UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

(Mark One)
[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                        For the fiscal year June 30, 2001

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

               For the Transition period from ________ to ________

                         Commission File Number: 0 27138


                             DIAMOND EQUITIES, INC.
                 (Name of Small Business Issuer in its Charter)


            Nevada                                                88-0232816
(State or Other Jurisdiction of                                 (IRS Employer
 Incorporation or Organization)                              Identification No.)

 216 S. Alma School Road, Mesa, Arizona                              85210
(Address of Principal Executive Offices)                          (Zip Code)

                                 (480) 898-1846
                (Issuer's Telephone Number, Including Area Code)

       Securities registered under Section 12(b) of the Exchange Act: None

         Securities registered under Section 12(g) of the Exchange Act:

                     Common Stock, par value $.001 per share

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

     Check here if there is no disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B contained in this form,  and no disclosure  will be
contained,  to  the  best  of  registrant's  knowledge,  in  definite  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

     The Issuer's gross revenues  including its  subsidiary,  for the year ended
June 30, 2001, were $726,172.

     The market price of the voting stock held by non-affiliates  (approximately
1,876,763  shares as of June 30, 2001) based upon the prices of such stock as of
October 8, 2001, as reported in the OTC pink sheets was $0.05.

     The number of shares of Common Stock of the issuer  outstanding  as of June
30, 2001 was 8,480,099.

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

                      DOCUMENTS INCORPORATED BY REFERENCE

     Incorporated  by reference to this annual report are Forms 8-K filed by the
Registrant on August 4, 2000 and August 17, 2000,  both of which were related to
a change in accountants (with no adverse opinion or disagreement).
<PAGE>
                                TABLE OF CONTENTS

                                                                        Page No.
                                                                        --------
PART I

Item 1.  Description of Business ...........................................   1
Item 2.  Description of Property ...........................................   6
Item 3.  Legal Proceedings .................................................   6
Item 4.  Submission of Matters to a Vote of Security Holders ...............   7

PART II

Item 5.  Market Price of and Dividends on the Registrant's Common
         Equity and Other Stockholder Matters ..............................   8
Item 6.  Management's Discussion and Analysis or Plan of Operation .........   9
Item 7.  Financial Statements ..............................................  10
Item 8.  Changes in and Disagreements With Accountants .....................  10

PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons ......  11
Item 10. Executive Compensation ............................................  11
Item 11. Security Ownership of Certain Beneficial Owners and Management ....  12
Item 12. Certain Relationships and Related Transactions ....................  12
Item 13. Exhibits List and Reports on Form 8-K .............................  13
<PAGE>
                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

     HISTORY. The Company was organized under the laws of the State of Nevada on
July 24, 1987,  under the name of KTA  Corporation.  On September 25, 1989,  the
Company  changed its name to United  Payphone  Services,  Inc. At that time, the
Company was in the business of operating,  servicing and maintaining a system of
privately  owned public pay telephones in Nevada.  In January,  1990 the Company
expanded its operations into Arizona. In December, 1994, the Company sold all of
its pay telephone location  contracts in Las Vegas,  Nevada, but did not include
the pay telephone  equipment.  All of the Nevada equipment was then relocated to
Arizona where the Company did business under the name "U.S. Payphone, Inc."

     On November  15,  1996,  the Company  sold  substantially  all of its fixed
assets (the "Asset Sale") to Tru-Tel  Communications,  L.L.C.,  a Nevada limited
liability company ("Tru-Tel").

     The Company  effected the Asset Sale because the directors  determined that
the changing regulatory environment and business prospects would have a negative
effect on the  Company's  future  operations.  The sale was made  under an asset
purchase agreement (the "Asset Purchase Agreement") for $1,711,250 in cash and a
secured  promissory note of $811,250 (the "Tru-Tel Note").  The Tru-Tel Note was
payable on a monthly basis commencing on February 15, 1997,  bearing interest at
the rate of 8% per annum.  The final payment of all accrued and unpaid  interest
and  outstanding  principal was due on or before  January 15, 2002.  The Tru-Tel
Note was secured by a lien on all assets  transferred  in the Asset Sale and was
further secured by personal guarantees of the principals of Tru-Tel.

     In early 1997,  Tru-Tel  defaulted on the Note and on March 18,  1997,  the
Company  filed  suit.  On April 1, 1999,  the  parties  settled  the suit,  with
Tru-Tel's  promise to pay the  Company a total of Four  Hundred  Fifty  Thousand
Dollars ($450,000),  payable with a cash payment of One Hundred Thousand Dollars
($100,000)  and the  balance  in  quarterly  installments,  secured  by  another
Promissory  Note.  Since that time,  Tru-Tel  has  defaulted  on the  settlement
payments and filed for bankruptcy  under Chapter 11 of the Bankruptcy  Code. The
Company has filed a lawsuit against the principals of Tru-Tel for enforcement of
their  personal  guaranties  of the  remaining  amount  of Three  Hundred  Fifty
Thousand Dollars ($350,000).

     Subsequent  to the Asset Sale,  the Company has been  essentially  a "blank
check"  company,  with cash and a  promissory  note as it's primary  assets.  It
currently  is  engaged  primarily  in  the  plastics  business  pursuant  to the
acquisitions, which are discussed below.

     PLASTICS INDUSTRY ACQUISITION. In November, 1997, the Company established a
subsidiary,  Precision Plastics Molding, Inc. ("Precision" or the "Subsidiary"),
a Nevada  corporation,  and on June 15, 1998 the Company and Precision purchased
the assets of Premier Plastics Corporation, a Tempe, Arizona Private Corporation
engaged in the plastic injection  molding business.  Consideration of $80,000 in
cash was paid along with the  assumption  of various  notes and  payables in the
amount of approximately $40,000. In addition, the selling shareholder of Premier
received  300,000 shares of common stock of the  Subsidiary  valued at $0.25 per
share.  Prior to this  acquisition,  the Subsidiary had no assets.  The purchase
price was determined by negotiations between the parties. The cash paid was from
the Company's own funds. There was no prior relationship between Premier and its
sole  shareholder  and  the  officers  and  directors  of  the  Company  or  its
Subsidiary.

     On July 15, 1998, the Company and Precision closed a transaction  involving
the purchase of substantially  all the assets of Accurate  Thermoplastics,  Inc.
("Accurate") an Arizona  Private  Corporation  engaged in the plastic  injection
molding business. The assets purchased included equipment, inventories, contract
rights,  customer lists,  know-how,  drawings,  specifications  and intellectual
property.  The sole  shareholder of Accurate,  Roy L.  Thompson,  was engaged to
serve as a consultant to Precision.  He no longer serves in that  capacity.  The
business of Accurate was to continue under the name Precision  Plastics Molding,
Inc.  ("Precision").  Precision  acquired  the assets of Accurate for payment of
Five  Hundred  Sixty  Thousand  Dollars  ($560,000)  consisting  of  cash  and a
promissory note, and in consideration for the assumption by Precision of certain
<PAGE>
liabilities of Accurate.  The purchase price paid by Precision was determined by
negotiations between the parties. The cash paid was from funds paid to Precision
by the Company for  2,000,000  shares of  Precision's  common stock 68.9% of the
outstanding  common stock of Precision.  There was and is no other  relationship
between  Accurate and its sole shareholder and the officers and directors of the
Company or Precision.

     On July 9, 1999, Accurate filed suit against the Company alleging breach of
contract  by  failure  to  perform  certain  provisions  of the  asset  purchase
agreement, seeking unspecified damages. This lawsuit was subsequently settled by
the Company, which paid $165,000 and issued 14,000 shares of its Common Stock to
the plaintiff.

     CURRENT  PLASTICS  MANUFACTURING  OPERATIONS  AND  BUSINESS.  The  Company,
through  Precision,  is  actively  engaged  in the  plastics  injection  molding
business.  The  operations of Premier have been combined with those of Accurate,
with  both  acquisitions  now  operating  under the name of  Precision  Plastics
Molding,  Inc., and all operations are conducted at the former Accurate facility
at 216 S. Alma School Rd., Mesa, AZ. The following is a brief  discussion of the
business conducted by Precision / the Company.

     BUSINESS.  The business of  Precision is to produce a plastic  product from
the customer's  designs. A customer could either provide their own molds or have
Precision build a mold in its facility.  When a mold is completed Precision then
manufactures as many or as few products as the customers  desire.  Most products
require more than just one molded part.  In most cases  several parts are molded
and then assembled. Precision does not always mold all of the parts for assembly
nor does Precision normally do the assembly.

     PRODUCTS.  Precision  manufactures  many  products  that  are  owned by its
customers.  Precision  does not  presently own the rights to any of the products
that it  produces.  Precision  offers the service of  manufacturing  parts for a
customer's products at the level of quality they demand.

     MARKETING.  Currently,  Precision does not have a marketing or sales force.
The current customers were acquired from the companies purchased. Precision may,
if cash flow permits, hire personnel to find additional customers.

     CUSTOMERS / SUPPLIERS. Precision currently makes products for approximately
fifteen (15)  different  customers.  The major  customers  are Axxes and Amsafe.
Management  estimates  that their  business  makes up  approximately  fifty-five
percent (55%) of Precision's sales.  Precision works with fifteen (15) to twenty
(20) different suppliers of different products used in the manufacturing process
such as boxes and plastic  resin.  Precision's  main suppliers of plastic are GE
Polymer and Plastics General Polymers.

     SALES.  Precision  has, as of September 1, 2000, a sales  backlog of 2 days
and has the raw materials to run  production  for these sales.  The Company uses
subcontractors for tooling services. It has no order backlog.

