**UNITED
      STATES** **SECURITIES
      AND EXCHANGE COMMISSION** **Washington,
      D.C. 20549**




**FORM
      10-QSB/A** **FIRST
      AMENDMENT**





(Mark
      One)


[X]
            QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934For
                the quarterly period ended March 31, 2005[  
                ]
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACTFor
                the transition period from ________________ to
                _________________
              
              Commission
                file number 000-50742





**SIGN
                MEDIA SYSTEMS, INC**.
              (Exact
                name of small business issuer as specified in its
                charter)FLORIDA
              (State
                or other jurisdiction of incorporation or organization)
            02-0555904
              (IRS
                Employer Identification No.)2100
                19thStreet, Sarasota FL 34234
              (Address
                of principal executive offices)(941)
                330-0336
              (Issuer's
                telephone number)__________________________________________
              (Former
                name, former address and former fiscal year, if changed since last
                report)







**APPLICABLE
      ONLY TO CORPORATE ISSUERS**




State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of the latest practicable date: 8,460,000 Common Shares no par value as
      of
      March 31, 2005





Transitional
      Small Business Disclosure Format (Check one): Yes [ ] No [ X ]


1


**PART
      I — FINANCIAL INFORMATION**





**Item
      1. Financial Statements.**





**INDEX
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**CONDENSED
      CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**





Condensed
                Consolidated Balance Sheet (Unaudited) as of March 31,
                2005
            F-1Condensed
                Consolidated Statements of Income (Operations) for the
              Three
                Months Ended March 31, 2005 and 2004 (Unaudited)
            F-2Condensed
                Consolidated Statements of Cash Flows for the Three Months
              Ended
                March 31, 2005 and 2004 (Unaudited)
            F-3Notes
                to Condensed Consolidated Financial Statements
            F-4-11











2


**SIGN
      MEDIA SYSTEMS, INC.CONDENSED CONSOLIDATED BALANCE SHEETMARCH 31,
      2005(UNAUDITED)**


**ASSETS****(restated)****CURRENT
                  ASSETS**Cash
                  and cash equivalents
              
              $
              10,873Accounts
                  receivable
              
              
              543,238Inventory
              
              
              85,572**Total
                  current assets**
              
              
              639,683Property
                  and equipment, net
              
              
              130,124Other
                  assets
              
              
              4,000**TOTAL
                  ASSETS**
              
              $
              773,807**LIABILITIES
                  AND STOCKHOLDERS' EQUITY (DEFICIT)****CURRENT
                  LIABILITIES**Current
                  portion of long-term debt
              
              $
              13,815Accounts
                  payable and accrued expenses
              
              
              260,700Due
                  to related parties
              
              
              109,761Liability
                  for stock to be issued
              
              
              224,900**Total
                  current liabilities**
              
              
              609,176Long-term
                  debt, net of current portion
              
              
              51,184Due
                  to related parties
              
              
              169,236**TOTAL
                  LIABILITIES**
              
              
              829,596**STOCKHOLDERS'
                  EQUITY**Common
                  stock, no par value, 100,000,000 shares authorized and8,460,000
                  shares issued and outstanding at March 31, 2005
              
              
              5,000Additional
                  paid-in capital
              
              
              671,700Accumulated
                  deficit
              
              
              (732,489
              )**Total
                  stockholders' equity (deficit)**
              
              
              (55,789
              )**TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)**
              
              $
              773,807








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


F
          -
          1




**SIGN
        MEDIA SYSTEMS, INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME
        (OPERATIONS)FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
        (UNAUDITED)**
  **2005**
                
                **2004****(restated)****REVENUE
                    - net of discounts**
                
                $
                22,271
                
                $
                282,600**COST
                    OF GOODS SOLD**
                
                
                2,507
                
                
                55,144**GROSS
                    PROFIT**
                
                
                19,764
                
                
                227,456**OPERATING
                    EXPENSES**Professional
                    fees
                
                
                20,610
                
                
                21,357General
                    and administrative expenses
                
                
                157,263
                
                
                154,169Depreciation
                
                
                11,892
                
                
                4,500**Total
                    operating expenses**
                
                
                189,765
                
                
                180,026**NET
                    INCOME (LOSS) BEFORE OTHER INCOME (EXPENSE)**
                
                
                (170,001
                )
                
