|   | Form 10-QSB |   |
|--------|-------------|--------|

|   |
|--------|

|   | SECURITIES AND EXCHANGECOMMISSION Washington, D.C. |   |
|--------|----------------------------------------------------|--------|

|   |
|--------|

|   | [ X ]  Quarterly Report Pursuant to Section 13 or 15(d) of the SecuritiesExchange Act of 1934 For the quarterly period ended June 30, 2006 |   |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------|--------|

| OR |
|----|

|   | [   ]  Transition Report Pursuant to Section 13 or 15(d) of the SecuritiesExchange Act of 1934 For the transition period from _______ to _______. |   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|

|   |
|--------|

|   | Commission File No. 33-19961 |   |
|--------|------------------------------|--------|

|   |
|--------|

|   | Diamond I, Inc.                                                  |   |
|--------|------------------------------------------------------------------|--------|
|   | (Exact Name of Small Business Issuer as Specified in itsCharter) |   |

|   |
|--------|

|   | DELAWARE |   | 01-0623010 |   |
|--------|----------|--------|------------|--------|

|   | (State or Other Jurisdiction ofincorporation or organization) |   | (I.R.S. Employer IdentificationNumber) |   |
|--------|---------------------------------------------------------------|--------|----------------------------------------|--------|

|   | 8733 Siegen Lane, Suite 309, Baton Rouge, LA 70810 |   |
|--------|----------------------------------------------------|--------|

|   | (Address of Principal Executive Offices, including Zip Code) |   |
|--------|--------------------------------------------------------------|--------|

|   | (225) 341-4004 |   |
|--------|----------------|--------|

|   | (Issuer’s telephone number, including area code) |   |
|--------|--------------------------------------------------------|--------|

|   |
|--------|

| Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that Registrant is required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days: Yes [ X ]   No [   ] |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act). Yes [  ] No [ X ] |
|-----------------------------------------------------------------------------------------------------------------------------------|

| Indicate the number of shares outstanding of each of the issuer’s classes of common stock asof the latest practicable date: |
|-----------------------------------------------------------------------------------------------------------------------------------|

|   | Class |   | Outstanding as of 8-14-06 |   |
|--------|-------|--------|---------------------------|--------|

|   | Common Stock, $.001 par value |   | 264,189,541 |   |
|--------|-------------------------------|--------|-------------|--------|

|         |
|--------------|
| <PAGE> |
|         |

| PART I - FINANCIAL INFORMATION |
|--------------------------------|

|   |
|--------|

| Item 1.  Financial Statements. |   |
|--------------------------------|--------|

| INDEX TO CONSOLIDATED FINANCIAL STATEMENTS |
|--------------------------------------------|
| Diamond I, Inc.                            |

|   |   | Page |
|--------|--------|------|

|   | Consolidated Balance Sheets as of June 30, 2006 (unaudited), and December 31,2005 | 3 |
|--------|-----------------------------------------------------------------------------------|---|

|   | Consolidated Statements of Revenues and Expenses for the Three Months and SixMonths Ended June 30, 2006 and 2005, and Period from June 17, 2003 (Inception),Through June 30, 2006 (unaudited) | 4 |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---|

|   | Consolidated Statements of Stockholders’ Equity for the Six Months Ended June 30,2006 (unaudited) | 5 |
|--------|---------------------------------------------------------------------------------------------------------|---|

|   | Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2006and 2005, and Period from June 17, 2003 (Inception), Through June 30, 2006(unaudited) | 8 |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|---|

|   | Notes to Consolidated Financial Statements | 10 |
|--------|--------------------------------------------|----|

|         |
|--------------|
| <PAGE> |
|         |

|   | DIAMOND I, INC. |   |
|--------|-----------------|--------|

|   | (a development stage company) |   |
|--------|-------------------------------|--------|

|   | CONSOLIDATED BALANCE SHEETS |   |
|--------|-----------------------------|--------|

|   | June 30, 2006,and December 31, 2005 |   |
|--------|-------------------------------------|--------|

|   | 6/30/06(unaudited) |   | 12/31/05 |
|--------|--------------------|--------|----------|

| ASSETS |
|--------|

| Current assets: |   |   |
|-----------------|--------|--------|

|   | Cash | $6,851 |   | $         - |
|--------|------|--------|--------|-------------|

|   | Total current assets | 6,851 |   | - |
|--------|----------------------|-------|--------|---|

| Equipment, net of accumulated depreciation of $84,515and $75,439 | 17,600 |   | 26,677 |
|------------------------------------------------------------------|--------|--------|--------|

| Intangible asset - Pending patent, net of amortization of$8,086 | 477,047 |   | - |
|-----------------------------------------------------------------|---------|--------|---|

| Software | 376,000 |   | - |
|----------|---------|--------|---|

|   | Total Assets | $877,498 |   | $26,677 |
|--------|--------------|----------|--------|---------|

| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
|------------------------------------------------|

| Current liabilities: |   |   |
|----------------------|--------|--------|

|   | Accounts payable | $11,686 |   | $12,454 |
|--------|------------------|---------|--------|---------|

|   | Accrued expenses | 185,116 |   | 10,206 |
|--------|------------------|---------|--------|--------|

|   | Short-term note payable - related party | 41,240 |   | 35,500 |
|--------|-----------------------------------------|--------|--------|--------|

|   | Stock payable | 291,000 |   | - |
|--------|---------------|---------|--------|---|

|   | Dividend payable on preferred stock | 67,500 |   | 52,500 |
|--------|-------------------------------------|--------|--------|--------|

|   | Total current liabilities | 596,542 |   | 110,660 |
|--------|---------------------------|---------|--------|---------|

| Stockholders’ equity (deficit): |   |   |
|---------------------------------------|--------|--------|

|   | Preferred stock, $.001 par value, 50,000,000 sharesauthorized, 500,000 Series A shares issued andoutstanding | 500 |   | 500 |
|--------|--------------------------------------------------------------------------------------------------------------|-----|--------|-----|

|   | Common stock, $.001 par value; 700,000,000 sharesauthorized, 251,596,344 and 225,720,488 sharesissued and outstanding | 251,597 |   | 225,721 |
|--------|-----------------------------------------------------------------------------------------------------------------------|---------|--------|---------|

|   | Subscription receivable | (116,000) |   | (24,400) |
|--------|-------------------------|-----------|--------|----------|

|   | Additional paid-in capital | 28,510,498 |   | 27,078,468 |
|--------|----------------------------|------------|--------|------------|