     INTERNET BUSINESS ACQUISITION. On April 5, 1999, the Company entered into a
Stock Purchase Agreement with GoProfit.Com, Inc., a Nevada Corporation (See Item
3 "Legal Proceedings")

     GoProfit.com,  Inc.  was formed to design and build a  worldwide  financial
search  engine for the  Internet.  Through  the  licensing  and  repackaging  of
proprietary technology from leading Internet purveyors of content,  GoProfit.com
stated that it intended to gain instant user credibility while achieving its own
branded  identity.  At the same time,  GoProfit  management  was to work  toward
developing  innovative  technologies  designed so that  GoProfit  would become a
"next-generation" search engine/Internet portal.

     GoProfit had no operating history or revenues,  and was considered entirely
promotional.  GoProfit  faced  all  the  risks  inherent  in any  new  business,
including   competition,   the  absence  of  both  an   operating   history  and
profitability  and the need for  additional  working  capital.  GoProfit did not
succeed  because of problems and expenses  encountered  in  connection  with the
development and operation of the business.

                                       2
<PAGE>
     In August,  2000,  the Company  filed a lawsuit  against  Go-Profit and its
principals seeking recission of the acquisition agreement, and damages.

     As of October 1, 2001,  the lawsuit was  dismissed  as part of a settlement
between the parties. The Company received or was to receive,  and/or cancel, all
of the shares of common stock it had issued in connection with the  acquisition.
No damages were obtained. As part of the settlement, the Company returned all of
the common stock it had received in Go-Profit. The Company, therefore, no longer
has any interest in Go-Profit. (See Item 3 - "Go-Profit Litigation")

     MOTORCYCLE  BUSINESS  ACQUISITION  On September 21, 2000 the Company formed
RealMotorcycles.com. Inc., a Nevada corporation for the purpose of manufacturing
a  Harley-Davidson  powered  custom  motorcycle.  The  company  entered  into an
agreement  with  motorcycle  builder  Johnny Pag whereby Mr. Pag is to receive a
commission per motorcycle for using his name and design.

     The Company is still working on a prototype motorcycle to send to the USDOT
for  VIN  approval.  RealMotorcycles.com,   Inc.  currently  has  a  license  to
manufacture  motorcycles  in the state of  Arizona  and uses space  provided  by
Precision  Plastics Molding,  Inc.  RealMotorcycles.com,  Inc.  currently has 90
shareholders.

     CORPORATE  OPPORTUNITIES.  Although its  financial  resources  are severely
limited,  the Company intends to continue to seek corporate  opportunities.  The
Company's  principal business objective is to seek long-term growth potential in
a business  venture  rather than to seek  immediate,  short-term  earnings.  The
Company  does not  restrict  its search to any  specific  business,  industry or
geographical location.

     The Company is presently able to participate  only in a very limited number
of business  ventures,  due primarily to the Company's lack of capital.  Lack of
diversification, which the Company presently experiences, is a risk in investing
in the Company because it limits the ability of the Company to offset  potential
losses from one venture  against  gains from another and will expose the Company
to the cyclical and other risks of any business in which it invests.

     The Company  intends to seek a business  opportunity  which may involve the
acquisition  of, or merger  with a  company  which  does not need cash but which
desires to be part of a corporation  with public  trading  market for its common
stock. The Company may,  depending on its opportunities,  purchase assets,  with
its  common  or  preferred  stock,   and  establish  wholly  or   majority-owned
subsidiaries  in  various   businesses  or  purchase   existing   businesses  as
subsidiaries.  The present number of shares  outstanding may represent a problem
in  such  pursuits,   however,  a  recapitalization  of  the  Company  is  being
considered.

     Accordingly,  the  Company  anticipates  that the  selection  of a business
opportunity in which to participate will be narrow and complicated. In addition,
because of general economic conditions,  rapid technological advances being made
in some  industries,  and  shortages of  available  capital,  the Company  faces
roadblocks. However, the Company believes that there are other companies seeking
the perceived benefits of a publicly traded corporation.  The perceived benefits
of a publicly-traded corporation may include facilitating or improving the terms
on which additional equity financing may be sought,  providing liquidity for the
principals of a business, creating a means for providing incentive stock options
or  similar  benefits  to  key  employees,   providing   liquidity  (subject  to
restrictions of applicable  statutes) for all shareholders,  estate planning and
other factors. Business opportunities may occur in many different industries and
at various stages of development,  all of which can make the task of comparative
investigation and analysis of such business opportunities difficult and complex.

     The  Company  has no capital  with which to provide  the owners of business
opportunities  with any cash.  However,  the  Company  plans to offer  owners of
business opportunities the possibility of acquiring equity interests in a public
company at substantially less cost than is required,  for example, to conduct an
initial public offering.  Aside from the problems discussed above, the owners of
the business  opportunities  could incur significant  post-merger or acquisition
registration  costs if they wish to  register  a  portion  of their  shares  for
subsequent  sale. The Company will also incur  significant  legal and accounting
costs in connection with the acquisition of a business opportunity including the

                                       3
<PAGE>
costs of preparing registration  statements and related reports and documents if
required, Forms 8-K, acquisition and other agreements.

     Decisions  regarding future  acquisitions will be made by management of the
Company, which will in all probability act without the consent, vote or approval
of the Company's  shareholders.  The Company  presently has no other agreements,
understandings  or  arrangements  to  acquire  or  participate  in any  specific
business opportunity.

     EVALUATION OF OPPORTUNITIES.  Analyses of new business acquisitions will be
undertaken  by or under the  supervision  of the officers  and  directors of the
Company,  none  of  whom  is  a  professional  business  analyst.  In  analyzing
prospective  business  opportunities,  management would consider such matters as
the available technical,  financial,  and managerial resources;  working capital
and other financial  requirements;  history of operation,  if any; prospects for
the  future;  nature of  present  and  expected  competition;  the  quality  and
experience of management  services  which may be available and the depth of such
management;  the potential for further  research,  development,  or exploration;
specific risk factors not now  foreseeable  but which then may be anticipated to
impact the proposed  activities  of the  Company;  the  potential  for growth or
expansion;  the  potential  for profit;  the  perceived  public  recognition  or
acceptance of products,  services,  or trades;  name  identification;  and other
relevant  factors.  Officers and  directors of the Company will meet  personally
with  management  and key  personnel  of the  target  business  as part of their
investigation.  To the extent  possible,  the Company intends to utilize written
reports and personal  investigation  to evaluate the above factors.  The Company
may retain outside consultants,  if the Board deems it necessary and financially
possible, to aid in the analysis of a business opportunity.

     Since the Company is subject to Section 13 of the Exchange  Act, it will be
required  to  furnish  certain   information  about  significant   acquisitions,
including audited  financial  statements for the company(s)  acquired,  covering
one, two or three years  depending  upon the relative  size of the  acquisition.
Consequently, acquisition prospects that do not have or are unable to obtain the
required audited statements may not be appropriate for acquisition.

     Any venture in which the Company may participate would present a variety of
risks. Most of these risks cannot be adequately identified prior to selection of
the  specific  opportunity,  and the  Company  must,  therefore,  depend  on its
management to identify and evaluate such risks. Certain opportunities  available
to the  Company  may have been  unable to  develop a going  concern or may be in
development  stage in that they have not  generated  significant  revenues  from
their principal business activities. In such cases, the combined enterprises may
not become going concerns or advance beyond the development stage even after the
Company's  participation in the activity.  Some of the opportunities may involve
new and  untested  products,  processes,  or  market  strategies,  which may not
succeed.  Further,  market and industry  conditions are subject to change.  Such
risks  have  been  and  will be  assumed  by the  Company  and,  therefore,  its
shareholders.

     The Company does not restrict its search to any specific kind of firms, but
seeks to  acquire  a  venture,  which is in any  stage  of its  corporate  life,
including,  but not limited to,  companies  in the  development  stage and those
already in  operation.  It is  impossible  to predict at this time the status or
maturity of any business in which the Company may further become engaged through
acquisition  or otherwise.  The results of the Company's past  acquisitions  are
reflected  in  the  Company's  combined  financial  statements  and in  Item  6,
"Management's Discussion and Analysis or Plan of Operation").

     FUTURE ACQUISITIONS.  In any business  opportunity,  the Company may become
party to a merger,  consolidation,  reorganization,  joint venture, or licensing
agreement with another  corporation or entity. It may also allow the purchase of
its capital stock or assets to an existing business. On the consummation of such
a transaction,  it is very possible that the present management and shareholders
of the Company will not be in control of the Company. In addition, a majority or
all of the  Company's  directors  may, as part of the terms of the  transaction,
resign  and be  replaced  by new  directors  without  a  vote  of the  Company's
shareholders.

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<PAGE>
     The manner in which the Company  participates in an opportunity will depend
on the  nature of the  opportunity,  the  respective  needs and  desires  of the
Company and other parties, the management of the other company, and the relative
negotiating strength of the Company and such other management.

     It is probable that any securities issued in any such reorganization  would
be issued in reliance on federal and state exemptions from registration. In some
circumstances, however, as a negotiated element of this transaction, the Company
may agree to register  such  securities  either at the time the  transaction  is
consummated,  under certain  conditions,  or at specified times thereafter.  The
issuance of substantial  additional securities and their potential sale into any
trading  market  would   undoubtedly   adversely  affect  the  market  for  such
securities.

