10QSB/A 1 body.htm DIAMOND I 10QSBA#2 6-30-2005

Form 10-QSB/A

SECURITIES AND EXCHANGE COMMISSION Washington, D.C.

[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2005

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange 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 its Charter)

DELAWARE

01-0623010

(State or Other Jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)

5555 Hilton Avenue, Suite 207, Baton Rouge, Louisiana 70808

(Address of Principal Executive Offices, including Zip Code)

(225) 923-1034

(Issuer’s telephone number, including area code)

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

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

Class

Outstanding as of 8-18-05

Common Stock, $.001 par value

201,971,383

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

As of the date of this Quarterly Report on Form 10-QSB, our independent auditor had not yet completed its review of the financial statements included herein.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Diamond I, Inc. and Subsidiaries

Page

Consolidated Balance Sheet as of June 30, 2005 (unaudited)

Consolidated Statement of Revenues and Expenses for the Three Months and Six Months Ended June 30, 2005 and 2004, and Period from June 17, 2003 (Inception), Through June 30, 2005 (unaudited)

Consolidated Statement of Cash Flows for the Six Months Ended June 30, 2005 and 2004, and Period from June 17, 2003 (Inception), Through June 30, 2005 (unaudited)

Notes to Consolidated Financial Statements

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DIAMOND I, INC. AND SUBSIDIARIES

(a development stage company)

CONSOLIDATED BALANCE SHEET

June 30, 2005 (unaudited)

ASSETS

Current assets:

Cash

Total Current Assets

Equipment, net of accumulated depreciation of $60,963

39,855

Total Assets

$39,855

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Disbursements in excess of cash balances

$9,791

Accounts payable

4,849

Accrued liabilities

11,997

Total current liabilities

26,637

Commitments

Stockholders’ Equity:

Preferred stock, $.001 par value, 50,000,000 shares authorized, 500,000 Series A shares issued and outstanding

500

Common stock, $.001 par value; 700,000,000 shares authorized, 196,262,772 shares issued and outstanding

196,264

Additional paid-in capital

25,051,734

Deficit accumulated during the development stage

(25,288,317)

Subscription receivable

26,400

Total Stockholders' Equity

11,218

Total Liabilities and Stockholders’ Equity

$39,855

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DIAMOND I, INC. AND SUBSIDIARIES

(a development stage company)

CONSOLIDATED STATEMENT OF REVENUES AND EXPENSES

Three Months and Six Months Ended June 30, 2005 and 2004, and Period from June 17, 2003 (Inception), Through June 30, 2005 (Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

Inception through

2005

2004

2005

2004

6/30/05

Revenues

1,454

$1,407

$2,166

$1,625

$10,260

Internet access costs

(522)

(6,704)

(32,768)

Gross profit (loss)

932

1,407

(4,538)

1,625

(22,508)

OPERATING EXPENSES

Consulting fees

345,336

374,561

1,907,311

Salaries and commissions

119,065

939,177

1,325,139

Legal and professional

13,682

254,745

329,443

Depreciation

4,228

8,456

47,513

Rent

3,621

18,007

63,934

Impairment expense

16,306,527

16,808,527

Other general and administrative

779,929

1,004,583

1,590,607

1,770,849

4,785,040

Total Operating Expenses

1,265,861

1,004,583

19,492,080

1,770,849

25,266,907

LOSS FROM OPERATIONS

(1,264,929)

(1,003,177)

(19,496,618)

(1,769,224)

25,289,415

OTHER INCOME (EXPENSE)

1,144

NET LOSS

(1,264,929)

(1,003,177)

(19,496,573)

(1,769,224)

(25,288,271)

Deemed Dividend on Preferred Stock

(165,442)

Net Loss Available to Common Shareholders

$(1,264,929)

$(1,003,177)

$(19,496,573)

$(1,934,666)

$(25,453,713)

Net loss applicable to common shareholders

Basic and diluted

$(0.007)

$(0.01)

$(0.109)

$(0.02)

Weighted average number of shares outstanding

Basic and diluted

190,248,337

81,752,880

177,668,037

82,154,144

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DIAMOND I, INC. AND SUBSIDIARIES

(a development stage company)

