Tank Sports (TNSP) 10QSB/A 2007 Q1 Quarterly report (small business) (amended)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB/A

Amendment No. 3

xQuarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended May 31, 2006

o Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ______________ to ______________

Commission file number: 333-129910

TANK SPORTS, INC.

(Exact name of small business issuer as specified in its charter)

California	95-4849012
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

10925 Schmidt Road

El Monte, California 91733

(Address, including zip code, of principal executive offices)

Issuer’s telephone number : (626) 350-4039

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK, PAR VALUE $.001 PER SHARE

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

Yes xNo ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in exchange A Rule 12b-2)

Yes  ¨    No  x

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

Yes  ¨    No  x

The number of outstanding shares of the Registrant's common stock, $0.001 par value, as of May 31, 2006 was 8,125,700.

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TANK SPORTS, INC.

TABLE OF CONTENTS

		Page
PART I:	FINANCIAL INFORMATION	4
	Item 1. Financial Statements:	4
	Balance Sheet, May 31, 2006 (Unaudited)	4
	Statements of Operations, for the three month periods ended May 31, 2006 and 2005 (unaudited)	5
	Statement of Cash Flows, or the three month periods ended May 31, 2006 and 2005 (unaudited)	6
	Notes to Financial Statements (Unaudited)	7- 12
	Item 2. Managements Discussion and Analysis of Financial Condition and Plan of Operations	13
	Item 3. Controls and Procedures	14
PART II:	OTHER INFORMATION	15
	Item 1. Legal Proceedings	15
	Item 2. Changes in Securities	15
	Item 3. Defaults upon Senior Securities	15
	Item 4. Submission of Matters for a Vote of Security Holders	15
	Item 5. Other Information	15
	Item 6. Exhibits and Reports on Form 8-K	15
	SIGNATURES	16

2

This Form 10-QSB contains forward-looking statements within the meaning of the "safe harbor" provisions under Section 21E of the Securities Exchange Act of 1934. We use forward-looking statements in our description of our plans and objectives for future operations and assumptions underlying these plans and objectives. Forward-looking terminology includes the words "may," "expects," "believes," "anticipates," "intends," "projects," or similar terms, variations of such terms or the negative of such terms. These forward-looking statements are based on management's current expectations and are subject to factors and uncertainties, which could cause actual results to differ materially from those, described in such forward-looking statements. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this Form 10-QSB to reflect any change in our expectations or any changes in events, conditions or circumstances on which any forward-looking statement is based. Factors, which could cause such results to differ materially from those described in the forward-looking statements, and elsewhere,, are incorporated by reference into this Form 10-QSB.

3

PART I: FINANCIAL INFORMATION

Item1. Financial Statements

TANK SPORTS, INC.
BALANCE SHEET
May 31, 2006
(Unaudited)
ASSETS
CURRENT ASSETS
Cash & cash equivalents	$	84,854
Accounts receivable, net		143,207
Other receivable		25,120
Inventory		606,704
Prepaid expenses		59,473
Total current assets		919,358
PROPERTY AND EQUIPMENT, NET		61,956
LOANS RECEIVABLE		215,577
OTHER ASSETS		10,000
TOTAL ASSETS	$	1,206,891
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Loan payable	$	32,873
Due to affiliate		1,327,446
Other payables		288,049
Accrued liabilities		157,340
TOTAL CURRENT LIABILITIES		1,805,708
STOCKHOLDERS' DEFICIT
Share capital (authorized 50,000,000 shares, no par value, issued and 8,125,700 shares outstanding)		135,700
Accumulated deficit		(734,517	)
Total stockholders' deficit		(598,817	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	1,206,891