                47,430**OTHER
                    INCOME (EXPENSE)**Interest
                    income
                
                
                2
                
                
                -Interest
                    expense
                
                
                (303
                )
                
                (92
                )**Total
                    Other Income (Expense)**
                
                
                (301
                )
                
                (92
                )**NET
                    INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES**
                
                
                (170,302
                )
                
                47,338Provision
                    for income taxes
                
                
                -
                
                
                -**NET
                    INCOME (LOSS) APPLICABLE TO COMMON SHARES**
                
                $
                (170,302
                )
                $
                47,338**NET
                    INCOME (LOSS) PER BASIC AND DILUTED SHARES**
                
                $
                (0.020
                )
                $
                0.006**WEIGHTED
                    AVERAGE NUMBER OF COMMON****SHARES
                    OUTSTANDING**
                
                
                8,460,000
                
                
                8,222,222
    The
        accompanying notes are an integral part of these condensed consolidated
        financial statements.






F
          -
          2


**SIGN
        MEDIA SYSTEMS, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSFOR
        THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004 (UNAUDITED)**
  **2005**
                
                **2004****(restated)****CASH
                    FLOWS FROM OPERATING ACTIVITIES:**Net
                    income (loss)
                
                $
                (170,302
                )
                $
                47,338Adjustments
                    to reconcile net income (loss) to net cash provided by(used
                    in) operating activitiesDepreciation
                
                
                11,892
                
                
                4,500**Changes
                    in assets and liabilities:**(Increase)/decrease
                    in accounts receivable
                
                
                7,340
                
                
                24,949(Increase)
                    in inventory
                
                
                -
                
                
                (8,283
                )Decrease
                    in prepaid expenses and other current assets
                
                
                -
                
                
                55,144Increase
                    in accounts payable and accrued expenses
                
                
                90,711
                
                
                15,380**Total
                    adjustments**
                
                
                109,943
                
                
                91,690**Net
                    cash provided by (used in) operating activities**
                
                
                (60,359
                )
                
                139,028**CASH
                    FLOWS FROM INVESTING ACTIVITIES:**Acquisition
                    of property and equipment
                
                
                (17,461
                )
                
                (12,687
                )**Net
                    cash (used in) investing activities**
                
                
                (17,461
                )
                
                (12,687
                )**CASH
                    FLOWS FROM FINANCING ACTIVITIES:**Proceeds
                    (payments) from long-term debt
                
                
                (4,605
                )
                
                (49,402
                )Liability
                    for stock to be issued
                
                
                24,900
                
                
                -Proceeds
                    (payments) to related parties - net
                
                
                62,046
                
                
                25,552**Net
                    cash provided by (used in) financing activities**
                
                
                82,341
                
                
                (23,850
                )**NET
                    INCREASE IN CASH AND CASH EQUIVALENTS**
                
                
                4,521
                
                
                102,491**CASH
                    AND CASH EQUIVALENTS - BEGINNING OF PERIOD**
                
                
                6,352
                
                
                47,068**CASH
                    AND CASH EQUIVALENTS - END OF PERIOD**
                
                $
                10,873
                
                $
                149,559**SUPPLEMENTAL
                    DISCLOSURE OF CASH FLOW INFORMATION:**Cash
                    paid during the period for interest.
                
                $
                -
                
                $
                92
    The
        accompanying notes are an integral part of these condensed consolidated
        financial statements.




F
          -
          3




**SIGN
      MEDIA SYSTEMS, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**MARCH
      31, 2005 AND 2004**







**NOTE
      1 -**  **ORGANIZATION
      AND BASIS OF PRESENTATION**





The
      condensed unaudited interim financial statements included herein have been
      prepared by Sign Media Systems, Inc. (the “Company”) without audit, pursuant to
      the rules and regulations of the Securities and Exchange Commission (the “SEC”).
      Certain information and footnote disclosures normally included in the financial
      statements prepared in accordance with accounting principles generally accepted
      in the United States of America have been condensed or omitted as allowed by
      such rules and regulations, and the Company believes that the disclosures are
      adequate to make the information presented not misleading. It is suggested
      that
      these condensed consolidated financial statements be read in conjunction with
      the December 31, 2004 audited financial statements and the accompanying notes
      thereto. While management believes the procedures followed in preparing these
      condensed financial statements are reasonable, the accuracy of the amounts
      are
      in some respects dependent upon the facts that will exist, and procedures that
      will be accomplished by the Company later that year.





