UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended ~~September~~March 3031, ~~2009~~2010

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

for the transition period from ______to _________.

Commission file number 000-25385

POWER SPORTS FACTORY, INC.

(Exact name of registrant as specified in its charter)

Minnesota	41-1853993
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

~~6950~~300 ~~Central~~Walnut ~~Highway~~Street, ~~Pennsauken~~Philadelphia, ~~NJ 08109~~PA 19106

(Address of Principal Executive Office) (Zip Code)

(~~856~~267-~~488~~546-~~9333~~9073)

(Registrant’s Telephone number, Including Area Code)

Check whether the issuer (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 þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. (Check One):

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer oSmaller reporting company þ

(Do not check if a smaller reporting company)

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

The number of shares outstanding the issuer's common stock, no par value, was 58100,~~751~~000,~~769~~000 as of ~~November~~June 1822, ~~2009~~2010.

Table of Contents

Table of Contents

PART I FINANCIAL INFORMATION

Item 1.	Financial Statements	1

Item 2.	Management's Discussion and Analysis or Plan of Operations	18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20

Item 4T.	Controls and Procedures	20

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	21

Item 1A.	Risk Factors	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 3.	Defaults Upon Senior Securities	22

Item 4.	(Removed and Reserved)	23

Item 5.	Other Information	23

Item 6.	Exhibits	23

EXHIBIT INDEX		25

PART I FINANCIAL INFORMATION Item 1. Financial Statements. 2 Item 2. Management's Discussion and Analysis or Plan of Operations 23 Item 3. Quantitative and Qualitative Disclosures About Market Risk. 26 Item 4T. Controls and Procedures. 26 PART II OTHER INFORMATION Item 1. Legal Proceedings. 27 Item 1A. Risk Factors. 27 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 28 Item 3. Defaults Upon Senior Securities. 28 Item 4. Submission Of Matters to a Vote of Security Holders. 28 Item 5. Other Information. 28 Item 6. Exhibits. 28 EXHIBIT INDEX 30i

Item 1. Financial Statements

Power Sports Factory, Inc.

I N D E X

	Page No.
Consolidated Balance Sheets as at September 30, 2009 and December 31, 2008 (Unaudited)	3
Consolidated Balance Sheets as at March 31, 2010 and December 31, 2009 (Unaudited)	2
Consolidated Statements of Operations for the Nine and Three Months Ended September 30, 2009 and 2008 (Unaudited)	4
Consolidated Statements of Operations for the Three Months Ended March 31, 2010 and 2009 (Unaudited)	3
Consolidated Statements of Stockholders' Deficiency For the Period Ended September 30, 2009 (Unaudited)	5
Consolidated Statements of Stockholders' Deficiency For the Period Ended March 31, 2010 (Unaudited)	4
Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2009 and 2008 (Unaudited)	6-7
Consolidated Statements of Cash Flows For the Nine Months Ended March 31, 2010 and 2009 (Unaudited)	5-6
Notes to Unaudited Consolidated Financial Statements	87

1PART I—FINANCIAL INFORMATION

~~PART~~Item ~~I—FINANCIAL~~1. ~~INFORMATION~~Financial Statements.

~~Item~~Certain 1information and footnote disclosures required under accounting principles generally accepted in the United States of America have been condensed or omitted from the following consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. It is suggested that the following consolidated financial statements be read in conjunction with the year-end consolidated financial statements and notes thereto included in the Company's Form 10-K for the year ending December 31, 2009.

~~Financial~~The ~~Statements~~results of operations for the three months ended March 31, 2010 and 2009 are not necessarily indicative of the results for the entire fiscal year or for any other period.

Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America have been condensed or omitted from the following consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. It is suggested that the following consolidated financial statements be read in conjunction with the year-end consolidated financial statements and notes thereto included in the Company's Form 10-K for the year ending December 31, 2008. 1

~~The~~POWER ~~results~~SPORTS ~~of operations for the nine months ended September 30~~FACTORY, ~~2009 and 2008 are not necessarily indicative of the results for the entire fiscal year or for any other period~~INC.

2FINANCIAL STATEMENTS

~~POWER SPORTS FACTORY, INC.~~ CONSOLIDATED BALANCE SHEETS ~~(Unaudited)~~

	September 30,				December 31,
	2009				2008
ASSETS
Current Assets:
Cash	$	1,722			$	117
Accounts receivable		63,273				67,749
Inventory		1,459,186				1,735,181
Prepaid expenses		18,084				97,363
Total Current Assets		1,542,265				1,900,410
Property and equipment-net		18,904				25,135
Other assets		9,118				9,876
TOTAL ASSETS	$	1,570,287			$	1,935,421
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Accounts payable	$		3,720,428		$	3,554,654
Accounts payable to related party			35,539			28,383
Notes payable to related party			10,208			22,863
Current portion of long-term debt			548,997			387,882
Convertible debt			300,000			501,356
Accrued expenses			1,063,356			1,226,211
Dividends Payable			673,176			673,176
Customer deposit payable			37,048			52,774
Total Current Liabilities			6,388,752			6,447,299
Long term liabilites:
Long-term debt - less current portion			––			7,370
Convertible debt - less current portion			––			24,323
Total Long-Term Liabilities			––			31,693
TOTAL LIABILITIES			6,388,752			6,478,992
Stockholders' Deficiency:
Preferred stock; no value – authorized 50,000,000 shares, Series B Convertible Preferred Stock - outstanding -0- shares at September 30, 2009 and -0- shares at December 31, 2008			––			––
Common stock, no par value - authorized 100,000,000 shares outstanding 56,852,359 shares at September 30, 2009 and 31,375,188 shares at December 31, 2008			6,697,021			5,476,228
Additional paid-in capital			456,000			456,000
Deposits on common stock to be issued			21,711			––
Deficit			(11,993,197	)		(10,475,799	)
Total Stockholders' Deficiency			(4,818,465	)		(4,543,571	)
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIENCY	$		1,570,287		$	1,935,421

(UNAUDITED)

See Notes to Unaudited Consolidated Financial Statements

ASSETS	March 31,			December 31,
	2010			2009
Current Assets:
Cash	$	947		$	-
Accounts receivable - net of allowance of $46,362
and $24,000		47,118			32,975
Inventory		664,305			932,285
Prepaid expenses		20,462			6,129
Total Current Assets		732,832			971,389

Property and equipment-net		8,770			9,918


TOTAL ASSETS	$	741,602		$	981,307

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current Liabilities:
Accounts payable	$	2,685,425		$	2,840,622
Account payable to related party		3,575			2,954
Notes payable to related party		6,160			19,508
Current portion of long-term debt		240,554			326,796
Convertible debt		300,000			300,000
Accrued expenses		1,178,404			1,099,404
Dividends Payable		477,488			477,488
Customer deposits		36,048			37,048

Total Current Liabilities		4,927,654			5,103,820


Stockholders' Deficiency:
Preferred stock; stated at, as no par value - authorized
50,000,000 shares, Series B Convertible Preferred
Stock - outstanding -0- shares at March 31, 2010
and December 31, 2009		-			-
Common stock, stated at, as no par value - authorized
100,000,000 shares;
outstanding 83,359,490 shares at March 31, 2010
and 77,725,647 shares at December 31, 2009		8,365,076			8,206,061
Additional paid-in capital		456,000			456,000
Stock to be issued		31,053			-
Deficit		(13,038,181	)		(12,784,574	)

Total Stockholders' Deficiency		(4,186,052	)		(4,122,513	)

TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIENCY	$	741,602		$	981,307

See Notes To Unaudited Consolidated Financial Statements

POWER SPORTS FACTORY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS ~~(Unaudited)~~

	Nine Months Ended						Three Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
Net sales	$	507,705		$	2,081,750		$	157,338		$	671,616
Costs and Expenses:
Cost of sales		506,702			1,650,120			183,959			658,601
Selling, general and administrative
expenses		1,318,513			2,921,994			41,310			809,198
Non-cash compensation		100,821			––			––			––
Bad debt expense		33,621			5,000			12,220			3,501
		1,959,657			4,577,114			237,489			1,471,300
Loss from operations		(1,451,952	)		(2,495,364	)		(80,150	)		(799,684	)
Other income and expenses:
Forgiveness of debt		133,223			––			133,223			––
Interest expense		(198,669	)		(108,996	)		(76,439	)		(39,436	)
Interest income		––			2,196			––			1,394
		(65,446	)		(106,800	)		56,784			(38,042	)
Loss before benefit
from income taxes		(1,517,398	)		(2,602,164	)		(23,366	)		(837,726	)
Income tax benefit		––			––			––			––
Net loss	$	(1,517,398	)	$	(2,602,164	)	$	(23,366	)	$	(837,726	)
Loss per common share - basic and diluted	$	(0.03	)	$	(0.11	)	$	—		$	(0.03	)
Weighted average common shares -Basic and diluted		53,088,326			22,906,529			53,088,326			28,839,513

(UNAUDITED)

See Notes to Unaudited Consolidated Financial Statements

	For the Three Months Ended
	March 31,
	2010			2009
Net sales	$	249,508		$	132,189

Costs and Expenses:
Cost of sales		287,496			151,593
Selling, general and administrative
expenses		164,720			967,580

		452,216			1,119,173

Loss from operations		(202,708	)		(986,984	)

Other income and expenses:
Acretion of beneficial conversion feature		-			(12,313	)
Interest expense		(50,899	)		(71,753	)
		(50,899	)		(84,065	)

Loss before benefit
from income taxes		(253,607	)		(1,071,049	)

Income tax benefit		-			-

Net loss	$	(253,607	)	$	(1,071,049	)

Loss per common share - basic
and diluted	$	(0.00	)	$	(0.03	)
Weighted average common shares -
Basic and diluted		78,273,333			37,531,818

4See Notes to Unaudited Consolidated Financial Statements

~~POWER SPORTS FACTORY, INC.~~3

~~CONSOLIDATED~~POWER ~~STATEMENTS~~SPORTS OFFACTORY, ~~STOCKHOLDERS' DEFICIENCY~~INC.