     While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it is expected that the parties to the business transaction
will find it  desirable  to avoid the  creation  of a taxable  event and thereby
structure  the  acquisition  in  a  "tax  free"  reorganization  under  Sections
368(a)(1) or 351 of the Internal  Revenue Code of 1954, as amended (the "Code").
In order to obtain  tax-free  treatment  under the Code, it may be necessary for
the owners of the  acquired  business to own 80% or more of all classes of stock
of the surviving entity.  In such event, the shareholders of the Company,  would
retain  less than 20% of the  issued  and  outstanding  shares of the  surviving
entity,  which would result in significant  dilution in the percent ownership of
such shareholders.

     With  respect to any  mergers or  acquisitions,  negotiations  with  target
company  management  will be expected to focus on the percentage of the Company,
which  target  company   shareholders   would  acquire  in  exchange  for  their
shareholdings  in the target company.  Depending upon,  among other things,  the
target company's assets and liabilities, the Company's shareholders will, in all
likelihood, hold a lesser percentage ownership interest in the Company following
any merger or acquisition. Such dilution of ownership interest probably would be
significant in the event the Company acquires or is acquired by a target company
with substantial  assets. Any merger or acquisition  effected by the Company can
be expected to have a significant  dilutive  effect on the  percentage of shares
held by the Company's  shareholders,  including those  shareholders who continue
their investment.

     As part of the  Company's  investigation,  officers  and  directors  of the
Company may meet with  management  and key  personnel of a target  company,  may
visit and inspect  facilities,  obtain  independent  analysis or verification of
certain information provided by such Company, check references of management and
key personnel,  and take other reasonable  investigative measures, to the extent
that the Company's limited financial resources and management expertise allow.

     It is probable that in the near term, the Company will not have  sufficient
working  capital  to  undertake  any  significant  development,   marketing,  or
manufacturing for any company, which may be acquired. Accordingly, following the
acquisition  of any such  company,  the  Company  may be required to either seek
additional  debt or equity  financing or obtain funding from third  parties,  in
exchange for which the Company may be required to give up a substantial  portion
of its interest in the  acquired  company.  There can be no  assurance  that the
Company will be able to obtain additional financing or to interest third parties
in providing funding for the further development of any companies acquired.

     The  Company  will  participate  in a business  opportunity  only after the
negotiation and execution of appropriate written agreements.  Although the terms
of such agreements  cannot be predicted,  generally such agreements will require
specific  representations  and  warranties by all of the parties  thereto,  will
specify  certain  events of  default,  will  detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to such closing,
will outline the manner of bearing costs if the transaction is not closed,  will
set  forth  remedies  on  default,  and will  include  other  terms  typical  in
transactions of such nature.

     It is anticipated that the investigation of specific business opportunities
and the negotiation,  drafting, and execution of relevant agreements, disclosure
documents,  and other instruments will require  substantial  management time and
attention and substantial costs for accountants,  attorneys,  and others,.  If a

                                       5
<PAGE>
decision is made not to  participate  in a specific  business  opportunity,  the
costs  incurred  in  the  related   investigation   would  not  be  recoverable.
Furthermore, even if an agreement is reached for the participation in a specific
business  opportunity,  the failure to consummate that transaction may result in
the loss to the Company of the related costs incurred.

     As is  customary  in the  industry,  the Company may pay a finder's fee for
locating  a merger or  acquisition  candidate  and for  location  of  additional
financing.  If any such fee is paid, it will be approved by the Company's  board
of directors and will be in accordance with industry standards. This type of fee
would not be paid to any employee, officer, director or a 5% or more shareholder
of the Company.

     FORWARD-LOOKING STATEMENTS. This report contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities  Exchange Act of 1934, as amended,  and is subject
to the safe harbors  created  thereby.  Actual  results could differ  materially
because of the following  uncertain  factors:  the inability to make  additional
acquisitions;  the  probability  of losses due to its new line of business;  the
continued employment of key management; a change in control of the Company.

     COMPETITION. In terms of making other acquisitions,  the Company is a minor
participant  among the  firms,  which  engage  in the  acquisition  of  business
opportunities. There are many established venture capital and financial concerns
which have significantly greater financial and personnel resources and technical
expertise  than  the  Company.  In  view  of  the  Company's  limited  financial
resources,  the  Company  will  continue  to  be  at a  significant  competitive
disadvantage   compared  to  the  Company's   competitors  in  making  desirable
acquisitions.  Also, the Company may be competing with other small,  blind pool,
public companies located in the Southwest and elsewhere.

     REGULATION. The Company could, in certain circumstances, be deemed to be an
investment  company  under the  provisions  of Section  3(a)(3) of the 1940 Act,
which could have substantial adverse impact on its operations.  This could occur
if among other  things,  a significant  proportion  of its working  capital were
invested in short-term  debt  instruments  for longer than a one-year period and
the Company had no significant operations.  The Company has, and intends to take
all reasonable steps to avoid such classification in the future.  Presently, the
Company, through its subsidiary, will also review any mergers or acquisitions in
an effort to minimize the  possibility  that any merger or  acquisition  will be
classified as a taxable event by the Internal Revenue Service.

     EMPLOYEES.  Diamond  Equities,  Inc.  presently has one (1)  employee,  its
President,  who is engaged  in  management  and  administrative  functions.  The
Company also  engages,  from time to time,  services of outside  consultants  to
assist it in  various  functions.  The  Company  may  allocate  a portion of its
working capital for part-time secretarial and other services required by it.

     The Company's subsidiary, Precision, has seven (7) non-union employees: One
(1) is a plant manager, one (1) is a production supervisor, one (1) is a quality
assurance manager,  one (1) is an operator,  and three (3) are engaged in office
and clerical duties.

ITEM 2. DESCRIPTION OF PROPERTY.

     The Company presently operates in the offices of its subsidiary, Precision,
which leases  15,000  square feet of space at 216 South Alma School Road,  Mesa,
Arizona  85210,  of which 13,000 square feet are used for  production  and 2,000
square feet for offices. The space is rented at $6,885 per month.

ITEM 3. LEGAL PROCEEDINGS.

     Except as set forth below,  Neither the Company nor any of its subsidiaries
is a party to any material  pending  legal  proceedings  or  government  actions
including  any  material  bankruptcy,   receivership,  or  similar  proceedings.
Management  of the  Company  does  not  believe  that  there  are  any  material
proceedings  to which any  officer or  affiliate  of the  Company,  any owner of
record of  beneficially  of more than 5% of the Common Stock of the Company,  or
any  associate of any such  director,  officer,  affiliate  of the  Company,  or
security  holder is a party  adverse to the  Company or has a material  interest
adverse to the Company.  The persons  named in the  indictments  as disclosed in
prior 10-KSB filings, are no longer officers or directors of the Company.

                                       6
<PAGE>
     TRU-TEL  LITIGATION.  In  connection  with  the  sale of its  pay-telephone
operations,  the Company  received a  promissory  note in the  principal  sum of
$811,250.  Monthly  payments of $14,000 on the note were to commence on February
15, 1997. No payments on the note were received. In March, 1999, a complaint for
breach of contract was filed with the Eighth  Judicial  District  Court of Clark
County,  Nevada.  The  complaint  alleged  breach  by  the  defendant,   Tru-Tel
Communications,  LLC, issuer of the promissory note. The complaint also named as
party  defendants,  the  principals  of Tru-Tel  Communications,  LLC and Finova
Capital Corporation (provider of the financing used to purchase the assets.)

     The lawsuit was settled  pursuant to a Settlement and Release  Agreement on
or about  April 1, 1999,  filed with the Court,  wherein  Tru-Tel  and the other
named  defendants  (Finova  was  dismissed)  agreed  to pay Four  Hundred  Fifty
Thousand  Dollars  ($450,000),  of which One Hundred Thousand was paid in April,
1999, and the balance was payable quarterly in payments of $21,874.98.

     Tru-Tel has since filed for bankruptcy, and the Company has filed a lawsuit
against the principals of Tru-Tel who personally  guaranteed the Note.  There is
no assurance that the Company will be able to collect the  approximate  $350,000
balance.  It may be likely  that the Company  will not receive the full  payment
settled upon.

     INVESTIGATION OF SHAREHOLDER. In 1999, the State of Florida's Department of
Banking  and Finance  Control  advised the  Company  that it was  reviewing  the
ownership of securities of the Company by Derby Holdings Group,  Ltd. (See Items
5 and 11).  The  Company was advised  that review was  confidential  and was not
construed  as an  indication  of a  violation  on the part of the Company or any
other person or entity. The Company has heard nothing further regarding this.

     GOPROFIT  LITIGATION.  On August 28, 2000 the Company  filed a complaint in
the Eight Judicial District Court,  Clark County,  Nevada,  seeking recission of
the Stock Purchase  Agreement with GoProfit.com,  Inc.  ("GoProfit") and damages
against the former principals of the GoProfit. In the action, the Company sought
to cancel or retrieve the common stock it issued to GoProfit and its principals.
It also sought the  appointment  of a Receiver or  Custodian  pursuant to Nevada
state law.  The  latter was  requested  on the basis of the  alleged  fraudulent
nature of the sale, and the insolvency of GoProfit.  The claim for recission was
based on the alleged  breach of the terms and  conditions of the GoProfit  Stock
Purchase  Agreement.  Damages  were sought for the loss of benefit of the buyer,
i.e.,  because of the alleged lost opportunity  with respect to its assets;  the
Company believed it had lost market value in its stock equity.

     The  Complaint  also  alleged  a breach  of  fiduciary  duty by the  former
principals of GoProfit in the failure to protect assets and the misappropriation
and/or  division  of assets.  Removal of the former  principals  of  GoProfit as
Directors of that company is also sought.