See accompanying notes to unaudited financial statements

4

TANK SPORTS, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED MAY 31, 2006 AND 2005
(Unaudited)
		2006			2005
NET REVENUE	$	2,924,907		$	1,055,031
COST OF REVENUE		2,095,510			834,565
GROSS PROFIT		829,397			220,466
OPERATING EXPENSES
Selling expenses		275,065			104,246
General and administrative expenses		504,238			234,951
Total operating expenses		779,303			339,197
INCOME (LOSS) FROM OPERATIONS		50,094			(118,731	)
NON-OPERATING INCOME (EXPENSES)
Other income		10,754			8,132
Interest expense		(700	)		(147	)
Total non-operating income		10,054			8,279
NET INCOME (LOSS)	$	60,148		$	(110,452	)
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING, BASIC AND DILUTED		8,125,700			8,000,000
BASIC AND DILUTED NET INCOME (LOSS) PER SHARE	$	0.007		$	(0.014	)

See accompanying notes to unaudited financial statements

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TANK SPORTS, INC.
STATEMENT OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED MAY 31, 2006 AND 2005
(Unaudited)
		2006			2005
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	60,148		$	(110,452	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		6,792			1,629
(Increase) decrease in current assets:
Accounts receivable		127,376			(24,149	)
Other receivable		8,291			(970	)
Inventory		819,387			(132,865	)
Prepaid expense		7,417			2,975
Other assets		1,600			-
Increase (decrease) in current liabilities:
Other payables		223,198			(11,515	)
Accrued liabilities		62,617			20,286
Net cash provided by (used in) operating activities		1,316,827			(255,061	)
CASH FLOWS FROM INVESTING ACTIVITIES
Payment on purchase of property		(3,008	)		(1,689	)
Decrease in loans receivable		(3,731	)		(7,162	)
Net cash used in investing activities		(6,739	)		(8,851	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from (payments of) loans for auto and equipment		(2,582	)		68,654
Increase (decrease) of due to affiliate		(1,386,181	)		365,853
Net cash provided by (used in) investing activities		(1,388,763	)		434,507
NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS		(78,675	)		170,595
CASH & CASH EQUIVALENTS, BEGINNING BALANCE		163,528			40,941
CASH & CASH EQUIVALENTS, ENDING BALANCE	$	84,854		$	211,536

See accompanying notes to unaudited financial statements

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TANK SPORTS, INC.

Notes to Financial Statements

(Unaudited)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Tank Sports, Inc. (“Tank” or “the Company”) was incorporated in the state of California on March 5, 2001. The Company is located in the city of El Monte, California, U.S.A. The Company is engaged in the sales and distribution of high quality recreational and transportation motorcycles, all-terrain vehicles (“ATVs”), dirt bikes, scooters, and Go Karts. The Company’s motorcycles and ATVs products are manufactured in China and Mexico.

Basis of Preparation

The unaudited financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited financial statements and footnotes included in the Company’s Annual Report on Form 10-KSB. The results of the three months ended May 31, 2006 are not necessarily indicative of the results to be expected for the full year ending February 28, 2007.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

2. SUMMARY OF SIGNIFICANT ACCOUTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with 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.

Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.

Accounts Receivable

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Terms of the sales vary from COD through a credit term up to 9 to 12 months. Reserves are recorded primarily on a specific identification basis. Allowance for doubtful debts amounted to $65,000 as at May 31, 2006.

Other Payable

Other payable includes customer deposits of $274,004 and payroll tax payable of $13,898 at May 31, 2006.

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TANK SPORTS, INC.

Notes to Financial Statements

(Unaudited)

2. SUMMARY OF SIGNIFICANT ACCOUTING POLICIES - continued

Revenue Recognition

The Company’s revenue recognition policies are in compliance with Staff accounting bulletin (SAB) 104. Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectibility is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

Income Taxes

The Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

Segment Reporting

Statement of Financial Accounting Standards No. 131 (“SFAS 131”), “Disclosure About Segments of an Enterprise and Related Information” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. SFAS 131 has no effect on the Company’s consolidated financial statements as the Company consists of one reportable business segment. All of the Company’s assets are located in one segment in its facility in California.