|   | Deficit accumulated during the development stage | (28,365,639) |   | (27,364,272) |
|--------|--------------------------------------------------|--------------|--------|--------------|

|   | Total stockholders' equity (deficit) | 280,956 |   | (83,983) |
|--------|--------------------------------------|---------|--------|----------|

|   | Total liabilities and stockholders’ equity(deficit) | $877,498 |   | $26,677 |
|--------|-----------------------------------------------------------|----------|--------|---------|

|         |
|--------------|
| <PAGE> |
|         |

|   | DIAMOND I, INC. |   |
|--------|-----------------|--------|

|   | (a development stage company) |   |
|--------|-------------------------------|--------|

|   | STATEMENTS OF REVENUES ANDEXPENSES |   |
|--------|------------------------------------|--------|

|   | For the Three Months and Six Months Ended June 30, 2006 and 2005, andthe Period from June 17, 2003 (Inception), Through June 30, 2006(unaudited) |   |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|

|   |   | Three Months EndedJune 30, |   | Six Months Ended June30, |   |
|--------|--------|----------------------------|--------|--------------------------|--------|

|   | 2006 |   | 2005 |   | 2006 |   | 2005 |   | Inceptionthrough6/30/2006 |
|--------|------|--------|------|--------|------|--------|------|--------|---------------------------|

| Revenues | $             - |   | $1,455 |   | $             - |   | $2,121 |   | 10,784 |
|----------|-----------------|--------|--------|--------|-----------------|--------|--------|--------|--------|

| Internet access costs | - |   | 543 |   | - |   | 6,725 |   | 32,850 |
|-----------------------|---|--------|-----|--------|---|--------|-------|--------|--------|

| Gross profit (loss) | (           -  ) |   | 912 |   | (           -  ) |   | (4,604) |   | (22,066) |
|---------------------|------------------|--------|-----|--------|------------------|--------|---------|--------|----------|

| OPERATINGEXPENSES |   |   |   |   |   |   |   |   |   |
|-------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|

|   | Professional andconsulting fees | 57,379 |   | - |   | 223,011 |   | - |   | 3,508,479 |
|--------|---------------------------------|--------|--------|---|--------|---------|--------|---|--------|-----------|

|   | Compensation expense | 441,155 |   | - |   | 729,730 |   | - |   | 4,555,120 |
|--------|----------------------|---------|--------|---|--------|---------|--------|---|--------|-----------|

|   | Depreciation andamortization | 12,583 |   | - |   | 17,162 |   | - |   | 92,602 |
|--------|------------------------------|--------|--------|---|--------|--------|--------|---|--------|--------|

|   | Impairment loss | - |   | - |   | - |   | 16,306,527 |   | 16,808,527 |
|--------|-----------------|---|--------|---|--------|---|--------|------------|--------|------------|

|   | General andadministrative(excluding professionaland consulting fees,compensation expense,depreciation andimpairment loss) | 24,708 |   | 977,575 |   | 28,898 |   | 2,897,267 |   | 3,377,423 |
|--------|---------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|-----------|--------|-----------|

|   | Total OperatingExpenses | 535,825 |   | 977,575 |   | 998,801 |   | 19,203,794 |   | 28,342,151 |
|--------|-------------------------|---------|--------|---------|--------|---------|--------|------------|--------|------------|

| LOSS FROMOPERATIONS | (535,825) |   | (976,663) |   | (998,801) |   | (19,208,398) |   | (28,364,217) |
|---------------------|-----------|--------|-----------|--------|-----------|--------|--------------|--------|--------------|

| OTHER INCOME(EXPENSE) | (823) |   | - |   | (2,566) |   | 45 |   | (1,422) |
|-----------------------|-------|--------|---|--------|---------|--------|----|--------|---------|

| NET LOSS | (536,648) |   | (976,663) |   | (1,001,367) |   | (19,208,353) |   | (28,365,639) |
|----------|-----------|--------|-----------|--------|-------------|--------|--------------|--------|--------------|

| Deemed Dividend onPreferred stock | - |   | - |   | - |   | - |   | (165,442) |
|-----------------------------------|---|--------|---|--------|---|--------|---|--------|-----------|

| Cumulative PreferredDividends | (7,500) |   | - |   | (15,000) |   | - |   | (67,500) |
|-------------------------------|---------|--------|---|--------|----------|--------|---|--------|----------|

| Net Loss Charged toCommon Shareholders | (544,148) |   | $(976,663) |   | (1,016,367) |   | $19,208,353) |   | (28,598,581) |
|----------------------------------------|-----------|--------|------------|--------|-------------|--------|--------------|--------|--------------|

| Net Loss Applicable toCommon Shareholders |   |   |   |   |   |   |   |   |   |
|-------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|

|   | Basic and diluted | $(0.00) |   | $(0.01) |   | $(0.00) |   | $(0.11) |   |   |
|--------|-------------------|---------|--------|---------|--------|---------|--------|---------|--------|--------|

| Weighted averagenumber of sharesoutstanding |   |   |   |   |   |   |   |   |   |
|---------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|

|   | Basic and diluted | 241,363,099 |   | 190,682,829 |   | 237,014,445 |   | 176,937,509 |   |   |
|--------|-------------------|-------------|--------|-------------|--------|-------------|--------|-------------|--------|--------|

|         |
|--------------|
| <PAGE> |
|         |

|   | CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) |   |
|--------|-----------------------------------------------------------------|--------|

|   |  For the Six Months Ended June 30, 2006(unaudited) |   |
|--------|---------------------------------------------------------|--------|

|   |
|--------|

|   | Preferred Stock |   | Common Stock |   |
|--------|-----------------|--------|--------------|--------|

|   | Shares |   | Amount |   | Shares |   | Amount |   | AdditionalPaid-inCapital |   | SubscriptionReceivable |   | DeficitAccumulatedDuring theDevelopmentStage |   | Total |   |   |
|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------------------------|--------|------------------------|--------|----------------------------------------------|--------|-------|--------|--------|

| Balance,December 31,2005 | 500,000 |   | $500 |   | 225,720,488 |   | $225,721 |   | $27,078,468 |   | $(24,400) |   | $(27,364,272) |   | $(83,983) |   |   |
|--------------------------|---------|--------|------|--------|-------------|--------|----------|--------|-------------|--------|-----------|--------|---------------|--------|-----------|--------|--------|