     In October 2001, the parties settled the matter, which rescinded the entire
matter.  All stock  included has been, or is being  retrieved or  cancelled.  No
damages were obtained.

     1996 DEPARTMENT OF JUSTICE ACTION. In 1996, the U.S.  Department of Justice
took action  against  certain  former  directors and officers of the Company and
other  non-affiliated  individuals  who  were  accused  of  racketeering,   RICO
violations,  securities  fraud and wire fraud.  All of the  charges  against the
former  directors and officer arose out of alleged  activities  the  individuals
undertook  while serving as directors  and officers of the Company.  The Company
was not a party of and was not  named as a  defendant  in the  indictments.  The
persons named in the action (as disclosed in prior Form 10-KSB filings),  are no
longer officers or directors of the Company.  It is the Company's  understanding
that  as of the  date  of this  report,  certain  of the  defendants  have  been
convicted and sentenced.  For more information,  see Form 10-KSB's as previously
filed by the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     No matter was  submitted  during the fiscal year ended June 30, 2000,  to a
vote of the Company's security holders.

                                       7
<PAGE>
                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     The  Company's  Common  Stock is currently  traded in the  over-the-counter
market  and is quoted by the  National  Quotation  Bureau  as a  non-NASDAQ  OTC
security.  According to information  provided to the Company,  during the fiscal
year ended June 30, 2001,  5,365,500  shares of the Company's  Common Stock were
traded on the OTC Market. Nonetheless, the Company therefore believes that there
is no well-established public trading market for the Company's Common Stock. The
Company  also  believes  that  there  are only  five (5)  market  makers,  which
currently  make a market in the  Company's  Common  Stock.  These  "pink  sheet"
quotations  reflect  inter-dealer  reported  bid  prices,  and  may or  may  not
necessarily represent actual transactions.

                                          CLOSING BID             CLOSING ASK
                                         --------------          --------------
                                         HIGH       LOW          HIGH       LOW
                                         ----       ---          ----       ---
     2000
     July 1 through September 30        .96875      .26        1.03125      .28
     October 1 through December 1          .26     .065            .29     .075


     2001
     January 3 through March 31            .09      .06            .10     .063
     April 3 through June 30               .27      .05            .33     .055

     As of June 30, 2001, there were  approximately 819 holders of record of the
Company's Common Stock as reported to the Company by its transfer agent.

     No cash  dividends  have  been  declared  or paid to date on the  Company's
Common Stock.

RELATED STOCKHOLDER MATTERS.

     The  Registrant  previously  had 727 shares of Series A 6% Preferred  Stock
outstanding,  with $194,023 in accrued but unpaid dividends. On October 28, 1997
the Registrant  entered into an agreement with Dingaan Holdings,  S.A., the sole
shareholders  of the Series A  Preferred  Stock,  to exchange  these  shares for
18,000  shares of new Series B Preferred  Stock.  The Series B  Preferred  Stock
carries no dividend and is convertible  to 18,000,000  shares of common stock of
the Registrant. Dividends were left outstanding.

     Of the eighteen thousand (18,000) shares of Series B convertible  preferred
stock  held  by  Dingaan  Holdings,  SA  ("Dingaan"),   an  affiliate,   Dingaan
transferred  all of its  shares  to Derby  Holdings  Group,  Limited  ("Derby").
Subsequently, Derby has since converted a number of the Class B preferred stock.
See Item 11.

     From March 9, 1999 to May 1, 2001, such  transactions  were made, and Derby
has been  issued a total of Three  Million  Four  Hundred  Thousand  (3,400,000)
shares of the Company's common stock.

     The  Company had issued one hundred  (100)  shares of Series B  Convertible
Preferred   Stock  to  Hanes   Development,   Ltd.,  a  British  Virgin  Islands
corporation, in connection with the Company's acquisition of GoProfit.com,  Inc.
The Company also issued five hundred  thousand  (500,000)  shares of  restricted
common  stock to  principals  of  GoProfit.com,  Inc.,  in  connection  with the
GoProfit.com,  Inc. acquisition.  All these share have been or will be retrieved
or cancelled as part of a settlement with Go-Profit.

                                       8
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

LIQUIDITY AND CAPITAL RESOURCES OF THE COMPANY

     Cash and cash  equivalents  totaled  $108,713 at June 30, 2001  compared to
$125,049 at June 30, 2000.  The  decrease in cash of  $(16,336)  was due to cash
used in operations of approximately $100,000, partially offset by the receipt of
$65,000 of debt  financing  and the sale of a small amount of our  investment in
Precision Plastics for $25,000.  The Company's current cash requirements are for
the operation of the Company, the purchase of inventory and payments on debt.

     Long-term  cash  requirements  are  for the  support  of  normal  operating
expenses, payments on our remaining capital lease obligation, and the payment of
preferred  dividends.  If found,  funds are  anticipated  for the acquisition of
additional ventures,  however,  funds will need to be raised to support such new
ventures,  or to expand operations  through a sales force. The company currently
has not located any  additional  acquisitions.  The  Company  believes  that its
existing cash and anticipated  cash generated from operations will be sufficient
to satisfy its currently anticipated cash requirements for fiscal year 2002.

     The Company's principal commitments at June 30, 2001 consist of obligations
under capital leases and operating leases for facilities.

RESULTS OF OPERATIONS

     The Company  generated  revenues  from  operations of $726,172 with cost of
sales of $610,947,  and a gross margin of $115,225,  (16% of sales) for the year
ended June 30, 2001 as  compared  to revenues of $689,289  with cost of sales of
$84,461  and gross  profit of  $104,828  (15% of sales) for the same period last
year.  The result is a 5% increase in sales,  and a 1% increase in gross margin.
The increase in sales is minimal and equates to approximately  $20,000 increased
volume of injection  molding and  approximately  $17,000 in service  revenues in
Diamond.  The  increase  in profit  margin  is due to the  increase  of  service
revenues received by the parent company with essentially no cost associated with
these  revenues.  The plastic  operations had a 3% decrease in margin due to the
use of outside  tool  makers,  rather than  staffing  their own tool room.  This
caused a much lower margin on the tool making revenues.

     Selling,  general and  administrative  expenses  were $499,712 for the year
ended June 30, 2001 a decrease of $194,401  over the same period last year.  The
decrease  is due in  part to the  decrease  in  salary  costs  of  approximately
$112,000, due to the decrease in personnel.  There were also decreases in travel
costs of $25,000, and a decrease in legal, utility and various overhead expenses
from the continuing effort to minimize our operating expenses,  and the decrease
in operating activities of Diamond Equities.

     Management  anticipates  that general selling and  administrative  expenses
will continue to remain  constant for the upcoming year,  with a possible slight
decrease as we continue to search for ways to decrease operating overhead.

     The Company  incurred a loss of $(294,504) for the year ended June 30, 2001
compared  to a loss of  $(943,011)  for the same  time  period a year  ago.  The
$648,500  increase in our bottom line is due primarily to the decrease in losses
from investments and the write off of notes  receivable  totaling over $473,000.
The remaining  increase in our bottom line is due to the decrease in general and
administrative expenses of $190,000.

     The 2nd fiscal quarter is typically the slowest quarter of the year, due to
the holidays and the seasonal  aspect to the orders of our  customers.  No other
seasonal  aspects of the  Company's  business  are  expected  to have a material
effect on the financial conditions or results of operations.

                                       9
<PAGE>
PLAN OF OPERATIONS

     The  Company's  plan for fiscal  2002 is to  increase  sales in the plastic
molding  operations  through the addition of new  customers  through our current
contacts in the industry and the exploration of potential  acquisitions of small
plastic  operations.  Management  intends to increase  revenues to more  closely
reach the  manufacturing  capacity of our Mesa Arizona plant in order to achieve
maximum profit.

     The Company  also  intends to continue  its plan to assemble and market the
prototype  motorcycle of Real  Motorcycles.com,  our subsidiary.  Operations are
being set up at the Plastics operation in Mesa,  Arizona,  where assembly of the
motorcycle will take place. We are currently  waiting for the prototype to clear
DOT and are  finishing  our final  touches on the design of the two models.  The
Company  will need to raise  between  $500,000  and  $1,000,000  to  launch  the
manufacturing  process of  RealMotorcycles.com,  Inc.  Management  is  currently
reviewing it's options and sources of providing the needed capital to begin this
operation.

     THE FOREGOING ARE FORWARD-LOOKING  STATEMENTS WITHIN THE MEANING OF SECTION
27A OF THE SECURITIES  EXCHANGE ACT OF 1933, AS AMENDED,  AND SECTION 21E OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,  AND IS SUBJECT TO THE SAFE HARBORS
CREATED THEREBY. ACTUAL RESULTS COULD DIFFER MATERIALLY BECAUSE OF THE FOLLOWING
FACTORS:  LOSSES DUE TO AN  UNPROFITABLE  NEW LINE OF  BUSINESS;  THE  CONTINUED
EMPLOYMENT  OF KEY  MANAGEMENT;  A CHANGE IN CONTROL OF THE  COMPANY  DUE TO THE
CONVERSION BY DINGAAN  HOLDINGS,  S.A. OF ITS SERIES B PREFERRED  STOCK OR OTHER
EVENTS.

ITEM 7. FINANCIAL STATEMENTS.

