UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549





Form
10-Q





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





For
the quarterly period ended September 30,
2008





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




Commission
file number 333-149978




DIAMOND
INFORMATION INSTITUTE, INC


(Exact
name of registrant as specified in its charter)





New
      Jersey
            
            22-2935867(State
      or other jurisdiction of incorporation or organization)
            
            (I.R.S.
      Employer Identification No.)





12
      Daniel Road EastFairfield,
      New Jersey
            
            07004(Address
      of principal executive offices)
            
            (Zip
      Code)





Registrant's
telephone
number:                                                                                     (973)
227-3230





Copies of
Communication to:


Stoecklein
Law Group


402 West
Broadway


Suite
690


San
Diego, CA 92101


(619)
704-1310


(619)
704-1325





Indicate
by check mark whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes  x    No  





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See definitions of “large accelerated filer,” “accelerated
filer” and “smaller reporting company” in Ruble 12b-2 of the Exchange
Act.





Large
      accelerated filer  
            Accelerated
      filer  Non-accelerated
      filer   (Do not check if a smaller reporting
      company)
            Smaller
      reporting company  x





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





The
number of shares of Common Stock, $0.001 par value, outstanding on November 10,
2008, was 11,643,100 shares.





PART
I – FINANCIAL INFORMATION





Item
1. Financial Statements.





DIAMOND INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY
      BERGIOBALANCE
      SHEETSSeptember 30,
            
            
            December 31,2008
            
            
            2007[Unaudited]Assets:Current
      Assets:Accounts
      Receivable
            
            $
            448,017
            
            
            $
            692,619Inventory
            
            
            1,402,719
            
            
            
            1,333,752Prepaid
      Expenses
            
            
            29,503
            
            
            
            48,618Total
      Current Assets
            
            
            1,880,239
            
            
            
            2,074,989Property
      and Equipment – Net
            
            
            176,416
            
            
            
            222,715Other
      Assets:Deferred
      Tax Asset
            
            
            157,168
            
            
            
            -Investment
      in Unconsolidated Affiliate
            
            
            5,000
            
            
            
            5,000Total
      Other Assets
            
            
            162,168
            
            
            
            5,000Total
      Assets
            
            $
            2,218,823
            
            
            $
            2,302,704See
      Notes to Financial Statements.


2


DIAMOND
      INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY BERGIOBALANCE
      SHEETSSeptember 30,
            
            
            December 31,2008
            
            
            2007[Unaudited]Liabilities
      and Stockholders' Equity:Current
      Liabilities:Cash
      Overdraft
            
            $
            293,233
            
            
            $
            48,144Accounts
      Payable and Accrued Expenses
            
            
            190,368
            
            
            
            389,798Bank
      Lines of Credit – Net
            
            
            917,355
            
            
            
            853,621Current
      Maturities of Notes Payable
            
            
            93,285
            
            
            
            110,088Current
      Maturities of Capital Leases
            
            
            20,497
            
            
            
            19,060Advances
      from Stockholder – Net
            
            
            101,380
            
            
            
            90,289Sales
      Returns and Allowances Reserve
            
            
            25,794
            
            
            
            24,726Deferred
      Tax Liability
            
            
            -
            
            
            
            13,812Total
      Current Liabilities
            
            
            1,641,912
            
            
            
            1,549,538Long-Term
      LiabilitiesNotes
      Payable
            
            
            113,340
            
            
            
            177,167Capital
      Leases
            
            
            45,433
            
            
            
            60,924Deferred
      Tax Liability
            
            
            -
            
            
            
            78,672Total
      Long-Term Liabilities
            
            
            158,773
            
            
            
            316,763Commitments
      and Contingencies
            
            
            -
            
            
            
            -Stockholders'
      EquityCommon
      Stock - $.001 Par Value, 25,000,000 Shares Authorized, 11,643,100 and
      18,075,000 Shares Issued and Outstanding as of September 30, 2008 and
      December 31, 2007, respectively
            
            
            11,644
            
            
            
            18,075Additional
      Paid-In Capital
            
            
            1,574,706
            
            
            
            825,175Accumulated
      Deficit
            
            
            (1,168,212
            )
            
            
            (392,540
            )Deferred
      Compensation
            
            
            -
            
            
            
            (14,307
            )Total
      Stockholders' Equity
            
            
            418,138
            
            
            
            436,403Total
      Liabilities and Stockholders' Equity
            
            $
            2,218,823
            
            
            $
            2,302,704See
      Notes to Financial Statements.


3


DIAMOND INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY
      BERGIOSTATEMENTS
      OF OPERATIONS [UNAUDITED]Three Months Ended September
      30,
            
            
            Nine Months Ended September
    30,2008
            
            
            2007
            
            
            2008
            
            
            2007Sales
            
            $
            233,227
            
            
            $
            308,091
            
            
            $
            876,110
            
            
            $
            816,302Cost
      of Sales
            
            
            100,503
            
            
            
            232,878
            
            
            
            402,632
            
            
            
            818,845Gross
      Profit [Loss]
            
            
            132,724
            
            
            
            75,213
            
            
            
            473,478
            
            
            
            (2,543
            )Selling
      Expenses
            
            
            183,514
            
            
            
            160,219
            
            
            
            327,279
            
            
            
            394,022General
      and Administrative ExpensesShare-based
      Compensation
            
            
            25,000
            
            
            
            37,500
            
            
            
            292,500
            
            
            
            112,500Services
      rendered for Common Stock
            
            
            200,000
            
            
            
            --
            
            
            
            450,000
            
            
            
            --Other
            
            
            71,178
            
            
            
            248,566
            
            
            
            349,749
            
            
            
            738,135Total
      General and Administrative expenses
            
            
            296,178
            
            
            
            286,066
            
            
            
            1,092,249
            
            
            
            850,635Total
      Operating Expenses
            
            
            479,692
            
            
            
            446,285
            
            
            
            1,419,528
            
            
            
            1,244,657Loss
      from Operations
            
            
            (346,968
            )
            
            
            (371,072
            )
            
            
            (946,050
            )
            
            
            (1,247,200
            )Other
      Income [Expense]Interest
      Expense
            
            
            (21,187
            )
            
            
            (27,096
            )
            
            
            (77,436
            )
            
            
            (86,966
            )Other
      Income
            
            
            --
            
            
            
            35,155
            
            
            
            1,369
            
            
            
            35,155Total
      Other Income [Expense]
            
            
            (21,187
            )
            
            
            8,059
            
            
            
            (76,067
            )
            
            
            (51,811
            )Loss
      Before Income Tax [Benefit] Provision
            
            
            (368,155
            )
            
            
            (363,013
            )
            
            
            (1,022,117
            )
            
            
            (1,299,011
            )Income
      Tax [Benefit] Provision
            
            
            (77,999
            )
            
            
            164,973
            
            
            
            (246,445
            )
            
            
            16,752Net
      Loss
            
            $
            (290,156
            )
            
            $
            (527,986
            )
            
            $
            (775,672
            )
            
            $
            (1,315,763
            )Net
      Loss Per Share - Basic and Diluted
            
            $
            (0.03
            )
            
            $
            (0.03
            )
            
            $
            (0.06
            )
            
            $
            (0.07
            )Weighted
      Average Common Shares Outstanding - Basic and Diluted
            
            
            11,490,926
            
            
            
            18,075,000
            
            
            
            12,659,003
            
            
            
            17,695,147See
      Notes to Financial Statements.


4


DIAMOND INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY
      BERGIOSTATEMENTS
      OF CASH FLOWS [UNAUDITED]Nine Months Ended September
    30,2008
            
            
            2007Operating
      ActivitiesNet
      Loss
            
            $
            (775,672
            )
            
            $
            (1,315,763
            )Adjustments
      to Reconcile Net Lossto
      Net Cash [Used in ] Operating
              Activities:Sales
      Returns and Allowance
              Reserve
            
            
            1,068
            
            
            
            21,500Depreciation
      and Amortization
            
            
            46,299
            
            
            
            40,920Share-Based
      Compensation
            
            
            292,500
            
            
            
            112,500Services
      Rendered for Common
              Stock
            
            
            450,000
            
            
            
            -Amortization
      of Deferred
              Compensation
            
            
            14,307
            
            
            
            15,000Deferred
      Tax [Benefit] Provision
            
            
            (249,652
            )
            
            
            13,955Allowance
      for Doubtful
              Accounts
            
            
            -
            
            
            
            (18,781
            )Changes
      in Assets and Liabilities[Increase]
      Decrease in:Accounts
      Receivable
            
            
            244,602
            
            
            
            418,485Inventory
            
            
            (68,967
            )
            
            
            16,089Prepaid
      Expenses
            
            
            19,115
            
            
            
            2,870Increase
      [Decrease] in:Accounts
      Payable and Accrued
              Expenses
            
            
            (199,430
            )
            
            
            103,308Total
      Adjustments
            
            
            549,842
            
            
            
            725,846Net
      Cash - Operating Activities
            
            
            (225,830
            )
            
            
            (589,917
            )Investing
      Activities:Capital
      Expenditures
            
            
            -
            
            
            
            (51,454
            )Financing
      Activities:Cash
      Overdraft
            
            
            245,089
            
            
            
            16,954Advances
      under Lines of Credit - Net
            
            
            63,734
            
            
            
            229,237Repayments
      of Notes Payable
            
            
            (80,630
            )
            
            
            (73,315
            )Advances  from
      Stockholder - Net
            
            
            11,091
            
            
            
            8,262Repayments
      of Capital Leases
            
            
            (14,054
            )
            
            
            (7,234
            )Proceeds
      from Private Placements of
              Common
      Stock
            
            
            600
            
            
            
            425,000Net
      Cash - Financing Activities
            
            
            225,830
            
            
            
            598,904Net
      [Decrease] in Cash
            
            
            -
            
            
            
            (42,467
            )Cash
      - Beginning of Periods
            
            
            -
            
            
            
            42,467Cash
      - End of Periods
            
            $
            -
            
            
            $
            -See
      Notes to Financial Statements.


5


DIAMOND
      INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY BERGIOSTATEMENTS
      OF CASH FLOWS [UNAUDITED]September 30,2008
            
            2007Supplemental Disclosures of Cash Flow
      Information:Cash
      Paid during the years for:Interest
            
            $         83,000
            
            $            83,000Income
      Taxes
            
            $           4,000
            
            $              2,000Supplemental Disclosures of Non-Cash Investing and
      Financing Activities:During
      2008 and 2007, the Company issued 200,000 and 250,000 shares of common
      stock to vendors as full settlement for accounts payable balances
      amounting to $200,000 and $250,000, respectively. These shares were issued
      as consideration for payment of accounts payable balances and pre-payments
      for services payable balances and pre-payments for
    services.During
      2007 the Company entered into certain capital leases for the purchase of
      equipment having an aggregate net present value of
  $40,000.See
      Notes to Financial Statements.