| Stock issuedas bonuses,January 2006 | - |   | - |   | 4,700,000 |   | 4,700 |   | 136,300 |   | - |   | - |   | 141,000 |   |   |
|-------------------------------------|---|--------|---|--------|-----------|--------|-------|--------|---------|--------|---|--------|---|--------|---------|--------|--------|

| Stock issuedfor exercise ofwarrants | - |   | - |   | 4,620,642 |   | 4,621 |   | 95,379 |   | (100,000) |   | - |   | - |   |   |
|-------------------------------------|---|--------|---|--------|-----------|--------|-------|--------|--------|--------|-----------|--------|---|--------|---|--------|--------|

| Cash receivedforsubscriptionreceivable | - |   | - |   | - |   | - |   | - |   | 65,400 |   | - |   | 65,400 |   |   |
|----------------------------------------|---|--------|---|--------|---|--------|---|--------|---|--------|--------|--------|---|--------|--------|--------|--------|

| Stock issued forservices: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|---------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|

| January 2006 | - |   | - |   | 3,000,000 |   | 3,000 |   | 87,000 |   | - |   | - |   | 90,000 |   |   |
|--------------|---|--------|---|--------|-----------|--------|-------|--------|--------|--------|---|--------|---|--------|--------|--------|--------|

| February2006 | - |   | - |   | 1,107,142 |   | 1,107 |   | 26,712 |   | - |   | - |   | 27,819 |   |   |
|--------------|---|--------|---|--------|-----------|--------|-------|--------|--------|--------|---|--------|---|--------|--------|--------|--------|

| March 2006 | - |   | - |   | 400,000 |   | 400 |   | 9,240 |   | - |   | - |   | 9,640 |   |   |
|------------|---|--------|---|--------|---------|--------|-----|--------|-------|--------|---|--------|---|--------|-------|--------|--------|

| Issuance ofwarrants forpatents | - |   | - |   | - |   | - |   | 485,133 |   | - |   | - |   | 485,133 |   |   |
|--------------------------------|---|--------|---|--------|---|--------|---|--------|---------|--------|---|--------|---|--------|---------|--------|--------|

| Dividendpayable onpreferredstock | - |   | - |   | - |   | - |   | (7,500) |   | - |   | - |   | (7,500) |   |   |
|----------------------------------|---|--------|---|--------|---|--------|---|--------|---------|--------|---|--------|---|--------|---------|--------|--------|

| Warrantsissued forservices | - |   | - |   | - |   | - |   | 53,575 |   | - |   | - |   | 53,575 |   |   |
|----------------------------|---|--------|---|--------|---|--------|---|--------|--------|--------|---|--------|---|--------|--------|--------|--------|

| Net loss | - |   | - |   | - |   | - |   | - |   | - |   | (464,719) |   | (464,719) |   |   |
|----------|---|--------|---|--------|---|--------|---|--------|---|--------|---|--------|-----------|--------|-----------|--------|--------|

| Balance,March 31,2006 | 500,000 |   | 500 |   | 239,548,272 |   | $239,549 |   | $27,964,307 |   | $(59,000) |   | $(27,828,991) |   | $316,365 |   |   |
|-----------------------|---------|--------|-----|--------|-------------|--------|----------|--------|-------------|--------|-----------|--------|---------------|--------|----------|--------|--------|

| Stock issued forservices: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|---------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|

| April 2006 | - |   | - |   | 739,982 |   | 740 |   | 31,686 |   | - |   | - |   | 32,426 |   |   |
|------------|---|--------|---|--------|---------|--------|-----|--------|--------|--------|---|--------|---|--------|--------|--------|--------|

| May 2006 | - |   | - |   | 166,600 |   | 167 |   | 4,231 |   | - |   | - |   | 4,398 |   |   |
|----------|---|--------|---|--------|---------|--------|-----|--------|-------|--------|---|--------|---|--------|-------|--------|--------|

| June 2006 | - |   | - |   | 200,000 |   | 200 |   | 9,560 |   | - |   | - |   | 9,760 |   |   |
|-----------|---|--------|---|--------|---------|--------|-----|--------|-------|--------|---|--------|---|--------|-------|--------|--------|

| Stock issuedfor cash | - |   | - |   | 1,200,000 |   | 1,200 |   | 16,800 |   | - |   | - |   | 18,000 |   |   |
|----------------------|---|--------|---|--------|-----------|--------|-------|--------|--------|--------|---|--------|---|--------|--------|--------|--------|

| Stock issuedfor exercise ofwarrants | - |   | - |   | 1,741,490 |   | 1,741 |   | 73,259 |   | (75,000) |   | - |   | - |   |   |
|-------------------------------------|---|--------|---|--------|-----------|--------|-------|--------|--------|--------|----------|--------|---|--------|---|--------|--------|

| Cash receivedforsubscriptionreceivable | - |   | - |   | - |   | - |   | - |   | 18,000 |   | - |   | 18,000 |   |   |
|----------------------------------------|---|--------|---|--------|---|--------|---|--------|---|--------|--------|--------|---|--------|--------|--------|--------|

| Stock issuedfor software | - |   | - |   | 8,000,000 |   | 8,000 |   | 368,000 |   | - |   | - |   | 376,000 |   |   |
|--------------------------|---|--------|---|--------|-----------|--------|-------|--------|---------|--------|---|--------|---|--------|---------|--------|--------|

| Dividendpayable onpreferredstock | - |   | - |   | - |   | - |   | (7,500) |   | - |   | - |   | (7,500) |   |   |
|----------------------------------|---|--------|---|--------|---|--------|---|--------|---------|--------|---|--------|---|--------|---------|--------|--------|

| Warrantsissued forservices | - |   | - |   | - |   | - |   | 50,155 |   | - |   | - |   | 50,155 |   |   |
|----------------------------|---|--------|---|--------|---|--------|---|--------|--------|--------|---|--------|---|--------|--------|--------|--------|

| Net loss | - |   | - |   | - |   | - |   | - |   | - |   | (536,648) |   | (536,648) |   |   |
|----------|---|--------|---|--------|---|--------|---|--------|---|--------|---|--------|-----------|--------|-----------|--------|--------|

| Balance, June30, 2006 | 500,000 |   | 500 |   | 251,596,344 |   | $251,597 |   | $28,510,498 |   | $(116,000) |   | $(28,365,639) |   | $280,956 |   |   |
|-----------------------|---------|--------|-----|--------|-------------|--------|----------|--------|-------------|--------|------------|--------|---------------|--------|----------|--------|--------|