The
      management of the Company believes that the accompanying unaudited condensed
      consolidated financial statements contain all adjustments (including normal
      recurring adjustments) necessary to present fairly the operations and cash
      flows
      for the periods presented.




The
      Company began business as Go! Agency LLC, a Florida Limited Liability Company
      (“Go Agency”). Go Agency was formed in April 2000 , principally
      to pursue third party truck side advertising. The principal of Go Agency
      invested approximately $857,000 in Go Agency pursuing this business. It became
      apparent that a more advanced truck side mounting system would be required
      and
      that third party truck side advertising alone would not sustain an ongoing
      profitable business. Go Agency determined to develop a technologically advanced
      mounting system and focused on a different business plan.








F
          -
          4




**SIGN
      MEDIA SYSTEMS, INC.** **NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (CONTINUED)** **MARCH
      31, 2005 AND 2004**








**NOTE
      1
      -**  **ORGANIZATION
      AND BASIS OF PRESENTATION (CONTINUED)**





The
      Company was incorporated on January 28, 2002 as a Florida corporation. Upon
      incorporation, an officer of the Company contributed $5,000 and received 1,000
      shares of common stock of the Company. Effective January 1, 2003, the Company
      issued 7,959,000 shares of common stock in exchange of $55,702 of net assets
      of
      GO! Agency, LLC, a Florida limited liability company (“Go Agency”), a company
      formed on June 20, 2000, as E Signs Plus.com, LLC., a Florida limited liability
      company. In this exchange, the Company assumed some debt of Go Agency and the
      exchange qualified as a tax free exchange under IRC Section 351. The net assets
      received were valued at historical cost. The net assets of Go Agency that were
      exchanged for the shares of stock were as follows:


Accounts
                  receivable
              
              $
              30,668Fixed
                  assets, net of depreciation
              
              
              112,214Other
                  assets
              
              
              85,264Accounts
                  payable
              
              
              (29,242
              )Notes
                  payable
              
              
              (27,338
              )Other
                  payables
              
              
              (115,864
              )Total
              
              $
              55,702
  Go
      Agency
      was formed to pursue third party truck side advertising. The principal of Go
      Agency invested approximately $857,000 in Go Agency pursuing this business.
      It
      became apparent that a more advanced truck side mounting system would be
      required and that third party truck side advertising alone would not sustain
      an
      ongoing profitable business. Go Agency determined to develop a technologically
      advanced mounting system and focused on a different business plan. Go Agency
      pre-exchange transaction was a company under common control of the major
      shareholder of SMS. Post-exchange transactions have not differed. Go Agency
      still continues to operate and is still under common control.





Go
      Agency
      and the Company developed a new and unique truck side mounting system which
      utilizes a proprietary cam lever technology which allows an advertising image
      to
      be stretched tight as a drum. Following the exchange, the Company had 7,960,000
      shares of common stock issued and outstanding. The Company has developed and
      filed an application for a patent on its mounting systems. The cam lever
      technology is considered an intangible asset and has not been recorded as an
      asset on the Company’s consolidated balance sheet. This asset was not recorded
      due to the fact that there was no historic recorded value on the books of Go
      Agency for this asset.