CONSOLIDATED STATEMENT OF CASH FLOWS

Six Months Ended June 30, 2005 and 2004, and Period from June 17, 2003 (Inception), Through June 30, 2005 (Unaudited)

Six Months Ended June 30,

Inception through

2005

2004

June 30, 2005

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

$(19,496,573)

$(1,934,666)

$(25,288,271)

Adjustments to reconcile net loss to cash used in operating activities:

Depreciation

8,456

9,473

60,963

Stock issued for services and salary

1,307,266

1,503,899

5,465,756

Impairment expense and write-down of assets

16,306,527

16,808,527

Stock option expense

1,535,214

Changes in assets and liabilities:

Disbursements in excess of cash balances

(9,791)

Accounts payable

(8,991)

4,849

Accrued expenses

(5,820)

11,997

CASH FLOWS USED IN OPERATING ACTIVITIES

(363,712)

(410,571)

(1,410,756)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of equipment

(6,062)

(102,826)

CASH FLOWS FROM FINANCING ACTIVITIES

Issuance of note payable

55,000

Payment on note payable

(55,000)

512

(55,000)

Disbursements in excess of cash balances

9,791

Issuance of preferred shares

209,558

Issuance of warrants

290,442

Sale of common stock, net

394,000

994,000

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES

348,791

499,488

1,503,791

NET CHANGE IN CASH

(20,983)

38,589

(9,791)

Cash, beginning of period

11,192

98,709

Cash, end of period

$(9,791)

$17,298

$(9,791)

Supplemental information:

Interest paid

$6,600

<PAGE>

DIAMOND I, INC.

(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2005 (Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The consolidated balance sheet as of June 30, 2005, the statement of revenues and expenses for the three months and six months and the statement of cash flows for the six months ended June 30, 2005 and 2004, have been prepared by Diamond I, Inc. (together with its subsidiaries, “Diamond I”) 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, 2005, and for all other periods presented, have been made. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted in accordance with the Securities and Exchange Commission’s rules for interim reporting. Accordingly, these financial statements should be read in conjunction with the financial statements and accompanying notes thereto in Diamond I’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004.

NOTE 2 - CRITICAL ACCOUNTING POLICIES

Consolidation

As of June 30, 2005, Diamond I had two wholly owned subsidiaries, Diamond I Technologies, Inc. (formerly Air-Q Corp.) and AirRover Networks, Inc. All material inter-company balances and inter-company transactions have been eliminated for the purpose of presenting the accompanying consolidated financial statements.

Goodwill and Other Intangible Assets

Goodwill and other intangible assets are stated on the basis of cost and are amortized, principally on a straight-line basis, over the estimated future periods to be benefitted (generally three years). Goodwill and other intangible assets are periodically reviewed for impairment to ensure they are appropriately valued. Conditions which may indicate an impairment issue exists include a negative economic downturn or a change in the assessment of future operations. In the event that a condition is identified which may indicate an impairment issue exists, an assessment is performed using a variety of methodologies, including cash flow analysis, estimates of sales proceeds and independent appraisals.

For the six months ended June 30, 2005, the entire value of associated with the acquisition of Diamond I Technologies, Inc. was impaired in the amount of $16,306,527.

NOTE 3 - ACQUISITION

On January 18, 2005, pursuant to an agreement and plan of reorganization, Diamond I acquired all of the outstanding capital stock of Diamond I Technologies, Inc., a Nevada corporation (“DITech”), by issuing a total of 70,591,026 shares of its common stock to the shareholders of DITech. The reorganization agreement provides for further issuances of shares of Diamond I’s common stock, upon DITech’s satisfying certain performance standards, as follows: (a) an additional 35,295,513 shares to the shareholders of DITech, if, on or before the date which is two years from the consummation of the reorganization agreement, DITech shall have completed the design and installation of a hand-held Wi-Fi-based gaming system in a first-class hotel/casino with no fewer than 400 guest rooms located in the State of Nevada (the “Target System”), to the effect that the Target System is 100% operational and ready for use by guests of the host hotel/casino, which readiness shall include the approval of the Nevada Gaming Commission; and (b) an additional 35,295,513 shares to the shareholders of DITech, if, on or before the date which is five years from the consummation of the reorganization agreement, the Target System shall have operated at a profit, as determined by generally accepted accounting principles, for a period of three consecutive months.