     The following  financial  statements are attached  hereto and  incorporated
herein:

                                                                          Page
                                                                          ----
Independent Auditor's Report ...........................................   F-1

Consolidated Balance Sheet .............................................   F-2

Consolidated Statements of Operations for the Years Ended
June 30, 2001 and 2000 .................................................   F-3

Consolidated Statements of Stockholder's Equity for the years
ended June 30, 2001 and 2000 ...........................................   F-4

Consolidated Statements of Cash Flows for the years ended
June 30, 2001, and 2000 ................................................   F-5

Notes to Consolidated Financial Statements .............................   F-6

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.

     On July 31, 2000, the Company changed accountants, without any disagreement
or adverse opinion or disclaimer.

                                       10
<PAGE>
                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.

GENERAL

     The following  information  is provided for each of the executive  officers
and directors of the Company:

     DAVID WESTFERE, 35, has been a Director,  President and Chief Executive and
Operating Officer of the Company since April 6, 1995, and was General Manager of
Operations  from  January  1991 to April  1995.  He also  acts as  President  of
Precision  Plastics  Molding,  Inc., a subsidiary of the Company.  Mr.  Westfere
presently  works  part  time for the  Company,  and for  Precision,  and is also
presently the  owner-operator of a towing service company.  From 1988 until 1990
he was the  route  supervisor  for the  Company's  pay  telephone  operation  in
Bakersfield, California, and from 1990 until 1991 he was the route supervisor of
the Company's pay telephone operation in Phoenix,  Arizona.  From September 1984
to June 1987 Mr. Westfere attended the University of Akron.

     TODD D.  CHISHOLM,  39, has been a Director of the  Company  since June 27,
1995. From June 1990 until September 1992 he was employed as a staff  accountant
by Orton & Company, Certified Public Accountants,  and from September 1992 until
June 1994 he was employed as audit  manager by Jones,  Jensen,  Orton & Company,
Certified  Public  Accountants.  Since June 1994 he has been  self-employed as a
Certified   Public   Accountant.   Since   April  1995  he  has  also  been  the
Vice-President  and Chief Financial  Officer of The Solarium,  Inc., a privately
held travel and tanning center.  Mr. Chisholm received a Bachelor of Arts degree
in  business  from the  University  of  Utah.  He has  been a  Certified  Public
Accountant since 1992.

     The   Registrant    also   employs   Mr.    Chisholm   as   its   CFO   and
Secretary/Treasurer.   Mr.  Chisholm,   performs  accounting  services  for  the
Registrant for which he is paid a flat fee of $850 per month for compilation and
payroll  services  and is paid an  hourly  fee for any  additional  work.  It is
believed  that  the  terms  of the  arrangement  between  Mr.  Chisholm  and the
Registrant  are at least as  favorable  as terms that could be  obtained  with a
non-affiliated party.

ITEM 10. EXECUTIVE COMPENSATION.

     The following table set forth the aggregate  executive  compensation earned
by or paid to current  management  of the Company for the fiscal year ended June
30, 2001, 2000 and 1999.

                                           ANNUAL COMPENSATION
                                           -------------------
                                                                   OTHER ANNUAL
NAME AND PRINCIPAL POSITIONS      YEAR      SALARY       BONUS     COMPENSATION
----------------------------      ----      ------       -----     ------------
David Westfere, President (1)     2001     $20,000 (5)  $  0.00      $ 9,474 (2)
                                  2000     $76,000      $  0.00      $ 9,496 (3)
                                  1999     $38,400      $10,000      $19,994 (4)

Todd D. Chisholm                  2001     $  0.00      $  0.00      $  0.00
                                  2000     $  0.00      $  0.00      $  0.00
                                  1999     $  0.00      $10,000      $  0.00
----------
(1)  The Company did not pay any long-term  compensation  to Mr. Westfere during
     the above periods.
(2)  During Fiscal year 2001, the Company paid $5566.12 in medical insurance and
     $3908.25 in other employee benefits.
(3)  During  Fiscal 2000,  the Company paid  $5,654.36 in Medical  Insurance and
     $3,841.94 in other employee benefits.
(4)  During the fiscal year 1999, the Company paid (i) health insurance premiums
     of  approximately  $6,000  and  (ii),  $33,000  to  C&N,  Inc.,  a  company
     controlled by Mr. Westfere, for management services.
(5)  In addition, the Company is delinquent in salary payments of $20,000.

                                       11
<PAGE>
     No  executive  officer  of  the  Company  received  compensation  exceeding
$100,000 for the fiscal years ended June 2000, 1999 and 1998.

     COMPENSATION  OF  DIRECTORS.  Directors are permitted to receive fixed fees
and other  compensation  for their  services as directors,  as determined by the
Board of Directors.  No such fees were paid to the  Company's  directors for the
fiscal year 2001.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following  table sets forth certain  information  concerning the Common
Stock  ownership  as of June 30,  1998,  of (i) each  person who is known to the
Company to be the  beneficial  owner of more than five percent of the  Company's
Common  Stock;  (ii)  all  directors;  (iii)  each  of the  Company's  executive
officers; and (iv) directors and executive officers of the Company as a group:

                                                        AMOUNT AND NATURE OF
    NAME AND ADDRESS OF BENEFICIAL OWNER                BENEFICIAL OWNERSHIP
    ------------------------------------                --------------------
    Oak Holdings, Inc.                                       2,500,000 (1)
    Apartado 63685
    Panama, Republic of Panama

    Cede & Co.                                               4,720,951 (2)
    P.O. Box 222
    Bowling Green Station
    New York, New York 10274

    Directors and Executive Officers                                -0-
    as a Group (2 persons)

----------
(1)  These  shares  are  held  and of  record  by Oak  Holdings,  Inc.,  Grafton
     Holdings,  S.A.  ("Grafton")  has indicated  that it has direct  beneficial
     ownership of such shares.  However,  the Company  believes that Grafton has
     indirect  ownership  of such shares as the sole  corporate  director of Oak
     Holdings,  Inc..  As the sole  corporate  director of Oak  Holdings,  Inc.,
     Grafton has  represented  to the  Company  that it is  responsible  for the
     management  of Oak  Holdings,  Inc. Mr. Baily has  indicated to the Company
     that he has indirect beneficial ownership of such shares by virtue of being
     a controlling shareholder of Oak Holdings, Inc. with Pedro Coronado.
(2)  Represents  shares held for the benefit of individual  shareholders  in the
     "street  name"  of Cede & Co.,  an  entity  that  exists  to  perform  that
     function.

     The above table and  footnotes  reflects  the removal of certain  entities,
which no longer own 5% or more of the outstanding Common Stock.

     As of September  27, 2001,  the Company had  outstanding  14,600  shares of
Series B Preferred  Stock,  all of which shares are now owned of record by Derby
Holding Group ("Derby").

     There are no arrangements known to the Company,  the operation of which may
at a subsequent date result in a change of control of the Company.  However,  if
at any time Derby should elect to convert its shares of Series B Preferred Stock
into shares of Common Stock,  control of the Company would change to that entity
upon such conversion.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Mr. Chisholm,  a director of the Company,  performs accounting services for
the Company. He is paid a flat fee of $850 per month for compilation and payroll
services and is paid an hourly fee for any additional  work. It is believed that
the terms of the  arrangement  are at least as favorable as the terms that could
be obtained with a non-affiliated party.

                                       12
<PAGE>
ITEM 13. EXHIBITS LIST AND REPORTS ON FORM 8-K.

(a)  The following  exhibits are furnished with this Report pursuant to Item 601
     of Regulation SB-2.

Exhibit No.             Description of Exhibit                              Page
-----------             ----------------------                              ----
  3 (i)      Articles of Incorporation as amended                              *
  3 (ii)     Bylaws of the Company, as currently in effect                     *
  3 (iii)    Certificate regarding Series A 6% Preferred Stock               ***
  3 (iv)     Certificate of Amendment of Articles of Incorporation,
             dated June 20, 1997                                             ***
  3 (v)      Articles of Incorporation - Precision Plastics Molding, Inc.     *3
  3 (vi)     Bylaws - Precision Plastics Molding, Inc.                        *3
  4 (a)      Form of certificate evidencing shares of Common Stock             *
  4 (b)      Form of certificate evidencing shares of Series A
             6% Preferred Stock                                              ***
  10.1       Assignment and Assumption of Liabilities Agreement               **
  10.2       Stock Purchase Agreement dated April 3, 1995 between
             Oak Holdings and Teletek, Inc.                                 ****
  10.3       Consulting Agreement dated April 6, 1995, between the
             Company and Michael Swan                                       ****
  10.4       Consulting Agreement dated January 1, 1995, between the
             Company and C&N, Inc.                                           ***
  10.5       Severance Agreement dated October 3, 1996 between the
             Company and Michael Swan                                         *2
  10.6       Stock Purchase Agreement between Teletek, Inc. and Dingaan
             Holdings, S.A. dated December 1, 1996 (change in control
             of registrant)                                                *****
  10.7       Asset Purchase Agreement between the Company, Precision
             and Premier Plastics Corp, dated June 15, 1998.                  *3
  10.8       Asset Purchase Agreement between the Company, Precision
             and Accurate Thermoplastics, Inc., dated July 15, 1998           *3
  10.9       Preferred Stock Exchange Agreement  Dingaan/DEI                  *3
  10.10      Stock Purchase Agreement - GoProfit.Com, Inc.                    *4
  10.11      Correction Agreement - GoProfit.Com, Inc.                        *4

----------
*         Incorporated   by  reference  to  the  exhibits   with  the  Company's
          registration  statement on Form 10-SB  (Commission  File No.  0-24138)
          filed with the Securities and Exchange Commission on May 13, 1994.
**        Incorporated  by reference to the  exhibits  filed with the  Company's
          1994 annual report on Form 10-KSB  (Commission File No. 0-24138) filed
          with the Securities and Exchange Commission on October 13, 1994.
***       Incorporated  by reference to the  exhibits  filed with the  Company's
          registration statement on Form SB-2 (Commission File No. 33-85884).
****      Incorporated  by reference to the  exhibits  filed with the  Company's
          Current Report on Form 8-K  (Commission  File No.  0-24138) filed with
          the Securities and Exchange Commission on December 1, 1996.
*****     Incorporated  by  reference  to  the  Company's  Report  on  Form  8-K
          (Commission  File No.  0-24138) filed with the Securities and Exchange
          Commission on March 15, 1997.
*2        Incorporated  by reference to the  exhibits  filed with the  Company's
          1996 Annual Report on Form 10-KSB  (Commission file No. 0-24138) filed
          with the Securities and Exchange Commission on October 11, 1996.
*3        Incorporated  by reference to the  exhibits  filed with the  Company's
          Form 10-KSB filed with the Commission on September 28, 1998.
*4        Incorporated  by reference to the  exhibits  filed with the  Company's
          Form 10-KSB filed with the Commission on October 13, 1999.