Recent Pronouncements

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections." This statement applies to all voluntary changes in accounting principle and requires retrospective application to prior periods' financial statements of changes in accounting principle, unless this would be impracticable. This statement also makes a distinction between "retrospective application" of an accounting principle and the "restatement" of financial statements to reflect the correction of an error. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.

In February 2006, FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments”. SFAS No. 155 amends SFAS No 133, “Accounting for Derivative Instruments and Hedging Activities”, and SFAF No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”. SFAS No. 155, permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133, establishes a requirement to evaluate interest in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives, and amends SFAS No. 140 to eliminate the prohibition on the qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. This statement is effective for all financial instruments acquired or issued after the beginning of the Company’s first fiscal year that begins after September 15, 2006.

In December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment, an Amendment of FASB Statement No. 123" ("FAS No. 123R"). FAS No. 123R requires companies to recognize in the statement of operations the grant- date fair value of stock options and other equity-based compensation issued to employees. FAS No. 123R is effective beginning in the Company's first quarter of fiscal 2006.

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TANK SPORTS, INC.

Notes to Financial Statements

(Unaudited)

2. SUMMARY OF SIGNIFICANT ACCOUTING POLICIES - continued

In June 2005, the EITF reached consensus on Issue No. 05-6, determining the Amortization Period for Leasehold Improvements ("EITF 05-6.") EITF 05-6 provides guidance on determining the amortization period for leasehold improvements acquired in a business combination or acquired subsequent to lease inception. The guidance in EITF 05-6 will be applied prospectively and is effective for periods beginning after June 29, 2005. EITF 05-6 is not expected to have a material effect on its consolidated financial position or results of operations.

In March 2006 FASB issued SFAS 156 ‘Accounting for Servicing of Financial Assets’ this Statement amends FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, with respect to the accounting for separately recognized servicing assets and servicing liabilities. This Statement:

1. Requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract.

2. Requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable.

3. Permits an entity to choose ‘Amortization method’ or ‘Fair value measurement method’ for each class of separately recognized servicing assets and servicing liabilities.

4. At its initial adoption, permits a one-time reclassification of available-for-sale securities to trading securities by entities with recognized servicing rights, without calling into question the treatment of other available-for-sale securities under Statement 115, provided that the available-for-sale securities are identified in some manner as offsetting the entity’s exposure to changes in fair value of servicing assets or servicing liabilities that a servicer elects to subsequently measure at fair value.

Requires separate presentation of servicing assets and servicing liabilities subsequently measured at fair value in the statement of financial position and additional disclosures for all separately recognized servicing assets and servicing liabilities.

3. GOING CONCERN

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company as a going concern. The Company has accumulated deficit of $734,517 and negative working capital of $886,350 as of May 31, 2006. However, the Company has recorded a net profit of $60,148 for the three months ended May 31, 2006. Accordingly, the generation of this profit is a good indication that the Company’s liquidity may begin to improve. The Company faces some business risks, which includes but not limited to, its ability to maintain vendor and supplier relationships by making timely payments when due.

In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to raise additional capital, to increase more sales and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management has taken the following steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue as a going concern. Management devoted considerable effort towards (i) build “Tank” brand (ii) set up sales channels to increase sales (iii) liquidate less profitable products, and focus on selling more profitable motorcycles (vi) obtain additional equity.

Management believes that the above actions will allow the Company to continue operations through the next fiscal year.

9

TANK SPORTS, INC.

Notes to Financial Statements

(Unaudited)

4. LOAN RECEIVABLE

On January 10, 2004 and December 20, 2004, the Company loaned $146,451 and $50,167 to two unrelated parties at interest rate of 6% per annum. The loans are unsecured, both principal and interest are payable on January 10, 2007 and December 20, 2007, respectively. Interest income has been accrued and recorded in loan receivable. As of May 31, 2006, the loan receivables are $54,513 and $161,064, respectively.

