS No. 141(R) shall
be applied prospectively to business combinations for which the acquisition date
is on or after the beginning of the first annual report period beginning on or
after December 15, 2008.  The Company has adopted SFAS No. 141(R)
effective January 1, 2009 and it did not have a material impact on its financial
statements.




In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles”.  SFAS No. 162 identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States.  The Company has adopted SFAS No. 162 effective
January 1, 2009 and it did not have a material impact on its financial
statements.




2.
            Inventories





The
components of inventories are as follows:





June
      30,
              
              
              December
      31,2009
              
              
              2008Motor
      bikes
              
              $
              1,171,223
              
              
              $
              1,339,802Parts
              
              
              126,338
              
              
              
              145,379Deposits
      on Inventory
              
              
              250,000
              
              
              
              250,000$
              1,547,561
              
              
              $
              1,735,181





In
October, 2007, the Company entered into a Manufacturing Agreement, and
subsequently entered into an Amendment thereto, with Dickson International
Holdings Ltd. for the manufacture of Andretti/Benelli branded motor scooters for
the exclusive distribution thereof in the United States by the Company. The
Manufacturing Agreement is for a term of two years and is renewable for
successive two-year terms unless either party gives notice of termination in
advance of the renewal period.   The Company is required to use
commercially reasonable efforts to purchase certain minimum quantities of motor
scooters.  As an initial deposit under the Manufacturing Agreement,
the Company issued to Dickson Holdings Ltd. 500,000 shares of the Company’s
common stock valued at $250,000.




On August
12, 2008, the Company entered into an interim inventory funding arrangement with
a distributor whereby the distributor has agreed to acquire inventory of makes
and models from the Company’s manufacturers under the Andretti brand and finance
them exclusively for the Company over a ninety day period for an average cost of
3.333% per month.  On August 26, 2008, the parties modified the
agreement to four percent fixed plus interest of one and one-tenth percent per
month after ninety days plus fees up to one hundred and eighty
days.  The Company also issued the distributor 250,000 shares of its
common stock valued at $62,500 as an additional incentive.  The
Company may utilize this arrangement up to one million two hundred thousand
dollars.  The distributor has the right to acquire inventory at
substantially favorable pricing if it desires to sell the product in territories
that the Company has no dealers.  These transactions must be approved
by the Company.  The Company maintains product liability and warranty
responsibility on the entire inventory, as well as financing costs and
warehousing costs.  If the Company does not take possession of the
inventory at the end of any ninety day period, the distributor has the right to
sell them at cost.  The agreement is personally guaranteed by a
current officer of the Company.




10




Power
Sports Factory, Inc.
 Notes to
Unaudited Consolidated Financial Statements
 June 30,
2009




3.
            Property
      and Equipment




June
      30,
              
              
              December
      31,2009
              
              
              2008Equipment
              
              $
              41,898
              
              
              $
              41,898Signs
              
              
              7,040
              
              
              
              7,040Software
              
              
              -
              
              
              
              -48,938
              
              
              
              48,938Less:
      accumulated depreciation
              
              
              28,040
              
              
              
              23,803$
              20,898
              
              
              $
              25,135




Depreciation
expense for the six and three months ended June 30, 2009 and 2008 amounted to
$4,238 and $4,885 and $1,994 and $2,414, respectively.




11




Power
Sports Factory, Inc.
 Notes to
Unaudited Consolidated Financial Statements
 June 30,
2009


4.
            Long-term
      debt





Long-term
debt consists of the following:




June
      30,
            
            
            December
      31,2009
            
            
            2008Note
      payable to Five PointCapital
      Inc. due May 2011;interest
      at 18.45%; monthlypayments
      of $397
            
            $
            -
            
            
            $
            10,461Note
      payable due April 30, 2008;interest
      at 10% payable atmaturity
      (1)
            
            
            65,000
            
            
            
            68,645Note
      payable to Cananwill, Inc dueAugust
      1, 2009, interest at 8.84%;monthly
      payments of $7,027
            
            
            -
            
            
            
            54,393Note
      payable to Cananwill, Inc. dueAugust
      1, 2009, interest at 8.59%monthly
      payments of $2,807
            
            
            -
            
            
            
            21,753Note
      payable to BankDirectdue
      January 12, 2010; interest at 8%Monthly
      payments of $2,333
            
            
            18,119
            
            
            
            -Note
      payable to Crossroads Financial dueJanuary
      9, 2010, interest 21% plus fees,monthly
      payments variable
            
            
            425,834
            
            
            
            -Note
      payable due May 24, 2009,10.0%
      simple interest with a private investor
            
            
            25,000Note
      payable due June 15, 2008;interest
      at 20.0% simple interest with aprivate
      investor(s) (5)
            
            
            -
            
            
            
            240,000533,953
            
            
            
            395,252Less
      amounts due within one year
            
            
            533,953
            
            
            
            387,882$
            -
            
            
            $
            7,370


For the
six and three months ended June 30, 2009 and 2008, the Company recorded interest
expense of $122,230, $69,660 and $50,477and $41,129, respectively.




12




Power
Sports Factory, Inc.
 Notes to
Unaudited Consolidated Financial Statements
 June 30,
2009