~~(Unaudited)~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

						Common Stock					Additional Paid-In Capital		Deposits on Common Stock To Be Issued
	Preferred Stock			Stated Value			Shares		Stated Value						(Deficit)			Total
Balance at January 1, 2008	2,303,216		$	2,687,450			4,925,213	$	2,216,485	$	355,000			$	(6,605,465	)	$	(1,346,530	)
Issuance of preferred stock for services (valued at $2.50 to $7.00 per share)	39,103			63,543														63,543
Issuance of 200,000 warrants									80,000									80,000
Conversion of preferred stock into common stock	(2,342,319	)		(2,750,993	)		23,423,190		2,750,993
Issuance of common stock for debt (valued at $.08 per share)							1,262,500				101,000							101,000
Issuance of common stock for services (valued at $.10 to $.70)							1,214,285		178,750									178,750
Conversion of debt for common stock) (valued at $.08 to $.45							550,000		250,000									250,000
Net loss for the twelve months ended December 31, 2008															(3,870,334	)		(3,870,334	)
Balance at December 31, 2008	—			—			31,375,188		5,476,228		456,000		—		(10,475,799	)		(4,543,571	)
Sale of common stock (valued at $.04 to $.10 per share)							6,956,590		363,542									363,542
Deposit on stock to be issued													21,711					21,711
Issuance of common stock for fees (valued at $.03 to $.05 per share)							810,000		40,300									40,300
Issuance of common stock for expenses (valued at $.02 per share)							526,000		10,521									10,521
Issuance of common stock for incentives (valued at $.05 per share)							1,000,000		50,000									50,000
Conversion of debt for common stock (valued at $.02 to $.08 per share)							16,184,581		756,430									756,430
Net loss for the nine months ended September 30, 2009															(1,517,398	)		(1,517,398	)
Balance at September 30, 2009	—		$	—			56,852,359	$	6,697,021	$	456,000	$	21,711	$	(11,993,197	)	$	(4,818,465	)

(UNAUDITED)

See Notes to Unaudited Consolidated Financial Statements

					Common Stock				Additional		Value
	Preferred		Stated				Stated		Paid-In		0f Stock
	Stock		Value		Shares		Value		Capital		to be Issued		Deficit			Total
Balance at January 1, 2009		-	$	-		31,385,188	$	5,476,228	$	456,000	$	-	$	(10,475,799	)	$	(4,543,571	)

Proceeds from sale of common stock						9,075,190		456,000									456,000
Issuance of common stock for debt
(valued at $.02-$.09 per share)						27,383,032		1691492		-							1,691,492
Issuance of common stock for services
and fees (valued at $.10 to $.70)						4,361,000		214,446									214,446
Conversion of debt for common stock						5,521,237		367,895									367,895
Net loss for the twelve months ended
December 31,2009		-												(2,308,775	)		(2,308,775	)

Balance at December 31,2009		-		-		77,725,647		8,206,061		456,000		-		-12,784,574			-4,122,513

												31,053					31,053
Issuance of common stock for debt
(valued at $.03 per share)						4,633,843		139,015		-				-			139,015
Issuance of common stock for services
and fees (valued at $.02)						1,000,000		20,000		-				-			20,000

Net loss														(253,607	)		(253,607	)
Balance, March 31, 2010		-	$	-		83,359,490	$	8,365,076	$	456,000	$	31,053	$	(13,038,181	)	$	(4,186,052	)

5 See Notes to Unaudited Consolidated Financial Statements

~~POWER SPORTS FACTORY, INC.~~4

~~CONSOLIDATED~~POWER ~~STATEMENTS~~SPORTS OFFACTORY, ~~CASH FLOWS~~INC.

~~(Unaudited)~~CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Nine Months
	Ended September 30,
	2009			2008
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss	$	(1,517,398	)	$	(2,602,164	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		6,231			7,271
Non cash compensation		100,821			179,793
Non-cash fair value of warrants		––			80,000
Accretion of beneficial conversion feature		24,323			76,752
Changes in operating assets and liabilities		870,527			1,693,115
Net cash (used in) operating activities		(515,496	)		(565,233	)
CASH FLOW FROM INVESTING ACTIVITIES:
Security deposit		758			––
Return of Equipment		––			36,254
Net cash provided by investing activities		758			36,254
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from notes payable related party		5,000			22,247
Payment to note payable related party		(17,655	)		(25,350	)
Proceeds from loan payable		563,478			357,420
Payments on loan		(419,733	)		(85,504	)
Deposits on common stock to be issued		21,711			—
Proceeds from sale of common stock		363,542			––
Proceeds from convertible debt		––			250,000
Net cash provided by financing activities		516,343			518,813

(UNAUDITED)

See Notes to Unaudited Consolidated Financial Statements

	For the Three Months Ended
	March 31,
	2010			2009
CASH FLOW FROM
OPERATING ACTIVITIES:
Net loss	$	(253,607	)	$	(1,071,049	)
Adjustments to reconcile
net loss to net cash
used in operating
activities:
Depreciation and
amortization		1,148			2,244
Non cash compensation		20,000			73,321
Accretion of beneficial conversion feature		-			12,313


Changes in operating assets
and liabilities		301,943			688,110
Net cash used in
operating activities		69,484			(295,061	)

CASH FLOW FROM
INVESTING ACTIVITIES:
Security deposit		-			(1,224	)


CASH FLOW FROM
FINANCING ACTIVITIES:
Payment to related parties		(13,348	)		(7,000	)
Proceeds from loans		4,500			522,500
Payments on loans		(90,742	)		(219,221	)
Proceeds from stock to be issued		31,053			-

Net cash provided by financing activities		(68,537	)		296,279

See Notes to Unaudited Consolidated Financial Statements

POWER SPORTS FACTORY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (~~continued~~Continued)

(~~Unaudited~~UNAUDITED)

	For the Nine Months
	For the Three Months Ended
	Ended September 30, 2009
	March 31,
	2009			2008
	2010			2009
Net increase (decrease) in cash		~~1,605~~947			(~~10,166~~6	)
Cash - beginning of year		117			11,146
Cash - beginning of period		-			117
Cash - end of year	$	1,722		$	980
Cash - end of period	$	947		$	111
Changes in operating assets and liabilities consists of:
Changes in operating assets
Decrease (increase) in accounts receivable	$	4,475		$	(75,237	)
and liabilities consists of:
Decrease (increase) in inventory		275,995			(807,426	)
(Increase) decrease in accounts receivable	$	(14,143	)	$	15,903
Decrease (increase) in prepaid expenses		79,279			(1,959	)
Decrease in inventory		267,980			104,569
Increase in accounts payable		622,929			2,096,432
(Increase) decrease in prepaid expenses		(14,333	)		4,836
(Decrease) increase in accrued expenses		(96,426	)		415,824
Increase (decrease) in accounts payable		(15,561	)		207,224
(Decrease) increase in customer deposits		(15,726	)		65,481
Increase in accrued expenses		79,000			356,724
	$	870,527		$	1,693,115
Decrease) in customer deposits		(1,000	)		(1,146	)
	$	301,943		$	688,110
Supplementary information:
Cash paid during the year for:
Income taxes	$	––-		$	––-
Interest	$	3716,~~924~~950		$	1737,~~499~~924
Non-cash financing activities
Issuance of preferred stock for services	$	––		$	63,543
Issuance of common stock for services	$	20,000		$	73,321
Beneficial Conversion Feature	$	––		$	––
Issuance of common stock for debt	$	139,015		$	150,000
Issuance of preferred stock for debt	$	––		$	––
Issuance of warrants for services	$	––		$	80,000
Issuance of common stock for services	$	100,821		$	116,250
Issuance of common stock for debt	$	756,430		$	351,000

See Notes to Unaudited Consolidated Financial Statements

POWER SPORTS FACTORY, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER~~MARCH 3031, ~~2009~~2010

1. Description of Business and Summary of Significant Accounting Policies

~~Description of Business and Summary of Significant Accounting Policies~~ORGANIZATION

~~ORGANIZATION~~Power Sports Factory, Inc. (formerly Purchase Point Media Corp.), (the “Company”) was incorporated under the laws of the State of Minnesota.

~~Power~~The ~~Sports~~Company, ~~Factory~~through a reverse acquisition described below, ~~Inc~~is in the business of marketing, selling, importing and distributing motorcycles and scooters. The ~~(formerly~~Company ~~Purchase~~principally ~~Point~~imports ~~Media~~products ~~Corp~~from China.), To (date the “Company”) ~~was~~has ~~incorporated~~marketed ~~under~~ the ~~laws~~products ofsignificantly under the ~~State~~Yamati ofand ~~Minnesota~~Andretti brands.

~~The~~BASIS ~~Company,~~OF through a reverse acquisition described below is in the business of marketing, selling, importing and distributing motorcycles and scooters. The Company principally imports products from China. To date the Company has marketed significantly under the Yamati and Andretti brands.PRESENTATION

~~BASIS~~On OFSeptember ~~PRESENTATION~~5, 2007, the Company entered into a share exchange agreement with the shareholders of Power Sports Factory, Inc. (“PSF”). In connection with the share exchange, the Company acquired the assets and assumed the liabilities of PSF (subsidiary) as the acquirer. The financial statements prior to September 5, 2007 are those of PSF and reflect the assets and liabilities of PSF at historical carrying amounts.