6


DIAMOND
INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY BERGIO


NOTES TO FINANCIAL STATEMENTS
[UNAUDITED]





[1]
Nature of Operations and Basis of Presentation





Diamond
Information Institute Inc. d/b/a Designs by Bergio [the "Company"] is engaged in
the product design, manufacturing, distribution of fine jewelry throughout the
United States and is headquartered from its corporate office in Fairfield, New
Jersey.  Based on the nature of operations, the Company's sales cycle
experiences significant seasonal volatility with the first two quarters of the
year representing 15% - 25% of annual sales and the remaining two quarters
representing the remaining portion of annual sales.





The
accompanying unaudited interim financial statements as of September 30, 2008,
and for the three and nine months ended September 30, 2008 and 2007 have been
prepared in accordance with accounting principles generally accepted for interim
financial statement presentation and in accordance with the instructions to
Regulation S-X.  Accordingly, they do not include all the information
and footnotes required by accounting principles generally accepted in the United
States of America for complete financial statement presentation.  In
the opinion of management, all adjustments (consisting only of normal recurring
accruals) considered necessary in order to make the interim financials not
misleading have been included and all such adjustments are of a normal recurring
nature.  The results of operations for the nine months ended September
30, 2008 and 2007 are not necessarily indicative of the results to be expected
for the full year.





[2]
Summary of Significant Accounting Policies





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 reporting period.  Actual results could differ from those
estimates.





Revenue
Recognition-Revenue is recognized upon the shipment of products to customers with the
price to the buyer being fixed and determinable and collectability reasonably
assured.  The Company maintains a reserve for potential product
returns based on historical experience.





Cash and Cash
Equivalents-Cash equivalents are comprised of certain highly liquid instruments with
a maturity of three months or less when purchased.  The Company did
not have any cash equivalents on hand at September 30, 2008 and December 31,
2007.





Accounts
Receivable– Our
accounts receivable is generated from sales of fine jewelry to retail outlets
throughout the United States. At September 30, 2008 and December 31, 2007,
accounts receivable were substantially comprised of balances due from retailers.
As of September 30, 2008 and December 31, 2007, no allowance for doubtful
accounts has been recorded.





7


DIAMOND
INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY BERGIO


NOTES
TO FINANCIAL STATEMENTS [UNAUDITED]





[2]
Summary of Significant Accounting Policies [Continued]





Inventories- Substantially all
inventory consists primarily of finished goods and is valued at the lower of
cost or market. Cost is determined using the weighted average method and average
cost is recomputed after each inventory purchase or sale.





In June
2007, the Company recorded an inventory adjustment of approximately $284,000 to
more appropriately value amounts on hand at the lower of cost or
market.  The adjustment was reflected in the Statements of Operations
for the nine months ended September 30, 2007 and excluded from the three month
presentation for that period as the adjustment was recorded in the second
quarter of 2007.





The
inventory adjustment was prompted by the refinement of cost and quantity on hand
data attributable to the conversion of the Company's books and records to new
accounting software in early 2007.  Subsequent to implementation of
the new accounting system, cost and quantity on hand data was refined as the
Company discovered product data was not properly defined for importing into the
new accounting module.  These data conversion complications were
attributable to product information not established on a more disaggregated
basis for proper recognition by the accounting module.  In other
words, products offered with varying metal and stone qualities were not
enumerated as needed, resulting in erroneous price averaging or improper
quantities on hand, as product counts were not performed prior to data
conversion.





As
management's sophistication for use of the accounting software increased, these
discrepancies were discovered and corrected through greater specification of the
product type in the accounting module and revision of unit costs by comparing to
original purchasing documents or physical count of on hand
quantities.  These corrective efforts prompted the aforementioned
inventory adjustment.





Concentrations of
Credit Risk–
Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of cash and cash equivalents and accounts
receivables.  The Company places its cash and cash equivalents with
high credit quality financial institutions.  The Company, from time to
time, maintains balances in financial institutions beyond the insured
amounts.  At September 30, 2008 and 2007, the Company had no cash
balances beyond the federally insured amounts.





Concentrations
of credit risk with respect to accounts receivable is limited due to the wide
variety of customers and markets into which the Company's services are provided,
as well as their dispersion across many different geographical
areas.  As is characteristic of the Company's business and of the
jewelry industry generally, the Company extends its customers seasonal credit
terms. The carrying amount of receivables approximates fair value. The Company
routinely assesses the financial strength of its customers. Based on
management’s review of accounts receivable, no allowance for doubtful accounts
is considered necessary. The Company does not require collateral to support
these financial instruments.





8


DIAMOND
INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY BERGIO


NOTES
TO FINANCIAL STATEMENTS [UNAUDITED]





[2]
Summary of Significant Accounting Policies [Continued]





Property and
Equipment and Depreciation-Property and equipment are
stated at cost less accumulated depreciation.  Depreciation is
computed using the straight-line method over estimated useful lives ranging from
five (5) to seven (7) years.





Expenditures
for repairs and maintenance are charged to expense as incurred whereas
expenditures for renewals and improvements that extend the useful life of the
assets are capitalized.  Upon the sale or retirement, the cost and the
related accumulated depreciation are eliminated from the respective accounts and
any resulting gain or loss is reported within the Statements of Operations in
the period of disposal.





Long-Lived
Assets- In
accordance with Statement of Financial Accounting Standards ["SFAS"] No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived
tangible assets subject to depreciation or amortization are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the asset over it's fair value as determined by an estimate
of undiscounted future cash flows.





Losses on
assets held for disposal are recognized when management has approved and
committed to a plan to dispose of the assets, and the assets are available for
disposal.





Fair Value of
Financial Instruments-Generally accepted accounting principles require disclosing the fair
value of financial instruments to the extent practicable for financial
instruments, which are recognized or unrecognized in the balance
sheet.  The fair value of the financial instruments disclosed herein
is not necessarily representative of the amount that could be realized or
settled, nor does the fair value amount consider the tax consequences of
realization or settlement.  In assessing the fair value of these
financial instruments, the Company used a variety of methods and assumptions,
which were based on estimates of market conditions and risks existing at that
time.  For certain instruments, including cash, accounts receivable,
accounts payable and accrued expenses, it was estimated that the carrying amount
approximated fair value for the majority of these instruments because of their
short maturity.  The fair value of property and equipment is estimated
to approximate their net book value.  The fair value of debt
obligations as recorded approximates their fair values due to the variable rate
of interest associated with these underlying obligations.





Investments in
Unconsolidated Affiliates-Investments in
unconsolidated affiliates, jointly owned companies and other investees in which
the Company owns 20% to 50% interest or otherwise exercises significant
influence are carried at cost, adjusted for the Company's proportionate share of
their undistributed earnings or losses.  Investments in unconsolidated
affiliates, in which the Company owns less than 20% or otherwise does not
exercise significant influence, are stated at cost.  At September 30,
2008 and December 31, 2007, the Company had an investment in which, the Company
owned less than 1% interest in an unconsolidated affiliate and therefore the
investment is carried at cost.





9


DIAMOND
INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY BERGIO


NOTES
TO FINANCIAL STATEMENTS [UNAUDITED]





[2]
Summary of Significant Accounting Policies [Continued]





Share-Based
Compensation-The Company does not currently sponsor stock option plans or restricted
stock awards plans.  However, on January 1, 2006, the Company adopted
the provisions of SFAS No. 123(R), "Share-Based Payment" using the modified
prospective method. SFAS No. 123(R) requires companies to recognize the cost of
employee services received in exchange for awards of equity instruments based
upon the grant date fair value of those awards. Under the modified
prospective  method of adopting SFAS No. 123(R), the Company
recognized compensation cost for all share-based payments granted after January
1, 2006, plus any awards granted to employees prior to January 1, 2006 that
remain unvested at that time. Under this method of adoption, no restatement of
prior periods is made.





The
Company applies the fair value provisions of SFAS No. 123(R), to issuance of
non-employee equity instruments at either the fair value of the services
rendered or the instruments issued in exchange for such services, whichever is
more readily determinable, using the measurement date guidelines enumerated in
EITF 96-18, "Accounting for Equity Instruments That are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or
Services".





Advertising and
Promotional Costs- Advertising and promotional costs are expensed as incurred and are
recorded as part of Selling Expenses in the Statement of
Operations.  The total cost for the three months ended September 30,
2008 and 2007 was approximately $4,000 and $87,000, respectively and for the
nine months ended September 30, 2008 and 2007 was approximately $36,000 and
$171,000, respectively.





During
the year, the Company prepays costs associated with trade shows which, are
recorded as Prepaid Expenses in the Balance Sheet and are charged to the
Statement of Operations upon the trade shows being conducted.  At
September 30, 2008 and December 31, 2007, approximately $30,000 and $49,000,
respectively of prepaid trade show expenses have been recorded.





Income
Taxes-The
Company follows the provisions of SFAS No. 109, "Accounting for Income
Taxes."  Under the asset and liability method of SFAS 109, deferred
income tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax
basis.  Deferred income tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or
settled.  Under SFAS 109, the effect on deferred income tax assets and
liabilities of a change in tax rates is recognized in earnings in the period
that includes the enactment date.  Valuation allowances are
established when necessary to reduce deferred tax assets to amounts expected to
be realized.


10


DIAMOND
INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY BERGIO


NOTES
TO FINANCIAL STATEMENTS [UNAUDITED]





[2]
Summary of Significant Accounting Policies [Continued]





On
January 1, 2007, we adopted the provisions of FIN 48, "Accounting for
Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109",
which provides a financial statement recognition threshold and measurement
attribute for a tax position taken or expected to be taken in a tax
return.  Under FIN 48, we may recognize the tax benefit from an
uncertain tax position only if it is more likely than not that the tax position
will be sustained on examination by the taxing authorities, based on the
technical merits of the position.  The tax benefits recognized in the
financial statements from such a position should be measured based on the
largest benefit that has a greater than 50% likelihood of being realized upon
ultimate settlement.  FIN 48 also provides guidance on derecognition
of income tax assets and liabilities, classification of current and deferred
income tax assets and liabilities, accounting for interest and penalties
associated with tax positions, and income tax disclosures.  The
adoption of FIN 48 did not have a material impact on our financial
statements.





Basic and Diluted
Loss Per Share-
Basic earnings per share includes no dilution and is computed by dividing
earnings  available to common stockholders by the weighted average
number of common shares outstanding for the period. Dilutive earnings per share
reflect the potential dilution of securities that could occur through the effect
of common shares issuable upon the exercise of stock options, warrants and
convertible securities.  For the three and nine months ended September
30, 2008 and 2007, 575,000 potential common shares issuable under Class A
purchase warrants have not been included in the computation of diluted loss per
share since the effect would be anti-dilutive.  These Class A purchase
warrants may have a dilutive effect in future periods.





Reclassifications-Certain prior
period amounts have been reclassified to conform to current interim period
presentation.