1)
              On
      July 31, 2007, the Company borrowed $80,000 from an
      investor.  The note matured on April 30, 2008 at which time
      the principal amount plus ten percent interest was due. The maturity
      date was extended to May 30, 2008 and then extended to October 1, 2008.
      The Company issued 10,000 shares of the Company’s common stock valued at
      $3,000, as additional consideration with the loan, subsequent to March 31,
      2008. On June 30, 2009 the balance on this note is $68,645. This note is
      currently in default.
  2)
              On
      April 15, 2008, the Company entered into a short term promissory note with
      a private investor in the amount of $300,000.  The interest rate
      is a simple twenty percent and the note matures on June 15, 2008. The
      balance on this note is -0-.  On March 12, 2009, the Company
      issued 250,000 shares to the investor as compensation valued at $12,500
      for an extension on this loan until July 1, 2009. On May 11, 2009 the
      $240,000 balance of the note and the accrued interest in the amount of
      $46,430 was converted to 4,163,487 shares of common
  stock.
  3)
              On
      March 26, 2009, the Company entered into a premium finance Agreement with
      Bank Direct Capital Finance for the purchase of insurance.  The
      total amount financed was $22,500, with and annual percentage rate of 8%
      and monthly payments of $2,333.
  4)
              On
      January 9, 2009, the Company entered into a revolving credit loan (the
      “Credit Facility”) with Crossroads Debt LLC, a private investment company
      (the “Lender”).  The loan is for a term of one year which is
      renewable under certain conditions and in the amount of $1,000,000. 
      Terms under the agreement include and origination fee of one and one-half
      percent,  interest of one and three-quarters percent per month, a
      collateral management fee of one-half percent a month, an advance rate of
      fifty percent of cost, which includes supplier invoice, freight and
      customs, with a maturity on advances of one hundred and twenty days, audit
      fees, a minimum outstanding balance requirement of three hundred and fifty
      thousand dollars and an early termination fee of seven thousand five
      hundred dollars per month for every month still outstanding in the
      term.  The Lender has a first security interest in all accounts,
      chattel paper, goods (including inventory and equipment), instruments,
      investment property, documents, and general intangibles, letter of credit
      rights, commercial tort claims, deposit accounts, and the proceeds thereof
      via Uniform Commercial Code Filing Position.   As of June
      30, 2009, the outstanding balance on this line is
  $425,834.
  5)
              On
      April 24, 2009, the Company borrowed $25,000 from an investor on a short
      term basis.  The interest rate is ten percent.  The
      loan was due on May 24, 2009.  This loan is in default and the
      lender has instituted legal action. The loan is personally guaranteed by
      an officer and director of the
company.
  13
 Power
Sports Factory, Inc.
 Notes to
Unaudited Consolidated Financial Statements
 June 30,
2009
  The
aggregate amounts of all long-term debt to be repaid for the year following
December 31, 2009 is:
  2009
                
                $
                533,9532010
                
                
                -2011
                
                
                -533,953Current
      portion
                
                
                533,953$
                -
  5.
              Convertible
      Debt
 
 On
September 7, 2007, the Company issued four convertible promissory notes for a
total of $150,000 with interest at twelve (12.0%) percent.  The notes
mature October 1, 2009.  The notes are convertible, at the option of the
holders, into 300,000 shares of the Company’s common stock.  Quarterly
interest and principal payments are $5,812.50 per note.  Total interest due
June 30, 2009 is $35,115. Payments due under the note for are currently in
default.
 
 On
November 2, 2007, the Company issued a convertible promissory note for $250,000
with interest at twelve (12%) percent.  The note matured on April 30,
2008.  The maturity date had been extended to October 1, 2008. The note is
convertible, at the option of the holder, into 250,000 shares of the Company’s
common stock. On August 6, 2008, this note and accrued interest of $25,000 were
converted in to 550,000 common shares.
 
 On
January 4, 2008, the Company entered into a short term secured convertible
promissory note with a private investor for $250,000 at an annual simple
interest rate of 15%.  The note originally matured on March 1, 2008 and was
extended to August 15, 2008.  This note is currently in default. The note
has the option to convert into common shares @ $1.00 per share.  The
Company granted the investor a security interest in all of the Company’s right,
title and interest in all inventory of motorcycles, motor scooters, parts
accessories and all proceeds of any and all of same including insurance payments
and cash.  On December 9, 2008, the investor executed an agreement
with the Company’s new inventory financier in which the private investor
accepted a $100,000 payment towards principal, subordinated his security
interest to the new inventory financier and agreed to a stand still subject to
written authorization from the new financier.
 
 On
October 1, 2008, the Company borrowed $150,000 on a short term basis at fifteen
percent interest compounded monthly and 125,000 shares of common stock valued at
$22,500.  The note and interest were due on November 30,
2008.  On January 7, 2009, the Company was granted an extension until
May 1, 2009 at which time the note was modified to include a conversion feature
at $.02 a share for all, or any part, of the principal and interest
due.  Principal payments of $85,000 have been made and the outstanding
principal balance is $65,000.  This note has been extended to
September 1, 2009.
 
 The
Company has evaluated the conversion feature under applicable accounting
literature, including SFAS No. 133, “Accounting for Derivative Instruments and
Hedging Activities” and EITF 00-19 “Accounting for Derivative Financial
Instruments indexed to, and Potentially Settled in, a Company’s Owned Stock” and
concluded that none of these features should be respectively accounted for as
derivatives.  The difference between the conversion of $650,000 and
the fair value of the common stock into which the debt is convertible of
$470,000 was included as additional paid in capital based on the conversion
discount. The beneficial conversion factor in the amount of $180,000 is being
accreted over the lives of the outstanding debt.  Accretion expense of
the beneficial conversion feature for the six months ended June 30, 2009
amounted to $24,323.  For the six months ended June 30, 2009, and
2008, the Company recorded interest expense of $23,481 and $43,684 respectively
on the convertible notes of which $36,492 is included in accrued expenses on the
Company’s balance sheet.
  14
  Power
Sports Factory, Inc.
 Notes to
Unaudited Consolidated Financial Statements
 June 30,
2009
  6.
              Note
      Receivable/Note Payable - Related
Party
 
 a)
              During
      2008 and 2007, certain officers of the Company made advances to the
      Company.  After repayment to the officers, the balance due the
      officers as of June 30, 2009, and December 2008, were $12,008 and $22,863,
      respectively.  Two of the advances are interest free and all are
      due upon demand.  Interest expense for the six months ended June
      30, 2009, and 2008 were $270 and $240,
  respectively.
 
 7.
              Accrued
      Expenses
 
 Accrued
expenses consist of the following:
  June
      30,
                
                
                December
      31,2009
                
                
                2008Payroll
      expense
                
                $
                252,149
                
                
                $
                167,902Payroll
      tax expense
                
                
                472,471
                
                
                
                379,572Penalties
                
                
                804,651
                
                
                
                486,903Professional
      fees
                
                
                11,000
                
                
                
                50,438Interest
      expense
                
                
                143,292
                
                
                
                141,296$
                1,683,563
                
                
                $
                1,226,111
  8.
              Stockholders’
      Equity
 
 Common Stock
 The
Company is authorized to issue 100,000,000 shares of no par value common
stock.    All the outstanding common stock is fully paid and
non-assessable.  The total proceeds received for the common stock is
the value used for the common stock.
 
