# UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-QSB

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xQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2006

Commission File No. 000-51632

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VIPER POWERSPORTS INC.
(Exact name of small business issuer as specified in its charter)

|Nevada                                                         | 41-1200215                       
|-------------------------------------------------------------- | ---------------------------------
|(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.)

|19950 177th St., Suite F, Big Lake, Minnesota | 55309     
|--------------------------------------------- | ----------
|(Address of principal executive offices)      | (Zip Code)

(763) 263-5700(Issuers telephone number)

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Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
xNoo

Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes
oNox

The number of shares of common stock outstanding was 9,993,047
 as of August 15, 2006.

Transitional Small Business Disclosure Format (check one): Yes
oNox





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# TABLE OF CONTENTS

|PART I: FINANCIAL INFORMATION
|-----------------------------
|                             
|                             
|                             
|                             
|PART II: OTHER INFORMATION   
|                             
|                             
|SIGNATURE:                   
|                             
|INDEX TO EXHIBITS            
|                             
|                             
|                             

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PART I: FINANCIAL
INFORMATION

Item 1:   Financial
Statements

# Viper Powersports Inc.
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)

|                                    | Three Months Ended |  | Six Months Ended |            | Cumulative fromInceptionNovember 18, 2002throughJune 30, 2006
|----------------------------------- | ------------------ |  | ---------------- | ---------- | -------------------------------------------------------------
|
|Revenue                             |                    |  | $                | 66         |                                                              
|Cost of revenue                     |                    |  |                  | 29         |                                                              
|                                    |                    |  |                  |            |                                                              
|Gross profit                        |                    |  |                  | 37         |                                                              
|                                   
|Operating Expenses:                 |                    | 
|Research and development costs      |                    |  |                  | 489,942    |                                                              
|Selling, general and administrative |                    |  |                  | 742,219    |                                                              
|                                    |                    |  |                  |            |                                                              
|                                    |                    |  |                  | 1,232,161  |                                                              
|                                   
|                                    |                    |  |                  |            |                                                              
|Loss from operations                |                    |  |                  | (1,232,124 | )                                                            
|                                   
|Other (expenses) income:           
|Interest expense                    |                    |  |                  | (88,618    | )                                                            
|Other income                        |                    |  |                  | 4,551      |                                                              
|                                   
|                                    |                    |  |                  |            |                                                              
|Net Loss                            |                    |  | $                | (1,316,191 | )                                                            
|                                    |                    |  |                  |            |                                                              
|                                   
|Net Loss Per Common Share          
|                                    |                    |  |                  |            |                                                              
|(Basic and  diluted)                |                    |  | $                | (0.13      | )                                                            
|                                    |                    |  |                  |            |                                                              
|                                   
|Weighted Average Shares            
|                                    |                    |  |                  |            |                                                              
|Common Stock Outstanding            |                    |  |                  | 9,993,047  |                                                              
|                                    |                    |  |                  |            |                                                              

See accompanying notes to financial statements.

2

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# Viper Powersports Inc.
(A Development Stage Company)
Consolidated Balance Sheet
(Unaudited)