In determining the number of shares of our common stock to be issued to the shareholders of DITech, Diamond I’s board of directors did not employ any standard valuation formula or any other standard measure of value. Rather, the number shares issued to the shareholders of Diamond I was determined through arm’s-length negotiations.

The following represents the allocation of the purchase price over the historical net book values of Diamond I Technologies, Inc. on the date of the acquisition. The allocation made is as follows:

Tangible assets acquired at fair value

Cost in excess of net tangible assets

16,306,527

Total purchase price

$16,306,527

For the six months ended June 30, 2005, the entire value of associated with the acquisition of Diamond I Technologies, Inc. was written-down in the amount of $16,306,527.

DITech has developed a hand-held Wi-Fi-based gaming system for on-premises use by casinos/resorts. DITech’s gaming system, based on a patent-pending security system, would permit casino patrons to secure a PDA device from the casino that would enable the patrons to enjoy in-room and pool-side gaming action, as well as other casino services. Diamond I has previewed the system for private audiences in client-and-regulatory-specific presentations (where necessary, DITech intends to seek regulatory approval of its gaming system).

NOTE 4 - NOTE PAYABLE

During the six months ended June 30, 2005, Diamond I paid in full its note payable in the principal amount of $55,000, plus all accrued and unpaid interest of approximately $6,600.

NOTE 5 - CAPITAL STOCK

On January 18, 2005, Diamond I amended its Amended and Restated Certificate of Incorporation to increase the authorized number of shares of common stock to 700,000,000.

Stock for Services and Bonuses

During the first six months of 2005, Diamond I issued a total of 6,420,704 shares of common stock to third-party consultants for services, resulting in $621,904 in non-cash compensation expense included in professional and legal expenses and consulting fees in the accompanying statement of revenues and expenses.

During the first six months of 2005, Diamond I issued, as bonuses to certain of its officers and directors, a total of 4,200,000 shares of common stock, valued at $462,000.

NOTE 6 - OPTIONS

In January 2005, Diamond I entered into a consulting agreement with a third party. Pursuant to this consulting agreement, the consultant has the right to purchase up to $150,000 worth of Diamond I’s common stock each month, at a purchase price equal to 70% of the market price for Diamond I’s common stock, at the time of issue. During the first six months of 2005, Diamond I issued a total of 7,445,500 shares upon the exercise of these options, for cash in the amount of $394,000 and a subscription receivable in the amount of $26,400. A stock option expense of $1,535,214 was recorded as of June 30, 2005.

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FORWARD-LOOKING STATEMENTS

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

-	Events that deprive us of the services of our president and largest shareholder, David Loflin;

-	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 business plan; and

-	Other uncertainties, all of which are difficult to predict and many of which are beyond our control.

We do not intend to update forward-looking statements.

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

Recent Acquisition; Change in Business Plan

During the last half of 2004, our Wi-Fi (wireless fidelity) Internet access, or “hotspot”, business did not expand as we had expected. This lack of growth was in line with the rest of the hotspot industry. To date, Wi-Fi hotspot use by consumers has not met, by a wide margin, forecasts made during 2002 and 2003, with several well-known telecommunications companies abandoning their efforts to develop a hotspot business.

During the last quarter of 2004, our management determined to change the direction of our company, to focus on the development of products that embody Wi-Fi technologies rather than on the provision of hotspot Internet access. In conjunction with this determination, we began a search for Wi-Fi-related products that offered growth potential and were available for acquisition.

As a result, on January 18, 2005, pursuant to an agreement and plan of reorganization, we acquired all of the outstanding capital stock of Diamond I Technologies, Inc., a Nevada corporation (DITech).

DITech has developed a hand-held Wi-Fi-based gaming system for on-premises use by casinos/resorts, known as “WiFiCasino GS”(TM).

Our management has determined to focus all of our available resources, financial and otherwise, on the exploitation of this wireless gaming system and will not pursue additional Wi-Fi hotspot locations, unless that industry regains its pervious vitality.