F
          -
          5





**SIGN
      MEDIA SYSTEMS, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**


**MARCH
      31, 2005 AND 2004**





**NOTE
      1 -**  **ORGANIZATION
      AND BASIS OF PRESENTATION (CONTINUED)**





On
      November 17, 2003, the Company entered into a merger agreement by and among
      American Powerhouse, Inc., a Delaware corporation and its wholly owned subsidiary,
      Sign Media Systems Acquisition Company, Inc., a Florida corporation and Sign
      Media Systems, Inc. Pursuant to the merger agreement, Sign Media Systems merged
      with Sign Media Systems Acquisition Company with Sign Media Systems being the
      surviving corporation. The merger was completed on December 8, 2003 with the
      filing of Articles of Merger with the State of Florida at which time Sign Media
      Systems Acquisition ceased to exist and Sign Media Systems became the surviving
      corporation. Some time prior to the merger, American Powerhouse had acquired
      certain technology for the manufacture of a water machine in the form of a
      water
      cooler that manufactures water from ambient air. However, American Powerhouse
      was not engaged in the business of manufacturing and distributing the water
      machine but was engaged in the licensing of that right to others. Prior to
      the
      merger, American Powerhouse granted a license to Sign Media Systems Acquisition
      to use that technology and to manufacture and sell the water machines. The
      acquisition of this license was the business purpose of the merger. As
      consideration for the merger, Sign Media Systems issued 300,000 shares of its
      common stock to American Powerhouse, 100,000 shares in the year ending December
      31, 2002, and 200,000 shares in the year ending December 31, 2004. The 300,000
      shares of stock were valued at $1.50 per share based on recent private sales
      of
      Sign Media Systems common stock. There were no other material costs of the
      merger. There was and is no relationship between American Powerhouse and either
      Sign Media Systems or GO! AGENCY. The Company recorded this license as an
      intangible asset for $400,000 for and subsequently impaired the entire amount.





The
      Company has reclassified its June 30, 2004 condensed consolidated financial
      statements to reflect certain reclassifications on the condensed consolidated
      balance sheet. These reclassifications had no effect on any income or expense
      for the three months ended March 31, 2005.











F
          -
          6
 **SIGN
        MEDIA SYSTEMS, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**


**MARCH
      31, 2005 AND 2004**


**NOTE
        2 -**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES**
 
 **Principles
        of Consolidation**




The
      condensed consolidated financial statements include the accounts of the Company
      and its wholly owned subsidiary. All significant intercompany accounts and
      transactions have been eliminated in consolidation.





**Use
      of Estimates**





The
      preparation of condensed consolidated 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 disclosures of contingent assets and
      liabilities at the date of the financial statements and the reported amounts
      of
      revenues and expenses during the reporting period. Actual results could differ
      from those estimates.





**Revenue
      and Cost Recognition**





Currently,
      the Company has three primary sources of revenue:





(1)
            The
                sale and installation of their mounting
                system


(2)
            The
                printing of advertising images to be inserted on trucks utilizing
                the
                Company’s mounting systems.


(3)
            Third
                party advertising





The
      Company’s revenue recognition policy for these sources of revenue is as follows.
      The Company relies on Staff Accounting Bulletin Topic 13, in determining when
      recognition of revenue occurs. There are four criteria that the Company must
      meet when determining when revenue is realized or realizable and earned. The
      Company has persuasive evidence of an arrangement existing; delivery has
      occurred or services rendered; the price is fixed or determinable; and
      collectibility is reasonably assured. Typically, the Company recognizes revenue
      when orders are placed and they receive deposits on those orders. In regard
      to
      the revenue recognition of third party advertising, the Company recognizes
      the
      revenue once they have completed the task for which the consumer
      paid.





In
      addition, the Company offers manufacturer’s warranties. These warranties are
      provided by the Company and not sold. Therefore, no income is derived from
      the
      warranty itself.





Cost
      is
      recorded on the accrual basis as well, when the services are incurred rather
      than when payment is made.




F
          -
          7





**SIGN
      MEDIA SYSTEMS, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**


**MARCH
      31, 2005 AND 2004**





**NOTE
      2 -**  **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**


**Revenue
      Recognition (Continued)**





Costs
      of
      goods sold are separated by components consistent with the revenue categories.
      Mounting systems, printing and advertising costs include purchases made, and
      payroll costs attributable to those components. Payroll costs is included for
      sales, engineering and warehouse personnel in cost of goods sold. Cost of
      overhead is diminimus. The Company’s inventory consists of finished goods, and
      unassembled parts that comprise the framework for the mounting system placed
      on
      trucks for their advertising. All of these costs are included in costs of goods
      sold for the three months ended March 31, 2005 and 2004.





**Cash
      and Cash Equivalents**





The
      Company considers all highly liquid debt instruments and other short-term
      investments with an initial maturity of three months or less to be cash
      equivalents.





The
      Company maintains cash and cash equivalent balances at several financial
      institutions that are insured by the Federal Deposit Insurance Corporation
      up to
      $100,000.





**Property
      and Equipment**





Property
      and equipment are stated at cost. Depreciation is computed primarily using
      the
      straight-line method over the estimated useful life of the assets.