|         |
|--------------|
| <PAGE> |
|         |

|   | DIAMOND I, INC. |   |
|--------|-----------------|--------|

|   | (a development stage company) |   |
|--------|-------------------------------|--------|

|   | CONSOLIDATED STATEMENTS OF CASHFLOWS |   |
|--------|--------------------------------------|--------|

|   | For the Six Months Ended June 30, 2006 and 2005,and the Period from June 17, 2003 (Inception), Through June 30, 2006(unaudited) |   |
|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|

|   |
|--------|

|   | Six Months Ended June 30, |   |   |
|--------|---------------------------|--------|--------|

|   | 2006 |   | 2005 |   | Inceptionthrough6/30/2006 |
|--------|------|--------|------|--------|---------------------------|

| CASH FLOWS FROM OPERATINGACTIVITIES |   |   |   |   |   |
|-------------------------------------|--------|--------|--------|--------|--------|

| Net loss | $(1,001,367) |   | $(19,208,353) |   | $(28,365,639) |
|----------|--------------|--------|---------------|--------|---------------|

|   | Adjustments to reconcile net loss tocash used in operating activities: |   |   |   |   |   |
|--------|------------------------------------------------------------------------|--------|--------|--------|--------|--------|

|   | Depreciation and amortization | 17,162 |   | 11,370 |   | 92,602 |
|--------|-------------------------------|--------|--------|--------|--------|--------|

|   | Stock issued for services | 315,043 |   | 1,375,540 |   | 6,940,177 |
|--------|---------------------------|---------|--------|-----------|--------|-----------|

|   | Impairment loss and write-down ofassets | - |   | 16,306,527 |   | 16,808,527 |
|--------|-----------------------------------------|---|--------|------------|--------|------------|

|   | Warrant expense | 103,730 |   | 1,171,685 |   | 2,176,333 |
|--------|-----------------|---------|--------|-----------|--------|-----------|

|   | Donated capital, officers’ salaries | - |   | - |   | 279,808 |
|--------|-------------------------------------------|---|--------|---|--------|---------|

|   | Changes in assets and liabilities: |   |   |   |   |   |
|--------|------------------------------------|--------|--------|--------|--------|--------|

|   | Stock payable | 291,000 |   | - |   | 291,000 |
|--------|---------------|---------|--------|---|--------|---------|

|   | Accrued expenses | 174,911 |   | (5,457) |   | 191,344 |
|--------|------------------|---------|--------|---------|--------|---------|

|   | Accounts payable | (768) |   | 3,856 |   | 7,575 |
|--------|------------------|-------|--------|-------|--------|-------|

| CASH FLOWS USED IN OPERATINGACTIVITIES | (100,289) |   | (344,832) |   | (1,578,273) |
|----------------------------------------|-----------|--------|-----------|--------|-------------|

|   |
|--------|

| CASH FLOWS FROM INVESTINGACTIVITIES |   |   |   |   |   |
|-------------------------------------|--------|--------|--------|--------|--------|

|   | Purchase of equipment | - |   | (5,352) |   | (102,116) |
|--------|-----------------------|---|--------|---------|--------|-----------|

|   |
|--------|

| CASH FLOWS FROM FINANCINGACTIVITIES |   |   |   |   |   |
|-------------------------------------|--------|--------|--------|--------|--------|

|   | Payment of note | (4,000) |   | (55,000) |   | (59,000) |
|--------|-----------------|---------|--------|----------|--------|----------|

|   | Proceeds from issuance of notepayable | 9,740 |   | - |   | 100,240 |
|--------|---------------------------------------|-------|--------|---|--------|---------|

|   | Proceeds from issuance ofpreferred shares, net | - |   | - |   | 209,558 |
|--------|------------------------------------------------|---|--------|---|--------|---------|

|   | Proceeds from exercise of warrants | 83,400 |   | - |   | 818,442 |
|--------|------------------------------------|--------|--------|---|--------|---------|

|   | Sale of common stock, net | 18,000 |   | 394,000 |   | 618,000 |
|--------|---------------------------|--------|--------|---------|--------|---------|

| CASH FLOWS PROVIDED BYFINANCING ACTIVITIES | 107,140 |   | 339,000 |   | $1,687,240 |
|--------------------------------------------|---------|--------|---------|--------|------------|

|   |
|--------|

| NET CHANGE IN CASH | 6,851 |   | (11,184) |   | 6,851 |
|--------------------|-------|--------|----------|--------|-------|

| Cash, beginning of period | - |   | 11,192 |   | - |
|---------------------------|---|--------|--------|--------|---|

| Cash, end of period | $6,851 |   | $8 |   | $6,851 |
|---------------------|--------|--------|----|--------|--------|

|   |
|--------|

| Supplemental information: |   |   |   |   |   |
|---------------------------|--------|--------|--------|--------|--------|

|   | Income taxes paid | $ - |   | $ - |   | $ - |
|--------|-------------------|-----|--------|-----|--------|-----|

|   | Interest paid | $ - |   | $6,600 |   | $6,600 |
|--------|---------------|-----|--------|--------|--------|--------|

|   |
|--------|

| Non-cash Investing and FinancingActivities: |   |   |   |   |   |
|---------------------------------------------|--------|--------|--------|--------|--------|

|   | Cumulative dividends on preferredstock | $15,000 |   | $0 |   | $67,500 |
|--------|----------------------------------------|---------|--------|----|--------|---------|

|   | Liabilities assumed in merger | $0 |   | $0 |   | $8,922 |
|--------|-------------------------------|----|--------|----|--------|--------|

|   | Stock issued in acquisition | $0 |   | $0 |   | $16,687,627 |
|--------|-----------------------------|----|--------|----|--------|-------------|

|   | Stock issued for wi-fi hotspots | $0 |   | $0 |   | $120,900 |
|--------|---------------------------------|----|--------|----|--------|----------|

|   | Warrants issued for patent | $485,133 |   | $0 |   | $485,133 |
|--------|----------------------------|----------|--------|----|--------|----------|

|   | Stock issued for software | $376,000 |   | $0 |   | $376,000 |
|--------|---------------------------|----------|--------|----|--------|----------|

|         |
|--------------|
| <PAGE> |
|         |

|   | DIAMOND I, INC. |   |
|--------|-----------------|--------|

|   | (a development stage company) |   |
|--------|-------------------------------|--------|