[3]
Recently Issued Accounting Standards





In
February 2007, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 159, "The Fair
Value Option for Financial Assets and Financial Liabilities – Including an
amendment of FASB Statement No. 115," which is effective for fiscal years
beginning after November 15, 2007. This statement permits entities to
choose to measure many financial instruments and certain other items at fair
value. This statement also establishes presentation and disclosure requirements
designed to facilitate comparisons between entities that choose different
measurement attributes for similar types of assets and liabilities. Unrealized
gains and losses on items for which the fair value option is elected would be
reported in earnings. We have evaluated the new statement and have determined
that it will not have a significant impact on the determination or reporting of
our financial results.


11


DIAMOND
INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY BERGIO


NOTES
TO FINANCIAL STATEMENTS [UNAUDITED]





[3]
Recently Issued Accounting Standards [Continued]





In
December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
Combinations" (SFAS 141(R)), which replaces SFAS No. 141, "Business
Combinations." SFAS 141(R) retains the underlying concepts of SFAS 141 in that
all business combinations are still required to be accounted for at fair value
under the acquisition method of accounting but SFAS 141(R) changed the method of
applying the acquisition method in a number of significant aspects. Acquisition
costs will generally be expensed as incurred; noncontrolling interests will be
valued at fair value at the acquisition date; in-process research and
development will be recorded at fair value as an indefinite-lived intangible
asset at the acquisition date; restructuring costs associated with a business
combination will generally be expensed subsequent to the acquisition date; and
changes in deferred tax asset valuation allowances and income tax uncertainties
after the acquisition date generally will affect income tax expense. SFAS 141(R)
is effective on a prospective basis for all business combinations for which the
acquisition date is on or after the beginning of the first annual period
subsequent to December 15, 2008, with the exception of the accounting for
valuation allowances on deferred taxes and acquired tax contingencies. SFAS
141(R) amends SFAS 109 such that adjustments made to valuation allowances on
deferred taxes and acquired tax contingencies associated with acquisitions that
closed prior to the effective date of SFAS 141(R) would also apply the
provisions of SFAS 141(R). Early adoption is not permitted. We are currently
evaluating the effects, if any, that SFAS 141(R) may have on our financial
statements and believe it could have a significant impact if business
combinations are consummated.  However, the effect of which is
indeterminable as of September 30, 2008.





In
December 2007, the FASB issued Financial Accounting Standards No. 160,
"Noncontrolling Interests in Consolidated Financial Statements-an amendment of
ARB No. 51." This statement is effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15, 2008,
with earlier adoption prohibited. This statement requires the recognition of a
noncontrolling interest (minority interest) as equity in the consolidated
financial statements and separate from the parent's equity. The amount of net
income attributable to the noncontrolling interest will be included in
consolidated net income on the face of the income statement. It also amends
certain of ARB No. 51's consolidation procedures for consistency with the
requirements of SFAS 141(R).This statement also includes expanded disclosure requirements regarding
the interests of the parent and its noncontrolling interest. We are currently
evaluating this new statement and anticipate that the statement will not have a
significant impact on the reporting of our results of operations.





In March
2008, the FASB issued FASB Statement No. 161, "Disclosures about Derivative
Instruments and Hedging Activities."  The new standard is intended to
improve financial reporting about derivative instruments and hedging activities
by requiring enhanced disclosures to enable investors to better understand their
effects on an entity's financial position, financial performance, and cash
flows.  This statement is effective for financial statements issued
for fiscal years and interim periods beginning after November 15, 2008, with
early application encouraged.  The Company is currently evaluating the
impact of adopting SFAS No. 161 on its financial statements.








12





DIAMOND
INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY BERGIO


NOTES
TO FINANCIAL STATEMENTS [UNAUDITED]





[4]
Property and Equipment





Property
and equipment and accumulated depreciation and amortization are as
follows:





September
      30,
            
            
            December
      31,2008
            
            
            2007Selling
      Equipment
            
            $
            56,000
            
            
            $
            56,000Office
      and Equipment
            
            
            242,271
            
            
            
            242,271Leasehold
      Improvements
            
            
            7,781
            
            
            
            7,781Furniture
      and Fixtures
            
            
            18,487
            
            
            
            18,487Total
      – At Cost
            
            
            324,539
            
            
            
            324,539Less:
      Accumulated Depreciation and Amortization
            
            
            148,123
            
            
            
            101,824Property
      and Equipment - Net
            
            $
            176,416
            
            
            $
            222,715





Depreciation
and amortization expense for the three months ended September 30, 2008 and 2007
was approximately $15,000 and $14,000, respectively and for the nine months
ended September 30, 2008 and 2007 was approximately $46,000 and $41,000,
respectively.





[5]
Notes Payable





September
      30,
            
            
            December
      31,2008
            
            
            2007Notes
      payable due in equal monthly installments, over 36 months,
              maturing
      through May 2009 at interest rates of 7.25%.  The
      notes
              are
      collateralized by the assets of the Company.
            
            $
            33,333
            
            
            $
            70,833Notes
      payable due in equal monthly installments, over 60 months,
              maturing
      through May 2011 at interest rates of 7.96%.  The
      notes
              are
      collateralized by the assets of the Company.
            
            
            173,292
            
            
            
            216,422Total
            
            
            206,625
            
            
            
            287,255Less:
      Current Maturities Included in Current Liabilities
            
            
            93,285
            
            
            
            110,088Total
      Long-Term Portion of Debt
            
            $
            113,340
            
            
            $
            177,167


13


DIAMOND
INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY BERGIO


NOTES
TO FINANCIAL STATEMENTS [UNAUDITED]





[5]
Notes Payable [Continued]





Maturities
of long-term debt are as follows:





Years
      endedDecember
      31,2008
            
            $  110,1002009
            
            80,7002010
            
            67,5002011
            
            28,9002012
            
            --Thereafter
            
            --Total
            
            $  287,200





[6]
Bank Lines of Credit





During
2007, the Company refinanced its existing credit facilities and notes payable
with various other financial institutions.  A summary of these credit
facilities is as follows:





September
      30,
            
            
            December
      31,2008
            
            
            2007Credit
      Line of $700,000, minimum payment of interest only is due monthly at the
      bank's prime rate plus .75%. At September 30, 2008 and December 31, 2007,
      the interest rate was 5.75% and 8.00%, respectively. The Credit Line
      renews annually in May 2009 and is collateralized by the assets of the
      Company.
            
            $
            699,999
            
            
            $
            699,999Credit
      Line of $55,000, minimum payment of interest only is due monthly at the
      bank's prime rate plus .75%. At September 30, 2008 and December 31, 2007,
      the interest rate was 5.75% and 8.00%, respectively. The Credit Line
      renews annually in July 2009 and is collateralized by the assets of the
      Company.
            
            
            46,426
            
            
            
            48,293Various
      unsecured Credit Cards of $206,000 and $250,000, minimum payment of
      principal and interest are due monthly
              at
      the credit card's annual interest rate.  At September 30, 2008
      and December 31, 2007, the interest rates ranged from 5.74% to 14.99% and
      8.24% to 29.49%, respectively.
            
            
            170,930
            
            
            
            105,329Total Bank Lines of Credit
            
            $
            917,355
            
            
            $
            853,621


14


DIAMOND
INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY BERGIO


NOTES
TO FINANCIAL STATEMENTS [UNAUDITED]





[6]
Bank Lines of Credit [Continued]





The
Company's CEO and majority shareholder, also serves as a guarantor of the
Company's debt.





The
Company had approximately $9,000 and $7,000 available under the various credit
facilities (not including credit cards) at September 30, 2008 and December 31,
2007, respectively.





[7]
Equipment Held Under Capital Leases





The
Company's equipment held under the capital lease obligations as of September 30,
2008 and December 31, 2007 is summarized as follows:





September
      30,
            
            
            December
      31,2008
            
            
            2007Showroom
      Equipment
            
            $
            96,000
            
            
            $
            96,000Less:
      Accumulated Amortization
            
            
            30,934
            
            
            
            16,533Equipment
      Held under Capitalized Lease Obligations - Net
            
            $
            65,066
            
            
            $
            79,467





Amortization
related to the equipment held under capital leases for the three months ended
September 30, 2008 and 2007 was approximately $3,000 for each period and for the
nine months ended September 30, 2008 and 2007 was approximately $14,000 and
$8,000, respectively.





As of
December 31, 2007, the future minimum lease payments under the capital leases
are as follows:





2008
            
            $
            26,4322009
            
            
            26,4322010
            
            
            26,4322011
            
            
            17,405Total
            
            
            96,701Less:
      Amount Representing Imputed Interest
            
            
            (16,717
            )Present
      Value of Net Minimum Capital Lease Payments
            
            
            79,984Less:
      Current Portion of Capitalized Lease Obligations
            
            
            19,060Non Current Portion of Capitalized Lease
      Obligations
            
            $
            60,924


15


DIAMOND
INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY BERGIO


NOTES
TO FINANCIAL STATEMENTS [UNAUDITED]





[7]
Equipment Held Under Capital Leases [Continued]





Interest
expense related to capital leases for the three months ended September 30, 2008
and 2007 was approximately $1,800 and $1,000, respectively, and for the nine
months ended September 30, 2008 and 2007 was approximately $6,000 and $3,000,
respectively.





[8]
Income Taxes





The
income tax [benefit] provision is as follows:





Three
      Months Ended
              September
      30,
            
            
            Nine
      Months Ended September 30,2008
            
            
            2007
            
            
            2008
            
            
            2007Current:Federal
            
            $
            --
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -State
            
            
            276
            
            
            
            --
            
            
            
            3,207
            
            
            
            2,117Totals
            
            
            276
            
            
            
            --
            
            
            
            3,207
            
            
            
            2,117Deferred:Federal
            
            
            (53,980
            )
            
            
            113,769
            
            
            
            (184,181
            )
            
            
            9,559State
            
            
            (24,295
            )
            
            
            51,204
            
            
            
            (65,471
            )
            
            
            5,076Totals
            
            
            (78,275
            )
            
            
            164,973
            
            
            
            (249,652
            )
            
            
            14,635Totals
            
            $
            (77,999
            )
            
            $
            164,973
            
            
            $
            (246,445
            )
            
            $
            16,752





Deferred
income tax [assets] liabilities are as follows:





September
      30,
            
            
            December
      31,2008
            
            
            2007Deferred
      Income Tax Assets:Net
      Operating Loss Carry-forward
            
            $
            (309,872
            )
            
            $
            (301,900
            )Differences
      in Income Tax to Financial Reporting Accounting
              Method
            
            
            (284,735
            )
            
            
            (88,316
            )Totals
            
            
            (594,607
            )
            
            
            (390,216
            )Deferred
      Income Tax Liabilities:Property,
      Plant and Equipment
            
            $
            14,385
            
            
            $
            14,388Differences
      in Income Tax to Financial Reporting Accounting
              Method
            
            
            423,054
            
            
            
            468,312Totals
            
            
            437,439
            
            
            
            482,700Net
      Deferred Tax (Asset) Liability
            
            $
            (157,168
            )
            
            $
            92,484


16


DIAMOND
INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY BERGIO


NOTES
TO FINANCIAL STATEMENTS [UNAUDITED]





[8]
Income Taxes [Continued]





In 2008,
management will voluntarily elect a change in its method of tax accounting to
the accrual basis as required by Section 481 of the Internal Revenue Code (the
"IRC").  In management's opinion, based on provisions of the IRC, a
voluntary election to the accrual basis of tax reporting should not subject the
Company to tax examinations for previous years that income tax returns have been
filed and prompt an uncertain tax position in accordance with the Financial
Accounting Standards Board Interpretation ("FIN") No. 48, Accounting for
Uncertainty in Income Taxes.  As a result, no contingent liability has
been recorded for the anticipated change in tax reporting.  Further,
the resulting tax liability should be reduced by operating losses previously
incurred.