Furniture
                  and fixtures
              5
                  yearsEquipment
              5
                  yearsTrucks
              5
                  years


**Advertising**





Costs
      of
      advertising and marketing are expensed as incurred. Advertising and marketing
      costs were $1,800 and $2,733 for the three months ended March 31, 2005 and
      2004,
      respectively





**Fair
      Value of Financial Instruments**




The
      carrying amount reported in the balance sheets for cash and cash equivalents,
      accounts receivable, accounts payable and accrued expenses approximate fair
      value because of the immediate or short-term maturity of these financial
      instruments.





**Earnings
      per Share of Common Stock**




Historical
      net income per common share is computed using the weighted-average number of
      common shares outstanding. Diluted earnings per share (EPS) include additional
      dilution from common stock equivalents, such as stock issuable pursuant to
      the
      exercise of stock options and warrants.






F
          -
          8


**SIGN
      MEDIA SYSTEMS, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**


**MARCH
      31, 2005 AND 2004**





**NOTE
      2 -**  **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**


**Earnings
      per Share of Common Stock (Continued)**





The
      following is a reconciliation of the computation for basic and diluted
      EPS:


**March
                  31,****2005**
              
              **2004****(restated)**Net
                  income (loss)
              
              $
              (170,302
              )
              $
              47,338Weighted-average
                  common shares outstandingBasic
              
              
              8,460,000
              
              
              8,222,222Weighted-average
                  common stock equivalentsStock
                  options
              
              
              -
              
              
              -Warrants
              
              
              -
              
              
              -Weighted-average
                  common shares outstandingDiluted
              
              
              8,460,000
              
              
              8,222,222


**NOTE
        3
        -** **PROPERTY
        AND EQUIPMENT**
 Property
        and equipment consist of the following at March 31, 2005 and 2004:
 **2005**
                
                **2004**Equipment
                
                $
                88,923
                
                $
                39,217Furniture
                    and Fixtures
                
                
                57,882
                
                
                35,947Transportation
                    Equipment
                
                
                54,620
                
                
                54,621201,425
                
                
                129,785Less:
                    accumulated depreciation
                
                
                71,301
                
                
                18,534Net
                    Book Value
                
                $
                130,124
                
                $
                111,251
   Depreciation
        expense for the three months ended March 31, 2005 and 2004 was $11,892 and
        $4,500, respectively.
  F
            -
            9


**SIGN
      MEDIA SYSTEMS, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**


**MARCH
      31, 2005 AND 2004**





**NOTE
      4
      -** **COMMITMENTS
      AND CONTINGENCIES**




The
      Company entered into a lease agreement on November 1, 2002 with Hawkeye Real
      Estate, LLC, a related entity, to lease warehouse and office space. The lease
      expires on December 30, 2007, and provides that SMS pay all applicable sales
      and
      use tax, insurance and maintenance. The total minimum rental commitments at
      March 31, 2005 under this lease are as follows:


2005
              
              $
              30,0002006
              
              
              30,0002007
              
              
              27,500$
              87,500




Rent
      expense for the three months ended March 31, 2005 and 2004 was $8,025, and
      $11,781, respectively.




**NOTE
      5
      -**  **RELATED
      PARTY TRANSACTIONS**




On
      January 28, 2002, Sign Media Systems, Inc. was formed as a Florida Corporation
      but did not begin business operations until April 2002. Most of the revenue
      that
      Sign Media Systems, Inc. earned was contract work with Go! Agency, LLC., a
      Florida limited liability company, a related party. Sign Media Systems, Inc.
      would contract Go! Agency, LLC. to handle and complete jobs. There was no
      additional revenue or expense added from one entity to the other.




On
      January 3, 2003, the Company entered into a loan agreement with Olympus Leasing
      Company, a related party, and in connection therewith executed a promissory
      note
      with a future advance clause in favor of Olympus Leasing, whereby Olympus
      Leasing agreed to loan the Company up to a maximum of $1,000,000 for a period
      of
      three years, with interest accruing on the unpaid balance at 18% per annum,
      payable interest only monthly, with the entire unpaid balance due and payable
      in
      full on January 3, 2006. As of March 31, 2005 there was $109,761 due. Other
      due
      to related party advances were $169,256. Due to related parties totaled $278,997
      at March 31, 2005.