                                       13
<PAGE>
                                   SIGNATURES

In accordance  with Section 13 or 15(d) of the Exchange Act, the  registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                   DIAMOND EQUITIES, INC.
                                   Registrant ("Company")


Date: October 15, 2001             By: /s/ David D. Westfere
                                      ----------------------------
                                      David D. Westfere,
                                      President



Date: October 15, 2001             By: /s/ Todd D. Chisholm
                                      ----------------------------
                                      Todd D. Chisholm,
                                      Chief Financial Officer

                                       14
<PAGE>
                             DIAMOND EQUITIES, INC.

                    Including the accounts of its subsidiary
                        Precision Plastics Molding, Inc.


                        CONSOLIDATED FINANCIAL STATEMENTS

                                  June 30, 2001

                       [WITH INDEPENDENT AUDITORS' REPORT]
<PAGE>
                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Shareholders of
Diamond Equities, Inc.

We have audited the accompanying consolidated balance sheet of Diamond Equities,
Inc. including the accounts of its subsidiary,  Precision Plastics Molding, Inc.
as of June 30, 2001,  and the related  consolidated  statements  of  operations,
stockholders'  equity,  and cash flows for the year ended June 30,  2001.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.  The financial  statements of Diamond  Equities,  Inc, for the period
ended June 30, 2000, were audited by other auditors whose report dated September
16, 1999, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of Diamond Equities,
Inc.,  including  the accounts of its  subsidiary  as of June 30, 2001,  and the
results of  operations  and cash flows for the period  ended June 30,  2001,  in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 5 to the
consolidated  financial  statements,  the  Company has  accumulated  losses from
operations  and has  experienced  declining  revenue  from levels in prior years
which raises substantial doubt about its ability to continue as a going concern.
Management's  plans in regard to these matters are also described in Note 5. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.

                                       /s/ MANTYLA McREYNOLDS

Salt Lake City, Utah
August 4, 2001

                                      F-1
<PAGE>
                             DIAMOND EQUITIES, INC.
                    INCLUDING THE ACCOUNTS OF ITS SUBSIDIARY

                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 2001

                                     ASSETS

CURRENT ASSETS
  Cash & cash equivalents - Notes 2 & 3                            $   108,713
  Accounts receivable (net of allowance $10,000)-Note 13               110,687
  Inventory - Notes 2 & 6                                               71,989
                                                                   -----------
     TOTAL CURRENT ASSETS                                              291,389

PROPERTY AND EQUIPMENT - Note 7
  Property and equipment                                             1,045,306
  Less: Accumulated depreciation                                      (642,772)
                                                                   -----------
     NET PROPERTY AND EQUIPMENT                                        402,534

OTHER ASSETS
  Other assets                                                           1,191
  Deposits                                                               6,750
                                                                   -----------
     TOTAL OTHER ASSETS                                                  7,941
                                                                   -----------
     TOTAL ASSETS                                                  $   701,864
                                                                   ===========

                       LIABILITIES & STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                                                 $   154,828
  Accrued liabilities                                                   97,295
  Accrued preferred dividends - Note 12                                 31,874
  Due to related party - Note 15                                        50,000
  Capital lease payable - Note 18                                        2,287
                                                                   -----------
     TOTAL CURRENT LIABILITIES                                         336,284

Long-Term Liabilities
  Notes payable related parties - Note 15                               15,000
                                                                   -----------
     TOTAL LONG-TERM LIABILITIES                                        15,000
                                                                   -----------
     TOTAL LIABILITIES                                                 351,284

MINORITY INTEREST                                                      164,736

STOCKHOLDERS' EQUITY - Note 12
  Preferred stock A -- 6%, $.001 par value, convertible,
   18,000 shares authorized, 250 issued and outstanding,
   liquidation preference of $250,000                                        1
  Preferred stock B-convertible, 18,000 shares authorized,
   14,794 shares issued and outstanding                              1,663,120
  Common stock -- 50,000,000 shares authorized, $.001 par
   value;  8,480,099 shares issued and outstanding                       8,480
  Additional paid-in capital                                         3,651,756
  Deficit accumulated during the development stage                  (5,137,513)
                                                                   -----------
     TOTAL STOCKHOLDERS' EQUITY                                        185,844
                                                                   -----------
     TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                      $   701,864
                                                                   ===========

                 See accompanying notes to financial statements

                                      F-2
<PAGE>
                             DIAMOND EQUITIES, INC.
                    INCLUDING THE ACCOUNTS OF ITS SUBSIDIARY

            CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED
                             JUNE 30, 2001 AND 2000


                                                    YEAR ENDED       YEAR ENDED
                                                     6/30/01          6/30/00
                                                   -----------      -----------

Revenues - Note 1                                  $   726,172      $   689,289
Cost of Sales                                          610,947          584,461
                                                   -----------      -----------
     GROSS PROFIT                                      115,225          104,828

Marketing, general and administrative                  499,712          694,113
                                                   -----------      -----------
  Total Operating Expenses                             499,712          694,113
                                                   -----------      -----------
     NET LOSS FROM OPERATIONS                         (384,487)        (589,285)

OTHER INCOME/(EXPENSE)
  Interest Income                                  $         0      $     3,667
  Interest Expense                                        (566)         (11,937)
  Other Income                                             413           23,696
  Loss From Write Off of Investments - Note 8                          (212,906)
  Loss From Write Off of Note - Note 4                                 (261,000)
                                                   -----------      -----------
     TOTAL OTHER INCOME/(EXPENSE)                         (153)        (458,480)
                                                   -----------      -----------
NET LOSS FROM CONTINUING OPERATIONS
BEFORE MINORITY INTEREST AND EXTRAORDINARY ITEM       (384,640)      (1,047,765)
Minority Interest                                       90,136          104,754
                                                   -----------      -----------

     NET LOSS                                      $  (294,504)     $  (943,011)
                                                   ===========      ===========

BASIC NET LOSS PER COMMON SHARE                    $     (0.04)     $     (0.12)
                                                   ===========      ===========

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING           8,325,031        8,074,265
                                                   ===========      ===========

                 See accompanying notes to financial statements

                                      F-3
<PAGE>
                             DIAMOND EQUITIES, INC.
                    INCLUDING THE ACCOUNTS OF ITS SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
               FOR THE YEARS ENDED JUNE 30, 2001 AND JUNE 30, 2000

<TABLE>
<CAPTION>


                                                                            PREFERRED STOCK
                                COMMON STOCK                     ---------------------------------------
                            --------------------    ADDITIONAL       SERIES A             SERIES B
                              SHARES     COMMON      PAID-IN     ---------------    --------------------   ACCUMULATED
                              ISSUED      STOCK      CAPITAL     SHARES   AMOUNT    SHARES      AMOUNT       DEFICIT         TOTAL
                            ----------   -------    ----------   ------   ------    ------    ----------   -----------    ----------
<S>                         <C>          <C>        <C>          <C>      <C>       <C>       <C>          <C>            <C>
BALANCE, JUNE 30, 1999       7,366,099   $ 7,366    $4,130,066     350     $  1     15,900   $1,605,540   $(3,865,302)   $1,877,671
                            ----------   -------    ----------    ----     ----    -------   ----------   -----------    ----------
Conversion of Series B         600,000       600        59,986                        (600)     (60,586)                          0

Stock issued to settle
 suit                           14,000        14       114,780                                                              114,794

Conversion of Series B         300,000       300        29,993                        (300)     (30,293)                          0

Acquired and Cancelled
Series A                                              (100,000)   (100)       0                                            (100,000)

Adjustment to equity
 method for GoProfit
 minority interest                                    (628,433)                                                            (628,433)

Conversion of Preferred
dividends to Series B
Preferred stock                                                                        194      194,023                     194,023

Preferred dividends                                                                                           (17,481)      (17,481)

Net loss for the year
ended June 30, 2000                                                                                          (943,011)     (943,011)
                            ----------   -------    ----------    ----     ----    -------   ----------   -----------    ----------
BALANCE, JUNE 30, 2000       8,280,099   $ 8,280    $3,606,392     250     $  1     15,194   $1,708,684   $(4,825,794)   $  497,563
                            ----------   -------    ----------    ----     ----    -------   ----------   -----------    ----------
Preferred shares converted
to common stock                400,000       400        45,164                        (400)     (45,564)                          0