Sales of Equity

In March 2004, we entered into a securities purchase agreement. Under this agreement, we issued securities for cash in the amount of $500,000, as follows: 500,000 shares of our Series A preferred stock, convertible into 100,000 shares of our common stock after September 2, 2004, 250,000 common stock purchase warrants to purchase a like number of shares at an exercise price of $3.50 per share and 250,000 common stock purchase warrants to purchase a like number of shares at an exercise price of $4.50 per share. These warrants expire March 1, 2007.

During 2004, we obtained $150,000 from the exercise of certain options, which funds were used for operating expenses.

During the first half of 2005, we obtained a total of $394,000 from the exercise of certain options, which funds were used to pay costs associated with our wireless gaming business and for operating expenses. Since June 30, 2005, we have obtained a total of approximately $51,400 from the exercise of certain options, which funds have been used to pay costs associated with the development of our wireless gaming business and for operating expenses. We are actively seeking capital for use in our business. We can make no assurance that we will obtain enough to continue our business operations.

Critical Accounting Policies

There were no material changes to our critical accounting policies during the period ended June 30, 2005.

Management's Discussion and Analysis discusses the results of operations and financial condition as reflected in our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates and judgments, including those related to accounts receivable, inventory valuation, amortization and recoverability of long-lived assets, including goodwill, litigation accruals and revenue recognition. Management bases its estimates and judgments on our historical experience and other relevant factors, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

While we believe that the historical experience and other factors considered provide a meaningful basis for the accounting policies applied in the preparation of our consolidated financial statements, we cannot guarantee that our estimates and assumptions will be accurate. If such estimates and assumptions prove to be inaccurate, we may be required to make adjustments to these estimates in future periods.

Results of Operations

During the six months ended June 30, 2005 and 2004, we generated $2,166 and $1,625, respectively, in revenues from our business operations. It is likely that our revenues for the remainder of 2005 will be less than for 2004, due to our determination to develop our wireless gaming products rather than to pursue further development of our hotspot business. We currently lack the capital necessary to pursue aggressively our business objectives, and we may never possess enough capital with which to do so. In this circumstance, it is likely that we would never earn a profit.

For the six months ended June 30, 2005, the entire value of associated with the acquisition of Diamond I Technologies, Inc. was written-down in the amount of $16,306,527 and is included in our operating expenses for the period then ended.

As an additional non-cash expense during the first half of 2005, we recorded a stock option expense of $1,535,214. This option expense relates to a consulting agreement pursuant to which the consultant has the right to purchase up to $150,000 worth of our common stock each month, at a purchase price equal to 70% of the market price for Diamond I’s common stock, at the time of issue. During the first six months of 2005, we issued a total of 7,445,500 shares upon the exercise of these options, for cash in the amount of $394,000 and a subscription receivable in the amount of $26,400.

Due to our severe lack of capital during both interim periods, we issued shares of our common stock to consultants. During the first six months of 2004, we issued shares of common stock to third-party consultants for services, resulting in $1,503,900 in non-cash compensation expense included in general and administrative expense in the accompanying statement of revenues and expenses. During the first six months of 2005, we issued a total of 6,552,204 shares of common stock to third-party consultants for services, resulting in $645,060 in non-cash compensation expense included in professional and legal expenses and consulting fees in the accompanying statement of revenues and expenses. Issuing shares of our common stock was the only means by which we could obtain the consultants' services. The full value of the consulting services received by us under each agreement has been expensed.

It is possible that we will incur significant consulting expenses during the remainder 2005. Our management may, if necessary, hire consultants and pay them in cash, shares of our common stock or a combination thereof.

During the first six months of 2004, we issued no shares of common stock as a bonus to any of our officers and directors. During the first six months of 2005, we issued, as bonuses to certain of its officers and directors, a total of 4,200,000 shares of common stock, valued at $462,000.

You should note that we measured the foregoing stock transactions at the respective dates of issuance at the then-quoted market price. There are no performance commitments or penalties for non-performance, therefore, we recorded the expense at the date of issuance.

Liquidity and Capital Resources

Since our inception, we have lacked adequate capital with which to accomplish our business objectives. Currently, we are in a substantially illiquid position, with a working capital deficit of$26,637. In general, we are able to pay our operating expenses as they are incurred. Following our acquisition of DITech, we have focused on the development of our wireless gaming products and its related business.