**NOTE
      6
      -**  **LONG-TERM
      DEBT**




Long-term
      debt consists of two installment notes with GMAC Finance. As discussed in Note
      1, the Company assumed debt from Go! Agency as of January 28, 2002. On June
      18,
      2003, the Company acquired a truck in the amount of $45,761 financed by GMAC
      over a period of 5 years. Monthly payments are $763. The loan carries no
      interest charges.





F
          -
          10


**SIGN
      MEDIA SYSTEMS, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (CONTINUED)** **MARCH
      31, 2005 AND 2004**








**NOTE
      7
      -** **PROVISION
      FOR INCOME TAXES**




The
      net
      deferred tax assets in the accompanying condensed consolidated balance sheets
      include the following components at March 31, 2005:


Deferred
                  tax assets
              
              $
              299,575Deferred
                  tax valuation allowance
              
              
              (299,575
              )$
              -
  Due
        to
        the uncertainty of utilizing the approximate $855,928 in net operating losses,
        and recognizing the deferred tax assets, an offsetting valuation allowance
        has
        been established.





**NOTE
      8
      -**  **STOCKHOLDERS’
      EQUITY**




As
      of
      March 31, 2005 and 2004, there were 100,000,000 shares of common stock
      authorized.




As
      of
      March 31, 2005 and 2004, there were 8,460,000 shares of common stock issued
      and
      outstanding.




During
      the three months ended March 31, 2005 the Company did not have any stock
      transactions.




**NOTE
      9 -**  **LIABILITY
      FOR STOCK TO BE ISSUED**





As
      of
      March 31, 2005 the Company received $224,900 for common stock to be issued
      at a
      later date. Upon issuance of the common stock the liability will be
      removed.





**NOTE
      10  -**  **ADJUSTMENT**





The
      Company had reclassified $123,439 from Additional Paid-In Capital to Accumulated
      Deficit at December 31, 2004. The reclassification was done since the client
      had
      terminated its S-Corp status during the year 2004.






F
          -
          11






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





THE
      FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
      THE
      COMPANY SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND NOTES
      THERETO INCLUDED ELSEWHERE IN THIS REPORT.





THIS
      DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
      UNCERTAINTIES, AND THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM
      THOSE
      ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
      INCLUDING, BUT NOT LIMITED TO COMPETITION AND OVERALL MARKET AND ECONOMIC
      CONDITIONS.





RESULTS
      OF CONTINUING OPERATIONS





Three
      Months Ended


March
      31





2005
            
            2004
              (restated)Revenue
            
            $
            22,271
            
            $
            282,600Cost
                of Revenue
            
            
            2,507
            
            
            55,144Gross
                profit
            
            
            19,764
            
            
            227,456Operating
                and
              Other
                Expenses
            
            
            190,066
            
            
            180,118Net
                income (loss)
            
            $
            (170,302
            )
            $
            47,338Gross
                profit margin
            
            
            89
            %
            
            80
            %Earnings
                per share
              of
                common stock
            
            $
            (0.020
            )
            $
            0.006





The
      Company had reclassified $123,439 from Additional Paid-In Capital to Accumulated
      Deficit at December 31, 2004. The reclassification was done because the Company
      terminated its S-Corporation status under the Internal Revenue Code during
      the
      year 2004.





The
      Company generated $22,271 of revenue, $19,764 of gross profit, $(170,302) of
      net
      loss and $(0.020) in net loss per weighted-average common share for the three
      months ended March 31, 2005.





Net
      loss
      for the three months ended March 31, 2005, was $(170,302) or $(0.020) in net
      loss per weighted-average common share with 8,460,000 weighted average common
      shares outstanding compared with a earnings of $47,338 or $0.006 in earnings
      per
      weighted-average common with 8,222,222 weighted average common shares
      outstanding for the three months ended March 31, 2004.


3





Revenue
      for the three months ended March 31, 2005, decreased $260,329 from the same
      period last year. Cost of goods sold for the three months ended March 31, 2005,
      decreased $52,637 from the same period last year. Operating and other expenses
      for the three months ended March 31, 2005, increased $9,948 from the same period
      last year. Income from continuing operations for the three months ended March
      31, 2005, decreased $217,640 from the same period last year.





Earnings
      per weighted-average common share was $(0.020) for the three months ended March
      31, 2005, based on weighted-average common shares outstanding of 8,460,000,
      and
      earnings per weighted-average common share was $0.006 for the three months
      ended
      March 31, 2004 based upon weighted-average common shares outstanding of
      8,222,222.