At
December 31, 2007, the Company had approximately $1,300,000 of federal net
operating tax loss carryforwards expiring at various dates through
2027.  The Tax Reform Act of 1986 enacted a complex set of rules which
limits a company's ability to utilize net operating loss carryforwards and tax
credit carryforwards in periods following an ownership change. These rules
define an ownership change as a greater than 50 percent point change in stock
ownership within a defined testing period which is generally a three-year
period. As a result of stock which may be issued by us from time to time and the
conversion of warrants, options or the result of other changes in ownership of
our outstanding stock, the Company may experience an ownership change and
consequently our utilization of net operating loss carryforwards could be
significantly limited.





Although
realization is not assured and dependent upon things such as generating
sufficient taxable income in future periods, management believes it is more
likely than not that all of the deferred tax asset will be
realized.  The amount of the deferred tax asset considered realizable,
however, could be reduced in the near term if estimates of future taxable income
during the future periods decline.





[9]
Stockholders' Equity





Articles of
Incorporation Amendment and Stock Split-The Company's Certificate
of Incorporation, as amended, authorizes the issuance of up to 25,000,000 shares
of common stock at a par value of $.001 per share.  Over the course of
2007, the Company's Board of Directors ratified two forward stock splits. The
first stock split, for 1.725 to 1 and the second for 10,000 to 1.





This
resulted in common stock outstanding increasing from 1,000 to 17,250,000 which
were all owned by the Company's founder and CEO.  The per share data
for all periods presented has been retroactively adjusted due to each of the
stock splits.





Subsequent
to the forward stock splits, the Company's founder and CEO transferred a total
of 2,250,000 shares to the Company's President and an Advisory Panel
member.  Upon resignation of the Company’s President and Advisory
Panel Member in late 2007, the Company cancelled 2,200,000 of the shares
previously issued.  These shares were cancelled in February
2008.


17


DIAMOND
INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY BERGIO


NOTES
TO FINANCIAL STATEMENTS [UNAUDITED]





[9]
Stockholders' Equity [Continued]





The share
and per share data for all periods presented has been retroactively adjusted to
reflect the stock splits.





Private Placement
Offering-During the second quarter of 2007, the Company conducted a
private placement offering (the "Offering") of its common stock to Accredited
Investors in accordance with SEC regulations.  The offering was up to
40 units at $25,000 per unit or $1,000,000 in total.  Each unit was
composed of 25,000 shares of common stock and 25,000 "Class A" common stock
purchase warrants to purchase additional shares at $1.50 per share.





Through
the aforementioned period, the Company issued 17 units or 425,000 shares
resulting in total cash proceeds of $425,000.  Through September 30,
2008, no "Class A" purchase warrants were exercised by the
investors.





Debt
Conversions-In
April 2007, the Company entered into a Debt Conversion Agreement (the
"Agreement") and issued 100,000 shares of common stock at $1 per share to a
vendor as full satisfaction for accounts payable previously due and future
services to be rendered.  Of the total $100,000 of common stock
issued, $55,000 was to satisfy previous account payable balances and $45,000 was
issued as consideration for future services to be rendered and is reflected in
the Deferred Compensation caption of the stockholders' equity section of the
Balance Sheet, of which approximately $31,000 was expensed in 2007. The shares
have a one year restriction from sale or offering.





In June
2007, the Company entered into a Debt Conversion Agreement (the "Agreement") and
issued 150,000 shares of common stock at a fair market value of $1 per share to
a vendor as full satisfaction of an accounts payable balance of
$150,000.  The shares have a one year restriction from sale or
offering and the Agreement allows for the vendor to purchase for a period of 60
months from the date of closing of this Agreement 150,000 shares of common stock
under "Class A" purchase warrants at $1.50 per share.  Through
September 30, 2008, no "Class A" purchase warrants were exercised by the
vendor.





Of the
total 250,000 shares issued in connection with debt conversions and future
services to be rendered, 205,000 shares of common stock valued at $1 per share
or $205,000 were in full satisfaction of prior debts outstanding while, 45,000
shares of common stock valued at $1 or $45,000 were issued in connection with
future services to be rendered.  As of December 31, 2007,
approximately $14,000 of Deferred Compensation remained unamortized in
connection with the 45,000 shares previously issued.  At September 30,
2008, the balance was fully amortized.





Restricted Share
Issuances-During 2007, the Board of Directors ratified issuance of 50,000
restricted shares of common stock to the Company's CEO, also serving as a
director, as compensation for services rendered through December 31,
2007.  The Board of Directors also ratified issuance of a total of
100,000 restricted shares of common stock to two of the Company's Advisory Panel
Members as compensation for services rendered from January through






18




DIAMOND
INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY BERGIO


NOTES
TO FINANCIAL STATEMENTS [UNAUDITED]





[9]
Stockholders' Equity [Continued]





December
of 2007.





For the
nine months ended September 30, 2007, the Company valued their shares based on
recent stock transaction, and recorded $112,500 of stock based compensation
expense which is reflected as part of General and Administrative expenses in the
Statement of Operations.





In
January 2008, two Advisory Panel members and a Board of Director member received
restricted common stock for services to be rendered throughout
2008.  The two Advisory Panel members received 50,000 and 100,000
shares, respectively, with a fair value of $1.00 per share or $150,000 while the
Board of Director member received 50,000 shares with a fair value of $1.00 per
share or $50,000.  Through the first nine months of 2008, $175,000 was
charged to the Statement of Operations as Share-based Compensation
expense.





Also in
January 2008, the Company issued 117,500 shares of restricted common stock with
a fair value of $1.00 per share or $117,500 to employees.  Shares
issued in connection with the Board of Director consent, were dispersed ratably
over the first two quarters of 2008 as authorized in the consent.





Additionally,
in January and February 2008, the Company sold 600 shares of common stock at
$1.00 per share to individual investees.





Finally,
in February 2008, certain stockholders of the Company with significant
ownership, cancelled shares they owned for no consideration.  The
share cancellation totaled 7,200,000 of shares previously
outstanding.





Through
the first nine months of 2008, the Company issued to its SEC counsel, 450,000
shares of restricted common stock with a fair value of $1.00 per share or
$450,000 for services previously in connection with becoming effective with the
SEC through a Form S-1 filing..





[10]
Related Party Transactions





The
Company receives advances from time to time from its principal stockholder based
upon the Company's cash flow needs.  At September 30, 2008 and
December 31, 2007, $101,380 and $90,289, respectively was due to the
shareholder.  Repayment and interest terms have not been established
and as a result the amount has been classified as a current
liability.





In 2007,
the Company hired an information technology company to provide consultation and
technical support related to certain software applications and technology
infrastructure.  The information technology company is also a
shareholder of the Company with a total ownership interest of less than
1%.  During 2007, common stock issued to this information
technology


19


DIAMOND
INFORMATION INSTITUTE, INC. D/B/A DESIGNS BY BERGIO


NOTES
TO FINANCIAL STATEMENTS [UNAUDITED]





[10]
Related Party Transactions [Continued]





company
in connection with services rendered or, to be performed in future periods
totaled $100,000 or 100,000 shares of common stock with a fair value of $1 per
share. Of the total, $45,000 related to future services and was recorded as
deferred compensation.  See “Debt Conversions” Note 9.





[11] Commitment
and Contingencies





Operating
Leases-The
Company leases certain office and manufacturing facilities and equipment. The
lease agreements, which expire at various dates through 2011, are subject, in
many cases, to renewal options and provide for the payment of taxes, and
operating costs, such as insurance and maintenance.  Certain leases
contain escalation clauses resulting from the pass-through of increases in
operating costs and property taxes.  All these leases are classified
as operating leases.





Aggregate
minimum annual rental payments under non-cancelable operating leases are as
follows:





Years
      endedDecember
      31,2008
            
            $       21,4002009
            
            21,4002010
            
            14,8002011
            
            6002012
            
            --Thereafter
            
            --Total
            
            $       58,200





Rent
expense for the Company's operating leases for the three months ended September
30, 2008 and 2007 was approximately $4,000 and $10,000, respectively and for the
nine months ended September 30, 2008 and 2007 was approximately $17,000 and
$21,000, respectively.





Litigation- The Company,
in the normal course of business, is involved in certain legal matters for which
it carries insurance, subject to certain exclusions and
deductibles.  As of December 31, 2007 and through the date of issuance
of these financial statements, there was no asserted or unasserted litigation,
claims or assessments warranting recognition and/or disclosure in the financial
statements.








20


FORWARD-LOOKING
STATEMENTS





This
document contains “forward-looking statements”.  All statements other
than statements of historical fact are “forward-looking statements” for purposes
of federal and state securities laws, including, but not limited to, any
projections of earnings, revenue or other financial items; any statements of the
plans, strategies and objections of management for future operations; any
statements concerning proposed new services or developments; any statements
regarding future economic conditions or performance; any statements or belief;
and any statements of assumptions underlying any of the foregoing.





Forward-looking
statements may include the words “may,” “could,” “estimate,” “intend,”
“continue,” “believe,” “expect” or “anticipate” or other similar
words.  These forward-looking statements present our estimates and
assumptions only as of the date of this report.  Accordingly, readers
are cautioned not to place undue reliance on forward-looking statements, which
speak only as of the dates on which they are made.  Except for our
ongoing securities laws, we do not intend, and undertake no obligation, to
update any forward-looking statement.  You should, however, consult
further disclosures we make in future filings of our Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.