During 2004, we obtained $500,000 from the sale of preferred stock, the proceeds of which equity sale were used to develop our hotspot business and for working capital. We also obtained $150,000 from the exercise of certain options, which funds were used for operating expenses.

Our management has made this determination because of its desire not to over-commit our resources. Our management’s philosophy is to make capital and related commitments only to the extent our available capital permits. Our management’s philosophy may, in the future, prove to have 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 six months. However, to begin the aggressive pursuit of our wireless gaming business objectives, we will require approximately $2 million.

Currently, we do not possess enough capital to pursue aggressively our business objectives.

Management's Plans Relating to Future Liquidity

We will be able to sustain our current level of operations for the next six months, due to expected exercise of certain options. However, this level of funding will not be adequate for us to aggressively pursue the exploitation of our wireless gaming products. We continue to seek capital for these purposes.

Capital Expenditures

For the six months ended June 30, 2005, we made only small expenditures for needed equipment. We currently have limited capital with which to make any significant capital expenditures. Should we obtain significant funding, of which there is no assurance, we would be able to make significant expenditures on equipment. The amount of these equipment purchases cannot be predicted due to the uncertainty of funding levels and timing. However, without additional capital, we will make no significant capital expenditures.

Item 3. Controls and Procedures.

Our Chief Executive Officer and Acting Chief Financial Officer has reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 240.13a-14(c) and 15d-14(c)) as of the end of the period covered by this report and has concluded that such disclosure controls and procedures are effective in timely alerting him and other members of management to material information about our company required to be disclosed by us in our periodic reports that we file or submit under the Securities Exchange Act of 1934.

There have not been any significant changes in our internal controls over financial reporting (as such 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 reasonably likely 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. Changes in Securities.

During the three months ended June 30, 2005, we issued restricted securities as follows:

1.	(a)	Securities Sold. In April 2005, 50,000 shares of our common stock were issued.
	(b)	Underwriter or Other Purchasers. Such shares of common stock were issued to YCOM.
	(c)	Consideration. Such shares of common stock were issued pursuant to a consulting agreement and were valued, in the aggregate, at $4,500.
	(d)	Exemption from Registration Claimed. These securities were sold to a single non-U.S. purchaser and are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Regulation S thereunder.

2.	(a)	Securities Sold. In April 2005, 500,000 shares of our common stock were issued.
	(b)	Underwriter or Other Purchasers. Such shares of common stock were issued to The George Miller Company.
	(c)	Consideration. Such shares of common stock were issued pursuant to a consulting fee and were valued, in the aggregate, at $27,500.
	(d)	Exemption from Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(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 in our company.

3.	(a)	Securities Sold. In May 2005, 5,000,000 shares of our common stock were issued.
	(b)	Underwriter or Other Purchasers. Such shares of common stock were issued to U.S. BioDefense, Inc.
	(c)	Consideration. Such shares of common stock were issued pursuant to a consulting agreement and were valued, in the aggregate, at $260,000.
	(d)	Exemption from Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(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 in our company.

4.	(a)	Securities Sold. In May 2005, 500,000 shares of our common stock were issued.
	(b)	Underwriter or Other Purchasers. Such shares of common stock were issued to Victor Nostas.
	(c)	Consideration. Such shares of common stock were issued pursuant to a consulting agreement and were valued, in the aggregate, at $26,500.
	(d)	Exemption from Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(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 in our 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

Exhibit No.

Description

31.1

Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(b)

31.2

Certification of Chief Accounting Officer required by Rule 13a-14(a) or Rule 15d-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, 2005, we filed one Current Report on Form 8-K, as follows:

-	Date of Event: April 29, 2005, wherein we reported a change in our independent auditor; this Current Report on Form 8- K, as amended on June 7, 2005, is incorporated herein by this reference.

Subsequent to June 30, 2005, we have filed one Current Report on Form 8-K, as follows:

-	Date of Event: July 13, 2005, wherein we reported our entry into a material contract and information pursuant to Regulation FD; this Current Report on Form 8- K is incorporated herein by this reference.

SIGNATURES

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

Date: August 23, 2005.

DIAMOND I, INC.

By:

/s/ DAVID LOFLIN

David Loflin, President and Acting Chief Financial Officer [Principal Accounting Officer]