OnAs ~~August 31,~~provided ~~2007,~~for in the ~~Company~~share ~~entered~~exchange ~~into~~agreement, anthe ~~amendment~~stockholders toof aPSF ~~share~~received ~~exchange~~60,000,000 ~~agreement~~shares ~~with~~of the ~~shareholders~~Company’s ofcommon ~~Power~~stock ~~Sports~~and ~~Factory~~1,650,000 ~~Inc.~~of Series B Convertible Preferred Stock (“~~PSF~~Preferred Stock”)~~. In~~ ~~connection~~of ~~with~~ the Company (each share ~~exchange,~~of preferred stock is convertible into 10 shares of common stock) representing 77% of the ~~Company~~outstanding ~~acquired~~stock after the ~~assets~~acquisition, ~~and~~in ~~assumed~~exchange for the ~~liabilities~~outstanding shares of PSF ~~(subsidiary)~~common stock they held, which was accounted for as ~~the~~a ~~acquirer~~recapitalization. The financial statements ~~prior~~show toa ~~September~~retroactive 5,restatement ~~2007~~of ~~are~~the ~~those~~Company’s ofhistorical ~~PSF~~stockholders’ ~~and~~deficiency to reflect the ~~assets~~equivalent ~~and~~number ~~liabilities~~of shares of ~~PSF~~common atstock ~~historical~~issued ~~carrying~~in ~~amounts~~the acquisition.

AsOn ~~provided~~July ~~for in the share exchange agreement~~1, ~~the stockholders of PSF received 60~~2009,~~000,000~~ ~~shares of~~ the ~~Company’s~~Financial ~~common~~Accounting ~~stock~~Standards ~~and~~Board ~~1,650,000~~("FASB") ofestablished ~~Series~~Accounting BStandards ~~Convertible~~Codification ~~Preferred Stock~~ (~~“Preferred Stock”~~"ASC") ofas the ~~Company~~primary ~~(each~~source ~~share~~ of ~~preferred~~authoritative ~~stock~~generally isaccepted ~~convertible~~accounting ~~into~~principles ~~10 shares of common stock~~("GAAP") ~~representing~~recognized ~~77%~~by of the ~~outstanding~~FASB ~~stock~~to ~~after~~be ~~the~~applied ~~acquisition,~~by innongovernmental ~~exchange~~entities. Although ~~for~~ the ~~outstanding~~establishment ~~shares~~ of ~~PSF~~the ~~common~~ASC ~~stock~~did ~~they~~not ~~held,~~change ~~which~~current ~~was~~GAAP, ~~accounted~~it ~~for~~did aschange athe ~~recapitalization. The~~way ~~financial~~we ~~statements~~refer ~~show~~to aGAAP ~~retroactive~~throughout ~~restatement~~this ofdocument ~~the Company’s historical stockholders’ deficiency~~ to reflect the ~~equivalent~~updated ~~number~~referencing ~~of shares of common stock issued in the acquisition~~convention.

~~GOING~~Recent ~~CONCERN~~Accounting Pronouncements

The Company’s ~~consolidated~~significant ~~financial~~accounting ~~statements~~policies ~~for~~are ~~the~~summarized ~~nine~~in ~~months~~Note ~~ended~~1 ~~September~~of ~~30,~~the ~~2009~~Company’s ~~have~~Annual ~~been~~Report ~~prepared~~ on aForm ~~going~~10-K ~~concern~~for ~~basis which contemplates~~ the ~~realization~~year ofended ~~assets~~December ~~and~~31, ~~the~~2009. There ~~settlement~~were ofno ~~liabilities~~significant inchanges ~~the~~to ~~normal~~these ~~course~~accounting ofpolicies ~~business. Management~~during ~~recognizes that~~ the ~~Company’s~~three ~~continued~~months ~~existence~~ended isMarch 31, ~~dependent~~2010 ~~upon~~and ~~its~~the ~~ability~~Company todoes ~~obtain~~not ~~needed~~expect ~~working~~that ~~capital~~the ~~through~~adoption ~~additional~~of ~~equity~~other ~~and/or~~recent ~~debt~~accounting ~~financing~~pronouncements ~~and~~will ~~revenue~~have toa ~~cover~~material ~~expenses~~impact ason ~~the~~its ~~Company~~financial ~~continues to incur losses~~statements.

~~The~~GOING Company presently does not have sufficient liquid assets to finance its anticipated funding needs and obligations. The Company’s continued existence is dependent upon its ability to obtain needed working capital through additional equity and/or debt financing and achieve a level of revenue and production adequate to support its cost structure. Management is actively seeking additional capital to ensure the continuation of its current operations, complete its proposed activities and fund its current debt obligations. However, there is no assurance that additional capital will be obtained. These uncertainties raise substantial doubt about the ability of the Company to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties should the Company be unable to continue as a going concern.CONCERN

~~SIGNIFICANT~~The ~~ACCOUNTING~~Company’s ~~POLICIES~~consolidated financial statements for the three months ended March 31, 2010 have been prepared on a going concern basis which contemplates the realization of assets and the settlement of liabilities in the normal course of business. Management recognizes that the Company’s continued existence is dependent upon its ability to obtain needed working capital through additional equity and/or debt financing and revenue to cover expenses as the Company continues to incur losses.

~~PRINCIPLES~~The OFCompany ~~CONSOLIDATION~~presently does not have sufficient liquid assets to finance its anticipated funding needs and obligations. The Company’s continued existence is dependent upon its ability to obtain needed working capital through additional equity and/or debt financing and achieve a level of revenue and production adequate to support its cost structure. Management is actively seeking additional capital to ensure the continuation of its current operations, complete its proposed activities and fund its current debt obligations. However, there is no assurance that additional capital will be obtained. These uncertainties raise substantial doubt about the ability of the Company to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties should the Company be unable to continue as a going concern.

The Company’s consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All inter-company transactions and balances have been eliminated. 7

~~USE~~POWER OFSPORTS ~~ESTIMATES~~FACTORY, INC.

~~The~~NOTES ~~preparation~~TO ofUNAUDITED ~~financial~~CONSOLIDATED ~~statements~~FINANCIAL in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.STATEMENTS

8MARCH 31, 2010

~~POWER~~2. EARNINGS ~~SPORTS~~PER ~~FACTORY, INC.~~SHARE

~~NOTES~~Basic TOloss ~~UNAUDITED~~per ~~CONSOLIDATED~~share ~~FINANCIAL~~is ~~STATEMENTS~~computed by dividing net loss by the weighted average number of common shares outstanding during the specified period. Diluted loss per common share is computed by dividing net loss by the weighted average number of common shares and potential common shares during the specified period. All potentially dilutive securities at March 31, 2010 and 2009 which include stock purchase warrants and convertible debt, are convertible into 8,150,000 and 8,150,000 common shares, respectively have been excluded from the computation as their effect is antidilutive.

~~SEPTEMBER~~3. FAIR ~~30,~~VALUE ~~2009~~MEASUREMENT

~~CONCENTRATION~~The OFCompany ~~CREDIT~~utilizes ~~RISK~~the accounting guidance for fair value measurements and disclosures for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the condensed consolidated financial statements on a recurring basis or on a nonrecurring basis during the reporting period. The fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. The accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are defined as follows:

~~Financial~~Level ~~instruments~~1 ~~which~~- Observable ~~potentially~~inputs ~~subject~~such ~~the~~as ~~Company~~quoted tomarket ~~concentration~~prices ofin ~~credit~~active risk consist principally of accounts receivable. The Company grants credit to customers based on an evaluation of the customer’s financial condition, without requiring collateral. Exposure to losses on the receivables is principally dependent on each customer’s financial condition. The Company controls its exposure to credit risk through credit approvals.markets

Level 2 - Inputs other than quoted prices in active markets that are either directly or indirectly observable

~~INVENTORIES~~Level 3 - Unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions

~~Inventories~~As of March 31, 2010, the Company held certain financial assets that are ~~stated~~measured at fair value on a recurring basis. These consisted of cash and cash equivalents. The fair values of the ~~lower~~cash and cash equivalents is determined based on quoted market prices in public markets and is categorized as Level 1. The Company does not have any financial assets measured at fair value on a recurring basis as Level 2 or 3 and there were no transfers in or out of ~~cost~~Level 2 or ~~market~~Level 3 during the three months ended March 31, 2010 and 2009.

~~REVENUE~~The ~~RECOGNITION~~following table sets forth by level, within the fair value hierarchy, the Company’s financial assets accounted for at fair value on a recurring basis as of March 31, 2010 and December 31, 2009.

The Company recognizes revenue in accordance with the guidance contained in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (ASC”) 605 "Revenue Recognition” (ASC 605). Revenue is recognized when the product has been delivered and title and risk of loss have passed to the customer, collection of the receivables is deemed reasonably assured by management, persuasive evidence of an agreement exist and the sale price is fixed and determinable.

	Assets at Fair Value as of March 31, 2010 and December 31, 2009 Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2010
Cash and cash equivalents	$	947	$	947	$	-	$	-
December 31, 2009
Cash and cash equivalents	$	-	$	-	$	-	$	-

~~EARNINGS~~ The ~~PER~~Company ~~SHARE~~has other financial instruments, such as receivables, accounts payable and other liabilities which have been excluded from the tables above. Due to the short-term nature of these instruments, the carrying value of receivables, accounts payable and other liabilities approximate their fair values. The Company did not have any other financial liabilities with the scope of the fair value disclosure requirements as of March 31, 2010.

Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the specified period. Diluted loss per common share is computed by dividing net loss by the weighted average number of common shares and potential common shares during the specified period. All potentially dilutive securities at September 30, 2009 and 2008 which include stock purchase warrants and convertible debt, are convertible into 1,000,000 and 1,000,000 common shares, respectively have been excluded from the computation as their effect is antidilutive. 8

~~EVALUATION~~POWER OFSPORTS ~~LONG-LIVED~~FACTORY, ~~ASSETS~~INC.

~~The~~NOTES ~~Company~~TO ~~reviews~~UNAUDITED ~~property~~CONSOLIDATED ~~and~~FINANCIAL equipment and finite-lived intangible assets for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable in accordance with guidance in FASB ASC 360-15-35, “Impairment or Disposal of Long-Lived Assets”, (ASC 360-15-35). If the carrying value of the long-lived asset exceeds the present value of the related estimated future cash flows, the asset would be adjusted to its fair value and an impairment loss would be charged to operations in the period identified.STATEMENTS

~~DEPRECIATION~~MARCH ~~AND~~31, ~~AMORTIZATION~~2010

~~Property and equipment are stated at cost~~4. ~~Depreciation is provided for by the straight-line method over the estimated useful lives of the related assets.~~Inventories

~~STOCK~~The ~~BASED~~components ~~COMPENSATION~~of inventories are as follows:

For the nine months ended September 30, 2009 and 2008, the Company issued -0- and 200,000 warrants and recorded consulting expense of $-0- and $200,000, respectively, the fair value of the warrants at the time of issuance.

	March 31,		December 31,
	2010		2009
Motor bikes	$	414,305	$	684,209
Deposits on Inventory		250,000		250,000
	$	664,305	$	934,209

~~For~~In August 12, 2008, the ~~nine~~Company ~~months~~entered ~~ended~~into ~~September~~a 30Manufacturing Agreement, ~~2009~~ and ~~2008~~subsequently entered into an Amendment thereto, with Dickson International Holdings Ltd. For the manufacture of Andretti/Benelli branded motor scooters for the exclusive distribution thereof in the United States by the Company. The ~~issued~~Manufacturing ~~2,336,000~~Agreement is for a term of two years and is renewable for successive two-0-year ~~shares~~terms unless either party gives notice of ~~its~~termination ~~common~~in ~~stock~~advance ~~and~~of ~~recorded~~the ~~consulting~~renewal ~~expenses~~period. The Company is required to use commercially reasonable efforts to purchase certain minimum quantities of ~~$100,821~~motor ~~and~~scooters. As ~~$-0-~~an ~~respectively~~initial deposit under the Manufacturing Agreement, ~~fair~~the ~~value~~Company issued to Dickson International Holdings Ltd. 500,000 shares of the ~~shares~~Company’s common stock valued at $250,000. The Company will begin to amortize this deposit in the ~~time~~second quarter of ~~issuance~~2010.

~~For~~5. ~~the~~Property ~~nine months ended September 30, 2009~~ and ~~2008, the Company issued -0- and 39,103 shares of preferred stock and recorded consulting expenses of $-0- and $63,543, respectively, the fair value of the shares at the time of issuance.~~Equipment

~~INCOME~~Property ~~TAXES~~and equipment consist of furniture and equipment used in the ordinary course of business and are recorded at cost less accumulated depreciation.

The Company accounts for income taxes using an asset and liability approach under which deferred taxes are recognized by applying enacted tax rates applicable to future years to the differences between financial statement carrying amounts and the tax basis of reported assets and liabilities. The principal item giving rise to deferred taxes are future tax benefits of certain net operating loss carryforwards.

	March 31,		December 31,
	2010		2009
Equipment	$	20,924	$	20,924
Signs		7,040		7,040
		27,964		27,964
Less: accumulated depreciation		19,194		18,046
	$	8,770	$	9,918

9Depreciation expense for the three months ended March 31, 2010 and 2009 amounted to $1,148 and $2,244, respectively.

~~POWER SPORTS FACTORY, INC.~~9

~~NOTES~~POWER TOSPORTS ~~UNAUDITED~~FACTORY, ~~CONSOLIDATED FINANCIAL STATEMENTS~~INC.

~~SEPTEMBER~~NOTES ~~30,~~TO ~~2009~~UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~BENEFICIAL~~MARCH ~~CONVERSION~~31, ~~FEATURE~~2010

When debt or equity is issued which is convertible into common stock at a discount from the common stock market price at the date the debt or equity is issued, a beneficial conversion feature for the difference between the closing price and the conversion price multiplied by the number of shares issuable upon conversion is recognized6. ~~The beneficial conversion feature is presented as a discount to the related debt, with an offering amount increasing additional paid~~ Long-interm ~~capital.~~debt

~~FAIR~~Long-term ~~VALUE~~debt OFconsists ~~FINANCIAL~~of ~~INSTRUMENTS~~the following:

The Company adopted FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) on January 1, 2008, for all financial assets and liabilities that are recognized or disclosed at fair value in the condensed consolidated financial statements on a recurring basis or on a nonrecurring basis during the reporting period. While the Company adopted the provisions of ASC 820 for nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis, no such assets or liabilities existed at the balance sheet date. As permitted by ASC 820, the Company delayed implementation of this standard for all nonfinancial assets and liabilities recognized or disclosed at fair value in the financial statements on a nonrecurring basis and adopted these provisions effective January 1, 2009.

	March 31,		December 31,
	2010		2009
Note payable due April 30, 2008;
interest at 10% payable at
maturity (1)	$	68,645	$	68,645

Note payable to BankDirect
due January 12, 2010; interest at 8%
Monthly payments of $2,333(2)		-		2,333

Note payable to Crossroads Financial due
January 9, 2010, interest 21% plus fees,
monthly payments variable(3)		144,409		232,818

Note payable due May 24, 2009, interest
@ 10% per anum (4)		23,000		23,000

Note payable due September 10, 2010, interest
@ 10% per anum (5)		4,500		-

		240,554		326,796
Less amounts due within one year		240,554		326,796
	$	-	$	-

~~The~~For ~~fair~~the ~~value~~three ismonths anended ~~exit~~March ~~price~~31, ~~representing~~2010 ~~the~~and ~~price~~2009, ~~that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at~~ the ~~measurement date. The~~ Company ~~utilizes~~recorded ~~market~~interest ~~data~~expense orof ~~assumptions that market participants would use in pricing the asset or liability. ASC 820 establishes a three-tier fair value hierarchy~~$20, ~~which prioritizes the inputs used in measuring fair value. These tiers include: Level 1~~088, ~~defined as observable inputs such as quoted market prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable;~~ and ~~Level 3~~$28, ~~defined as unobservable inputs about which little or no market data exists~~908, ~~therefore requiring an entity to develop its own assumptions~~respectively.

As1) ofOn ~~September~~July 3031, ~~2009~~2007, the Company ~~held~~borrowed ~~certain~~$80,000 ~~financial~~from ~~assets~~an ~~that~~investor. The ~~are~~note ~~measured~~matured on April 30, 2008 at ~~fair~~which ~~value~~time onthe aprincipal ~~recurring~~amount ~~basis~~plus ten percent interest was due. ~~These~~ The ~~consisted~~maturity ofdate ~~cash~~was extended to May 30, 2008 and ~~cash~~then ~~equivalents~~extended to October 1, 2008. The ~~fair~~Company ~~value~~issued 10,000 shares of the ~~cash~~Company’s ~~and~~common ~~cash~~stock ~~equivalents~~valued isat ~~determined~~$3,000, ~~based~~as onadditional ~~quoted~~consideration ~~market~~with ~~prices~~the inloan, ~~public~~subsequent ~~markets~~to ~~and~~March is31, ~~categorized~~2008. As asof ~~Level~~March 1.31, ~~The~~2010 ~~Company~~and ~~does~~December ~~not~~31, ~~have~~2009, ~~any~~the ~~financial~~balance ~~assets~~on ~~measured~~this atnote ~~fair~~is ~~value~~$68,645. onThis anote ~~recurring~~is ~~basis~~currently asin ~~Level~~default. As 2of orMarch ~~Level~~31, 32010, ~~and~~the ~~there~~Company ~~were~~owes noaccrued ~~transfers~~interest in orthe ~~out~~amount of ~~Level~~$38,272. 2For orthe ~~Level~~three 3months ~~during~~ended March 31, 2010, and 2009, the ~~nine~~Company ~~months~~recorded ~~ended~~interest ~~September~~expense 30of $2,231 ~~2009~~and $2,025, respectively.

~~The~~2) ~~following~~On ~~table~~March ~~sets~~26, ~~forth~~2009, bythe ~~level,~~Company ~~within~~entered into a premium finance agreement with Bank Direct Capital Finance for the ~~fair~~purchase ~~value~~of ~~hierarchy~~insurance. The total amount financed was $23,333, with and annual percentage rate of 8% and monthly payments of $2,333. The loan was paid in full in January 2010. For the ~~Company’s~~three ~~financial~~months ~~assets~~ended ~~accounted~~March ~~for~~31, at2010, ~~fair~~and ~~value~~2009, onthe aCompany ~~recurring~~recorded ~~basis~~interest asexpense of ~~September~~$226 30and $339, ~~2009~~respectively.