Although
we believe the expectations reflected in any of our forward-looking statements
are reasonable, actual results could differ materially from those projected or
assumed in any of our forward-looking statements.  Our future
financial condition and results of operations, as well as any forward-looking
statements, are subject to change and inherent risks and
uncertainties.  The factors impacting these risks and uncertainties
include, but are not limited to:





·
            our
      current lack of working capital;


·
            increased
      competitive pressures from existing competitors and new
      entrants;


·
            increases
      in interest rates or our cost of borrowing or default under any material
      debt agreements;


·
            inability
      to raise additional financing;


·
            deterioration
      in general or regional economic
conditions;


·
            adverse
      state or federal legislation or regulation that increases the costs of
      compliance, or adverse findings by a regulator with respect to existing
      operations;


·
            changes
      in U.S. GAAP or in the legal, regulatory and legislative environments in
      the markets in which we operate;


·
            the
      fact that our accounting policies and methods are fundamental to how we
      report our financial condition and results of operations, and they may
      require management to make estimates about matters that are inherently
      uncertain;


·
            inability
      to efficiently manage our
operations;


·
            loss
      of customers or sales weakness;


·
            inability
      to achieve future sales levels or other operating
  results;


·
            key
      management or other unanticipated personnel
  changes;


·
            the
      unavailability of funds for capital expenditures;
  and


·
            operational
      inefficiencies in distribution or other
systems.


21





For a
detailed description of these and other factors that could cause actual results
to differ materially from those expressed in any forward-looking statement,
please see Item 1A. Risk
Factors in this document.





AVAILABLE
INFORMATION





Our
securities as of September 8, 2008 are registered under the Securities Act of
1933, and we will file reports and other information with the Securities and
Exchange Commission as a result. Additionally, we shall file supplementary and
periodic information, documents and reports that are required under section
13(a) and Section 15(d) of the Exchange Act, as amended.





All of
our reports will be able to be reviewed through the SEC’s Electronic Data
Gathering Analysis and Retrieval System (EDGAR) which is publicly available
through the SEC’s website (http://www.sec.gov)
or they can be inspected and copied at the public reference facility maintained
by the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549-0405.
Information regarding the public reference facilities may be obtained from the
SEC by telephoning 1-800-SEC-0330. Copies of such materials may also be obtained
by mail from the public reference section of the SEC at 100 F Street, N.E., Room
1580, Washington, D.C. 20549-0405 at prescribed rates.





Item
2. Management’s Discussion and Analysis and Plan of Operation





OVERVIEW





Diamond
Information Institute, Inc. (“Diamond”) was incorporated in the State of New
Jersey in October 1988 and had minimal activity until 1995 when it began in the
business of jewelry manufacturing under the name Diamond Information Institute
(d/b/a “Bergio”).  Since 1995 Diamond has been engaged in the design
and manufacture of upscale jewelry through its trade name of “Bergio” and in
2002 launched its “Bergio Bridal Collection”.  The Company sells to
approximately 150 independent jewelry retailers across the United States and has
incurred a significant amount of capital resources in creating brand recognition
in the jewelry industry.





Diamond’s products consist of a wide
range of unique styles and designs made from precious metals such as, gold,
platinum, and Karat gold, as well as diamonds and other precious
stones.  Diamond has approximately 50 to 75 product styles in its
inventory, with prices ranging from $400 to $200,000.  Additionally,
Diamond has manufacturing control over its line as a result of having a
manufacturing facility in New Jersey as well as subcontracts with facilities in
Italy and Bangkok.





22




OVERVIEW
OF CURRENT OPERATIONS





In
September of 2008, Diamond’s S-1 registration statement became effective with
the SEC.  Diamond believes that in becoming a public company, it will
provide the Company increased flexibility in being able to acquire smaller
jewelry manufacturers while also being able to
consolidate overlapping expenses.  It is Diamond’s intention to
establish itself as a holding company for the purpose of acquiring established
jewelry design and manufacturing firms who possess branded product
lines.  Branded product lines are products and/or collections whereby
the jewelry manufacturers have established their products within the industry
through advertising in consumer and trade magazines as well as possibly
obtaining federally registered trademarks of their products and
collections.  This is in line with the Company’s strategy and belief
that a brand name can create an association with innovation, design and quality
which helps add value to the individual products as well as facilitate the
introduction of new products.





The
Company intends to acquire design and manufacturing firms throughout the United
States and Europe.  If and when the Company pursues any potential
acquisition candidates, it intends to target the top 10% of the world’s jewelry
manufactures that have already created an identity and brand in the jewelry
industry.  Diamond intends to locate potential candidates through its
relationships in the industry and expects to structure the acquisition through
the payment of cash, which will most likely be provided from third party
financing, as well as the Company’s common stock and not cash generated from the
Company’s operations.  In the event, the Company obtains financing
from third parties for any potential acquisitions; the Company may agree to
issue the Company’s common stock in exchange for the capital
received.  However, as of the date of this quarterly report the
Company does not have any binding agreements with any potential acquisition
candidates or arrangements with any third parties for financing.





Diamond’s management believes
that the jewelry industry competes in the global marketplace and therefore must
be adaptable to ensure a competitive measure.  Recently the U.S.
economy has encountered a slowdown and Diamond anticipates the U.S. economy will
most likely remain weak at least through the remainder of
2008.  Consumer spending for discretionary goods such as jewelry is
sensitive to changes in consumer confidence and ultimately consumer confidence
is affected by general business considerations in the U.S.
economy.  Consumer spending for discretionary spending generally
decline during times of falling consumer confidence, which may affect Diamond’s
retail sale of its products.  U.S. consumer confidence reflected these
slowing conditions during the last quarter of 2007 and has been carried forward
throughout the first three quarters of 2008.





According to the US Department of
Commerce, the U.S. apparent consumption of precious metal jewelry is expected to
grow over the new few years at a slow but steady rate, before picking up
considerably in 2010.  A stronger economy, more spending by the baby
boomers and young professionals with an overall trend toward luxury products
will lead to future growth.  From 2007 to 2011, apparent consumption
of precious metal jewelry is expected to increase by an average of 3.9% per
year, totaling $14.0 billion in 2011.  Therefore, Diamond intends to
make strong efforts to maintain its brand in the industry through its focus on
the innovation and design of its products as well as being able to consolidate
and increase cost efficiency when possible through
acquisitions.


23





Result
of Operations for the Three and Nine Months Ended September 30, 2008 and
2007





The
following income and operating expenses tables summarize selected items from the
statement of operations for the three and nine months ended September 30, 2008
compared to the three and nine months ended September 30, 2007.





INCOME:





Three
      Months Ended
              September
            
            
            Increase/
              (Decrease)
            
            
            Nine
      Months Ended September
            
            
            Increase/
      (Decrease)2008
            
            
            2007
            
            
            %
            
            
            2008
            
            
            2007
            
            
            %Sales
            
            $
            233,227
            
            
            $
            308,091
            
            
            
            (24
            %)
            
            $
            876,110
            
            
            $
            816,302
            
            
            
            7
            %Cost
      of Sales
            
            
            100,503
            
            
            
            232,878
            
            
            
            (57
            %)
            
            
            402,632
            
            
            
            818,845
            
            
            
            (51
            %)Gross
      Profit (Loss)
            
            $
            132,724
            
            
            $
            75,213
            
            
            
            76
            %
            
            $
            473,478
            
            
            $
            (2,543
            )
            
            
            18,189
            %Gross
      Profit (Loss) Percentage of Revenue
            
            
            57
            %
            
            
            24
            %
            
            
            33
            %
            
            
            54
            %
            
            
            (0.3
            %)
            
            
            54.3
            %





Sales





Sales for
the three months ended September 30, 2008 were $233,227 compared to $308,091 for
the three months ended September 30, 2007.  This resulted in a
decrease of $74,864 or 24% from the comparable period of 2008 to
2007.  We experienced a decrease in sales during the three months
ended September 30, 2008 as compared to the comparable period of 2007 as a
result of having fewer pieces in production and having fewer orders from our
customers.  It is characteristic for this time of year for sales to
slow down in anticipation of the upcoming holiday season.  Although we
had fewer sales in the third quarter of 2008 as compared to the third quarter of
2007, we have already received higher than expected orders for our fourth
quarter and we anticipate our 2008 year end sales to be approximately $1.6
million compared to $1.3 million for the year ended December 31,
2007.





Sales for
the nine months ended September 30, 2008 were $876,110 compared to $816,302 for
the nine months ended September 30, 2007.  This resulted in an
increase of $59,808 or 7% from the comparable period of 2007 to
2008.  One of the reasons for the increase over the same period of
2007 was due to orders for the year ended December 31, 2007 being materialized
during the first quarter of 2008.  Additionally, we were able to sell
some of our inventories of raw metals during the first half of 2008, which
values significantly increased during this time period.


24





Typically,
revenues experience significant seasonal volatility in the jewelry
industry.  The first two quarters of any given year typically
represent approximately 15%-25% of total year revenues, based on historic
results.  The holiday buying season during the last two quarters of
every year typically account for the remainder of annual sales.  We
anticipate that the first two quarters of 2008, to represent approximately 30% -
35% of our total sales of 2008 as a result of being able to sell additional
inventories of raw metals in addition to our typical sales of our
products.





Cost of
Sales





Cost of
sales for the three months ended September 30, 2008 was $100,503 a decrease of
$132,375, or 57%, from $232,878 for the three months ended September 30,
2007.  During the three months ended September 30, 2008, we had
decreased our cost of sales when compared to the same period of 2007 as a result
of having fewer sales during the third quarter of 2008.  However, we
were able to have a more significant decrease in our cost of sales than just as
a result of reduced sales because we were able to sell dated inventory as raw
materials and at higher commodity prices.





Although
we experienced an increase in our cost of sales during the third quarter of
2008, we were able to decrease the cost of sales for the nine months ended
September 30, 2008.  Our cost of sales for the nine months ended
September 30, 2008 decreased by $416,213, or 51%, from $818,845 for the nine
months ended September 30, 2007 to $402,632 for the nine months ended September
30, 2008.  During the nine months of 2008, we had an overall decrease
in cost of sales as a result of being able to sell raw materials during the
first two quarters of 2008, which does not create additional cost of sales
expenses as compared to the production of our jewelry pieces.





Our cost
of sales were significantly higher for the nine months ended September 30, 2007
due to a write-down of approximately $284,000 of inventory values to the less of
cost or market value, which we experienced during the six months ended June 30,
2007.  The inventory write-down was a result of the refinement of cost
and quantity of on hand data attributable to the conversion of the Company’s
books and records to new accounting software in the beginning of
2007.    As a result of this write-down our cost of sales
for the six months ended June 30, 2007, were not necessarily representative of
typical cost of sales expenses.  We did not record any inventory
write-down for the nine months ended September 30, 2008 and believe the cost of
sales expenses are more reflective of what we expect our cost of sales expenses
to be going forward.





25




Gross
Profit:





During
the three months ended September 30, 2007, we experienced a gross profit as a
percentage of revenue of 24%, compared to a gross profit as a percentage of
revenue of 57% for the three months ended September 30, 2008.  Our
gross profit during the third quarter of 2008


was a
result of selling fewer products but at higher margins as a result of being able
to decrease our cost of sales expenses.