|                                                                | June 30,2006
|--------------------------------------------------------------- | ------------
|Assets                                                          |             
|                                                               
|Current Assets:                                                 |             
|Cash                                                            |             
|Accounts receivable                                             |             
|Inventory and supplies                                          |             
|Prepaid expenses and other                                      |             
|                                                                |             
|Total Current Assets                                            |             
|                                                               
|Fixed Assets:                                                   |             
|Office & computer equipment                                     |             
|Manufacturing and development equipment                         |             
|Vehicles                                                        |             
|Leasehold improvements                                          |             
|Accumulated depreciation                                        |             
|                                                                |             
|Total Fixed Assets                                              |             
|                                                               
|Other Assets:                                                  
|Engine development costs                                        |             
|Rental deposit and other                                        |             
|                                                                |             
|Total Other Assets                                              |             
|                                                               
|                                                                |             
|Total Assets                                                    |             
|                                                                |             
|                                                               
|Liabilities and Stockholders Equity (Deficit)                  |             
|                                                               
|Current Liabilities:                                           
|Accounts payable                                                |             
|Accrued liabilities                                             |             
|Shareholder note                                                |             
|Current portion of capital lease                                |             
|                                                                |             
|Total Current Liabilities                                       |             
|                                                               
|Long-Term Liabilities:                                         
|Capital lease, less current portion                             |             
|                                                                |             
|Total Long-Term Liabilities                                     |             
|                                                               
|                                                                |             
|Total Liabilities                                               |             
|                                                               
|Stockholders Equity (Deficit):                                
|Preferred stock, $.001 par value; authorized 20,000,000 shares;
|783,000 issued and outstanding at June 30, 2006                 |             
|                                                               
|Common Stock, $.001 par value; authorized 100,000,000 shares;  
|10,126,376 issued and outstanding at June 30, 2006              |             
|Additional Paid in Capital                                      |             
|Accumulated deficit during the development stage                |             
|                                                                |             
|Total Stockholders Equity (Deficit)                            |             
|                                                               
|                                                                |             
|Total Liabilities and Stockholders Equity (Deficit)            |             
|                                                                |             

See accompanying notes to the financial statements.

3

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# Viper Powersports Inc.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)

|                                                                      | Six Months Ended |  | Cumulative fromInception(November 18, 2002)to June 30, 2006
|--------------------------------------------------------------------- | ---------------- |  | -----------------------------------------------------------
|
|Cash Flows Used in Operating Activities:                              |                  |  |                                                            
|Net Loss                                                              |                  |  | $                                                          
|                                                                     
|Expenses not Requiring an Outlay of Cash:                            
|Depreciation                                                          |                  |  |                                                            
|Common stock and warrants issued for compensation and expenses        |                  |  |                                                            
|                                                                      |                  |  |                                                            
|Net Cash Used in Operations                                           |                  |  |                                                            
|Changes to Operating Assets and Liabilities:                         
|Decrease (Increase) in accounts receivable                            |                  |  |                                                            
|Decrease (Increase) in supplies and prepaids                          |                  |  |                                                            
|Decrease (Increase) in inventories                                    |                  |  |                                                            
|Decrease (Increase) in rental deposits and other                      |                  |  |                                                            
|Increase (decrease) in accounts payable                               |                  |  |                                                            
|Increase (decrease) in accrued liabilities                            |                  |  |                                                            
|                                                                      |                  |  |                                                            
|Cash Flows Used in Operating Activities                               |                  |  |                                                            
|                                                                     
|Cash Flows Used in Investing Activities:                             
|Funding from Thor Performance for engine development                  |                  |  |                                                            
|Purchase of intellectual property                                     |                  |  |                                                            
|Purchase of fixed assets                                              |                  |  |                                                            
|                                                                      |                  |  |                                                            
|Cash Flows Used in Investing Activities                               |                  |  |                                                            
|                                                                     
|Cash Flows from Financing Activities:                                 |                  | 
|Net proceeds from sale of stock                                       |                  |  |                                                            
|Checks in excess of bank balance (reduction)                          |                  |  |                                                            
|Stockholder loan and capital lease payments                           |                  |  |                                                            
|Loans from stockholders                                               |                  |  |                                                            
|                                                                      |                  |  |                                                            
|Cash Flows from Financing Activities                                  |                  |  |                                                            
|                                                                     
|                                                                      |                  |  |                                                            
|Net Increase (decrease) in Cash                                       |                  |  |                                                            
|                                                                     
|Cash at Beginning of Period                                           |                  |  |                                                            
|                                                                     
|                                                                      |                  |  |                                                            
|Cash at End of Period                                                 |                  |  | $                                                          
|                                                                      |                  |  |                                                            
|                                                                     
|Supplemental Non-Cash Financing Activities and Cash Flow Information:
|                                                                     
|Common Stock issued for accounts payable (expenses)                   |                  |  | $                                                          
|                                                                      |                  |  |                                                            
|Common Stock issued for accrued liabilities (expenses)                |                  |  | $                                                          
|                                                                      |                  |  |                                                            
|Preferred Stock issued for Debt                                       |                  |  | $                                                          
|                                                                      |                  |  |                                                            
|Common Stock issued for Debt                                          |                  |  | $                                                          
|                                                                      |                  |  |                                                            
|Common Stock and Warrants issued for Services                         |                  |  | $                                                          
|Common Stock issued for software (assets)                             |                  |  | $                                                          
|                                                                      |                  |  |                                                            
|Common Stock Issued for Engine Development Technology                 |                  | 
|and engine development obligation of $150,000                         |                  |  | $                                                          
|                                                                      |                  |  |                                                            
|Equipment Acquired via capital lease                                  |                  |  | $                                                          
|                                                                      |                  |  |                                                            
|Stock Warrants Issued with Convertible Debt                           |                  |  | $                                                          
|                                                                      |                  |  |                                                            
|Interest Paid                                                         |                  |  | $                                                          
|                                                                      |                  |  |                                                            
|Income Taxes Paid                                                     |                  |  | $                                                          
|                                                                      |                  |  |                                                            