 In June
2008, the Company’s shareholders approved a 1 for 20 reverse stock
split.  Except for the presentation of common shares authorized and
issued on the consolidated balance sheet, all shares and per share information
has been revised to give retroactive effect to the reverse stock
split.
 
 During
2007, certain officers of the Company contributed $175,000 to the Company, which
is included in Additional paid-in capital on the Company’s consolidated balance
sheet.
 
 a)
              On
      August 6, 2008, the Company converted a $250,000 note payable and accrued
      interest of $25,000 into 550,000 common
shares.
 
 b)
              On
      August 20, 2008, the company retained a consultant to provide equity
      research services.  The Consultant was compensated 75,000 common
      shares for these services valued at
$18,750.
 
 c)
              On
      August 26, 2008, the Company issued a distributor 250,000 shares of common
      stock valued at $62,500.
 
 d)
              On
      August 28, 2008, the Company paid compensation to a staffing company for
      providing sales personnel for a total of $20,000, which was paid $10,000
      in cash and 14,285 shares of common stock valued at
    $10,000.
 
 e)
              On
      September 25, 2008, the Company retained a consultant to provide long
      range investor relations planning.  The consultant was
      compensated 250,000 shares of common stock valued at $25,000 for these
      services.
  15
 Power
Sports Factory, Inc.
 Notes to
Unaudited Consolidated Financial Statements
 June 30,
2009
 f)
              On
      September 29, 2008, an officer and director of the company, converted
      $40,000 of debt into 500,000 shares of common
  stock.
 
 g)
              On
      September 29, 2008, an officer and director of the company, converted
      $21,000 of debt into 262,500 shares of common
  stock.
 
 h)
              On
      September 29, 2008, a consultant of the Company converted $40,000 of debt
      into 500,000 shares of common
stock.
 
 i)
              On
      October 1, 2008, the Company issued 125,000 shares of common stock to a
      lender valued at $22,500.
 
 j)
              On
      October 21, 2008, the Company entered into an agreement with a firm to
      provide the Company with capital restructuring and corporate financing
      advice.  The firm was compensated 500,000 shares of common stock
      valued at $40,000.
 
 k)
              On
      January 7, 2009, a creditor converted $90,000 of debt into 4,500,000
      shares of common stock.
 
 l)
              On
      January 7, 2009, an officer and director converted $10,520 into 526,000
      shares of common stock.
 
 m)
              On
      January 7, 2009, a creditor converted $20,000 of debt into 1,000,000
      shares of common stock.
 
 n)
              On
      February 12, 2009, an officer converted $21,000 into 666,666 shares of
      common stock.
 
 o)
              On
      March 9, 2009, the company issued 1,000,000 shares of common stock to a
      senior sales executive as a retention incentive package valued at
      $50,000.
 
 p)
              On
      March 30, 2009, the Company sold 428,750 shares of common stock to an
      investor for $15,000.
 
 q)
              On
      April 6, 2009 the Company sold 2,000,000 shares of  common stock
      to an investor for $100,000
 
 r)
              On
      April 24, 2009, the Company sold 1,000,000 shares of common stock to an
      investor for $50,000.
 
 s)
              On
      April 28, 2009, the Company converted $90,000 of debt into 1,250,000
      shares of common stock.
 
 t)
              On
      May 11, 2009, the Company converted $286,430 comprised of $240,000 in
      principal and $46,430 in accrued interest into 4,163,487 shares of common
      stock.
 
 u)
              On
      May 11, 2009, the Company converted $250,000 of accounts payable due to
      its manufacturing supplier into 4,604,428 shares of common
      stock.
  16
  Power
Sports Factory, Inc.
 Notes to
Unaudited Consolidated Financial Statements
 June 30,
2009
  Preferred
Stock
 The
Company is authorized to issue 50,000,000 shares of no par value preferred
stock.  The Company has designated 3,000,000 of these authorized
shares of preferred stock as Series B convertible Preferred
Stock.  The Board of Directors has the authority, without action by
the stockholders, to designate and issue the shares of preferred stock in one or
more series and to designate the rights, preferences and each series, any or all
of which may be greater than the rights of the Company’s common
stock.
 
 a)
              During
      2007, the Company sold 54,000 shares of Series B Convertible Preferred
      Stock and received proceeds of
$270,000.
 
 b)
              During
      2007, the Company issued 333,316 shares of Series B Convertible Preferred
      Stock in exchange for the liquidation of $1,663,000 of Company
      debt.
 
 c)
              During
      2007, the Company issued 265,900 shares of Series B Convertible Preferred
      Stock for services with a fair value of
  $726,950.
 
 d)
              On
      January 18, 2008, the Company retained a firm to provide management
      consulting, business advisory, shareholder information and public relation
      services. The term of the agreement is one year. The Company issued 35,000
      Series B Convertible shares for services to be performed with a fair value
      $43,750 and pays $2,500 per month as compensation under the
      agreement.
 
 e)
              On
      March 24, 2008, the Company issued 389 shares of Series B Convertible
      Preferred Stock for services valued at
$1,712.
 
 f)
              On
      April 1, 2008, the Company retained a marketing consultant for
      $15,000.  On April 21, 2008, the consultant agreed to convert
      his payable into 3,000 shares of Series B Convertible
    Shares.
 
 g)
              On
      April 24, 2008, the Company paid compensation to staffing company for
      providing permanent accounting personnel for a total of $10,272, which was
      paid $7,191 in cash and 514 shares of Series B Convertible Preferred
      Shares.
 
 h)
              On
      May 16, 2008, the Company issued MCMC, LLC. 200 shares of Series B
      Convertible Preferred Shares.
  In June
2008, the Board of Directors converted all shares of Series B Convertible
Preferred shares outstanding on that date into shares of common stock at the
rate of 10 shares for each share of Series B Convertible Preferred
Stock.
 