|   | NOTES TO CONSOLIDATED FINANCIALSTATEMENTS |   |
|--------|-------------------------------------------|--------|

|   | June 30, 2006(unaudited) |   |
|--------|--------------------------|--------|

|   |
|--------|

| Note 1 | Basis of Presentation |
|--------|-----------------------|

| These unaudited interim financial statements have been prepared by Diamond I, Inc. without audit.In the opinion of management, all adjustments necessary to present fairly the financial position,results of operations and cash flows of Diamond I at June 30, 2006, and for all other periodspresented, have been made.  The results of operations for interim periods are not necessarilyindicative of the results to be expected for the full year.  Certain information and disclosuresnormally included in financial statements prepared in accordance with generally acceptedaccounting principles have been omitted in accordance with the Securities and ExchangeCommission’s rules for interim reporting.  Accordingly, these financial statements should be readin conjunction with the financial statements and accompanying notes thereto in Diamond I’sAnnual Report on Form 10-KSB for the fiscal year ended December 31, 2005. |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Note 2 | Going Concern |
|--------|---------------|

| Diamond I has incurred losses totaling $28,365,639 through June 30, 2006, and had limitedworking capital at June 30, 2006.  Because of these conditions, Diamond I will require additionalworking capital to continue operations and develop the business.  Diamond I intends to raiseadditional working capital either through private placements, public offerings and/or bankfinancing. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| There are no assurances that Diamond I will be able to achieve a level of revenues adequate togenerate sufficient cash flow from operations or obtain additional financing through privateplacements, public offerings and/or bank financing necessary to support Diamond I’s workingcapital requirements.  To the extent that funds generated from any private placements, publicofferings and/or bank financing are insufficient, Diamond I will have to raise additional workingcapital.  No assurance can be given that additional financing will be available, or if available, willbe on terms acceptable to Diamond I.  If adequate working capital is not available Diamond I maynot continue its operations or execute its business plan. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| These conditions raise substantial doubt about Diamond I's ability to continue as a going concern.The financial statements do not include any adjustments relating to the recoverability andclassification of asset carrying amounts or the amount and classification of liabilities that mightbe necessary should Diamond I be unable to continue as a going concern. |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Note 3 | Intangible Assets and Software |
|--------|--------------------------------|

| On March 29, 2006, Diamond I purchased pending patent rights from Larson Tech Ventures, LLCand Larry Shultz related to: |
|-------------------------------------------------------------------------------------------------------------------------|

| 1. | Methods and apparatus for pari-mutuel, sports book and electronic casino gaming usingspeech recognition and concomitant video. |
|----|--------------------------------------------------------------------------------------------------------------------------------|

| 2. | Biometrically-secured portable wireless entertainment, shopping and gaming system. |
|----|------------------------------------------------------------------------------------|

| As consideration, Diamond I issued 6,500,000 warrants to purchase common stock exercisableat $0.35 per share and expiring March 31, 2011.  The fair value of these warrants was calculatedusing the Black-Scholes Model and used as the value of the patent at $485,133.  The model wasbased on a term of five years, a volatility rate of 236.74% and a discount rate of 4.83%. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| In May 2006, Diamond I acquired all of the capital stock of Touchdev Limited for 8,000,000shares of Diamond I common stock.  Diamond I analyzed the accounting treatment of thistransaction under SFAS 141, “Business Combinations and EITF 98-3, “Determining WhetherNonmonetary Transaction Involves Receipt of Productive Assets or of a Business”.    Thistransaction was accounted for as an asset purchase and not a business combination based onTouchdev Limited’s never having engaged in active business operations.  The only material assetheld by Touchdev Limited at the date of the agreement was proprietary software and thecopyrights, documentation and internet domains related to this software. The software wasrecorded at $376,000, which was estimated to be equal to the fair value of the stock issued to theoriginal shareholders of Touchdev Limited based on the market price at the date of the agreementand will be amortized over 5 years. |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Note 4 | Capital Stock |
|--------|---------------|

| Stock for Services and Bonuses |
|--------------------------------|

| During the first six months of 2006, Diamond I issued a total of 5,213,724 shares of commonstock to third-party consultants for services, resulting in $164,403 in non-cash compensationexpense included in professional and legal expenses and consulting fees in the accompanyingstatements of revenues and expenses. These were measured at the then stated market value of thecommon shares.  There were no performance commitments or penalties for non-performance,therefore Diamond I recorded the expense at the date of issuance. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| During the first six months of 2006, Diamond I issued a total of 4,700,000 shares of commonstock to certain officers and directors valued at $141,000 for bonuses and 400,000 shares forsalary valued at $9,640. |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Diamond I has committed to issue 6,200,000 shares as bonuses related to services performedthrough June 30, 2006.  This amount is included in stock payable at June 30, 2006 and was valuedat the then stated market value of the common shares of $186,000.  In addition, Diamond I hascommitted to issue 3,500,000 shares to an attorney for legal services.  This amount is alsoincluded in stock payable at June 30, 2006, at the then stated market value of the common sharesin the amount of $105,000. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Note 5 | Warrants |
|--------|----------|

| During the six months ended June 30, 2006, 6,362,132 warrants were exercised to purchase a likenumber of shares for $175,000 in cash, of which amount $116,000 is presented as subscriptionreceivable. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Diamond I granted 6,500,000 warrants at an exercise price of $.035 in exchange for a patent.$485,133 is recorded for this intangible asset. |
|---------------------------------------------------------------------------------------------------------------------------------------------|

| Diamond I recognized $103,730 in warrant expense associated with warrants granted in 2005 inconnection with a one-year service agreement. |
|-------------------------------------------------------------------------------------------------------------------------------------------|

| The following sets forth the warrants outstanding as of June 30, 2006. |
|------------------------------------------------------------------------|

|   | ExercisePrice |   | Number ofShares |   | Remaining Life |   | ExercisableNumber ofShares |   |
|--------|---------------|--------|-----------------|--------|----------------|--------|----------------------------|--------|

|   | $.875 |   | 1,000,000 |   | March 2007 |   | 1,000,000 |   |
|--------|-------|--------|-----------|--------|------------|--------|-----------|--------|

|   | 1.125 |   | 1,000,000 |   | March 2007 |   | 1,000,000 |   |
|--------|-------|--------|-----------|--------|------------|--------|-----------|--------|

|   | .25 |   | 20,000,000 |   | April 2009 |   | 20,000,000 |   |
|--------|-----|--------|------------|--------|------------|--------|------------|--------|