See accompanying notes to financial statements.

4

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Viper Powersports Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|A. | Basis of Presentation
|-- | ---------------------



The consolidated balance sheet as of June 30,
2006, the consolidated statements of operations for the three month and six months ended June 30, 2006 and 2005 and the
consolidated statements of cash flows for the six months ended June 30, 2006 and 2005 have been prepared by Viper Powersports
Inc., (the Company) without audit. In the opinion of management, all adjustments (consisting only of normal recurring
accruals) necessary to present fairly the financial position as of June 30, 2006, results of operations for the three and six
months ended June 30, 2006 and 2005, and cash flows for the six months ended June 30, 2006 and 2005 presented herein have been
made.



Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted. These financial statements should be read in conjunction with the Companys financial
statements and notes thereto included in the Annual Report on Form 10-KSB of the Company for the fiscal year ended December 31,
2005.



|B. | Going Concern
|-- | -------------



The accompanying financials statements have been
prepared assuming the Company will continue as a going concern. The Company has no current revenues and has a negative working
capital position of $1,675,070 as of June 30, 2006. Current cash and cash available is not sufficient to fund operations
beyond a short period of time. These conditions create uncertainty as to 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.

5

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# Item 2:   Managements Discussion and Analysis

The following discussion should be read and considered along with our
consolidated financial statements and related notes included in this 10-QSB. These financial statements were prepared in
accordance with United States Generally Accepted Accounting Principles (US GAAP). This discussion and analysis contains
forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ substantially from
those anticipated in these forward-looking statements as a result of various factors including those set forth in the Risk
Factors section of our 10-KSB filing for December 31, 2005.

# Business Development Overview

Viper Powersports Inc., formerly ECCO Capital Corporation (ECCO),
was incorporated in Nevada in 1980 under an earlier name. Prior to 2001, ECCO was for years actively engaged in an automobile
leasing business. ECCO was unable to become profitable, and ceased all active operations in 2001. ECCO remained inactive until
early 2005 when it acquired Viper Motorcycle Company, a Minnesota corporation. Incident to this acquisition, ECCO changed its name
to Viper Powersports Inc. The business combination between Viper Powersports Inc. and Viper Motorcycle Company was effected as a
reverse acquisition. Accordingly, Viper Powersports Inc. regards its inception as being the incorporation of Viper Motorcycle
Company in November 2002.

Effective June 30, 2005, Viper Powersports Inc. acquired all of the
outstanding capital stock of Viper Motorcycle Company through a stock exchange, resulting in Viper Motorcycle Company becoming a
wholly-owned subsidiary of Viper Powersports Inc. For accounting and operational purposes, this transaction was a recapitalization
of Viper Powersports Inc. through this reverse acquisition, and Viper Motorcycle Company is regarded as the acquirer. Our
financial statements reflecting this reverse acquisition have been prepared to give retroactive effect to the incorporation of
Viper Motorcycle Company on November 18, 2002 and represent the operations of Viper Motorcycle Company since its inception. Since
Viper Powersports Inc. had no assets or liabilities at the time of this acquisition, its book value has been stated as zero on the
recapitalized balance sheet.