 9.
              Income
      Taxes
  The
Company adopted the provisions of financial Interpretation No. 48, “Accounting
for Uncertainty in Income Taxes” (“FIN 48”) on January 1, 2007.  As a
result of the implementation of FIN 48, the Company recognized no adjustment in
the net liability for unrecognized income tax benefits.
 10.
                Warrants
  During
January 2008, the Company issued a warrant to purchase 200,000 common shares at
an exercise price of $0.01 per share.  The warrant expires December
31, 2017.  The fair value of the warrant is estimated on the date of
the grant using the Black-Scholes option-pricing model with the following
weighted average assumptions used for the warrant in 2008: dividend yields of
0%, expected volatility of 218% and expected life of 10 years.
  17
  Power
Sports Factory, Inc.
 Notes to
Unaudited Consolidated Financial Statements
 June 30,
2009
  Summary
of warrant activity as of June 30, 2009 and the changes during the six months
ended June 30, 2009:
  WeightedWeighted
                
                
                Average
                
                
                AggregateAverage
                
                
                Remaining
                
                
                IntrinsicWarrants
                
                Shares
                
                
                Exercise Price
                
                
                Contractual Term
                
                
                ValueOutstanding
      at January 1, 2009
                
                
                200,000
                
                
                $
                0.01
                
                
                
                9.5Granted
                
                
                -
                
                
                
                -
                
                
                
                
                
                
                $
                -Exercised
                
                
                -
                
                
                
                -Forfeited,
      expired or cancelled
                
                
                -
                
                
                
                -
                
                
                
                
                
                
                $
                -Outstanding
      at June 30, 2009
                
                
                200,000
                
                
                $
                0.01
                
                
                
                9.5Exercisable
      at June 30, 2009
                
                
                200,000
                
                
                $
                0.01
                
                
                
                9.5
   a.
              Dividend
      Payable
 
 In
September 2007, the Company entered into a share exchange agreement with the
shareholders of PSF.  Following the share exchange, the Company would
transfer its existing business relating to the development of lastword® to its
subsidiary, The Last Word Inc.  To distribute the existing business of
the Company to the shareholders, the Board of Directors of PPMC declared a
dividend, payable in common stock of our subsidiary holding the lastword®
technology, at the rate of one share of common stock of the subsidiary for each
share of common stock of PPMC owned on the record date.  The Board of
Directors of PPMC used May 2, 2007, as the record date for this share dividend,
with a payment date as soon as practicable thereafter.  Prior to the
payment of this dividend, our subsidiary holding the lastword® technology will
have to file a registration statement under the Securities Act of 1933 with, and
have the filing deemed effective by the SEC.  As of December 31, 2008
and June 30, 2009, the dividend payable in the amount of $673,176 represents the
net liabilities that would be assumed by The Last Word Inc.
 
 13.
              Commitments
      and Contingencies
 
 a)
              On
      April 1, 2007, the Company hired two consultants to provide transition
      management services, business planning, managerial systems analysis, sales
      and distribution assistance and inventory management systems
      services.  Both contracts are each $15,000 per month and can be
      terminated at will when the Company decides that the services have been
      completed and/or are no longer necessary.  One contract ceased
      on May 15, 2008.  The other contract ceased on August 15
      2008.
 
 b)
              On
      May 15, 2007, the Company entered into an exclusive licensing agreement
      with Andretti IV, LLC, a Pennsylvanian limited liability company to brand
      motorcycles and scooters.  The term of the agreement is through
      December 31, 2017.  Royalties under the agreement are tied to
      motorcycle and scooter sales branded under the “Andretti
      line”.  The agreement calls for a minimum annual
      guarantee.  After year two of the agreement, if the Company does
      not sell a certain minimum number of motorcycles and scooters under the
      “Andretti Line” it may elect to terminate the licensing agreement. A
      minimum payment of $250,000 was due under the agreement on March 31,
      2008.  A minimum payment of $250,000 was also due on July 31,
      2008.  These two payments totaling $500,000 represent the minimum
      annual guarantee owed to Andretti IV LLC for 2008.  In addition,
      after certain volume targets are met, Andretti IV LLC receives a per bike
      fee.  A consultant working for the Company co-guaranteed the minimum
      annual guarantee for the first two years and receives a 4.1667% of the
      license fees as a fee throughout the life of the license related to that
      work. The consultant subsequently became an officer and director of the
      Company.  On January 1, 2008, the Company issued a warrant to
      Andretti IV, LLC, pursuant to their May 15, 2007 agreement, to purchase
      200,000 common shares following the effectiveness of the Reverse Split at
      an exercise price equal to $.01 per share.  The warrant expires
      December 31, 2017.  The Company issued the warrant as part of the
      consideration to Andretti IV LLC in connection with the original license
      agreement signed in May 2007.  The Company paid $50,000 as a
      licensing fee in 2007.  The Company has paid $50,000 in 2008. The
      warrant has been accounted for in the financial
  statements.
 