In
contrast to the nine months ended September 30, 2007, which yielded a gross loss
of $2,543 we were able to show a gross profit of $473,478 for the nine months
ended September 30, 2008.  During the nine months ended September 30,
2007, we experienced a small gross loss as a percentage of revenue of 0.3%, as
compared to a gross profit as a percentage of revenue of 54% for the nine months
ended September 30, 2008.  In 2007, the Company recorded an inventory
adjustment of approximately $284,000.  Further, the Company was able
to sell its product at higher gross margins in 2008 in addition to being able to
sell raw metals.   The Company expects its gross profit to
stabilize during the next twelve months.





OPERATING
EXPENSES:





Three
      Months Ended
              September
            
            
            Increase/
              (Decrease)
            
            
            Nine
      Months Ended September
            
            
            Increase/
      (Decrease)2008
            
            
            2007
            
            
            %
            
            
            2008
            
            
            2007
            
            
            %Selling
      Expenses
            
            $
            183,514
            
            
            $
            160,219
            
            
            
            15
            %
            
            $
            327,279
            
            
            $
            394,022
            
            
            
            (17
            %)Total
      General and Administrative Expenses
            
            
            296,178
            
            
            
            286,066
            
            
            
            4
            %
            
            
            1,092,249
            
            
            
            850,635
            
            
            
            28
            %Total
      Operating Expenses
            
            
            479,692
            
            
            
            446,285
            
            
            
            7
            %
            
            
            1,419,528
            
            
            
            1,244,657
            
            
            
            14
            %Net
      (Loss)
            
            $
            (290,156
            )
            
            $
            (527,986
            )
            
            
            (45
            %)
            
            $
            (775,672
            )
            
            $
            (1,315,763
            )
            
            
            (41
            %)





Selling
Expenses





Total selling expenses were $183,514
for the three months ended September 30, 2008, which was approximately a 15%
increase from $160,219 of total selling expenses for the three months ended
September 30, 2007.  Selling expenses include advertising, trade show
expenses and selling commissions.  The increase in selling expenses
during the three months ended September 30, 2008 compared to the three months
ended September 30, 2007 was a result of increased trade show
expenses.





Total
selling expenses were $327,279 for the nine months ended September 30, 2008,
which was approximately a 17% decrease from $394,022 of total selling expenses
for the nine months ended September 30, 2007.  The reduction in
selling expenses during the nine months ended September 30, 2008 is generally
attributable to the Company’s efforts to reduce its marketing budget associated
with advertising campaigns and trade show participation, coupled with a general
reduction in commission-based salespeople.  In contrast to the nine
months ended September 30, 2007, we have reduced our advertising budget by
approximately $60,000 and our tradeshow expenses by approximately $34,000 for
the nine months ended September 30, 2008.


The
reduction in our tradeshow expenses occurred primarily in the first six months
of the year of the 2008 year.





26




General and Administrative
Expenses





General
and administrative expenses were $296,178 for the three months ended September
30, 2008 versus $286,066 for the three months ended September 30,
2007.  The increase in general & administrative expenses is due
primarily to a slight increase of professional fees as we continued with the
“going-public” process. We anticipate that our general and administrative
expenses may increase as a result of increased professional fees associated with
the financial reporting mandated by the SEC.





General
and administrative expenses were $1,092,249 for the nine months ended September
30, 2008 versus $850,635 for the nine months ended September 30,
2007.  During the first three quarters of 2008, our increase in
general & administrative expenses is due primarily to a non-cash charge
related to stock based compensation of approximately $292,500 to our employees
as a bonus and a non-cash charge related to stock based compensation of
approximately $450,000 for services provided by third parties.  Prior
to 2007, we experienced minimal stock based compensation.  A majority
of the services provided by the third parties relate to professional and
consulting fees associated with the “going-public” process.  During
the quarter ended September 30, 2008, our S-1 registration statement was granted
effectiveness by the SEC.





Loss from
Operations





During the three months ended September
30, 2008, we had a loss of operations totaling $346,968 which was a decrease of
$24,104 or 6% from the loss of operations of $371,072 for the three months ended
September 30, 2007.  The decrease in loss from operations is primarily
attributable to being able to increase our sales margins on our
products.





During the nine months ended September
30, 2008, we had a loss of operations totaling $946,050 which was a decrease
from $1,247,200, or approximately or 24%, for the nine months ended September
30, 2007.  The primary contributing factor of our loss from operations
in 2007, was due to the Company having recorded an inventory adjustment of
approximately $284,000.





Other Expense /
Income





Other
Expense / Income is comprised primarily of interest incurred on bank lines of
credit, corporate credit cards, term loans and capital leases in connection with
operations related to manufacturing and indirect operating expenses offset by
miscellaneous income.  We attribute the increase in our other expense/
income during the first nine months of 2008 when compared to the first nine
months of 2007 as a result of recognizing sales of gold scrap in 2007. No sales
of gold scrap occurred in 2008.


27





Income Tax (Benefit)
Provision





The Company reported an income tax
benefit of $246,445 for the nine months ended September 30, 2008 as compared to
a tax provision of $16,752 for the nine months ended September 30,
2007.  The tax benefit is primarily attributable to the increased net
operating loss carryforwards incurred, which management believes are more likely
than not to be realized.





Net Loss





The Company incurred a net loss of
$290,156 for three months ended September 30, 2008 versus a net loss of $527,986
for the three months ended September 30, 2007.  The largest
contributing factor to the decrease in our net loss for the comparable period
was our ability to increase our gross margins and ultimately our gross profit
during the three months ended September 30, 2008.





The
Company incurred a net loss of $775,672 for nine months ended September 30, 2008
versus a net loss of $1,315,763 for the nine months ended September 30,
2007.  This was a decrease of approximately 41% in our net loss for
comparable periods.  Although we experienced higher general and
administrative expenses for the nine months ended September 30, 2008, we were
able to decrease our net loss when compared to same period a year ago as a
result of decreasing our cost of sales and selling
expenses.  Additionally, our gross margins have significantly
increased based on an inventory adjustment of approximately $284,000 recorded in
2007 versus no inventory adjustment recorded in 2008.  Overall our net
loss is primarily attributable to a significant increase in costs associated
with the non-cash stock compensation paid to various third party
providers.





Liquidity
and Capital Resources





The
following table summarizes total assets, accumulated deficit, stockholders’
equity and working capital at September 30, 2008 compared to December 31,
2007.





September
      30, 2008
            December
      31, 2007
            Increase
      / (Decrease)$
            %Current
      Assets
            $1,880,239
            $2,074,989
            $(194,750)
            (9%)Current
      Liabilities
            $1,641,912
            $1,549,538
            $92,374
            6%Working
      Capital
            $238,327
            $525,451
            $(287,124)
            (55%)





As of
September 30, 2008, Diamond had a cash balance of zero and a cash overdraft of
$293,233, compared to a cash overdraft of $48,144 at December 31,
2007.  Previously in 2007, Diamond conducted a private placement and
raised approximately $425,000, which Diamond


believes
the capital raised in conjunction with its net earnings from operations will be
sufficient to fund its short term capital and liquidity
needs.  However, it is anticipated that Diamond will need to sell
additional equity or debt securities or obtain credit facilities from financial
institutions to meet its long-term liquidity and capital requirements, which
include strategic growth through mergers and acquisitions.  There is
no assurance that Diamond will be able to obtain additional capital or financing
in amounts or on terms acceptable to Diamond, if at all or on a timely
basis.





28




Accounts
receivable at September 30, 2008 was $448,017 and $692,619 at December 31, 2007,
representing a decrease of 35%.  Diamond typically offers its
customers 60, 90 or 120 day payment terms on sales, depending upon the product
mix purchased.  When setting terms with its customers, Diamond also
considers the term of the relationship with individual customers and
management’s assessed credit risk of the respective customer, and may at
management’s discretion, increase or decrease payment terms based on those
considerations.  The decrease in accounts receivable from December 31,
2007 to September 30, 2008 is attributable primarily to collecting payment
immediately from the sale of raw metals.





Inventory at December 31, 2007 was
$1,333,752 and $1,402,719 at September 30, 2008. Diamond’s management seeks to
maintain a very consistent inventory level that it believes is commensurate with
current market conditions and manufacturing requirements related to anticipated
sales volume.  In anticipation of the upcoming orders to be satisfied
during the fourth quarter of 2008, we increased our inventory levels to
accommodate these needs.  Diamond historically does not have an
inventory reserve for slow moving or obsolete products due to the nature of its
inventory of precious metals and stones, which are commodity-type raw materials
and rise in value based on quoted market prices established in actively trade
markets.  This allows for the Company to resell or recast these
materials into new products and/or designs as the market evolves.





Accounts payable and accrued expenses
at December 31, 2007 were $389,798 compared to $190,368 at September 30, 2008,
which represents a 51% decrease.  Diamond had a slight increase in
accounts payable after the first quarter as a result of having to acquire some
additional pieces for a trade show at the end of the second
quarter.  However, overall the Company was able to decrease its
accounts payable from December 31, 2007 to September 30, 2008 as a result of the
conscious effort made by the Company to pay vendors as cash became
available.





Diamond
does not typically utilize its shares as a method of payment for its debt but
during 2007, Diamond entered into a debt conversion agreement and agreed to
issue 100,000 shares of common stock at a fair market value of $1 per share to a
vendor as full satisfaction for accounts payable previously due and as
pre-payment for future services to be rendered. Of the total $100,000 of common
stock issued, approximately $55,000 was to satisfy previous accounts payable
balances, and the difference of approximately $45,000 was issued as
consideration for future services to be rendered.


29





Also
during 2007, Diamond entered into another debt conversion agreement and agreed
to issue 150,000 shares of common stock at fair market value of $1 per share to
a vendor as full satisfaction of an accounts payable balance of approximately
$150,000.  The debt conversion agreement allows for the vendor to
purchase for a period of 60 months, 150,000 “Class A” purchase warrants, which
have an exercise price of $1.50 per share. As of the period ended September 30,
2008, no “Class A” purchase warrants had been acquired by the
vendor.





Bank Lines of Credit and
Notes Payable





Diamond’s indebtedness is comprised of
various bank credit lines, term loans, capital leases and credit cards intended
to provide capital for the ongoing manufacturing of its jewelry line, in advance
of receipt of the payment from its retail distributors.  As of
September 30, 2008, Diamond had 2 outstanding term loans.  One of
loans is for $150,000 with Columbia Bank, which is payable in monthly
installments and matures in April of 2009.  The note bears an annual
interest rate of 7.25% and as of September 30, 2008, there was an outstanding
balance of $33,333.  Diamond also has a $300,000 term loan with
JPMorgan Chase, which is payable in monthly installments and matures in May
2011.  The note bears an annual interest rate of 7.60% and as of
September 30, 2008 there was an outstanding balance of $173,292.  Both
of these notes are collateralized by the assets of the Company as well as a
personal guarantee by the Company’s CEO, Berge Abajian.