			Assets at Fair Value as of September 30, 2009 Using
	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	1,722		$	1,722	$	––	$	––

~~The~~POWER ~~Company~~SPORTS ~~had no financial assets accounted for on a non-recurring basis as of September 30~~FACTORY, ~~2009~~INC.

~~There~~NOTES ~~were~~TO noUNAUDITED ~~changes~~CONSOLIDATED toFINANCIAL the Company’s valuation techniques used to measure asset fair values on a recurring or nonrecurring basis during the nine months ended September 30, 2009 and the Company did not have any financial liabilities as of September 30, 2009.STATEMENTS

~~The~~MARCH ~~Company has other financial instruments~~31, such as accounts receivables, accounts payable, notes payable, convertible debt and customer deposits which have been excluded from the tables above. Due to the short-term nature of these instruments, the carrying value of accounts receivables, accounts payable, notes payable, convertible debt and customer deposits approximate their fair values.2010

103) On January 9, 2009, the Company entered into a revolving credit loan (the “Credit Facility”) with Crossroads Debt LLC, a private investment company (the “Lender” or "Crossroads"). The loan is for a term of one year which is renewable under certain conditions and in the amount of $1,000,000. Terms under the agreement include and origination fee of one and one-half percent, interest of one and three-quarters percent per month, a collateral management fee of one-half percent a month, an advance rate of fifty percent of cost, which includes supplier invoice, freight and customs, with a maturity on advances of one hundred and twenty days, audit fees, a minimum outstanding balance requirement of $350,000 and an early termination fee of $7,500 per month for every month still outstanding in the term. The Lender has a first security interest in all accounts, chattel paper, goods (including inventory and equipment), instruments, investment property, documents, and general intangibles, letter of credit rights, commercial tort claims, deposit accounts, and the proceeds thereof via Uniform Commercial Code Filing Position. The Company also issued Crossroads 250,000 shares of common stock, valued at $12,500, in connection with the agreement. As of March 31, 2010 and December 31, 2009, the outstanding balance on this line was $144,409 and $232,818, respectively. For the three months ended March 31, 2010, and 2009, the Company recorded interest expense of $16,950 and $26,544 respectively.

~~POWER~~The ~~SPORTS~~Company ~~FACTORY~~entered into a Loan and Security Agreement (the “Agreement”), ~~INC~~dated January 9, 2010, by and between PSF, Inc. and Crossroads, pursuant to which advances to us of approximately $514,000 have been made. We are working with Crossroads to accelerate the liquidation of our inventory and pay the outstanding balance on the Agreement, which was approximately $98,000 as of June 20, 2010.

~~NOTES~~On TOApril ~~UNAUDITED~~6, ~~CONSOLIDATED~~2010, ~~FINANCIAL~~we ~~STATEMENTS~~entered into a further agreement with Crossroads that provided for specified payments to Crossroads for sales of particular scooter models. Crossroads specifically states that PSF is no longer in default on their loan and the new cash flow split is more advantageous to PSF. In addition, we agreed that we will sell at least 100 scooters in April, 150 scooters in May, and 150 scooters in June, 2010. We agreed to use our best efforts to facilitate scooter sales as quickly as possible. We agreed that in order to sell one X50, we must sell at least 10 units of another model. All other models would be sold in relation to their relative inventory levels.

~~SEPTEMBER~~4) 30On April 24, 2009, the Company borrowed $25,000 from an investor on a short-term basis. The interest rate is 10% per anum. The loan was due May 24, 2009. In October, 2009, the Company paid $2,000 against the outstanding balance. As of March 31, 2010, the balance due was $23,000. For the three months ended March 31, 2010, and 2009, the Company recorded interest expense of $623 and $0, respectively.

~~RECLASSIFICATIONS~~5) On March 10, 2010, the Company borrowed $4,500 from an investor on a short-term basis. The interest rate is 10% per anum. The loan is due September 10, 2010. For the three months ended March 31, 2010, and 2009, the Company recorded interest expense of $58 and $0, respectively.

~~Certain~~The ~~reclassifications~~aggregate ~~have~~amounts ~~been~~of ~~made~~all tolong-term ~~prior~~debt ~~period amounts~~ to ~~conform~~be torepaid for the ~~current~~ year ~~presentation. We~~following ~~made~~December ~~changes~~31, to2009 ~~dividends payable but it had no effect on the statement of operations.~~is:

NEW FINANCIAL ACCOUNTING STANDARDS

2010	$	240,554
2011		-
2012		-
		240,554
Current portion		-
	$	240,554

~~During the second quarter of 2009, the Company implemented additional interim disclosures about fair value of financial instruments, as required by FASB ASC Paragraph 825-10-65-1~~7. ~~Prior~~ toConvertible implementation, disclosures about fair values of financial instruments were only required to be disclosed annually. As the required modifications only related to additional disclosures of fair values of financial instruments in interim financial statements, the adoption did not affect the Company’s financial position or results of operations.Debt

~~Beginning~~1) inOn ~~the~~September ~~second~~7, ~~quarter of 2009~~2007, the Company ~~must~~issued ~~disclose~~four ~~the~~convertible ~~date~~promissory ~~through~~notes ~~which~~for ~~subsequent~~a ~~events~~total ~~have~~of ~~been evaluated~~$150,000 inwith ~~accordance~~interest ~~with~~at ~~the~~twelve ~~requirements~~(12.0%) inpercent. The ~~FASB~~notes ~~ASC~~matured ~~Paragraph~~October ~~855-10-50-~~1, 2009. ~~With~~ The ~~regards~~notes toare convertible, at the ~~condensed~~option ~~consolidated~~of ~~financial~~the ~~statements~~holders, into 300,000 shares of the Company’s common stock. Quarterly interest and ~~notes~~principal topayments ~~those~~are ~~financial~~$5,812 ~~statements~~per ~~contained~~note. Total ininterest ~~this~~due ~~Form~~as ~~10-Q~~of March 31, ~~the~~2010 ~~Company~~is ~~has~~$52,458. ~~evaluated~~The notes, all ~~subsequent~~of ~~events~~which ~~through~~are ~~November~~outstanding 18as at March 31, ~~2009~~2010, (are currently in default. For the ~~date~~three months ended March 31, 2010, and 2009, the Company’s ~~financial~~recorded ~~statement~~interest ~~are~~expense ~~issued)~~of $5,954 and $5,284 respectively.

In September 2009, the FASB implemented certain modifications to FASB ASC Topic 860, Transfers and Servicing, as a means to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets, the effects of a transfer on its financial position, financial performance, and cash flows, and a transferor’s continuing involvement, if any, in transferred financial assets. These modifications must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009. The Company does not expect the adoption of this standard to have an impact on the Company’s results of operations, financial condition or cash flows.11

~~During~~POWER ~~the~~SPORTS ~~third quarter of 2009~~FACTORY, the Company adopted the FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles in accordance with FASB ASC Topic 105, “Generally Accepted Accounting Principles” (the “Codification”)INC. The Codification has become the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. Effective with the Company’s adoption on July 1, 2009, the Codification has superseded all prior non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification has become non-authoritative. As the adoption of the Codification only affected how specific references to GAAP literature have been disclosed in the notes to the Company’s condensed consolidated financial statements, it did not result in any impact on the Company’s results of operations, financial condition or cash flows.

~~Updates~~NOTES toTO ~~the~~UNAUDITED ~~FASB~~CONSOLIDATED ~~Codification~~FINANCIAL ~~Applicable to the Company~~STATEMENTS

~~The~~MARCH ~~FASB has published FASB Accounting Standards Update No. 2009-12~~31, Fair Value Measurements and Disclosures (Topic 820)—Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). This Update amends Subtopic 820-10, Fair Value Measurements and Disclosures—Overall, to permit a reporting entity to measure the fair value of certain investments on the basis of the net asset value per share of the investment (or its equivalent). This Update also requires new disclosures, by major category of investments, about the attributes of investments included within the scope of this amendment to the Codification. The guidance in this Update is effective for interim and annual periods ending after December 15, 2009. The Company does not expect the adoption of this standard to have an impact on the Company’s results of operations, financial condition or cash flows.2010

112) On January 4, 2008, the Company entered into a short term secured convertible promissory note with a private investor for $250,000 at an annual simple interest rate of 15%. The note originally matured on March 1, 2008 and was extended to August 15, 2008. The note has the option to convert into common shares @ $1.00 per share. The Company granted the investor a security interest in all of the Company’s right, title and interest in all inventory of motorcycles, motor scooters, parts accessories and all proceeds of any and all of same including insurance payments and cash. On December 9, 2008, the investor executed an agreement with the Company’s new inventory financier in which the private investor accepted a $100,000 payment towards principal, subordinated his security interest to the new inventory financier and agreed to a stand still subject to written authorization from the new financier. The note, of which $150,000 is due as of December 31, 2009, is currently in default. As of March 31, 2010, the Company owed accrued interest in the amount of $58,184. For the three months ended March 31, 2010, and 2009, the Company recorded interest expense of $ 5,625 and $5,625, respectively.

~~POWER~~The ~~SPORTS~~Company ~~FACTORY~~has evaluated the conversion feature under applicable accounting literature, ~~INC~~including FASB ASC 815 “Derivatves and Hedging”, (ASC 815) and concluded that none of these features should be respectively accounted for as derivatives. The difference between the conversion of $650,000 and the fair value of the common stock into which the debt is convertible of $470,000 was included as additional paid in capital based on the conversion discount. The beneficial conversion factor in the amount of $180,000 has been accreted over the lives of the outstanding debt. Accretion expense of the beneficial conversion feature for the three months ended March 31, 2010 and 2009 amounted to $0 and $12,313, respectively. For the three months ended March 31, 2010, and 2009, the Company recorded interest expense of $11,579 and $18,352, respectively.