The stock exchange for this reverse acquisition was affected on a one-for-one
basis, resulting in the stockholders of Viper Motorcycle Company exchanging all of their outstanding capital stock for an equal
and like amount of capital stock of Viper Powersports Inc. Viper Powersports Inc. issued 8,378,324 shares of its common stock and
783,000 shares of its preferred stock to shareholders of Viper Motorcycle Company to complete this reverse acquisition, resulting
in the former shareholders of Viper Motorcycle Company acquiring approximately 94% of the combined entity from the acquisition. In
addition, all holders of stock options and warrants for the purchase of common stock of Viper Motorcycle Company received similar
options and warrants to purchase common stock of Viper Powersports Inc.

Our reverse acquisition was part of a major reorganization undertaken and
completed by us in early 2005, during which we converted most of our debt into our capital stock. At the time, we believed we
could not survive as an ongoing entity and obtain further material financing unless we eliminated our outstanding debt. Our debt
conversions in this reorganization took place in January through February 2005, and they were all effected on a conversion basis
of $2.50 per share of capital stock of Viper Powersports Inc. These debt conversions included accounts payable, accrued
liabilities and matured loans. We satisfied total liabilities of $4,770,879 including $2,813,379 being converted into 1,125,354
common shares and $1,957,500 being converted into preferred shares which are convertible into our common shares on a one-for-one
basis.

In March 2005, we also acquired major engine development technology including
the V-Twin engines which now power our Diablo and Diamondback cruisers, and will power other motorcycle models designed and
developed by us for the foreseeable future. This strategic asset purchase has enabled us to include and offer our own proprietary
engine in our motorcycles, and also to market and sell engines under our own brand in the large motorcycle aftermarket. This
engine technology was designed and developed over the past six to seven years by Melling Consultancy Design (MCD), a leading
engine design and development firm based in England. We purchased our engine development assets from Thor Performance Inc., a
Minnesota corporation in exchange for 2,996,575 shares of our common stock valued at $2.50 per share.

Viper Performance Inc. was incorporated by us in March 2005 as a wholly-owned
Minnesota corporation. We organized and incorporated Viper Performance Inc. for the purpose of receiving and holding the engine
development technology and related assets which we acquired from Thor Performance Inc.

6

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# Operational Overview

We are a motorcycle company in the business of designing, developing,
producing and marketing a line of premium custom V-Twin motorcycles popularly known as cruisers. Our motorcycles will
be distributed and sold under our Viper brand through a nationwide network of independent motorcycle dealers. Marketing of our
motorcycles is targeted toward the upscale market niche of motorcycle enthusiasts who prefer luxury products and are willing to
pay a higher price for enhanced performance, innovative styling and a distinctive brand. We believe there is a consistently strong
demand for upscale or luxury products like our American-styled classic Viper cruisers and our premium V-Twin engines.

In 2004, we produced and sold to our initial dealer base a preliminary
production run of our first cruiser model which was powered by a non-proprietary engine. These 2004 sales consisted of 25
motorcycles which generated revenues of approximately $600,000. We then discontinued any further production operations in order to
concentrate on obtaining proprietary V-Twin engine technology as well as to complete certain other planned enhancements to our
initial model. In early 2005, we completed the acquisition of our engine development technology to allow us to have our own V-Twin
engines to power all Viper motorcycles. We completed extensive testing of our proprietary V-Twin engine prototypes in late 2005,
and we have been very satisfied with their performance while powering our cruisers during all kinds of street and highway running
conditions.

During 2005, we also completed certain planned styling enhancements and
component modifications to our Diablo and Diamondback cruiser models, and we believe both of these motorcycles now satisfy all
styling, performance and quality standards or criteria we established to be met before their commercial introduction.