|   | .05 |   | 4,000,000 |   | September2008 |   | 4,000,000 |   |
|--------|-----|--------|-----------|--------|---------------|--------|-----------|--------|

|   | .075 |   | 4,000,000 |   | September2008 |   | 4,000,000 |   |
|--------|------|--------|-----------|--------|---------------|--------|-----------|--------|

|   | .10 |   | 4,000,000 |   | September2008 |   | 4,000,000 |   |
|--------|-----|--------|-----------|--------|---------------|--------|-----------|--------|

|   | 1.25 |   | 4,000,000 |   | September2008 |   | 4,000,000 |   |
|--------|------|--------|-----------|--------|---------------|--------|-----------|--------|

|   | .022 |   | 8,823,529 |   | August 2006 |   | 1,131,222 |   |
|--------|------|--------|-----------|--------|-------------|--------|-----------|--------|

|   | .04 |   | 3,500,000 |   | November 2010 |   | 3,500,000 |   |
|--------|-----|--------|-----------|--------|---------------|--------|-----------|--------|

|   | .035 |   | 6,500,000 |   | March 2011 |   | 6,500,000 |   |
|--------|------|--------|-----------|--------|------------|--------|-----------|--------|

|   | At 6/30/06 |   | 56,823,529 |   |   |   | 49,131,222 |   |
|--------|------------|--------|------------|--------|--------|--------|------------|--------|

| Note 6 | Short-term Note Payable to Related Party |
|--------|------------------------------------------|

| During the six months ended June 30, 2006, Diamond I was loaned $9,740 from a related partyunder a verbal agreement with no stated interest rate and is due on demand.  In addition, DiamondI repaid $4,000 of related party loans.  Accrued interest on related party loans was $2,566 as ofJune 30, 2006. |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Note 7 | Subsequent Event |
|--------|------------------|

| In July 2006, Diamond I issued 6,200,000 shares of common stock valued at $186,000 forbonuses.  This amount was accrued as stock payable at June 30, 2006. |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| In July 2006, Diamond I issued 3,500,000 shares of common stock valued at $105,000 for legalservices.  This amount was accrued as stock payable at June 30, 2006. |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| In July and August 2006, Diamond I issued 876,190 shares of common stock valued at $21,429to a consultant for services. |
|-------------------------------------------------------------------------------------------------------------------------|

| In August 2006, Diamond I issued 2,000,000 shares of common stock for payment of a $25,000note payable.  Diamond I, Inc. recognized a loss of $23,000 on this transaction. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| In August 2006, Diamond I issued 3,000,000 shares of common stock valued at $72,000 to aconsultant for services. |
|------------------------------------------------------------------------------------------------------------------|

|         |
|--------------|
| <PAGE> |
|         |

| FORWARD-LOOKING STATEMENTS |
|----------------------------|

| This report by Diamond I, Inc. contains forward-looking statements. These are statementsregarding financial and operating performance and results and other statements that are nothistorical facts. The words "expect", "project", "estimate", "believe", "anticipate", "intend", "plan","forecast" and similar expressions are intended to identify forward-looking statements. Certainimportant risks could cause results to differ materially from those anticipated by some of theforward-looking statements. Some, but not all, of the important risks that could cause actualresults to differ materially from those suggested by the forward-looking statements include, amongother things: |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| - | Events that deprive us of the services of our president and largest shareholder, DavidLoflin; |
|---|-----------------------------------------------------------------------------------------------|

| - | Whether or not we can successfully establish a market for our wireless gaming products; |
|---|-----------------------------------------------------------------------------------------|

| - | Whether we are able to obtain adequate capital with which to pursue our full businessplan; and |
|---|------------------------------------------------------------------------------------------------|

| - | Other uncertainties, all of which are difficult to predict and many of which are beyond ourcontrol. |
|---|-----------------------------------------------------------------------------------------------------|

| We do not intend to update forward-looking statements. |
|--------------------------------------------------------|

|   |
|--------|

| Item 2. | Plan of Operations. |
|---------|---------------------|

| Business Development |
|----------------------|

| Since our acquisition of Diamond I Technologies, Inc. (“DITech”), we have focused on thedevelopment of DITech’s hand-held wireless gaming system for on-premises use by casinos,resorts and restaurants, known as “WiFiCasino GS”(TM).  To date, we have not generated anyrevenues from this line of business. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| The development of our business has been significantly impaired by our lack of adequate capital. |
|--------------------------------------------------------------------------------------------------|

| However, our business prospects in the State of Nevada were greatly enhanced in March 2006,with the adoption of final regulations implementing Nevada Law AB471, which authorizes theuse of mobile communication devices, such as our WifiCasino GS wireless gaming system, forgaming in public areas in Nevada casinos. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| In furtherance of our plan to develop the business potential of our WifiCasino GS products, wehave, to the extent permitted by our capital position, taken the following actions: |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| - | completed final design and three-dimensional model of the first generation of our WifiCasinoGS that embodies our finger-print security technology; |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------|

| - | begun preparation of the application for a license from the Nevada Gaming Commission withrespect our WifiCasino GS; |
|---|---------------------------------------------------------------------------------------------------------------------|

| - | signed a letter of intent with The Palms Resort and Casino, a premier Las Vegas property,wherein The Palms has agreed to continue to develop our working relationship relating to ourWifiCasino GS wireless gaming system; |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| - | entered into a strategic alliance with Viking Productions, a marketing and promotions firmwith a presence in Jamaica, to bring our WifiCasino GS to venues within the extensiveJamaican hotel and tourism industries; |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| - | pursued numerous potential opportunities to install and operate one of our WifiCasino GSsystems on a cruise ship - these activities are ongoing; |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------|