~~NOTES~~8. TONote ~~UNAUDITED~~Receivable/Note ~~CONSOLIDATED~~Payable ~~FINANCIAL~~- ~~STATEMENTS~~Related Party

~~SEPTEMBER~~During 302008, certain officers of the Company made advances to the Company. After repayment to the officers, the balance due the officers as of March 31, 2010 and 2009, were $6,160 and $19,508, respectively. The advances are interest free and all are due upon demand.

29. Accrued Expenses

~~Inventories~~Accrued expenses consist of the following:

The components of inventories are as follows:

	March 31,		December 31,
	2010		2009
Payroll expense	$	385,177	$	342,117
Payroll tax expense		416,575		419,812
Penalties		202,479		164,245
Professional fees		5,000		20,006
Interest expense		169,173		153,224
	$	1,178,404	$	1,099,404

	September 30,		December 31,
	2009		2008
Motor bikes	$	1,083,449	$	1,339,802
Parts		125,737		145,379
Deposits on Inventory		250,000		250,000
	$	1,459,186	$	1,735,181

10.	Stockholders’ Equity

In Common ~~October,~~Stock The ~~2007, the~~ Company ~~entered~~is ~~into~~authorized ato ~~Manufacturing~~issue ~~Agreement~~100, ~~and subsequently entered into an Amendment thereto~~000,000 ~~with~~shares ~~Dickson International Holdings Ltd. for the manufacture~~ of ~~Andretti/Benelli~~no ~~branded~~par ~~motor~~value ~~scooters~~common ~~for~~stock. All the ~~exclusive~~outstanding ~~distribution~~common ~~thereof~~stock inis ~~the~~fully ~~United~~paid ~~States~~and ~~by the Company~~non-assessable. The ~~Manufacturing~~total ~~Agreement~~proceeds isreceived for ~~a term of two years and is renewable for successive two-year terms unless either party gives notice of termination in advance of~~ the ~~renewal~~common ~~period. The~~stock ~~Company~~ is ~~required to use commercially reasonable efforts to purchase certain minimum quantities of motor scooters. As an initial deposit under~~ the ~~Manufacturing~~value ~~Agreement,~~used ~~the~~for ~~Company issued to Dickson Holdings Ltd. 500,000 shares of~~ the ~~Company’s~~ common stock ~~valued at $250,000~~.

~~On August~~ 12, 2008, the Company entered into a Manufacturing Agreement, and subsequently entered into an Amendment thereto, with Dickson International Holdings Ltd. For the manufacture of Andretti/Benelli branded motor scooters for the exclusive distribution thereof in the United States by the Company. The Manufacturing Agreement is for a term of two years and is renewable for successive two-year terms unless either party gives notice of termination in advance of the renewal period. The Company is required to use commercially reasonable efforts to purchase certain minimum quantities of motor scooters. As an initial deposit under the Manufacturing Agreement, the Company issued to Dickson International Holdings Ltd. 500,000 shares of the Company’s common stock valued at $250,000.

3POWER SPORTS FACTORY, INC.

~~Property~~NOTES ~~and~~TO ~~Equipment~~UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	September 30,		December 31,
	2009		2008
Equipment	$	41,898	$	41,898
Signs		7,040		7,040
Software		––		––
		48,938		48,938
Less: accumulated depreciation		30,034		23,803
	$	18,904	$	25,135

MARCH 31, 2010

~~Depreciation~~During ~~expense for~~ the ~~nine~~year ~~and three months~~ ended ~~September~~December 3031, 2009, ~~and~~the ~~2008~~Company ~~amounted~~received toproceeds of $6456,~~231~~000 ~~and~~from ~~$7,271~~the ~~and~~sale $1of 9,~~994~~075,190 ~~and~~shares $2of common stock. During the quarter ended March 31,~~386~~ 2010, ~~respectively~~the Company received proceeds of $0 from the sale of shares of common stock.

12During the year ended December 31, 2009, the Company issued 4,361,000 shares of common stock, valued at $.04 - $.05 per share, of which 526,000 shares were to related parties, for services and fees in the amount of $214,446, the fair value of the shares at the date of issuance. During the quarter ended March 31, 2010, the Company issued 1,000,000 shares of common stock, valued at $.02 per share, for services and fees in the amount of $20,000, the fair value of the shares at the date of issuance.

~~POWER~~During ~~SPORTS~~the ~~FACTORY~~year ended December 31, ~~INC~~2009, the Company issued 27,383,032 shares of common stock, valued at $.02 - $.09 per share, of which 666,666 shares were to related parties, in exchange for accounts payable in the amount of $1,691,492. During the quarter ended March 31, 2010, the Company issued 4,633,843 shares of common stock, valued at $.03 per share, in exchange for accounts payable in the amount of $139.015.

~~NOTES~~During TOthe ~~UNAUDITED~~year ~~CONSOLIDATED~~ended ~~FINANCIAL~~December ~~STATEMENTS~~31, 2009, the Company issued 5,521,237 shares of common stock, valued at $.06 - $.07 per share, upon conversion of long-term debt and accrued interest of $367,895. During the quarter ended March 31, 2010, the Company issued 0 shares of common stock, valued at $.0 per share

~~SEPTEMBER~~On 30April 15, 2008, the Company entered into a short-term promissory note with a private investor in the amount of $300,000. The interest rate is a simple twenty percent and the note matures on June 15, 2008. On March 12, 2009, the Company issued 250,000 shares to the investor as compensation valued at $12,500 for an extension on this loan until July 1, 1009. On May 11, 2009, the $240,000 balance of the note and accrued interest in the amount of $46,430 was converted into 4,163,487 shares of common stock.

4On March 23, 2010, the Company issued 1,000,000 shares to a consultant as compensation valued at $20,000 for Merger and Acquisition consulting services.

~~Long-term~~On ~~debt~~March 23, 2010, the Company issued 4,633,843 shares to our manufacturing partner to convert $139,015 of accounts payable.

~~Long-term~~Preferred ~~debt consists of the following:~~Stock

	September 30,		December 31,
	2009		2008
Note payable to Five Point
Capital Inc. due May 2011;
interest at 18.45%; monthly
payments of $397	$	––	$	10,461
Note payable due October 1, 2009;
interest at 10% payable at
maturity (1)		68,645		68,645
Note payable due May 1, 2009;
interest at15% (7)		65,000		––
Note payable to Cananwill, Inc due
August 1, 2009, interest at 8.84%;
monthly payments of $7,027		––		54,393
Note payable to Cananwill, Inc. due
August 1, 2009, interest at 8.59%
monthly payments of $2,807		––		21,753
Note payable to BankDirect
due January 12, 2010; interest at 8%
Monthly payments of $2,333(3)		11,437		––
Note payable to Crossroads Financial due
January 9, 2010, interest 21% plus fees,
monthly payments variable(4)		377,214		––
Note payable due July 1, 2009;
interest at 20.0% simple interest with a
private investor(s) (2)		––		240,000
Note payable due May 24, 2009, 10%
simple interest with a private investor (5)		25,000		––
Note payable to Guard Insurance due
December 10, 2009. Monthly payments
of $854. (6)		1,701		––
		548,997		395,252
Less amounts due within one year		548,997		387,882
	$	––	$	7,370

The Company is authorized to issue 50,000,000 shares of no par value preferred stock. The Company has designated 3,000,000 of these authorized shares of preferred stock as Series B convertible Preferred Stock. The Board of Directors has the authority, without action by the stockholders, to designate and issue the shares of preferred stock in one or more series and to designate the rights, preferences and each series, any or all of which may be greater than the rights of the Company’s common stock.

1311. Income Taxes

~~POWER~~The ~~SPORTS~~Company ~~FACTORY~~adopted the provisions of FASB ASC 740, ~~INC~~"Income Taxes", ("ASC 740") on January 1, 2008. As a result of the implementation of ASC 740, the Company recognized no adjustment in the net liabilities or equity for unrecognized income tax benefits. The Company believes there are no potential uncertain tax positions and all tax returns are correct as filed. Should the Company recognize a liability for uncertain tax positions, the Company will separately recognize the liability for uncertain tax positions on its balance sheet. Included in any liability for uncertain tax positions, the Company will setup a liability for interest and penalties. The Company policy is to recognize interest and penalties related to uncertain tax positions as a component of the current provision for income taxes.

~~NOTES~~As TOof ~~UNAUDITED~~December ~~CONSOLIDATED~~31, ~~FINANCIAL~~2009, ~~STATEMENTS~~the Company recorded a deferred tax asset with a U.S. net operating loss ("NOL") carryforward of approximately $10.2 million that was fully offset by a valuation allowance due to the determination that it was more than likely that the Company would be unable to utilize those benefits in the foreseeable future. The Company's U.S. NOL expires in 2025.

~~SEPTEMBER 30, 2009~~13

~~For~~POWER ~~the~~SPORTS ~~nine and three months ended September 30~~FACTORY, ~~2009 and 2008, the Company recorded interest expense of $187,579 and $108,996, and $65,349 and $39,436, respectively~~INC.