During 2006 to date, we have been primarily involved in commercial
production and marketing operations and activities. From February through August 2006, we attended and displayed our motorcycles
at the leading annual dealer show for cruiser motorcycles in Cincinnati, the week-long Daytona rally, the Myrtle Beach Bike Show
and currently the Sturgis Bike rally. We have been and are currently devoting considerable marketing efforts toward recruiting and
retaining additional independent dealers for our distribution network. Regarding commercial production, we have ordered or sourced
all materials and components necessary for our planned 2006 production, many of which are now being delivered to us. We have also
ordered CNC capital equipment suitable for our planned production operations. Our V-Twin engine requirements for 2006
are currently being produced for us in England.

In February 2006, we entered into a five-year lease for permanent corporate
facilities of 36,000 square feet, which provides us with ample space and offices to satisfy our production, development, inventory
storage, product warehousing, marketing and administrative needs for the foreseeable future. Our new facility is located in Big
Lake, Minnesota, and we completed moving to the new facility in May 2006.

# Results of Operations

Revenues

Since our 2002 inception, we have generated total revenues of $618,093 most
of which occurred in 2004 before we discontinued offering a motorcycle with a non-proprietary engine. We anticipate that our
future revenues for the next 12 months will be primarily from sale of Viper cruisers, although we expect to begin obtaining sales
of our proprietary engines in the aftermarket in 2007. We anticipate receiving additional revenues from our planned line of custom
parts and accessories for the motorcycle aftermarket as well as our Viper branded apparel and other merchandise.

We believe our future revenue stream will be most significantly affected by
customer demand for Viper cruisers, performance of our proprietary V-Twin engines, our ability to timely manufacture our
motorcycle products in response to dealer and customer orders, recruitment and retention of dealers who actively promote and sell
our products, and dealer acceptance of our floor plan financing facility.

We currently have outstanding orders from our dealers for approximately 200
Viper cruisers.

7

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Comparison of Three and Six Months Ended June 30, 2006
to Same Periods of 2005.

Revenues for the second quarter of 2006 ended June 30, 2006 were $66
(consisting of sale of motorcycle parts) compared to $(24,589) for the second quarter of 2005 (consisting of product returns).
Revenues for the six months ended June 30, 2006 were $(24,030) compared to $(24,589) for the same six months of 2005,
consisting primarily of product returns in both periods.

Research and development expenses for the second quarter of 2006 ended
June 30, 2006 were $489,942 compared to $231,897 for the second quarter of 2005; and for the six months ended June 30,
2006 they were $656,326 compared to $300,557 for the same six months of 2005. Increased R&D expenses for both 2006 periods
compared to those of 2005 were due to increased expenses to complete motorcycle products of high quality to commence our
commercial production phase in 2006.

Selling, general and administrative expenses for the second quarter of 2006
ended June 30, 2006 were $745,721 compared to $558,497 for the second quarter of 2005. Increased S,G&A expenses for the
second quarter of 2006 compared to the second quarter of 2005 were primarily due to material increases in marketing expenses
incident to our entering commercial operations in 2006. Selling, general and administrative expenses for the six months ended
June 30, 2006 were $1,405,038 compared to $1,623,613 for the same six months of 2005. Decreased S,G&A expenses for this
six-month period of 2006 compared to the same six months of 2005 were due primarily to reduction of personnel in 2005 incident to
our major reorganization at the time.

Our loss from operations during the second quarter of 2006 ended
June 30, 2006 was $1,319,693 compared to $837,219 for the same three months of 2005. This loss increase was due to increased
R&D and S,G&A expenses during the first quarter of 2006 related to our commencing commerical operations. Our loss from
operations during the first six months of 2006 ended June 30, 2006 was $2,203,342 compared to $2,055,107 for the same six
months of 2005, consisting of similar losses for such six-month periods of both 2006 and 2005.

Interest expenses of $88,618 for the second quarter of 2006 compared to
$22,236 of interest expense in the first quarter of 2005, which increase resulted primarily from drawing on our inventory financing
facility between these quarterly periods. Interest expenses for the six-month periods ended June 30, 2006 and June 30,
2005 were practically the same, being $127,118 and $129,326, respectively.