Common shares cancelled       (200,000)     (200)          200                                                                    0

Preferred dividends                                                                                           (15,000)      (15,000)

Preferred dividend on
subsidiary                                                                                                     (2,215)       (2,215)

Net loss for the year
ended June 30, 2001                                                                                          (294,504)     (294,504)
                            ----------   -------    ----------    ----     ----    -------   ----------   -----------    ----------
BALANCE, JUNE 30, 2001       8,480,099   $ 8,480    $3,651,756     250     $  1     14,794   $1,663,120   $(5,137,513)   $  185,844
                            ----------   -------    ----------    ----     ----    -------   ----------   -----------    ----------
</TABLE>

                 See accompanying notes to financial statements

                                      F-4
<PAGE>
                             DIAMOND EQUITIES, INC.
                    INCLUDING THE ACCOUNTS OF ITS SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   FOR THE YEARS ENDED JUNE 30, 2001 AND 2000

<TABLE>
<CAPTION>
                                                                 YEAR ENDED          YEAR ENDED
                                                                   6/30/01            6/30/00
                                                                 ----------          ----------
<S>                                                              <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Loss                                                       $   (2,215)         $ (943,011)
  Minority interest net loss                                        (90,136)           (104,754)
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Depreciation and amortization                                   216,004             215,378
    Allowance on note and accounts receivable                        19,935              (3,646)
    Loss in investment                                                    0             300,186
    Decrease/(increase) in accounts receivable                      (27,985)            118,477
    Increase/(decrease) in accounts payable                          11,280             (68,205)
    Increase/(decrease) in other current liabilities                 40,851              (5,166)
    Decrease/(increase) in deposits                                       0               1,000
    Decrease/(increase) in interest receivable                            0              12,658
    Decrease/(increase) in inventories                               26,592              85,562
    Decrease/(increase) in other assets                              (1,191)            195,893
    Increase/(decrease) in deferred income                                0              (8,809)
    Decrease/(increase) in prepaid expenses                               0               6,628
                                                                 ----------          ----------
          NET CASH USED FOR OPERATING ACTIVITIES                    193,135            (197,809)

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property, machinery and equipment                        (582)            (17,839)
  Payments received on notes receivable                                   0             200,000
  Cash proceeds from sale of investment in subsidiary                25,000                   0
                                                                 ----------          ----------
          NET CASH USED FOR INVESTING ACTIVITIES                     24,418             182,161

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from borrowing                                            65,000                   0
  Payments on notes payable                                               0            (165,000)
  Accrual of preferred dividends minority interest                   (1,385)             (1,119)
  Proceeds from stock issued by subsidiary                                0             240,000
  Payment of dividends                                               (3,124)             (2,448)
  Principal payments on leases                                       (2,091)            (33,435)
                                                                 ----------          ----------
          NET CASH PROVIDED BY FINANCING ACTIVITIES                  58,400              37,998
                                                                 ----------          ----------
          NET INCREASE/(DECREASE) IN CASH                           275,953              22,350

BEGINNING CASH AND CASH EQUIVALENTS                                 125,049             210,035
LESS BEGINNING CASH IN GOPROFIT                                                        (107,336)
                                                                 ----------          ----------
ENDING CASH AND CASH EQUIVALENTS                                 $  401,002          $  125,049
                                                                 ==========          ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Cash paid during the year for interest                         $      566          $    1,475
  Cash paid during the year for income/franchise taxes           $        0          $      100

NONCASH FINANCING ACTIVITIES
  Common stock issued for debt                                   $        0          $  114,794
</TABLE>

                 See accompanying notes to financial statements

                                      F-5
<PAGE>
                             DIAMOND EQUITIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001


NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION

     The consolidated  financial statements include the accounts and activity of
     Diamond  Equities,  Inc. (the "Company") and its majority owned  subsidiary
     Precision  Plastics  Molding,  Inc.  ("Precision").  Precision  is  engaged
     primarily in the plastic  injection  molding  business.  All operations are
     conducted in a facility in Mesa, Arizona. The Company is also seeking other
     business opportunities.

     The consolidated  financial statements of the Company have been prepared in
     accordance  with  U.  S.  generally  accepted  accounting  principles.  All
     significant intercompany  transactions and balances have been eliminated in
     consolidation.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     CASH AND CASH EQUIVALENTS

     Includes  all  short-term  highly  liquid   investments  that  are  readily
     convertible to known amounts of cash and have original  maturities of three
     months or less.

     INVENTORIES

     Consist of finished goods, work in process and raw materials and are stated
     at the lower of cost (specific identification) or market.

     INCOME TAXES

     The Company  provides for income taxes based on the provisions of Statement
     of Financial  Accounting  Standards No. 109,  ACCOUNTING  FOR INCOME TAXES,
     which among other things,  requires  that  recognition  of deferred  income
     taxes be  measured by the  provisions  of enacted tax laws in effect at the
     date of financial statements.

     PROPERTY, MACHINERY AND EQUIPMENT

     Property, machinery and equipment are stated at cost and are depreciated on
     the  straight-line  method over their  respective  estimated  useful  lives
     ranging from 3 to 7 years.  Expenditures  for  maintenance  and repairs are
     charged to expense as incurred.

     REVENUE RECOGNITION

     The Company recognizes revenue upon shipment of product.

     ADVERTISING EXPENSES

     The Company expenses  advertising costs as incurred.  Advertising  expenses
     were  $686  and  $1,796  for the  years  ended  June  30,  2001  and  2000,
     respectively.

                                      F-6
<PAGE>
                             DIAMOND EQUITIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [CONTINUED]
                                  JUNE 30, 2001


NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)

     FINANCIAL INSTRUMENTS

     Financial instruments consist primarily of cash, accounts receivable, notes
     receivable,  investments and obligations  under accounts  payable,  accrued
     expenses,  debt,  and capital lease  instruments.  The carrying  amounts of
     cash,  restricted cash,  accounts  receivable,  accounts  payable,  accrued
     expenses and short-term  debt  approximate  fair value because of the short
     maturity of those instruments.  The carrying value of the Company's capital
     lease  arrangements  approximates  fair value because the instruments  were
     valued at the retail cost of the equipment at the time the Company  entered
     into the arrangements.

     USE OF ESTIMATES

     The preparation of financial  statements in conformity with U. S. generally
     accepted  accounting  principles  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.

     LOSS PER COMMON SHARE

     Net loss per common share is  calculated  under the  provisions of SFAS No.
     128 EARNINGS PER SHARE, by dividing net loss by the weighted average number
     of common shares outstanding.  Diluted earnings per share are not presented
     because the effect of considering the convertible  preferred stock would be
     antidilutive for both years ending June 30, 2001 and 2000.

NOTE 3. CASH AND CASH EQUIVALENTS

     The Company  maintains  cash  balances at banks in  Arizona.  Accounts  are
     insured by the Federal  Deposit  Insurance  Corporation up to $100,000.  At
     June 30, 2001, the Company's uninsured bank balances total $16,162.

NOTE 4. NOTE RECEIVABLE

     On  November  15, 1996 the  Company  sold all of its assets  related to the
     operation of the pay-telephone business. In connection with the sale of the
     assets, the Company received a note receivable of $811,250. No payments had
     been  received on the note through June 30, 1998 and the Company  commenced
     legal  proceedings to collect the amount. A settlement was reached in March
     1999 in the  amount of  $450,000  including  a  $100,000  payment  that was
     received  at time of  settlement.  During  fiscal  year  2000  the  company
     determined that the note was uncollectible  therefore  management wrote the
     note off to bad debt expense in the amount of $261,000.

     In July 1997 the company  made two loans for a total of $15,750  with terms
     of 12 months and an interest rate of 9.5% per annum. The original due dates
     were in July 1998.  The  maturity  dates were  extended to  December  2000.
     Interest  receivable  was  accrued  through  June 30, 2000 in the amount of
     $3,281.  The Company has determined  that the balance may be  uncollectible
     and has charged bad debt expense.

                                      F-7
<PAGE>
                             DIAMOND EQUITIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [CONTINUED]
                                  JUNE 30, 2001


NOTE 5. LIQUIDITY

     The Company has  accumulated  losses  through  June 30, 2001  amounting  to
     $5,116,702,  and has  experienced  a  significant  decrease in revenue from
     levels  in  prior  years.  The  Company's  ability  to  achieve  a level of
     profitable  operations  and/or  additional  financing impacts the Company's
     ability to continue  as it is  presently  organized.  These  factors  raise
     substantial  doubt  about the  Company's  ability  to  continue  as a going
     concern.

     Management  plans  include  increasing  revenue in its  subsidiary  through
     additional  marketing and through raising capital as needed. The Company is
     also seeking new business  opportunities.  The financial  statements do not
     include  any  adjustments  that  might  result  from  the  outcome  of this
     uncertainty.

NOTE 6. INVENTORIES

     Inventories consist of the following at June 30, 2001:

     Raw Materials                                               $  26,708
     Finished Goods                                                 45,281
                                                                 ---------
     Total Inventory                                             $  71,989
                                                                 =========

NOTE 7. PROPERTY, MACHINERY AND EQUIPMENT

     Property,  machinery  and  equipment  consist of the  following at June 30,
     2001:

                                                  ACCUMULATED
                                     COST         DEPRECIATION       NET VALUE
                                  ----------      ------------      ----------
     Equipment                    $  915,060       $  528,006       $  387,054
     Leasehold improvements           51,634           50,199            1,435
     Furniture and fixtures           41,217           32,456            8,761
     Office equipment                 36,145           30,896            5,249
     Vehicles                          1,250            1,215               35
                                  ----------       ----------       ----------
          TOTALS:                 $1,045,306       $  642,772       $  402,534
                                  ==========       ==========       ==========

     Office equipment includes $8,097 less $4,723 in accumulated amortization on
     equipment  under  capital  lease.  Depreciation  expense,  including  lease
     amortization,  for the years ended June 30, 2001 and 2000 was  $216,004 and
     $215,378, respectively.