1)NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

OnMARCH ~~July~~ 31, 2007, the Company borrowed $80,000 from an investor. The note matured on April 30, 2008 at which time the principal amount plus ten percent interest was due. The maturity date was extended to May 30, 2008 and then extended to October 1, 2008. The Company issued 10,000 shares of the Company’s common stock valued at $3,000, as additional consideration with the loan, subsequent to March 31, 2008. On September 30, 2009 the balance on this note is $68,645. This note is currently in default.2010

2)12. Warrants

OnDuring ~~April~~January ~~15,~~ 2008, the Company ~~entered~~issued ~~into~~ a ~~short~~warrant ~~term~~to ~~promissory~~purchase ~~note~~200,000 ~~with~~common ashares ~~private~~at ~~investor~~an inexercise ~~the~~price ~~amount~~ of $~~300,000~~0. 01 per share. The ~~interest~~warrant ~~rate~~expires isDecember a31, ~~simple~~2017. The ~~twenty~~fair ~~percent~~value ~~and~~of the ~~note~~warrant ~~matures~~is estimated on ~~June~~the ~~15,~~date ~~2008.~~of ~~The~~the ~~balance~~grant onusing ~~this~~the ~~note~~Black-Scholes isoption-pricing ~~$240,000. On~~model ~~March~~with ~~12, 2009,~~ the ~~Company~~following ~~issued~~weighted ~~250,000~~average ~~shares~~assumptions toused for the ~~investor~~warrant asin ~~compensation~~2008: ~~valued~~dividend atyields ~~$12~~of 0%,~~500~~ ~~for~~expected anvolatility ~~extension~~of on218% ~~this~~and ~~loan~~expected ~~until~~life ~~July~~of 1,10 ~~2009~~years. Summary Onof ~~May~~warrant ~~11,~~activity ~~the~~as ~~$240,000 balance~~ of ~~the~~March ~~note~~31, 2010 and the ~~accrued~~changes ~~interest~~during in the ~~amount~~three ofmonths ~~$46,430~~ended ~~was~~March ~~converted into 4~~31,~~163,487~~ ~~shares of common stock.~~2010:

					Weighted
			Weighted		Average	Aggregate
			Average		Remaining	Intrinsic
Warrants	Shares		Exercise Price		Contractual Term	Value
Outstanding at January 1, 2010		200,000	$	0.01	8.5 Years
Granted		-		-		$	-
Exercised		-		-
Forfeited, expired or cancelled		-		-		$	-

Outstanding at March 31, 2010		200,000	$	0.01	8.25 Years

Exercisable at March 31, 2010		200,000	$	0.01	8.25 Years

~~On March 26, 2009, the Company entered into a premium finance agreement with Bank Direct Capital Finance for the purchase of insurance~~13. ~~The~~ ~~total~~Dividend ~~amount financed was $23,333, with and annual percentage rate of 8% and monthly payments of $2,333.~~Payable

4In September 2007, the Company entered into a share exchange agreement with the shareholders of PSF. Following the share exchange, the Company intended to transfer the existing business relating to the development of lastword® to its subsidiary, The Last Word Inc. To distribute the existing business of the Company to the shareholders, the Board of Directors of Purchase Point Media Corporation ("PPMC") declared a dividend, payable in common stock of the subsidiary holding the lastword® technology, at the rate of one share of common stock of the subsidiary for each share of common stock of PPMC owned on the record date. The Board of Directors of PPMC used May 2, 2007, as the record date for this share dividend, with a payment date as soon as practicable thereafter. Prior to the payment of this dividend, the subsidiary holding the lastword® technology would have to file a registration statement under the Securities Act of 1933 with, and have the filing deemed effective by the Securities and Exchange Commission. The Company intended to file the registration statement as soon as practicable. As of March 31, 2010, the registration statement had not been filed. During the year ended December 31, 2009, $30,000 of the intended liabilities has been transferred to accrued expenses and $165,688 was converted into 82,844 shares of common stock. As of March 31st, 2010 and December 31, 2009 the dividend payable in the amount of $477,488 and $477,488, respectively, represents the net liabilities that will be assumed by The Last Word Inc.

~~On January 9, 2009, the Company entered into a revolving credit loan (the “Credit Facility”) with Crossroads Debt LLC, a private investment company (the “Lender”)~~14. ~~The~~ Commitments ~~loan is for a term of one year which is renewable under certain conditions~~ and in the amount of $1,000,000. Terms under the agreement include and origination fee of one and one-half percent, interest of one and three-quarters percent per month, a collateral management fee of one-half percent a month, an advance rate of fifty percent of cost, which includes supplier invoice, freight and customs, with a maturity on advances of one hundred and twenty days, audit fees, a minimum outstanding balance requirement of $350,000 and an early termination fee of $7,500 per month for every month still outstanding in the term. The Lender has a first security interest in all accounts, chattel paper, goods (including inventory and equipment), instruments, investment property, documents, and general intangibles, letter of credit rights, commercial tort claims, deposit accounts, and the proceeds thereof via Uniform Commercial Code Filing Position. As of September 30, 2009, the outstanding balance on this line is $377,214.Contingencies

5a) On May 15, 2007, the Company entered into an exclusive licensing agreement with Andretti IV, LLC, a Pennsylvanian limited liability company to brand motorcycles and scooters. The term of the agreement is through December 31, 2017. Royalties under the agreement are tied to motorcycle and scooter sales branded under the “Andretti line”. The agreement calls for a minimum annual guarantee. After year two of the agreement, if the Company does not sell a certain minimum number of motorcycles and scooters under the “Andretti Line” it may elect to terminate the licensing agreement. A minimum payment of $250,000 was due under the agreement on March 31, 2008. A minimum payment of $250,000 was also due on July 31, 2008. These two payments totaling $500,000 represent the minimum annual guarantee owed to Andretti IV LLC for 2008. In addition, after certain volume targets are met, Andretti IV LLC receives a per bike fee. On January 1, 2008, the Company issued a warrant to Andretti IV, LLC, pursuant to their May 15, 2007 agreement, to purchase 200,000 common shares following the effectiveness of the Reverse Split at an exercise price equal to $.01 per share. The warrant expires December 31, 2017. The Company issued the warrant as part of the consideration to Andretti IV LLC in connection with the original license agreement signed in May 2007. The Company paid $50,000 as a licensing fee in 2007. The Company has paid $50,000 in 2008. The warrant has been accounted for at its fair value. On June 27, 2008, the Company entered into a second licensing agreement with Andretti IV, LLC, to further utilize the name Andretti in the branding and sale of its Yamati brand line. The term of the agreement is through December 31, 2018. Royalties under the agreement are tied to motorcycle and scooter sales branded under the “Andretti Yamati line”. The agreement calls for a Minimum Annual Guarantee. Minimum payment of $45,000 was due on September 30, 2008. A minimum payment of $45,000 was also due on December 31, 2008. These payments have not been made. After year two of the agreement, if the Company does not sell a certain minimum number of motorcycles and scooters under the “Andretti Yamati Line” it may elect to terminate the licensing agreement. On April 24, 2009, the Company made a $30,000 payment towards this agreement. On December 12th, 2009 the company made a payment of $25,000 towards the balance. On February 14th, 2010, the Company entered into a Restructuring Agreement, amending our June 27, 2008 licensing agreement with Andretti IV, LLC (“Andretti”), with respect to payments due for the year 2008 and 2009. As of December 31, 2009, the Company had a balance of $1,285,000 due to Andretti IV. Under the Restructuring Agreement, Provided (1) that the money is received into the Andretti IV account by wire transfer by close of business on Monday, February 22, 2010; (2) that PSF can demonstrate and represent that any and all usage of the Andretti name in all forms is discontinued immediately; and (3) any release concerning the termination by Andretti IV is submitted to us for review and our modification prior to distribution, Andretti IV would accept a lump sum payment of $50,000 in settlement of claims. Upon receipt of these payments, including payment in full of the promissory note due March 30, 2009, Andretti agreed to forgive the remaining balance of license fees owed for 2008 and 2009. The Company did not pay the $50,000 payment and was working with Andretti IV to honor this arrangement. On May 16th, 2010, we were served with a suit filed by Andretti IV, LLC, which has licensed to us, pursuant to Licensing Agreements, certain rights to use the “Andretti” name in connection with the branding and sale of our “Andretti Benelli” and “Yamati” lines of scooters. We have been in default of our obligations under the Licensing Agreements at various points in the last several years, and have been engaged in settlement agreement negotiations with Andretti IV, LLC at various times up to recently. Andretti IV, LLC terminated the Licensing Agreements on February 1, 2010. The lawsuit names the Company, Shawn Landgraf (our Chief Executive Officer) and Steve Rubakh (our President) as defendants, and seeks payments owed under the Exclusive Licensing Agreement, damages for fraudulent inducement, misrepresentations, damages to the Andretti IV name, goodwill and reputation, and preliminary injunctive relief to prevent further use by us of Andretti IV licensed rights.

On April 24, 2009, the Company borrowed $25,000 from an investor on a short term basis. The interest rate is ten percent. The loan was due on May 24, 2009. This loan is in default and the lender has instituted legal action. The loan is personally guaranteed by an officer and director of the Company.14

6)POWER SPORTS FACTORY, INC.