8

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# Engine Production

We are currently outsourcing the production of our major engine components to
Melling Consultancy Design (MCD) to satisfy our initial planned production needs. Since MCD designed and developed our proprietary
V-Twin engines, we are particularly comfortable having our commercial engine components initially being manufactured by
MCD.

# Liquidity and Capital Resources

Since our inception, we have financed our development, capital expenditures,
and working capital needs through sale of our common stock to investors in private placements and substantial loans from our
principal shareholders. We raised a total of approximately $6.1 million through the sale of our common stock in private
placements, and in excess of $4.2 million through loans from our principal shareholders.

We also satisfied substantial employee compensation, consulting fees, product
development, marketing and administrative expenses directly through issuance of our common stock. Since our 2002 inception, we
have satisfied a total of approximately $2.4 million for such expenses through payment with our common stock.

As of June 30, 2006, we had cash resources of $16,243, total liabilities
of $2,063,353, and a negative working capital position of $1,675,070.

We currently have no cash position to fund our ongoing operations. We had anticipated
obtaining significant capital funding from proceeds expected from an SB-2 public offering of our equity securities. The
underwriter of this proposed public offering, however, has informed us that the offering cannot be undertaken at this time because
of deteriorating stock market conditions. Accordingly, we postponed our proposed public offering and our SB-2
registration which was filed with the Securities and Exchange Commission.

We are now pursuing up to $1,000,000 in private bridge loan financing with
various institutions and shareholders to support our planned commercial operations until we can obtain more permanent financing.
Although we believe we will be successful in obtaining further financing, there is no assurance it will happen or that we will
obtain enough funding to support our operations effectively. If we cannot obtain additional substantial financing as needed, our
business and operations will be curtailed substantially or may even be discontinued.

We estimate that our planned 2006 commercial operations have been delayed
3-4 months due to the inability to complete our planned public offering, which means that even assuming we soon obtain
adequate bridge financing, we will not be able to deliver any motorcycles to our dealers before December 2006.

The report of our independent registered accounting firm for our audited
financial statements for the period ended December 31, 2005 states that there is substantial doubt about the ability of our
business to continue as a going concern. Accordingly, our ability to continue our business as a going concern is in doubt.

9

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# Production Inventory Financing

In October 2005, we entered into a Secured Inventory Financing Agreement with
David Palmlund III, one of our principal shareholders, as the Lender. The agreement as amended provides us with production
inventory financing up to $1,500,000, which has enabled us to order and pay for substantial components and supplies for our
commercial production operations. We have utilized all $1,500,000 of this inventory financing facility. We pay the Lender monthly
interest of 2% of the average monthly outstanding amount owed by us. We have established a special bank account for depositing all
funds from the Lender, which account can only be used by us to pay vendors who have provided supplies for our commercial
production. If this agreement is still in effect when we commence commercial shipments of motorcycles to our dealers, we must then
deposit 80% of any payments we receive for our motorcycles into the special bank account. On July 27 and August 4, 2006
the Company entered into 2nd and 3rd Secured Inventory Financing Agreements with David Palmlund III, one of our principal
shareholders as the Lender. The agreements provide the Company with Production Inventory Financing for $100,000 each and both
agreements have been fully utilized. The agreements have the same terms as the original agreement with and expiration of
October 4, 2006. Until repaid by us, the Lender is secured with a first position against all Viper motorcycle parts and
components and finished goods inventory.

# Cash Flow Information

For the six months ended June 30, 2006, the Company used $673,929 in
cash compared to generating $132 in cash during the same six-month period of 2005. The Company used $2,203,342 in cash from
operations during the first six months of 2006 consisting primarily of its development stage losses offset by depreciation of
$55,254 during these six months. The Company also used $68,096 of cash in investing activities during the first six months of
2006, consisting primarily of purchases of manufacturing equipment. Financing activities of the Company during the first six
months of 2006 generated $1,388,115 of cash consisting primarily of inventory financing loans from a principal shareholder.