 18
  Power
Sports Factory, Inc.
 Notes to
Unaudited Consolidated Financial Statements
 June 30,
2009
  c)
              On
      June 1, 2007, the Company hired Steven A. Kempenich as its Chief Executive
      Officer and a director of the Company.  His contract is a
      two-year agreement at $16,666 per month.  On August 14, 2008, he
      was terminated for cause.
  d)
              On
      October 11, 2007, the Company retained a firm to provide corporate
      communications and investor relations.  The agreement is for one
      year which automatically renews unless either party elects to terminate
      the agreement with a notice of termination no later than sixty days prior
      to the end of the term.  Fees for these services are $5,000 per
      month and 20,000 shares of common stock.  Fees are earned but
      deferred until the seventh month at which time the deferred fees are paid
      in equal amounts along with the current fees as they are
      incurred.  The Company paid $24,000 as consulting fees in 2007
      of which $14,000 was paid with 1,000 shares of preferred
      stock.
  e)
              Effective
      January 1, 2008, the Company entered into a monthly agency retainer
      agreement with a marketing and advertising firm to provide the company
      with services at a fee of $25,000 per month. This agreement ceased at the
      end of May, 2008.
  f)
              On
      January 18, 2008, the Company retained a firm to provide management
      consulting, business advisory, shareholder information and public relation
      services.  The term of the agreement is one year.  The
      Company issued 35,000 Series B Convertible shares and pays $2,500 per
      month as compensation under the
agreement.
  g)
              On
      May 14, 2008, the Company signed an agreement with Road America Motor
      Club, Inc., to provide a 24 hour road-side assistance program to Andretti
      motorbike owners.  The agreement commenced as of April 1, 2008
      and continues for an initial term of two years, or until terminated by
      either party according to the terms of the agreement.  The
      Company pays for the enrollment of each bike properly entered into the
      company warranty program for a period of one year subject to term and
      conditions.
  h)
              On
      June 27, 2008, the Company entered into a second licensing agreement with
      Andretti IV, LLC, to further utilize the name Andretti in the branding and
      sale of its Yamati brand line.  The term of the agreement is through
      December 31, 2018.  Royalties under the agreement are tied to
      motorcycle and scooter sales branded under the “Andretti Yamati
      line”.  The agreement calls for a Minimum Annual
      Guarantee.  Minimum payment of $45,000 was due on September 30,
      2008.  A minimum payment of $45,000 is also due on December 31,
      2008.  These payments have not been made.  After year two
      of the agreement, if the Company does not sell a certain minimum number of
      motorcycles and scooters under the “Andretti Yamati Line” it may elect to
      terminate the licensing agreement.
  19
  Power
Sports Factory, Inc.
 Notes to
Unaudited Consolidated Financial Statements
 June 30,
2009
 i)
              On
      July 16, 2008, the Company entered into contracts with a storage company
      to provide warehousing and logistics services on the west coast of the
      United States.  This contract requires fees for storage and
      handling of our motor bike inventory which are incurred monthly on a per
      bike basis.
  j)
              On
      August 15, 2008, the Company hired Shawn Landgraf as the chief executive
      officer.  His salary is $156,000 per year.  He does
      not have a contract at this time.  Landgraf is also the
      president of Magnus Partners, Inc., which has provided services to the
      Company in the past and is currently owed
  $33,250.
  k)
              On
      October 1, 2008, the Company entered into a premium finance agreement with
      Cananwill Inc., for the purchase of additional insurance.  The
      total amount financed was 67500, with an annual percentage rate of 8.84%
      and monthly payments of $7,026.50. This contract was terminated on March
      1, 2009.  There is an outstanding balance of
      $54,393.
  l)
              On
      October 1, 2008, the Company entered into a premium finance agreement with
      Cananwill Inc., for the purchase of additional insurance.  The
      total amount financed was $27,000 with an annual percentage rate of 8.59%
      and monthly payments of $2,807.44.  This contract was terminated
      on March 1, 2009.  There is an outstanding balance of
      $21,753.
 
 m)
              On
      October 23, 2008, the Company entered into an exclusive distribution
      agreement with Eurospeed, Inc., to distribute its Andretti product line to
      new and used automotive dealers in the U. S. and Canada.  The
      agreement calls for an initial purchase of six hundred units before
      November 30, 2008 and a minimum of seventy-five hundred units over the
      first twelve months of the agreement.  The Company’s
      manufacturer has agreed to supply Eurospeed with product in the event that
      the Company defaults under its manufacturing agreement.  The
      initial purchase date had been extended to December 30,
      2008.  As of April, 2009 Eurospeed has not placed an initial
      order due to financing constraints.  This agreement has
      expired.
 
 n)
              On
      January 20, 2009, the Company entered into a modification of its licensing
      agreement with Andretti IV, LLC, for payments due for the year
      2008.  As of December 31, 2008, PSF had a balance of $540,000
      due to Andretti IV, LLC.  Under the restructuring agreement, PSF
      made a commitment to pay $250,000 by February 6, 2009, agreed to execute a
      note for $87,000 due March 30, 2009, and convert $58,000 into 1,000,000
      shares of common stock.  Upon receipt of the payments, and
      payment in full of the note, Andretti IV, LLC, agreed to forgive the
      remaining balance due for 2008.  On April 24, 2009, the Company
      made a $50,000 payment towards this agreement.  The balance of
      the agreement is pending. On August 15, 2009, the Company
      and  Andretti IV agreed to restructure its accrued payments of
      $1.34MM for a one-time payment of $150,000 by September 6th, 2009. The
      payments due under the agreement in the future shall be on per bike basis
      to be paid quarterly.
 
 o)
              On
      March 31, 2009, the Company subleased a portion of its warehouse space at
      its headquarters, structured with the landlord and the subtenant as a
      reduction in the Company’s
      rent.  The sublease is on a month-to-month basis for 6,000
      square feet at a monthly rate including CAM charges of
    $3,250.
  20
  14.
              Subsequent
      Events
 
 a)
              On
      May 25, 2009, the Company entered into a Joint Venture Agreement with
      CityRyde LLC, a premier Bike Share Consulting Company.  Under
      the agreement CityRyde will provide Power Sports Factory with product
      design, RFP development, and assistance in the development
      of  PSF’s “Bike Share Source’ Division.  Under the
      agreement, the parties shall split net profits equally after all
      costs.
 
 b)
              In
      March, 2009, our former Chief Executive Officer, Steven Kempenich, who was
      terminated August 14, 2008, sued the Company, and our directors and
      executives, Shawn Landgraf and Steven Rubakh (collectively, the
      “Defendants”), in the U.S. District Court for the District of New Jersey
      for, inter
      alia, unpaid compensation, unpaid expense reimbursements, allegedly
      owing to Mr. Kempenich. We filed an answer and counterclaim against Mr.
      Kempenich on April 13, 2009.  On July 24, 2009 (the “Settlement
      Date”), we agreed to settle all matters involved in this case on the
      following basis: the Defendants would pay to Mr. Kempenich $10,000 within
      30 days of the Settlement Date and would deliver to Mr. Kempenich shares
      of the Company’s common stock from certificates issued to an existing
      shareholder in September 2007 worth $15,000, the number of shares to be
      calculated by averaging the market prices of our common stock over the 30
      days prior to the Settlement Date (such payments guaranteed jointly and
      severally by all Defendants); Mr. Kempenich would be removed as a
      guarantor on twocorporate loans,
      and the Defendants jointly and severally agreed to indemnify Mr. Kempenich
      against any liability under these loans; the parties agreed to mutual
      non-disparagement and non-defamation and that any public representations
      would be consistent therewith; the Company would file a current report on
      Form 8-K disclosing that Mr. Kempenich’s termination in August 2008 has
      been determined by the Company not to have been for cause, but that the
      parties have elected not to resume their relationship; and mutual releases
      were agreed to by the parties.
 