MANAGEMENT’S
      DISCUSSION





The
      Company attributes the decrease in revenue, cost of goods sold, gross profit
      and
      income form continuing operations to decreases in sales primarily due to the
      timing of the placement of orders from the Company’s primary dealer. The Company
      expects sales to increase in its second quarter of 2005 and that sales for
      the
      year to increase compared to sales in 2004. The Company’s primary emphases is to
      expand sales nation wide.





The
      Company will require significant capital to implement both its short term and
      long-term business strategies . However,
      there can be no assurance that such additional capital will be available or,
      if
      available, that the terms will be favorable to the Company. The absence of
      significant additional capital whether raised through a public or private
      offering or through other means, including either private debt or equity
      financings, will have a material adverse effect on the Company’s operations and
      prospects.





The
      Company’s operations have consumed and will continue to consume substantial
      amounts of capital, which, up until now, have been largely financed internally
      through cash flows, from loans from related parties, and private investors.
      The
      Company expects capital and operating expenditures to increase. Although the
      Company believes that it will be able to attract additional capital through
      private investors and as a result thereof its cash reserves and cash flows
      from
      operations will be adequate to fund its operations through the end of calendar
      year 2006, there can be no assurance that such sources will, in fact, be
      adequate or that additional funds will not be required either during or after
      such period. No assurance can be given that any additional financing will be
      available or that, if available, it will be available on terms favorable to
      the
      Company. If adequate funds are not available to satisfy either short or
      long-term capital requirements, the Company may be required to limit its
      operations significantly or discontinue its operations. The Company’s capital
      requirements are dependent upon many factors including, but not limited to,
      the
      rate at which it develops and introduces its products and services, the market
      acceptance and competitive position of such products and services, the level
      of
      promotion and advertising required to market such products and services and
      attain a competitive position in the marketplace, and the response of
      competitors to its products and services.


4





Item
      3.
      Controls and Procedures.





(a)
      Evaluation of Disclosure Controls and Procedures.





The
      term
      "disclosure controls and procedures" is defined in Rules 13a-15(e) and 15d-15(e)
      of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). This
      term refers to the controls and procedures of a company that are designed to
      ensure that information required to be disclosed by a company in the reports
      that it files under the Exchange Act is recorded, processed, summarized, and
      reported within the required time periods. Our Chief Executive Officer and
      our
      Chief Financial Officer have evaluated the effectiveness of our disclosure
      controls and procedures as of the end of the period covered by this annual
      report. They have concluded that, as of that date, our disclosure controls
      and
      procedures were effective at ensuring that required information will be
      disclosed on a timely basis in our reports filed under the Exchange
      Act.





(b)
      Changes in Internal Control over Financial Reporting.





No
      change
      in our internal control over financial reporting (as defined in Rules 13a-15(f)
      and 15d-15(f) under the Exchange Act) occurred during the period covered by
      this
      report that has materially affected, or is reasonably likely to materially
      affect, our internal control over financial reporting.





**PART
      II — OTHER INFORMATION**





**Item
      1. Legal Proceedings.**





There
      are
      no pending or threatened legal proceedings against the Company or any of its
      subsidiaries.





**Item
      2. Changes in Securities.**





NONE





**Item
      3. Defaults Upon Senior Securities**





NONE





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





NONE





**Item
      5. Other Information.**





NONE


5





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





**INDEX
      TO EXHIBITS.**








**Exhibit
                Number**
            **Description
                of Exhibit****31.1**
            Certification
                of Chief Executive Officer pursuant to
                18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002**31.2**
            Certification
                of Chief Financial Officer pursuant to
                18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002**32.1**
            Certification
                of Chief Executive Officer and Chief
                Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
                pursuant
                to Section 906 of the Sarbanes-Oxley Act of
                2002





The
      Company filed no Forms 8K for the quarter ended March 31, 2005.









6




**SIGNATURES**




In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly authorized.





**SIGN
                MEDIA SYSTEMS, INC**.
              (Registrant)DateOctober
                13, 2005
            /s/Antonio
                F. Uccello,
                III
              Antonio
                F. Uccello, III
              Chief
                Executive Officer
              Chairman of the Board









7