In
addition to the notes payable, Diamond utilizes bank lines of credit to support
working capital needs.  As of September 30, 2008, Diamond had 2 lines
of credit.  One bank line of credit is for $700,000 with Columbia Bank
and requires minimum monthly payment of interest only.  The interest
is calculated at the bank’s prime rate plus 0.75%.  As of September
30, 2008, Diamond has an outstanding balance of $699,999 at an effective annual
interest rate of 5.75%.  Additionally, Diamond has a bank line of
credit of $55,000 with JPMorgan Chase Bank, which also requires a monthly
payment of interest only.  The interest rate is calculated at the
bank’s prime rate plus 0.75%.  As of September 30, 2008, Diamond has
an outstanding balance of $46,426 at an effective annual interest rate of
5.75%.  Each credit line renews annually and is collateralized by the
assets of the Company as well as a personal guarantee by the Company’s CEO,
Berge Abajian.





In
addition to the bank lines of credit and term loans, Diamond has a number of
various unsecured credit cards.  These credit cards require minimal
monthly payments of interest only and as of September 30, 2008 have interest
rates ranging from 5.74% to 14.49%.  As of September 30, 2008, Diamond
has outstanding balances of $170,930.





Satisfaction
of our cash obligations for the next 12 months.





A
critical component of our operating plan impacting our continued existence is to
efficiently manage the production of our jewelry lines and successfully develop
new lines through our Company or through possible acquisitions and/or mergers.
Our ability to obtain capital through additional equity and/or debt financing,
and joint venture partnerships will also be important to our expansion plans. In
the event we experience any significant problems


assimilating
acquired assets into our operations or cannot obtain the necessary capital to
pursue our strategic plan, we may have to reduce the growth of our operations.
This may materially impact our ability to increase revenue and continue our
growth.





30




Over the
next twelve months we believe that our existing capital combined with cash flow
from operations will be sufficient to sustain our current
operations.  However, in the event we locate potential acquisitions
and/or mergers we will most likely require additional financing.





Summary
of product and research and development that we will perform for the term of our
plan.





We are
not anticipating significant research and development expenditures in the near
future.





Expected
purchase or sale of plant and significant equipment.





We do not
anticipate the purchase or sale of any plant or significant equipment; as such
items are not required by us at this time.





Significant
changes in the number of employees.





We
currently have 4 full-time employees and 2 part-time employees.  Of
Diamond’s current employees, 1 is sales and marketing personnel, 1 is
manufacturing and 2 hold administrative and executive positions.  None
of our employees are subject to any collective bargaining
agreements.  We do not anticipate a significant change in the number
of full time employees over the next 12 months.





Off-Balance
Sheet Arrangements





We do not
have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, results or
operations, liquidity, capital expenditures or capital resources that is deemed
material.





Critical
Accounting Policies





The
Company prepares its financial statements in accordance with accounting
principles generally accepted in the United States. Preparing financial
statements in accordance with generally accepted accounting principles requires
the Company to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosures of contingent assets and liabilities
as of the date of the financial statements and the reported amounts of revenue
and expenses during the reported period.





31




Accounts
Receivable.  Management periodically performs a detailed review
of amounts due from customers to determine if accounts receivable balances are
impaired based on factors affecting
the collectibility of those balances.  Fine jewelry is sold to retail
outlets throughout the United States.





Long-Lived
Assets.  In accordance with Statement of Financial Accounting
Standards (“SFAS”) No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, long-lived tangible assets subject to depreciation or
amortization are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable.  If an asset is determined to be impaired, the loss is
measures by the excess of the carrying amount of the asset over its fair value
as determined by an estimate of undiscounted future cash flows.  As
these factors are difficult to predict and are subject to future events that may
alter management’s assumptions, the future cash flows estimated by management in
their impairment analyses may not be achieved.





Revenue Recognition. The
Company’s management recognizes revenue when realized or realizable and
earned.  In connection with revenue recorded, the Company establishes
a sales returns and allowances reserve for anticipated merchandise to be
returned.  The estimated percentage of sales to be returned is based
on the Company’s historical experience of returned merchandise as prescribed by
promulgated accounting principles. Also, management calculates an estimated
gross profit margin on returned merchandise deriving a cost for the anticipated
returned merchandise also based on the Company’s historical
operations.





The
Company’s sole revenue producing activity as a manufacturer and distributor of
upscale jewelry is affected by movement in fashion trends and customer desire
for new designs, varying economic conditions affecting consumer spending and
changing product demand by retailers affecting their desired inventory
levels.





Therefore,
management’s estimation process for merchandise returns can result in actual
amounts differing from those estimates.  This estimation process is
susceptible to variation and uncertainty due to the challenges faced by
management to comprehensively discern all conditions affecting future
merchandise returns whether prompted by fashion, the economy or customer
relationships.  Ultimately, management believes historical factors
provide the best indicator of future conditions based on the Company’s
responsiveness to changes in fashion trends, the cyclical nature of the economy
in conjunction with the number of years in business and consistency and
longevity of its customer mix.





Recent Accounting
Pronouncements





In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities – Including an amendment of FASB
Statement No. 115," which is effective for fiscal years beginning after
November 15, 2007. This statement permits entities to choose to measure
many financial instruments and certain other items at fair value. This statement
also establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for
similar types of assets and liabilities. Unrealized gains and losses on items
for which the fair value option is elected would be reported in earnings. We
have evaluated the new statement and have determined
that it will not have a significant impact on the determination or reporting of
our financial results.





32




In
December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
Combinations" (SFAS 141(R)), which replaces SFAS No. 141, "Business
Combinations." SFAS 141(R) retains the underlying concepts of SFAS 141 in that
all business combinations are still required to be accounted for at fair value
under the acquisition method of accounting but SFAS 141(R) changed the method of
applying the acquisition method in a number of significant aspects. Acquisition
costs will generally be expensed as incurred; noncontrolling interests will be
valued at fair value at the acquisition date; in-process research and
development will be recorded at fair value as an indefinite-lived intangible
asset at the acquisition date; restructuring costs associated with a business
combination will generally be expensed subsequent to the acquisition date; and
changes in deferred tax asset valuation allowances and income tax uncertainties
after the acquisition date generally will affect income tax expense. SFAS 141(R)
is effective on a prospective basis for all business combinations for which the
acquisition date is on or after the beginning of the first annual period
subsequent to December 15, 2008, with the exception of the accounting for
valuation allowances on deferred taxes and acquired tax contingencies. SFAS
141(R) amends SFAS 109 such that adjustments made to valuation allowances on
deferred taxes and acquired tax contingencies associated with acquisitions that
closed prior to the effective date of SFAS 141(R) would also apply the
provisions of SFAS 141(R). Early adoption is not permitted. We are currently
evaluating the effects, if any, that SFAS 141(R) may have on our financial
statements and believe it could have a significant impact if business
combinations are consummated.  However, the effect of which is
indeterminable as of December 31, 2007.





In
December 2007, the FASB issued Financial Accounting Standards No. 160,
"Noncontrolling Interests in Consolidated Financial Statements—an amendment of
ARB No. 51." This statement is effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15, 2008,
with earlier adoption prohibited. This statement requires the recognition of a
noncontrolling interest (minority interest) as equity in the consolidated
financial statements and separate from the parent's equity. The amount of net
income attributable to the noncontrolling interest will be included in
consolidated net income on the face of the income statement. It also amends
certain of ARB No. 51's consolidation procedures for consistency with the
requirements of SFAS 141(R).This statement also includes expanded disclosure requirements regarding
the interests of the parent and its noncontrolling interest. We are currently
evaluating this new statement and anticipate that the statement will not have a
significant impact on the reporting of our results of operations.





In March
2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative
Instruments and Hedging Activities. The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity’s financial position, financial performance, and cash
flows. It is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. The company is currently evaluating the impact of adopting SFAS No.
161 on its financial statements.





33




Item
3. Quantitative and Qualitative Disclosure About Market Risk





This item in not applicable as we are
currently considered a smaller reporting company.





Item
4T. Controls and Procedures





Evaluation
of Disclosure Controls and Procedures





Our Chief
Executive Officer and Principal Financial Officer, Berge Abajian, has evaluated
the effectiveness of our disclosure controls and procedures (as defined in Rule
13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end
of the period covered by this Report.  Based on that evaluation, Mr.
Abajian concluded that our disclosure controls and procedures are effective in
timely alerting him to material information relating to us required to be
included in our periodic SEC filings and in ensuring that information required
to be disclosed by us in the reports that we file or submit under the Act is
accumulated and communicated to our management, including our principal
executive and principal financial officer, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure.





Changes
in Internal Control Over Financial Reporting





In the
third quarter of 2008, we hired outside consultants to assist in our financial
reporting. We believe this will have a positive effect on our internal control
over financial reporting and mitigate potential weaknesses or
deficiencies.





PART
II – OTHER INFORMATION





Item
1. Legal Proceedings.





From time
to time, we may become involved in various lawsuits and legal proceedings which
arise in the ordinary course of business. However, litigation is subject to
inherent uncertainties, and an adverse result in these or other matters may
arise from time to time that may harm our business. We are not presently a party
to any material litigation, nor to the knowledge of management is any litigation
threatened against us, which may materially affect us.





Item
1A. Risk Factors





Risks Relating with Our
Business and Marketplace





Diamond
will need additional capital in the future to finance its operations or any
future acquisitions, which it may not be able to raise or it may only be
available on terms unfavorable to current non-affiliate
shareholders.  This may result in Diamond’s inability to fund its
working capital requirements and ultimately harm its operational
results.





34




Diamond
has and expects to continue to have substantial capital expenditure and working
capital needs.  For the nine months ended September 30, 2008 and 2007,
Diamond had sales of $876,110 and $816,302, respectively and net loss of
$775,672 and $1,315,763, respectively.  While management believes that
its financial policies have been prudent, the Company will be reliant on future
potential equity and/or debt raises to expand its current business and assist in
any future acquisitions, if and when those opportunities occur.





There can
be no assurance that Diamond will be successful in continuing to meet its cash
requirements from existing operations, or in raising a sufficient amount of
additional capital in future finance offerings.  Additional financing
might not be available on terms favorable to Diamond, or at all. If adequate
funds were not available or were not available on acceptable terms, Diamond’s
ability to fund its operations, take advantage of unanticipated opportunities,
develop or enhance its business or otherwise respond to competitive pressures
would be significantly limited.





Diamond
is highly dependent on its key executive officers for the success of its
business plan and may be dependent on the efforts and relationships of the
principals of future acquisitions and mergers.  If any of these
individuals become unable to continue in their role, the company’s business
could be adversely affected.





Diamond believes its success will
depend, to a significant extent, on the efforts and abilities of Berge Abajian,
its CEO.  If Diamond lost Mr. Abajian, it would be forced to expend
significant time and money in the pursuit of a replacement, which would result
in both a delay in the implementation of its business plan and the diversion of
limited working capital. Diamond can give you no assurance that it could find a
satisfactory replacement for Mr. Abajian at all, or on terms that are not unduly
expensive or burdensome.