 21
 
 ITEM
2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
 
 The
following discussion of our financial condition and results of operations should
be read in conjunction with the financial statements and notes thereto and the
other financial information included elsewhere in this
report.  Certain statements contained in this report, including,
without limitation, statements containing the words “believes,” “anticipates,”
“expects” and words of similar import, constitute “forward looking statements”
within the meaning of the Private Securities Litigation Reform Act of
1995.  Such forward-looking statements involve known and unknown risks
and uncertainties.  Our actual results may differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including our ability to create, sustain, manage or forecast our
growth; our ability to attract and retain key personnel; changes in our business
strategy or development plans; competition; business disruptions; adverse
publicity; and international, national and local general economic and market
conditions.
  Overview
  The
Company was organized under the laws of the State of Minnesota on June 28, 1996.
the Company, through the acquisition in 1997 of a Nevada corporation acquired
the trademark, patent and exclusive marketing rights to, and invested in the
development of a grocery cart advertising display device.
 
 On April
24, 2007, we entered into the Share Exchange Agreement with Power Sports
Factory, Inc. (“PSF”) and the shareholders of PSF. The Share Exchange Agreement
provided for our acquiring all of the outstanding shares of PSF in exchange for
shares of the Company’s Common Stock. On May 14, 2007, we issued 60,000,000
shares of Common Stock to Steve Rubakh, the major shareholder of PSF, and on
August 31, 2007, entered into an amendment (the “Amendment”) to the Share
Exchange Agreement, that provided for a completion of the acquisition of PSF at
a closing (the “Closing”) which was held on September 5, 2007. At the Closing
the Company issued 1,650,000 shares of a new Series B Convertible Preferred
Stock  to the shareholders of PSF, to complete the acquisition of PSF
by us.  Each share of Preferred Stock was converted into 10 shares of
our Common Stock effective June 9, 2008, following approval by the shareholders
at a shareholders meeting held on May 28, 2008, of a 1:20 reverse split of our
common stock and changing our name from Purchase Point Media Corp. to Power
Sports Factory, Inc.
 
 Through
PSF’s manufacturing relationships in China, it began to import and sell Power
Sports products in the United States. Our products have been marketed mainly
under the “Strada” and “Yamati”, and recently under the “Andretti”, brands. At
the beginning of 2007, we made the determination to focus primarily on the sales
and distribution of motor scooters. We now sell the motor scooters that we
import primarily to power sports dealers and a small portion through the
internet.
 
 
 Recent
Developments
 
 On May 1,
2009, we formed an Alternative Transportation Division named "BikeShareSource
(TM)". This newly launched division will provide sustainable transportation
solutions to municipalities and transit agencies, property managers and real
estate developers, colleges and universities, hotels, parks and other
transportation related businesses. We intend to plan, develop, distribute and
operate solar powered Bike Sharing Stations, enabling bicycle sharing to be an
integral part of the transportation system. In addition, we intend to partner
with major car sharing companies to facilitate our bike sharing solution. Our
services will include sustained transportation consulting and customized
solutions development, software licensing, equipment manufacturing and
distribution. In May, 2009, we announced  that we entered into a Joint
Venture Agreement with CityRyde LLC, the premier Bike Share Consulting Company.
CityRyde will provide us with product design, RFP development, and help grow our
“Bike Share Source” Division. In August, 2009, we placed an order for Bike
Sharing Systems to be deployed at a major educational facility on the East
Coast. Each solar powered station consists of 14 bicycles and features fully
automated bike release, activated by cell phone technology. Through our Bike
Share Source Division, we will deploy our first installation at a university in
conjunction with our joint venture with CityRyde LLC.
  22
 
 Results
of Operations
 
 Six
Months Ended, June 30, 2009 Compared to Six Months Ended June 30,
2008
 
 During
the six months ended June 30, 2009, we incurred a net loss of $1,494,032, as
compared with a net loss of $1,764,437 for the comparable period in 2008, the
decreased loss being primarily attributable to a decrease in our selling,
general and administrative costs from $2,112,796 in 2008 to $1,280,380 in 2009,
coupled with a decrease in net sales from $1,410,135 in 2008 to $350,367 in
2009, with cost of sales being $991,519 and $322,743, respectively, for these
periods. Non-cash compensation increased in 2009 to $73,321 from $-0- in 2008.
Interest expense increased from $69,560 for the six months ended June 30, 2008,
to $122,230 for the six months ended June 30, 2009.
 
 Three
Months Ended, June 30, 2009 Compared to Three Months Ended June 30,
2008
  During
the three months ended June 30, 2009, we incurred a net loss of $422,982, as
compared with a net loss of $398,973 for the comparable period in 2008, the
increased loss being primarily attributable to a decrease in our selling,
general and administrative costs from $717,837 in 2008 to $393,993 in 2009,
offset by a decrease in net sales from $917,047 in 2008 to $218,177 in 2009,
with cost of sales being $556,347 and $171,750, respectively in these periods.
Interest expense increased from $41,129 for the three months ended June 30,
2008, to $50,477 for the three months ended June 30, 2009.
  Liquidity
and Financial Resources
  Since the
acquisition of Power Sports Factory, we have operated at a loss.  We
rely significantly on the private placement of debt and equity to pay operating
expenses.
  As of
2009, the Company had $14,638 of cash on hand. The Company has incurred a net
loss of $1,494,032 in the six months ended June 30, 2009, and has working
capital and stockholders' deficiencies of $5,028,428 and $4,998,730,
respectively, at June 30, 2009.  The accompanying financial
statements have been prepared assuming that the Company will continue as a going
concern.  These conditions raise substantial doubt about the Company's
ability to continue as a going concern.  The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
 