5. INCOME TAXES

Through May 31, 2006, the Company incurred net operating losses for tax purposes of approximately $669,517. Differences between financial statement and tax losses consist primarily of bad debts allowance of $65,000 as of May 31, 2006. The net operating loss carry forward may be used to reduce taxable income through the year 2026. Net operating loss for carry forward for the State of California is generally available to reduce taxable income through the year 2011. The availability of the Company's net operating loss carry forward is subject to limitation if there is a 50% or more positive change in the ownership of the Company's stock. The provision for income taxes consists of the state minimum tax imposed on corporations.

The gross deferred tax asset balance, due to net operating loss carry forward and allowance for bad debts, as of May 31, 2006 was $267,807. A 100% valuation allowance has been established against the deferred tax assets, as the utilization of the loss carry forward cannot reasonably be assured. Components of deferred tax assets at May 31, 2006 are as follows:

Net operating loss	$	293,807
Allowance for bad debt		(26,000	)
Deferred tax asset		267,807
Less: valuation allowance		(267,807	)
	$	-

The following is a reconciliation of the provision for income taxes at the U.S. federal and California state income tax rate to the income taxes reflected in the Statements of Operations:

	November 30,  2005		November 30, 2004
Tax expense (credit) at statutory rate-federal	34	%	(34	)%
State tax expense net of federal tax	6		( 6	)
Changes in valuation allowance	(40	)	40
Tax expense at actual rate	-		-

6. BASIC AND DILUTED NET INCOME (NET LOSS) PER SHARE

Net income (net loss) per share is calculated in accordance with the Statement of financial accounting standards No. 128 (SFAS No. 128), “Earnings per share”. Basic net income (loss) per share is based upon the weighted average number of common shares outstanding. Diluted net income (loss) per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Weighted average number of shares used to compute basic and diluted net income (loss) per share is the same since there are no dilutive securities.

7. STOCKHOLDERS’ EQUITY

On October 10, 2005, Tank Sports, Inc. amended its articles to increase its number of authorized shares from 1,000,000 to 50,000,000 shares, at par value of $0.001 and a forward split of 800 shares for one. The financial statements have been retroactively restated for the effects of forward stock splits.

On October 10, 2005, Tank Sports, Inc. board consented a Regulation S offering of 300,000 shares of common stock at $1.00 per share. As of October 30, 2005, Tank Sports, Inc. closed the Regulation S offering, 125,700 shares were issued and collected $125,700 from 34 shareholders.

10

TANK SPORTS, INC.

Notes to Financial Statements

(Unaudited)

7. STOCKHOLDERS’ EQUITY - continued

On November 23, 2005, the Company filed a registration statement under the Securities Act of 1933 (SB-2) to register 1,446,500 shares of its common stock. The registration statement is under the review of Security and Exchange Commission. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities.

8. SHIPPING AND HANDLING EXPENSES

Tank has included $224,731 and $73,061 freight out shipping and handling expenses into selling expenses for the three month periods ended May 31, 2006 and 2005, respectively.

9. SUPPLEMENTAL DISCLOSURE OF CASH FLOWS

The Company prepares its statements of cash flows using the indirect method as defined under the Financial Accounting Standard No. 95.

The Company paid $0 for income tax during the three month periods ended May 31, 2006 and 2005. The Company paid $700 and $147 for interest during the three month periods ended May 31, 2006 and 2005, respectively.

10. RELATED PARTIES

On August 1, 2005, Tank entered into another lease agreement for the new facilities in which they operate. The lessors are Tank’s 2 shareholders who are also Tank’s directors. The term of the lease is 60 months with monthly payments of $19,900.. As of May 31, 2006, the amount due was $0.

Minimum annual rent expense for Tank for the year subsequent to May 31, 2006 is as follows:

Period	Amount
1 year after May 31, 2006	$ 238,800

Rent expenses were $59,700 and $12,225 for the three month periods ended May 31, 2006 and 2005, respectively.

Tank and its affiliated company share one credit card. The credit card is a commonly held card under Tank’s 2 shareholders who are also Tank’s directors. The credit card is for business related purposes only. Tank and its affiliated company will make payments for each company’s share of the expenses accordingly directly to the credit card company. As of May 31, 2006, the amount due was $7,273. The amount is due on demand, interest free and unsecured.