| - | pursued numerous potential opportunities with the owners of certain horse racing facilities,with respect to our installing and operating one of our WifiCasino GS systems on such afacility - these activities are ongoing; and |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| - | recently executed an agreement to acquire Touchdev Limited, a developer of an array ofinternally-derived and copyrighted gaming software products, with wireless PDA and cellular-phone-based capabilities.  Touchdev has created 12 different games, including Texas Hold’emPoker. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| We believe our most promising activities for the development of revenues in the short-term arerelated to our recently started Jamaican venture.  will, over the next two years, generate significantrevenues.  It is the stated objective of our Jamaican partner to place our wireless gaming systemin as many hotels and restaurants as is possible, as quickly as possible. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| We recently acquired the rights to pending patents relating to voice-recognition, or “voice-print”security technology.  Our board of directors, with the recommendation of management,determined to acquire these patent rights, due to its belief that the security provided by our “voice-print” technology, when coupled with our patent-pending finger-print security technology, wouldbe a significant point in our favor, as we solicit venues.  We will be able to assure venues (and thelocal government) that those who cannot game legally will not be able to do so. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Also, we expect that our acquisition of Touchdev and its proprietary software products, oncefinalized, will allow us to further enhance our WifiCasino GS products.  We believe that thesefeatures will provide a competitive advantage, when we begin our full-scale WifiCasino GS as weimplement our marketing strategy. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Our marketing plan in Nevada revolves around establishing a greater physical presence of ourpersonnel, who are to conduct our marketing activities on a face-to-face basis with the owners oftarget venues, i.e., casinos.  The success of our WifiCasino GS marketing efforts in Nevada will,like other gaming sales efforts, be largely dependent on our ability to establish positive personalrelationships with appropriate decision-makers.  Our management believes that it has alreadyestablished a positive relationship with a number of such persons. |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Our marketing in Jamaica is to be headed by our Jamaican partner, who has already targeted asubstantial number of venues that it believes will be amenable to having a WifiCasino GS systeminstalled and operated on their respective properties. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| To accomplish any of our business plan, we must obtain substantial capital.  Without capital, wewill not be successful in doing so. |
|-------------------------------------------------------------------------------------------------------------------------------------|

| Also, we cannot make any assurance  that we will be able to achieve a level of revenues adequateto generate sufficient cash flow from operations or obtain additional financing through privateplacements, public offerings and/or bank financing necessary to support our working capitalrequirements. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| We have recently undertaken discussions with a potential underwriter with which we wouldconduct a public offering of our common stock.  However, this particular potential source offunding may never materialize.  To the extent that funds generated from any private placements,public offerings and/or bank financing are insufficient, we will have to raise additional workingcapital.  No assurance can be given that additional financing will be available, or if available, willbe on terms acceptable to us.  If adequate working capital is not available we would be unable torealize the business potential of our WifiCasino GS products and may not be able to continue ouroperations or execute our business plan. |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Critical Accounting Policies |
|------------------------------|

| There were no material changes to our critical accounting policies during the period endedJune 30, 2006. |
|----------------------------------------------------------------------------------------------------------|

| Liquidity and Capital Resources |
|---------------------------------|

| We have incurred losses from inception of $28,365,639 and we have lacked adequate capital withwhich to accomplish our business objectives.  At June 30, 2006, we had a working capital deficitof $589,691. |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| We are actively seeking additional funds with which to execute our business plan.  We willrequire additional working capital to continue operations and develop our business.  We intendto obtain additional capital either through private placements, public offerings and/or financings. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| There are no assurances that we will be able to achieve a level of revenues adequate to generatesufficient cash flow from operations or obtain additional financing to sustain our business.Further, we cannot assure you that additional financing will be available or, if available, that anysuch financing will be on terms acceptable to us.  If we do not obtain adequate financing, we maynot be able to continue our operations or execute our business plan. |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| During the first six months of 2006, we obtained a total of $59,000 from the exercise of certainoptions, which funds have been used to pay costs associated with our wireless gaming businessand for operating expenses.  We are actively seeking capital for use in our business.  We can makeno assurance that we will obtain enough to continue our business operations. |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Our management has made this determination because of its desire not to over-commit ourresources.  Our management’s philosophy is to make capital and related commitments only to theextent our available capital permits.  Our management’s philosophy may, in the future, prove tohave been flawed, to the extreme detriment to our business and, ultimately, our shareholders. |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Our Capital Needs.  Our current level of operations can be maintained for the next twelvemonths.  We anticipate our capital needs will be met through the exercise of options andissuance of shares for services.  However, to begin the aggressive  pursuit of our wirelessgaming business objectives, we will require approximately $2 million. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Capital Expenditures |
|----------------------|

| We purchased $861,133 in patents, equipment and software, during the six months ended June30, 2006, by issuing shares of our common stock.  We currently have limited capital with whichto make any significant capital expenditures.  Should we obtain significant funding, of which thereis no assurance, we would be able to make significant expenditures for equipment.  The amountsof these patent, equipment and software purchases cannot be predicted due to the uncertainty offunding levels and timing.  However, without additional capital, we intend to make no capitalexpenditures. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |
|--------|

| Item 3. | Controls and Procedures. |
|---------|--------------------------|

| Our Chief Executive Officer and Acting Chief Financial Officer has reviewed and evaluated theeffectiveness of our disclosure controls and procedures (as defined in the Securities Exchange Actof 1934 Rules 240.13a-14(c) and 15d-14(c)) as of the end of the period covered by this report andhas concluded that such disclosure controls and procedures are not effective in timely alerting himand other members of management to material information about our company required to bedisclosed by us in our periodic reports that we file or submit under the Securities Exchange Actof 1934.  The deficiencies in our disclosure controls and procedures are a result of our lack ofaccounting personnel, due to our limited financial resources.  We are seeking additional financingthat would allow us to obtain the necessary resources to execute our business plan, includingpersonnel and other resources to improve our disclosure controls and procedures. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| There have not been any significant changes in our internal controls over financial reporting (assuch term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934)during the fiscal quarter to which this report relates that have materially affected, or are reasonablylikely to materially affect, our internal control over financial reporting. |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |
|--------|

| PART II - OTHER INFORMATION |
|-----------------------------|

| Item 1. | Legal Proceedings. |
|---------|--------------------|

| We are not currently involved in any legal proceeding. |
|--------------------------------------------------------|

|   |
|--------|

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

| 1.     | (a) | Securities Sold. In March 2006, an option to purchase up to 6,500,000 shares of ourcommon stock was issued.                                                                                                                                                                                                                                                |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers. Such options were issued to Larson Tech Ventures,LLC and Larry Shultz.                                                                                                                                                                                                                                                    |
|   | (c) | Consideration. Such warrants were issued in consideration of certain patent rights.                                                                                                                                                                                                                                                                        |
|   | (d) | Exemption from Registration Claimed. These securities are exempt from registrationunder the Securities Act of 1933, as amended, pursuant to the provisions of Section4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering.This purchaser was a sophisticated investor capable of evaluating an investment inthe company. |
|   | (e) | Terms of Conversion or Exercise. The exercise price of the options is $.035 per share.All of the options are exercisable until March 31, 2011.                                                                                                                                                                                                             |