 During
the six months ended June 30, 2009, we received proceeds of $165,000 from an
equity financing and proceeds net of repayments from loans payable of
$197,345.  We received proceeds of $5,000 from a loan from a related
party, and made a payment of $15,855 on a note to a related party. We will
require substantial additional financing to maintain operations at Power Sports
Factory, and to expand our operations to continue the launch of our new Andretti
brand.
  For the
six months ended June 30, 2009, cash increased approximately $14,000. The
increase in cash is primarily due to proceeds from borrowings of $552,500 and
the sale of common stock of $209,122, offset in part by the repayment of debt of
$366,010 and cash used in operating activities of approximately $382,000
(primarily due to a net loss of approximately $1.5 million, offset in part by an
increase in operating assets and liabilities of approximately $1.0
million).
 For the
six months ended June 30, 2009, inventory decreased to $1.5 million from $1.8
million at December 31, 2008, due primarily to the sale of bikes from the
current inventory.  Accounts payable decreased to $3.3 million from
$3.6 million at December 31, 2008, due primarily to the conversion of debt to
common stock. Long-term debt and convertible debt remained approximately the
same, due to the net increased borrowings offset by debt conversions into common
stock.  Accrued expenses increased to $1.7 million from $1.2 million
at December 31, 2008, due primarily to the license agreement fee due upon the
sale of bikes that has been accrued during the period.
  Critical
Accounting Policies
 
 The
Securities and Exchange Commission recently issued "Financial Reporting Release
No.  60 Cautionary Advice Regarding Disclosure About Critical
Accounting Policies" ("FRR 60"), suggesting companies provide additional
disclosures, discussion and commentary on those accounting policies considered
most critical to its business and financial reporting
requirements.  FRR 60 considers an accounting policy to be critical if
it is important to the Company's financial condition and results of operations,
and requires significant judgment and estimates on the part of management in the
application of the policy.  For a summary of the Company's significant
accounting policies, including the critical accounting policies discussed below,
please refer to the accompanying notes to the financial statements.
  23
 
 The
Company assesses potential impairment of its long-lived assets, which include
its property and equipment and its identifiable intangibles such as deferred
charges under the guidance of SFAS 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets". The Company must continually determine if a
permanent impairment of its long-lived assets has occurred and write down the
assets to their fair values and charge current operations for the measured
impairment.
  CRITICAL
ACCOUNTING ISSUES
  The
Company's discussion and analysis of its financial condition and results of
operations are based upon the Company's financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of the financial statements, requires
the Company to make estimates and judgments that effect the reported amount of
assets, liabilities, and expenses, and related disclosures of contingent assets
and liabilities. On an on-going basis, the Company evaluates its estimates,
including those related to intangible assets, income taxes and contingencies and
litigation. The Company bases its estimates on historical experience and on
various assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about carrying values
of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions or
conditions.
  NEW
FINANCIAL ACCOUNTING STANDARDS
 
 In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”, which
enhances existing guidance for measuring assets and liabilities using fair
value.  This Standard provides a single definition of fair value,
together with a framework for measuring it, and requires additional disclosure
about the use of fair value to measure assets and
liabilities.    In February 2008, the FASB issued FASB
Staff Position SFAS 157-1, “Application of SFAS No. 157 to SFAS No. 13 and Its
Related Interpretative Accounting Pronouncements that Address Leasing
Transactions” (“FSP SFAS 157-1”) and FASB Staff Position SFAS 157-2, “Effective
Date of SFAS No. 157” (“FSP SFAS 157-2”). FSP SFAS 157-1 excludes SFAS No.
13 and its related interpretive accounting pronouncements that address leasing
transactions from the requirements of SFAS No. 157, with the exception of fair
value measurements of assets and liabilities recorded as a result of a lease
transaction but measured pursuant to other pronouncements within the scope of
SFAS No. 157. FSP SFAS 157-2 delays the effective date of SFAS No. 157 for
all nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually). FSP SFAS 157-1 and FSP SFAS 157-2 became effective
for the Company upon adoption of SFAS No. 157 on January 1, 2008. See Note 4 of
Notes to Condensed Consolidated Financial Statements for disclosures related to
the Company’s financial assets accounted for at fair value on a recurring or
nonrecurring basis.  The Company completed its implementation of SFAS
No. 157 effective January 1, 2009 and it did not have a material impact on its
financial statements.
  In
December 2007, the FASB issued SFAS No. 141(R), which replaces SFAS No. 141
“Business Combinations”.  This Statement is intended to improve the
relevance, completeness and representational faithfulness of the information
provided in financial reports about the assets acquired and the liabilities
assumed in a business combination.  This Statement requires an
acquirer to recognize the assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree at the acquisition date, measured at
their fair values as of that date, with limited exceptions specified in the
Statement.  Under SFAS No. 141(R), acquisition-related costs,
including restructuring costs, must be recognized separately from the
acquisition and will generally be expensed as incurred.  That replaces
SFAS No. 141’s cost-allocation process, which required the cost of an
acquisition to be allocated to the individual assets acquired and liabilities
assumed based on their estimated fair values.  SFAS No. 141(R) shall
be applied prospectively to business combinations for which the acquisition date
is on or after the beginning of the first annual report period beginning on or
after December 15, 2008.  The Company has adopted SFAS No. 141(R)
effective January 1, 2009 and it did not have a material impact on its financial
statements.
  24
  In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles”.  SFAS No. 162 identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States.  The Company has adopted SFAS No. 162 effective
January 1, 2009 and it did not have a material impact on its financial
statements.
  ITEM
3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
 
 We are
primarily exposed to foreign currency risk, interest rate risk and credit
risk.
  Foreign
Currency Risk - We import products from China into the United States and market
our products in North America. As a result, our financial results could be
affected by factors such as changes in foreign currency exchange rates or, if we
initiate our planned international operations, weak economic conditions in
foreign markets. Because our revenues are currently denominated in U.S. dollars,
a strengthening of the dollar could make our products less competitive in
foreign markets that we plan to enter.  If the Chinese Yuan
strengthened against the dollar, our cost of imported products could increase
and make us less competitive.  We have not hedged foreign currency
exposures related to transactions denominated in currencies other than U.S.
dollars. We do not engage in financial transactions for trading or speculative
purposes.
  Interest
Rate Risk - Interest rate risk refers to fluctuations in the value of a security
resulting from changes in the general level of interest rates. Investments that
are classified as cash and cash equivalents have original maturities of three
months or less. Our interest income is sensitive to changes in the general level
of U.S. interest rates.  We do not have significant short-term
investments, and due to the short-term nature of our investments, we believe
that there is not a material risk exposure.
  Credit
Risk - Our accounts receivables are subject, in the normal course of business,
to collection risks. We regularly assess these risks and have established
policies and business practices to protect against the adverse effects of
collection risks. As a result we do not anticipate any material losses in this
area.
  ITEM
4T.  CONTROLS AND PROCEDURES.
 