The Company issues purchase orders to third party vendors in China. However, the third party vendors are paid by a US company owned by some of the shareholders of the Company. This affiliated company issues letter of credit in favor of vendors when the Company issues purchase order to the vendors. The Company makes payment to this affiliated company, which in turn pays to the vendors. As of May 31, 2006, the amount due to this affiliate was $1,327,446. The amount is due on demand, interest free and unsecured.

11. COMMITMENT

On August 1, 2005, Tank entered into another lease agreement for the new facilities in which they operate. The lessors are Tank’s 2 shareholders who are also Tank’s directors. The term of the lease is 60 months with monthly payments of $19,900.

In the opinion of management, the accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company's financial position as of

11

TANK SPORTS, INC.

Notes to Financial Statements

(Unaudited)

11. COMMITMENT - continued

May 31, 2006 and the results of its operations and cash flows for the three months ended May 31, 2006 and 2005 have been made. Operating results for the three months ended May 31, 2006 are not necessarily indicative of the results that may be expected for the year ended February 28, 2007.

These condensed financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's Form 10-KSB for the year ended February 28, 2006.

12

Item 2. Management’s Discussion and Analysis of Financial Condition and Plan of Operations

The following discussion is intended to provide an analysis of our financial condition and Plan of Operation and should be read in conjunction with our financial statements and the notes thereto set forth herein. The matters discussed in this section that are not historical or current facts, deal with potential future circumstances and developments. Our actual results could differ materially from the results discussed in the forward-looking statements. Factors that could cause or contribute to such differences include those discussed below.

MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATION

Plan of Operation

Since our inception, we commenced the sale and distribution of motorcycles and ATV’s under the brand name of TANK. In order to succeed, we intend to do the following:

1. Generate Dealer Interest and Recruit Dealers. We have used our power sports vehicles to create awareness within the power sports industry. We have also displayed these vehicles at trade shows and events to generate dealer interest in TANK products. We intend to continue our promotional efforts through public relations program, attending and displaying our products at dealer trade shows, direct mail efforts and direct solicitations of prospective customers. We have identified 25 dealers that we expect will enter into dealer agreements with us. We believe our dealer qualification criteria are strict and they include experience, reputation, ability to serve the geographic territory and financial strength.

2. Generate Consumer Interest and Develop the TANK Brand. To date, our products have appeared in over 10 publications. We believe this publicity is critical to creating awareness of the TANK brand. We intend to continue our public relations efforts to create additional consumer interest and to support our dealers in targeted advertising and marketing efforts in their geographic territories. We also plan to continue to attend trade shows and events targeted to consumers to provide them with opportunities to see, and in some cases ride, our products. We believe these efforts, as well as mailing information to persons who have inquired about our products, will generate the customer awareness we believe is necessary to sell our products, and to develop the TANK brand.

Our focus in the next 12 months has been to seek necessary working capital, and to develop our marketing plan. Our marketing plan focuses on dealers and the retail market, through comprehensive print advertising, participation in trade shows and other direct marketing efforts. Our marketing strategy is based on a reliable product, consistent quality and the delivery of a unique name and image. We estimate the necessary proceeds to implement this marketing campaign to be $180,000. We do not plan to carry out these actions until we have secured funds from our cash flows to fully fund this marketing plan. At this time, it is uncertain as if we can secure necessary financing.

Results of Operation

Three Months Ended May 31, 2006 and May 31, 2005.

We generated revenues of $2,924,907 for the three month period ending March 31, 2006, 177 percent increase as compared to $1,055,031 in revenues for the same period ended March 31, 2005. The increase is primarily attributable to improved brand recognition, the success of the launch of two new special edition 150cc motorcycle models and the 250cc engine TOURING scooter. Additionally, improvement in the dealer network is contributing to the higher sales.