If
Diamond grows and implements its business plan, it will need to add managerial
talent to support its business plan.  There is no guarantee that
Diamond will be successful in adding such managerial talent.  These
professionals are regularly recruited by other companies and may choose to
change companies.  Given Diamond’s relatively small size compared to
some of its competitors, the performance of its business may be more adversely
affected than its competitors would be if Diamond loses well-performing
employees and are unable to attract new ones.





We
may acquire assets or other businesses in the future.





We may
consider acquisitions of assets or other business. Any acquisition involves a
number of risks that could fail to meet our expectations and adversely affect
our profitability. For example:





·
            The
      acquired assets or business may not achieve expected
    results;


·
            We
      may incur substantial, unanticipated costs, delays or other operational or
      financial problems when integrating the acquired
  assets;


·
            We
      may not be able to retain key personnel of an acquired
      business;


·
            Our
      management’s attention may be diverted;
or


·
            Our
      management may not be able to manage the acquired assets or combined
      entity effectively or to make acquisitions and grow our business
      internally at the same time.





35




If these
problems arise we may not realize the expected benefits of an
acquisition.





A
decline in discretionary consumer spending may adversely affect Diamond’s
industry, its operations, and ultimately its profitability.





Luxury products, such as fine jewelry,
are discretionary purchases for consumers.  Any reduction in consumer
discretionary spending or disposable income may affect the jewelry industry more
significantly than other industries.  Many economic factors outside of
Diamond’s control could affect consumer discretionary spending, including the
financial markets, consumer credit availability, prevailing interest rates,
energy costs, employment levels, salary levels, and tax rates.  Any
reduction in discretionary consumer spending could materially adversely affect
Diamond’s business and financial condition.





The
jewelry industry in general is affected by fluctuations in the prices of
precious metals and precious and semi-precious stones.





The availability and prices of gold,
diamonds, and other precious metals and precious and semi-precious stones may be
influenced by cartels, political instability in exporting countries and
inflation.  Shortages of these materials or sharp changes in their
prices could have a material adverse effect on Diamond’s results of operations
or financial condition.  A significant change in prices of key
commodities, including gold, could adversely affect its business or reduce
operating margins and impact consumer demand if retail prices increased
significantly, even though Diamond historically incorporates any increases in
the purchase of raw materials to its consumers.  Additionally, a
significant disruption in our supply of gold or other commodities could decrease
the production and shipping levels of our products, which may materially
increase our operating costs and ultimately affect our profit
margins.





Diamond
depends on its ability to identify and respond to fashion trends.





The jewelry industry is subject to
rapidly changing fashion trends and shifting consumer
demands.  Accordingly, Diamond’s success may depend on the priority
that its target customers place on fashion and its ability to anticipate,
identify, and capitalize upon emerging fashion trends.  If Diamond
misjudges fashion trends or are unable to adjust its products in a timely
manner, its net sales may decline or fail to meet expectations and any excess
inventory may be sold at lower prices.


36





Diamond’s
ability to maintain or increase its revenues could be harmed if Diamond is
unable to strengthen and maintain its brand image.





Diamond has spent significant amounts
in branding its Bergio and Bergio Bridal lines.  Diamond believes that
primary factors in determining customer buying decisions, especially in the
jewelry industry, are determined by price, confidence in the merchandise and
quality associated with a brand.  The ability to differentiate
products from competitors of Diamond has been a factor in attracting
consumers.  However, if Diamond’s ability to promote its brand fails
to garner brand recognition, its ability to generate revenues may
suffer.  If Diamond fails to differentiate its products, its ability
to sell its products wholesale will be adversely affected.  These
factors could result in lower selling prices and sales volumes, which could
adversely affect its financial condition and results of operations.





Diamond
maintains a relatively large inventory of its raw materials and if this
inventory is lost due to theft, its results of operations would be negatively
impacted.





We purchase large volumes of precious
metals and store significant quantities of raw materials and jewelry products at
our facility in New Jersey.  Although we have an insurance policy with
Lloyd’s of London, if we were to encounter significant inventory losses due to
third party or employee theft from our facility which required us to implement
additional security measures, this would increase our operating
costs.  Also such losses of inventory could exceed the limits of, or
be subject to an exclusion from, coverage under our current insurance
policy.  Claims filed by us under our insurance policies could lead to
increases in the insurance premiums payable by us or possible termination of
coverage under the relevant policy.





If
Diamond were to experience substantial defaults by its customers on accounts
receivable, this could have a material adverse affect on Diamond’s liquidity and
results of operations.





A significant portion of our working
capital consists of accounts receivable from customers.  If customers
responsible for a large amount of accounts receivable were to become insolvent
or otherwise unable to pay for our products, or to make payments in a timely
manner, Diamond’s liquidity and results of operations could be materially
adversely affected.  An economic or industry downturn could materially
affect the ability to collect these accounts receivable, which could then result
in longer payment cycles, increased collections costs and defaults in excess of
management’s expectations.  A significant deterioration in the ability
to collect on accounts receivable could affect the cash flow and working capital
position of Diamond.





37




Risks Relating to our Common
Stock





No
market exists for our common stock





We have
submitted an application to a market maker to apply for inclusion of our common
stock on the OTC Bulletin Board.  However, there is currently no
market for our shares and there
can be no assurance that any such market will ever develop or be
maintained.  Any trading market that may develop in the future will
most likely be very volatile, and numerous factors beyond our control may have a
significant effect on the market.  Only companies that report their
current financial information to the SEC may have their securities included on
the OTC Bulletin Board.  Therefore, we will be required to maintain
current financial reports in order to have our securities quoted on the OTC
Bulletin Board.





Our
common stock could be deemed a low-priced “Penny” stock which could make it
cumbersome for brokers and dealers to trade in our common stock, making the
market for our common stock less liquid and negatively affect the price of our
stock.





In the
event where our securities are accepted for trading in the over-the-counter
market, trading of our common stock may be subject to certain provisions of the
Securities Exchange act of 1934, commonly referred to as the “penny stock” as
defined in Rule 3a51-1.  A penny stock is generally defined to be any
equity security that has a market price less than $5.00 per share, subject to
certain exceptions.  If our stock is deemed to be a penny stock,
trading will be subject to additional sales practice requirements on
broker-dealers.  These require a broker-dealer to:





·
            Deliver
      to the customer, and obtain a written receipt for, a disclosure
      document;


·
            Disclose
      certain price information about the
stock;


·
            Disclose
      the amount of compensation received by the broker-dealer or any associated
      person of the broker-dealer;


·
            Send
      monthly statements to customers with market and price information about
      the penny stock; and


·
            In
      some circumstances, approve the purchaser’s account under certain
      standards and deliver written statements to the customer with information
      specified in the rules.





Consequently,
penny stock rules may restrict the ability or willingness of broker-dealers to
trade and/or maintain a market in our common stock.  Also, prospective
investors may not want to get involved with the additional administrative
requirements, which may have a material adverse effect on the trading of our
shares.





Our
current chief executive officer and sole director, Mr. Berge Abajian, owns a
significant percentage of our company and will be able to exercise significant
influence over our company.





Berge Abajian, our chief executive
officer and sole director, beneficially owns approximately 88% of our common
stock.  Accordingly, Mr. Abajian will be able to determine the
composition of our board of directors, will retain the effective voting power to
approve all matters requiring shareholder approval, will prevail in matters
requiring shareholder approval, including, in particular the election and
removal of directors, and will continue to have significant influence over our
business.  As a result of his ownership and position in the Company,
Mr. Abajian is able to influence all matters requiring shareholder action,
including significant corporate transactions.  In addition, sales of
significant amount of shares held by Mr.


Abajian,
or the prospect of these sales, could adversely affect the market price of our
common stock.





38




Item
2. Unregistered Sales of Equity Securities and Use of Proceeds





On
September 26, 2008, the Company authorized the issuance of 200,000 shares of
common stock to Stoecklein Law Group pursuant to its retainer agreement for
legal services.





We
believe that the issuance of the shares was exempt from the registration and
prospectus delivery requirements of the Securities Act of 1933 by virtue of
Section 4(2). The shares were issued directly by us and did not involve a public
offering or general solicitation. The recipients of the shares were afforded an
opportunity for effective access to files and records of our company that
contained the relevant information needed to make their investment decision,
including our financial statements. We reasonably believed that the recipients,
immediately prior to issuing the shares, had such knowledge and experience in
our financial and business matters that they were capable of evaluating the
merits and risks of their investment.  The recipients had the
opportunity to speak with our management on several occasions prior to their
investment decision. There were no commissions paid on the issuance of the
shares.





Issuer
Purchases of Equity Securities





We did not repurchase any of our
securities during the quarter ended September 30, 2008.





Item
3. Defaults Upon Senior Securities





None.





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





We did not submit any matters to a vote
of our security holders during the quarter ended September 30,
2008.





Item
5. Other Information





Subsequent to the S-1 registration
statement becoming effective, the Company’s acting Chief Financial Officer,
Alfred Sirica, resigned from his position with the Company.  Mr.
Abajian, our Chief Executive Officer, will act as the Principal Accounting
Officer for the Company.


39





Item
6. Exhibits





Incorporated
      by referenceExhibit
            Exhibit
      Description
            Filed
      herewith
            Form
            Period
      ending
            Exhibit
            Filing
      date3(i)
            Certificate
      of Incorporation, dated October 24, 1988
            
            Form
      S-1/A
            
            3(i)
            08/28/083(i)(b)
            Certificate
      of Trade Name, dated January 31, 1997
            
            Form
      S-1/A
            
            3(i)(b)
            08/28/083(i)(c)
            Certificate
      of Amendment to the Certificate of Incorporation, dated May 31,
      2007
            
            Form
      S-1/A
            
            3(i)(c)
            08/28/083(ii)
            Bylaws
      of Diamond Information Institute, Inc.
            
            Form
      S-1/A
            
            3(ii)
            08/28/085
            Opinion
      of Legal Counsel (Stoecklein Law Group) – Dated August 28,
      2008
            
            Form
      S-1/A
            
            5
            08/28/0810.1
            Sample
      Subscription Agreement for the $25,000 unit offering
            
            Form
      S-1/A
            
            10.1
            08/28/0831
            Certification
      of Berge Abajian pursuant to Section 302 of the Sarbanes-Oxley
      Act
            X32
            Certification
      of Berge Abajian pursuant to Section 906 of the Sarbanes-Oxley
      Act
            X


40


SIGNATURES





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





DIAMOND INFORMATION
INSTITUTE, INC.


(Registrant)











By: /s/ Berge
Abajian


Berge
Abajian, President &


Chief
Executive Officer (On behalf of


the
registrant and as principal accounting


officer)





41