 The
Company's Chief Executive Officer and its Chief Financial Officer are primarily
responsible for the accuracy of the financial information that is presented in
this quarterly Report.  These officers have as of the close of the
period covered by this Quarterly Report, evaluated the Company's disclosure
controls and procedures (as defined in Rules 13a-4c and 15d-14c promulgated
under the Securities Exchange Act of 1934) and determined that such controls and
procedures were effective in ensuring that material information relating to the
Company was made known to them during the period covered by this Quarterly
Report.  In their evaluation, no changes were made to the Company's
internal controls in this period that have materially affected, or are
reasonably likely materially to affect, the Company’s internal control over
financial reporting.
  25
 PART
II—OTHER INFORMATION
 
 Item
1.   LEGAL PROCEEDINGS.
 
 The
Company is a party to the following lawsuits.
 
 Yellow Transportation v.
Power Sports Factory, Inc. The Company was sued in December, 2008, by
Yellow Transportation for the sum of $28,838, plus lawful interest, attorneys’
fees and the costs of the suit, in the Superior Court of New Jersey, Camden
County, for transportation services rendered by the plaintiff. The case is in
discovery. The Company intends to settle this lawsuit.
 
 Liberty Mutual Insurance
Company v. Power Sports Factory, Inc. The plaintiff in this case has sued
the Company in the Superior Court of New Jersey, Camden County, for the sum of
$45,096 for goods and/or services rendered.  We have answered the
complaint denying that the Company owes any amounts to plaintiff, and the case
is in discovery.
 
 Business Technology
Partners, Inc. v. Power Sports Factory, Inc. The plaintiff in this case
has sued the Company in the Superior Court of New Jersey, Camden County, for the
sum of $134,965.12 for goods and/or services rendered.  The parties to
this case are in discovery, and we have been served with interrogatories by the
plaintiff.
 
 Justin Gasarch v. Power
Sports Factory, Inc.  The plaintiff in this case filed suit
against the Company, Shawn Landgraf, our Chief Executive Officer, and a Company
consultant on July 9, 2009. On April 24, 2009 loaned the Company $25,000
with a maturity date of May 24, 2009. Shawn Landgraf and the consultant sued in
this case had personally guaranteed the loan. The Company intends to settle this
lawsuit.
 
 Steven Kempenich v. Power
Sports Factory, Inc. In March, 2009, our former Chief Executive Officer,
Steven Kempenich, who was terminated August 14, 2008, sued the Company, and our
directors and executives, Shawn Landgraf and Steven Rubakh (collectively, the
“Defendants”), in the U.S. District Court for the District of New Jersey for,
inter alia,
unpaid compensation, unpaid expense reimbursements, allegedly owing to Mr.
Kempenich. We filed an answer and counterclaim against Mr. Kempenich on April
13, 2009.  On July 24, 2009 (the “Settlement Date”), we agreed to settle
all matters involved in this case on the following basis: the Defendants would
pay to Mr. Kempenich $10,000 within 30 days of the Settlement Date and would
deliver to Mr. Kempenich shares of the Company’s common stock from certificates
issued to an existing shareholder in September 2007 worth $15,000, the number of
shares to be calculated by averaging the market prices of our common stock over
the 30 days prior to the Settlement Date (such payments guaranteed jointly and
severally by all Defendants); Mr. Kempenich would be removed as a guarantor on
twocorporate
loans, and the Defendants jointly and severally agreed to indemnify Mr.
Kempenich against any liability under these loans; the parties agreed to mutual
non-disparagement and non-defamation and that any public representations would
be consistent therewith; the Company would file a current report on Form 8-K
disclosing that Mr. Kempenich’s termination in August 2008 has been determined
by the Company not to have been for cause, but that the parties have elected not
to resume their relationship; and mutual releases were agreed to by the
parties.
  ITEM
1A.   RISK FACTORS.
 
 Not
applicable.
 
 
 ITEM
2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.
 
 Not
applicable.
 
 
 ITEM
3.   DEFAULTS UPON SENIOR SECURITIES.
 
 Not
applicable.
  26
 
 ITEM
4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
 
 Not
applicable.
 
 ITEM
5.   OTHER INFORMATION.
 
 Not
applicable.
 
 
 ITEM
6.   EXHIBITS.
  31.1
              Certification
      of Chief Executive Officer Pursuant to Section 302 of TheSarbanes
      Oxley Act of 2002.
 
 31.2
              Certification
      of Chief Financial Officer Pursuant to Section 302 of TheSarbanes
      Oxley Act of 2002.
 
 32.1
              Certification
      of Chief Executive Officer Pursuant to
      18  U.S.C.  Section  1350 asadopted
      pursuant to Section 906 of the Sarbanes-Oxley Oxley Act of
      2002.
 
 32.2
              Certification
      of Chief Financial Officer Pursuant to
      18  U.S.C.  Section  1350 asadopted
      pursuant to Section 906 of the Sarbanes-Oxley Oxley Act of
      2002.
 
 
 SIGNATURES
  Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned,
thereunto duly authorized.
   POWER SPORTS FACTORY, INC.
                  (Registrant)By:
                /s/ Shawn
      LandgrafShawn
      Landgraf, Chief Executive Officer
 Dated:
August 19, 2009
  27
  EXHIBIT
INDEX
 
 Exhibit
      Number
                
                Description31.1
                
                Certification  of
      Chief Executive Officer Pursuant to Section 302 of the
      Sarbanes  Oxley Act of 2002.31.2
                
                Certification  of
      Chief Financial Officer Pursuant to Section 302 of the
      Sarbanes  Oxley Act of 2002.32.1
                
                Certification
      of Chief Executive Officer Pursuant to
      18  U.S.C.  Section  1350 as adopted
      pursuant to Section  906 of the Sarbanes-Oxley Oxley Act of
      2002.32.2
                
                Certification
      of Chief Financial Officer Pursuant to
      18  U.S.C.  Section  1350 as adopted
      pursuant to Section  906 of the Sarbanes-Oxley Oxley Act of
      2002.
  28