Our gross profit for the three month period ended May 31, 2006, was $829,397, 276 percent increase as compared to $220,466 in gross profit for the same period ended March 31, 2005. Gross profit, as a percentage of revenue, was twenty-eight percent for the three month period ended March 31, 2006, an seven percent increase from twenty-one percent in the comparable period of 2004. The increase growth profit margin was primarily due to change in our product mix mainly from low profit bicycles to high profit motorcycles.

13

Item 2. Management’s Discussion and Analysis of Financial Condition and Plan of Operations - continued

Our net income for the three month period ended March 31, 2006 was $60,148 as compared to a net loss for the same period ended March 31, 2005 of approximately ($110,452). The increase in our net income is primarily attributable to increased sales and gross profit margin.

During the three month period ended March 31, 2006, we recorded operating expenses of $779,303, consisting primarily of (i) $275,065 in selling expenses; and (ii) $504,238 in general and administrative expenses. General and administrative expenses generally include corporate overhead, financial and administrative services.

During the three month period ended March 31, 2006, net cash flow provided by operating activities was $1,316,827. Our net cash flows provided by in operating activities consisted primarily of $819,387 in Inventory.

During the three month period ended March 31, 2006, net cash flows used in investing activities was $6,739, which was primarily the result of purchase of an automobile and few new office equipments for company use.

During the three month period ended March 31, 2006, net cash flow used in financing activities was $1,388,763, consisting primarily of (i) $2,582 in loan repayment; (ii) $1,386,181 decrease in due to affiliate.

Liquidity and Capital Resources.

At March 31, 2006, our current assets were $919,358, current liabilities were $1,805,708, resulting in a working capital deficit of $886,350.

At March 31, 2006, we had cash and cash equivalents of $84,854.

The Company anticipates the future cash flow from revenue and existing financing facilities would be adequate to fund our operations over the next twelve (12) months. We have no lines of credit or other bank financing arrangements. However, the Company is meeting its requirements from line of credit obtained by a related party.

Generally, we have financed operations to date through cash flow and shareholder loans. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to advertisement and marketing of our brand name and the expansion of dealership networks. We intend to finance these expenses from current and future revenues from operations.

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements.

MATERIAL COMMITMENTS

We have no material commitments as at the date of this registration statement.

PURCHASE OF SIGNIFICANT EQUIPMENT

We do not intend to purchase any significant equipment during the next twelve (12) months.

Item 3. Controls and Procedures

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act of 1934 are recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Principal Executive Officer and Principal Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure.

14

Item 3. Controls and Procedures - continued

At end of the period covered by this report,, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15 and 15d-15(e). This evaluation was done under the supervision and with the participation of our Principal Executive Officer/Principal Accounting Officer. Based upon that evaluation, we have concluded that our disclosure controls and procedures are effective in gathering, analyzing and disclosing information needed to satisfy our disclosure obligations under the Exchange Act.

Changes in Internal Controls

There were no changes in our internal controls or in other factors during the last quarter that materially affected, or was reasonably likely to materially affect, internal control over financial reporting.

PART II: OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 2. Changes in Securities

None

Item 3. Defaults upon Senior Securities

None

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

None

Item 5: Other Information

None

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

31.1 Certificate of Principal Executive Officer

31.2 Certificate of Principal Accounting Officer

32.1 Certification Pursuant to 18 U.S.C. 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certification Pursuant to 18 U.S.C. 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K

None

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SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TANK SPORTS, INC.
(Registrant)
Date: March 9, 2007	By:	/s/ Jing Jing Long
		Jing Jing Long
		Principal Executive Officer

Date: March 9, 2007	By:	/s/ Jing Jing Long
		Jing Jing Long
		Principal Accounting Officer
		Principal Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Date: March 9, 2007	By:	/s/ Jing Jing Long
		Jing Jing Long, Director

Date: March 9, 2007	By:	/s/ Jiangyong Ji
		Jiangyong Ji, Director

Date: March 9, 2007	By:	/s/ Jim Ji
		Jim Ji, Director

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