10

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Sales of motorcycles in the United States are affected materially by a
pattern of seasonality experienced in the industry, which results in lower sales during winter months in colder regions of the
country. Accordingly, we anticipate that our sales will be greater during spring, summer and early fall months than during late
fall and winter periods. We also expect our revenues and operating results could vary materially from quarter to quarter due to
industry seasonality.

# Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS
No. 123(R) (Share Based Payment) which established accounting standards for stock-based compensation transactions, including
grants of options and warrants. SFAS No. 123(R) requires that all share-based compensation transactions be reflected at fair value
on the transaction date and expensed over the applicable vesting period or immediately if fully vested. We comply with the
provisions of SFAS 123(R) regarding our stock-based compensation transactions. Future share-based compensation or options to our
employees or others could have a significant non-cash impact on our reported results of operations.

We have considered other recent accounting pronouncements of which we are
aware, and we believe their adoption has not had, and will not have, any material impact on our financial position or results of
operations.

# Off-Balance Sheet Arrangements

In January 2004 (as amended February 8, 2005), we obtained a letter of credit
(LOC) from Compass Bank of Dallas, Texas in the amount of $200,000 in favor of GE Commercial Distribution Finance Corporation for
the purpose of securing our floor plan financing facility. This LOC was guaranteed by David Palmlund III, a principal shareholder
of our company, who is being paid $3,000 monthly by us so long as this guarantee is outstanding.

11

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# Forward-Looking Statements

This quarterly report on
Form 10-QSB contains forward-looking statements within the meaning of the Securities Act of 1933 and the Securities
Exchange Act of 1934. Statements expressing expectations regarding our future and projections we make relating to products, sales,
revenues and earnings are typical of such statements. All forward-looking statements are subject to the risks and uncertainties
inherent in attempting to predict the future. Our actual results may differ materially from those projected, stated or implied in
our forward-looking statements as a result of many factors, including, but not limited to, our overall industry environment,
customer and dealer acceptance of our products, effectiveness of our dealer network, failure to develop or commercialize new
products, delay in the introduction of products, regulatory certification matters, production and/or quality control problems,
warranty and/or product liability matters, competitive pressures, inability to raise sufficient working capital, general economic
conditions and our financial condition.

Our forward-looking
statements speak only as of the date they are made by us. We undertake no obligation to update or revise any such statements to
reflect new circumstances or unanticipated events as they occur, and you are urged to review and consider all disclosures we make
in this and other reports that discuss risk factors germane to our business, including those risk factors in our 10-KSB.

12

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Item 3.   Controls and Procedures

Evaluation of disclosure controls and procedures.

The Companys Chief Executive and Chief Financial Officer, John Lai and
Jerome Posey, have reviewed the Companys disclosure controls and procedures as of the end of the period covered by this
report. Based upon this review, these two officers believe that the Companys disclosure controls and procedures are effective in
ensuring that information that is required to be disclosed by the Company in reports that it files under the Securities Exchange
Act of 1934 is recorded, processed and summarized and reported within the time periods specified in the rules of the Securities
and Exchange Commission.

Changes in internal controls.

There were no changes in the Companys internal controls over financial
reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to
materially affect, the Companys internal control over financial reporting.

13

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PART II  OTHER INFORMATION



Item 6.    Exhibits



See Index of Exhibits.

14

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SIGNATURE

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

| | VIPER POWERSPORTS INC. 
| | -----------------------
|
|
| |                        
| | Jerome Posey           
| | Chief Financial Officer

August 18, 2006 Big Lake, Minnesota

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# VIPER POWERSPORTS INC.
INDEX TO EXHIBITS

|Form 10-QSB forQuarter Ended June 30, 2006 | Commission File No. 000-51632
|------------------------------------------ | -----------------------------

|ExhibitNumber |  | Description
|------------- |  | -----------

|31.1 |  | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|---- |  | ------------------------------------------------------------------------------------------------------

|31.2 |  | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|---- |  | ------------------------------------------------------------------------------------------------------

|32.1 |  | Certification of Principal Executive Officer and Principal
Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------

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