| 2.     | (a) | Securities Sold. In May 2006, 8,000,000 shares of our common stock were issued.                                                                                                                                                                                                                                                                              |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers. Such shares of common stock were issued toBradley Martin (4,000,000 shares) and Rebekah Martin (4,000,000 shares).                                                                                                                                                                                                          |
|   | (c) | Consideration. Such shares of common stock were issued in consideration of all ofthe outstanding shares of capital stock of Touchdev Limited.                                                                                                                                                                                                                |
|   | (d) | Exemption from Registration Claimed. These securities are exempt from registrationunder the Securities Act of 1933, as amended, pursuant to the provisions of Section4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering.These purchasers were sophisticated investors capable of evaluating an investmentin our company. |

| 3.     | (a) | Securities Sold. In May 2006, 1,000,000 shares of our common stock were sold.                                                                                                                                                                                                                                                                              |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers. Such shares of common stock were issued to PaulGoldman.                                                                                                                                                                                                                                                                   |
|   | (c) | Consideration. Such shares of common stock were issued for $15,000 in cash.                                                                                                                                                                                                                                                                                |
|   | (d) | Exemption from Registration Claimed. These securities are exempt from registrationunder the Securities Act of 1933, as amended, pursuant to the provisions of Section4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering.This purchaser was a sophisticated investor capable of evaluating an investment inour company. |

| 4.     | (a) | Securities Sold. In May 2006, 200,000 shares of our common stock were sold.                                                                                                                                                                                                                                                                                |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers. Such shares of common stock were issued to JerrySingleton.                                                                                                                                                                                                                                                                |
|   | (c) | Consideration. Such shares of common stock were issued for $3,000 in cash.                                                                                                                                                                                                                                                                                 |
|   | (d) | Exemption from Registration Claimed. These securities are exempt from registrationunder the Securities Act of 1933, as amended, pursuant to the provisions of Section4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering.This purchaser was a sophisticated investor capable of evaluating an investment inour company. |

| 5.     | (a) | Securities Sold. In July 2006, a total of 6,200,000 shares of our common stock wereissued.                                                                                                                                                                                                                                                                   |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers. Such shares of common stock were issued to DavidLoflin (5,000,000 shares), Waddell D. Loflin (1,000,000 shares), Gregory A. Bonner(100,000 shares) and Ira R. Witkin (100,000 shares).                                                                                                                                      |
|   | (c) | Consideration. Such shares of common stock were issued as bonuses and werevalued, in the aggregate, at $186,000.                                                                                                                                                                                                                                             |
|   | (d) | Exemption from Registration Claimed. These securities are exempt from registrationunder the Securities Act of 1933, as amended, pursuant to the provisions of Section4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering.These purchasers were sophisticated investors capable of evaluating an investmentin our company. |

| 6.     | (a) | Securities Sold. In July 2006, 3,500,000 shares of our common stock were issued.                                                                                                                                                                                                                                                                           |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers. Such shares of common stock were issued toNewlan & Newlan, Attorneys at Law.                                                                                                                                                                                                                                          |
|   | (c) | Consideration. Such shares of common stock were issued in payment of legal servicesand were valued at $105,000.                                                                                                                                                                                                                                            |
|   | (d) | Exemption from Registration Claimed. These securities are exempt from registrationunder the Securities Act of 1933, as amended, pursuant to the provisions of Section4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering.This purchaser was a sophisticated investor capable of evaluating an investment inour company. |

| 7.     | (a) | Securities Sold. In August 2006, 2,000,000 shares of our common stock were issued.                                                                                                                                                                                                                                                                         |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Underwriter or Other Purchasers. Such shares of common stock were issued to EquitySolutions, Inc.                                                                                                                                                                                                                                                          |
|   | (c) | Consideration. Such shares of common stock were issued in payment of a promissorynote in the amount of $25,000.                                                                                                                                                                                                                                            |
|   | (d) | Exemption from Registration Claimed. These securities are exempt from registrationunder the Securities Act of 1933, as amended, pursuant to the provisions of Section4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering.This purchaser was a sophisticated investor capable of evaluating an investment inour company. |

|   |
|--------|

| Item 3. | Defaults upon Senior Securities. |
|---------|----------------------------------|

| None. |
|-------|

|   |
|--------|

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

| None. |
|-------|

|   |
|--------|

| Item 5. | Other Information. |
|---------|--------------------|

| None. |
|-------|

|   |
|--------|

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

| (a) Exhibits |
|--------------|

| ExhibitNo. |   | Description |
|------------|--------|-------------|

| 31.1 |   | Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule15d-14(b) |
|------|--------|--------------------------------------------------------------------------------------|

| 31.2 |   | Certification of Chief Accounting Officer required by Rule 13a-14(a) or Rule15d-14(b) |
|------|--------|---------------------------------------------------------------------------------------|

| 32.1 |   | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 |
|------|--------|-----------------------------------------------------------------------------|

| 32.2 |   | Certification of Chief Accounting Officer Pursuant to 18 U.S.C. Section 1350 |
|------|--------|------------------------------------------------------------------------------|

| (b) Reports on Form 8-K |
|-------------------------|

| During the three months ended June 30, 2006, we filed two Current Reports on Form 8-K, asfollows: |
|---------------------------------------------------------------------------------------------------|

| - | Date of event: May 17, 2006, as amended, wherein we reported the entry into a materialdefinitive agreement. |
|---|-------------------------------------------------------------------------------------------------------------|

| - | Date of event: May 31, 2006, wherein we reported the completion of acquisition ordisposition of assets. |
|---|---------------------------------------------------------------------------------------------------------|

| Since June 30, 2006, we have not filed a Current Report on Form 8-K. |
|----------------------------------------------------------------------|

|   |
|--------|

| SIGNATURES |
|------------|

| In accordance with the requirements of the Securities Exchange Act of 1934, Registrant hasduly caused this report to be signed on its behalf by the undersigned, thereunto dulyauthorized. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |
|--------|

| Date: August 21, 2006 | DIAMOND I, INC. |
|-----------------------|-----------------|

|   |
|--------|

|   |   | By: | /s/ DAVID LOFLIN |   |
|--------|--------|-----|------------------|--------|

|   | David Loflin, President andActing Chief Financial Officer[Principal Accounting Officer] |   |
|--------|-----------------------------------------------------------------------------------------|--------|