                                      F-8
<PAGE>
                             DIAMOND EQUITIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [CONTINUED]
                                  JUNE 30, 2001


NOTE 8. BUSINESS ACQUISITIONS

     On  April  5,  1999,  the  Company  acquired  all of the  common  stock  of
     GoProfit.com,  Inc.  ("GoProfit")  for 600,000  shares of its common stock.
     GoProfit is a development  stage enterprise in the process of developing an
     Internet web site and financial  search  engine for the Internet.  GoProfit
     was incorporated in March 1999, and there were no material operations prior
     to its  acquisition by the Company.  The acquisition was recorded under the
     purchase method of accounting.  The aggregate  purchase price was valued at
     $360,000 which was determined by the estimated value of the Company's stock
     at the time of the transaction.  GoProfit raised additional capital through
     the sale of common  stock  subsequent  to the  Company's  acquisition.  The
     result of those stock sales  reduced the Company  ownership  in GoProfit to
     approximately  76% at June 30,  1999.  Through the end of fiscal year 2000,
     GoProfit issued additional shares to outside  investors,  thus reducing the
     Company's  ownership  to  approximately  37%.  Due to  losses  incurred  by
     GoProfit, the Company determined there was no remaining value and wrote off
     its investment of $195,893 as of June 30, 2000.

     The founders and  principals of GoProfit have asserted  claims  against the
     Company to remove  restrictions  from the common stock previously issued to
     the founders and principals.  However, during the year ended June 30, 2001,
     200,000 of the 600,000 shares of Company stock which had been issued in the
     acquisition were returned to the treasury and cancelled.

NOTE 9. CUSTOMER DEPOSITS

     The Company requires a fifty percent deposit at time of order placement for
     tool work and recognizes the deposit as revenue upon shipment of order. The
     customer deposit balance as of June 30, 2001 was $0.

NOTE 10. INCOME TAXES

     The Company has the following  temporary  differences and loss carryforward
     amounts as of the balance sheet date. The timing  difference  multiplied by
     the  estimated  tax rate,  for the period  the  temporary  differences  are
     expected to reverse, becomes a deferred tax asset or liability.

                   DESCRIPTION                                    TAX       RATE
                   -----------                                -----------   ----
     Net operating loss-federal (expires 2021)   $3,848,705   $ 1,308,560    34%
     Net operating loss-state                     3,848,705       307,896     8%
     Valuation allowance                                       (1,616,456)
                                                              -----------
     Deferred tax asset 6/30/2001                             $         0
                                                              ===========

     The allowance has increased  $114,951 from  $1,501,505 as of June 30, 2000.
     For the years ending June 30, 2001 and 2000 the Company had no  significant
     income  tax  expense  or  liability  as a result  of net  operating  losses
     incurred. Currently, there is no reasonable assurance that the Company will
     be able to take  advantage  of deferred  tax assets,  thus,  an  offsetting
     allowance has been established for the deferred asset.

                                      F-9
<PAGE>
                             DIAMOND EQUITIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [CONTINUED]
                                  JUNE 30, 2001


NOTE 11. OPERATING LEASE

     The Company  leases its operations  facility under an operating  lease that
     expired in July 1999.  The rental  agreement  has been month to month since
     July 1999.  Rent  expense  under the lease was  approximately  $78,991  and
     $83,874 for the years ended June 30, 2001 and 2000.

NOTE 12. STOCKHOLDERS' EQUITY

     PREFERRED STOCK

     The  Series A has a  liquidation  preference  of  $250,000.  The shares are
     convertible to common stock at a rate equal to 75% the average bid price of
     the common stock for a period of ten days prior to conversion.  The Company
     accrued  dividends of $15,000 for the year on the Series A Preferred Stock;
     the balance due as of June 30, 2001 is $31,874.

     Series B shares are convertible  into 1,000 shares of common stock for each
     share of  preferred.  In prior  years,  the  Company  accrued  $194,023  in
     preferred  dividends.   Effective  June  30,  2000,  those  dividends  were
     converted to 194 shares of Class B Preferred Stock. There are no cumulative
     dividends on the Class B preferred stock.

     During the year ended June 30, 2000,  the Company  converted  900 shares of
     the Series B Preferred  Stock into 900,000  shares of common stock.  In the
     current  fiscal year, 400 shares were converted to 400,000 shares of common
     stock.

     COMMON STOCK

     For the year ended June 30,  1999,  the Company  issued  600,000  shares of
     common stock valued at $360,000 for the purchase of all of the common stock
     of Go-Profit.

     For the year ended June 30,  2000,  the  Company  issued  14,000  shares of
     common  stock in  settlement  of a note  payable  that the  Company  was in
     default to the prior owner of the Precision Plastics subsidiary.

     The Company  reclassified the minority interest in GoProfit from additional
     paid in capital to the minority  interest  when they switched to the equity
     method of accounting for its investment.

NOTE 13. CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

     Financial   instruments   that   potentially   subject   the   Company   to
     concentrations   of  credit  risk  are   primarily   accounts   receivable.
     Approximately  $93,000 of the accounts  receivable balance at June 30, 2001
     is due from two significant  customers.  Approximately 56% of the Company's
     revenue for the year ended June 30, 2001 was  derived  from two  customers,
     including 36% and 20% from each customer.

                                      F-10
<PAGE>
                             DIAMOND EQUITIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [CONTINUED]
                                  JUNE 30, 2001


NOTE 14. EMPLOYEE STOCK OPTION PLAN

     Precision Plastics Molding,  Inc., adopted an employee stock option plan in
     June 1998 pursuant to which options may be granted to key employees  and/or
     officers who are selected by the Board of Directors.  The exercise price of
     the options  granted  pursuant to the Plan are  determined  by the Board of
     Directors on a case-by-case  basis.  Options are  exercisable  over a three
     year period and only while the optionee remains an employee of the Company,
     except that,  in the event of an  optionee's  termination  of employment by
     reason of disability or death while an employee.  The Plan allows  granting
     of up to 2,400,000  shares of  Precision  common  stock.  On June 26, 2000,
     1,500,000  options were granted to five  individuals  and  exercised at the
     price of $.04 per share for services  valued in  aggregate  at $60,000.  No
     other options have been granted under the Plan.

NOTE 15. RELATED PARTY TRANSACTIONS

     During the year ended June 30,  2001,  the  Company  paid  $20,000 to David
     Westfere, an owner and officer for management services.

     An officer and director of the Company performs accounting services for the
     Company  through his  accounting  firm at its hourly rates for  compilation
     services and for any  additional  work. The Company paid $13,817 and $7,922
     to the firm for the years ended June 30, 2001 and 2000, respectively.

     To meet the operating cash needs, a shareholder has advanced $50,000 to the
     Company.  The loan is unsecured,  is non-interest bearing and is payable on
     demand.

     In connection with the GoProfit acquisition,  the Company received advances
     of approximately  $15,000. The Company executed an unsecured note providing
     interest  payable at 10% per annum; the principal is due on or before March
     25, 2002, and the note is renewable at the option of the Company.

NOTE 16. COMMITMENTS AND CONTINGENCIES

     Precision  entered  into an  employment  agreement  on July 1,  1998 for an
     initial  term of three  years.  The  employee/officer  is to receive a base
     salary of $40,000 and shall be adjusted  annually by the increase,  if any,
     in the cost of living.  The  employee  is  entitled  to an annual  bonus as
     determined by the Board of Directors. The Company paid $16,666 and $0 under
     this agreement during the years ended June 30, 2001 and 2000, respectively.
     The Company has recorded  approximately  $76,397, due under this obligation
     in accrued liabilities.

                                      F-11
<PAGE>
                             DIAMOND EQUITIES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [CONTINUED]
                                  JUNE 30, 2001


NOTE 17. SEGMENT INFORMATION

     The Company was  operating  in one business  segment at June 30, 2001.  The
     Company  operates  a  plastics  injection  molding  operation  through  its
     Precision  subsidiary.  The parent Company has no business  operations that
     generate revenue.  However,  the parent Company incurs expenses as it seeks
     additional business opportunities.

                                        PRECISION        PARENT         TOTAL
                                        ---------      ---------      ---------
     Revenues                           $ 709,172      $  17,000      $ 726,172

     Segment loss, net of minority
     interest in loss of $90,136 in
     Precision                           (143,967)      (129,725)      (273,692)

     Total assets                         688,842         33,313        722,155

     Capital expenditures                     582              0            582

     Depreciation                       $ 209,955      $   6,049      $ 216,004

NOTE 18. CAPITAL LEASE

     The Company leases office  equipment under capital leases expiring  through
     June 2002.  The following  presents  future  minimum lease  payments  under
     capital lease by year and the present value of minimum lease payments as of
     June 30, 2001:

                                                        YEAR ENDED JUNE 30, 2001
                                                        ------------------------
     2002                                                         $2,400
                                                                  ------
     Total minimum lease payments                                  2,400

     Less amount representing interest                               113
                                                                  ------
     Present value of minimum lease payments                       2,287

     Current portion                                               2,287
                                                                  ------
     Long-term portion                                            $    0
                                                                  ======

                                      F-12