OnNOTES ~~August~~TO ~~10,~~UNAUDITED ~~2009,~~CONSOLIDATED ~~the~~FINANCIAL ~~Company entered into a premium finance agreement with Guard Insurance for the purchase of insurance. The total amount financed was $3,410, with monthly payments of $854.~~STATEMENTS

7)MARCH 31, 2010

b) On ~~October~~May 114, 2008, the Company ~~borrowed~~signed ~~$150~~an agreement with Road America Motor Club,~~000~~ onInc., to provide a ~~short~~24-hour ~~term~~road-side ~~basis~~assistance atprogram ~~fifteen~~to ~~percent~~Andretti ~~interest~~motorbike ~~compounded~~owners. The ~~monthly~~agreement ~~and~~commenced ~~125~~as of April 1,~~000~~ ~~shares~~2008 ofand ~~common~~continues ~~stock~~for ~~valued~~an atinitial ~~$22~~term of two years,~~500. The~~ ~~note~~or ~~and~~until ~~interest~~terminated ~~were~~by ~~due~~either onparty ~~November~~according ~~30,~~to ~~2008. An~~the ~~Officer~~terms of the agreement. The Company ~~guaranteed~~pays for the ~~loan.~~enrollment ~~The~~of ~~loan~~each isbike ~~currently~~properly inentered ~~default.~~into ~~Principal~~the ~~payments~~company ofwarranty ~~$85,000~~program ~~have~~for ~~been~~a ~~made~~period ~~and~~of ~~the~~one ~~outstanding~~year ~~principal~~subject ~~balance~~to isterm ~~$65,000~~and conditions.

~~The~~15. ~~aggregate~~Legal ~~amounts of all long-term debt to be repaid for the year following December 31, 2008 is:~~Proceedings

2009	$	548,997
2010		––
2011		––
		548,997
Current portion		548,997
	$	––

Yellow Transportation v. Power Sports Factory, Inc. The Company was sued in December, 2008, by Yellow Transportation for the sum of $28,838, plus lawful interest, attorneys’ fees and the costs of the suit, in the Superior Court of New Jersey, Camden County, for transportation services rendered by the plaintiff. The company received an entry of Judgment on November 7th, 2009 for $31,592, all of which is included in accounts payable. The Company entered into a forbearance agreement with Yellow Transportation on January 7th, 2010. The agreement requires PSF to pay $5,000 per month to Yellow for 5 months starting in January. PSF failed to make the any payment on this forbearance agreement.

14Liberty Mutual Insurance Company v. Power Sports Factory, Inc. The plaintiff in this case has sued the Company in the Superior Court of New Jersey, Camden County, for the sum of $45,096 for goods and/or services rendered, all of which is included in accounts payable.

~~POWER~~Business ~~SPORTS~~Technology ~~FACTORY~~Partners, ~~INC~~Inc. v. Power Sports Factory, Inc. The plaintiff in this case has sued the Company in the Superior Court of New Jersey, Camden County, for the sum of $137,634 for goods and/or services rendered. On October 15th, 2009 BTP and PSF reached a settlement agreement. The agreement states that PSF will pay BTP $75,000 in payments beginning on November 5th, 2009 and ending April 5th, 2010. Business Technology Partners filed a final judgment on December 7th in this case against us in the amount of $137,634, all of which is included in accounts payable.

~~NOTES~~Fedex TOCustomer ~~UNAUDITED~~Information ~~CONSOLIDATED~~Services, ~~FINANCIAL~~Inc. ~~STATEMENTS~~v. Power Sports Factory, Inc. The Company was sued in April 2009 by Fedex Customer Information Services for $9,470 in the Superior Court of New Jersey. Power Sports Factory has not answered this claim as a result of cash flow constraints and expects Fedex to obtain a judgment against us in the amount of $11,788, all of which is included in accounts payable.

~~SEPTEMBER~~ Advanstar 30Commnications, Inc. v. Power Sports Factory, Inc. & Shawn Landgraf Advanstar Communications filed suit against us in the Superior Court of New Jersey on August 19, 2009, for $43,955 for advertising services, all of which is included in accounts payable. The Company intends to settle this lawsuit.

5.15

~~Convertible~~POWER ~~Debt~~SPORTS FACTORY, INC.

OnNOTES ~~September~~TO 7,UNAUDITED ~~2007,~~CONSOLIDATED ~~the~~FINANCIAL Company issued four convertible promissory notes for a total of $150,000 with interest at twelve (12.0%) percent. The notes mature October 1, 2009. The notes are convertible, at the option of the holders, into 300,000 shares of the Company’s common stock. Quarterly interest and principal payments are $5,812.50 per note. Total interest due September 30, 2009 is $40,725. Payments due under the note for January 1, April 1, July 1, and October 1, 2008 are currently in default.STATEMENTS

OnMARCH ~~November 2~~31, 2007, the Company issued a convertible promissory note for $250,000 with interest at twelve (12%) percent. The note matured on April 30, 2008. The maturity date had been extended to October 1, 2008. The note is convertible, at the option of the holder, into 250,000 shares of the Company’s common stock. On August 6, 2008, this note and accrued interest of $25,000 were converted in to 550,000 common shares.2010

~~On January 4~~Aicco, ~~2008,~~Inc. ~~the~~v. ~~Company~~Power ~~entered~~Sports ~~into a short term secured convertible promissory note with a private investor for $250~~Factory,~~000~~ ~~at an annual simple interest rate of 15%~~Inc. The ~~note~~Company ~~originally~~was ~~matured~~sued on ~~March~~September 123rd, ~~2008~~2009 ~~and~~by ~~was~~Aicco ~~extended~~Inc tofor ~~August 15~~$22,397 ~~2008. This note is currently~~ in ~~default. The note has~~ the ~~option~~Superior toCourt ~~convert~~of ~~into~~New ~~common~~Jersey, ~~shares @ $1.00 per share. The Company granted the investor a security interest in~~ all of ~~the~~which ~~Company’s~~is ~~right,~~included ~~title and interest~~ in ~~all~~accounts ~~inventory~~payable. ofPower ~~motorcycles,~~Sports ~~motor~~Factory ~~scooters,~~has ~~parts~~not ~~accessories~~answered ~~and~~this ~~all~~claim ~~proceeds~~as ofa ~~any~~result ~~and all~~ of ~~same~~cash ~~including~~flow ~~insurance~~constraints ~~payments~~ and ~~cash. On~~expects ~~December~~Aicco 9,to ~~2008,~~obtain ~~the~~a ~~investor~~judgment ~~executed~~against anus ~~agreement with the Company’s new inventory financier~~ in ~~which~~ the ~~private~~amount ~~investor~~of ~~accepted a~~ $~~100~~22,~~000 payment towards principal, subordinated his security interest to the new inventory financier and agreed to a stand still subject to written authorization from the new financier~~397.

~~The~~RR ~~Company~~Donnelly ~~has~~and ~~evaluated~~Sons. ~~the~~v. ~~conversion~~Power ~~feature~~Sports ~~under applicable accounting literature~~Factory, ~~including FASB ASC 815 “Derivatives and Hedging”, (ASC 815) and concluded that none of these features should be respectively accounted for as derivatives~~Inc. ~~The~~ ~~difference~~RR ~~between~~Donnelly ~~the conversion of $650,000~~ and ~~the~~Sons ~~fair~~filed ~~value~~suit ofagainst ~~the~~us ~~common~~in ~~stock into which~~ the ~~debt~~Superior isCourt ~~convertible~~ of ~~$470,000~~New ~~was~~Jersey ~~included as additional paid in capital based~~ on the conversion discount. The beneficial conversion factor in the amount of $180,000 is being accreted over the lives of the outstanding debt. Accretion expense of the beneficial conversion feature for the nine months ended September 3025, 2009, ~~amounted~~for to $247,~~323. For~~855 ~~the~~for ~~nine~~printing ~~months ended September 30~~services, ~~2009,~~all ~~and 2008, the Company recorded interest expense~~ of ~~$37,972 and $67,973 respectively on the convertible notes of~~ which ~~$87,659~~ is included in ~~accrued~~accounts ~~expenses~~payable. The onCompany ~~the~~intends ~~Company’s~~to ~~balance~~settle ~~sheet~~this lawsuit.

6Cananwill Inc. v. Power Sports Factory, Inc. Cannanwill Inc. filed suit against us in the Superior Court of New Jersey on October 1, 2009, for $20,457 for financing services, all of which is included in accounts payable. Power Sports Factory has not answered this complaint as a result of cash flow constraints and expects Cananwill to obtain a judgment against us in the amount of $20,457.

~~Note~~5WPR ~~Receivable/Note~~v. ~~Payable~~Power -Sports ~~Related~~Factory, ~~Party~~Inc. 5WPR. filed suit against us in the Superior Court of New York on October 21, 2009, for $33,000 for Public Relations services. The Company intends to contest this lawsuit as 5WPR never performed any services under the contract.

1st Priority 1st Priority filed suit against us in the Superior Court of New Jersey on October 22, 2009, for $41,538 for shipping services, all of which is included in accounts payable. Power Sports Factory has not answered this complaint as a) result of cash flow constraints and expects 1st Priority to obtain a judgment against us in the amount of $41,538.

~~During~~USA ~~2008~~MotorToys ~~and~~v. ~~2007,~~Power ~~certain~~Sports ~~officers~~Factory, ofInc. ~~the~~On ~~Company~~November ~~made~~9, ~~advances~~2009 to the Company~~. After~~ ~~repayment~~received toa ~~the~~notice ~~officers,~~of ~~the~~entry ~~balance~~of ~~due~~judgment ~~the~~against ~~officers~~Power asSports ofFactory ~~September~~in ~~30,~~the ~~2009,~~fourth ~~and~~judicial ~~December~~district ~~2008,~~Court ~~were~~of ~~$10,208~~Utah ~~and~~for $22,~~863, respectively~~085. ~~Two~~ The ofCompany ~~the~~intends ~~advances~~to ~~are~~contest ~~interest~~this ~~free~~lawsuit ~~and~~as ~~all~~Power ~~are~~Sports ~~due~~Factory ~~upon~~was ~~demand. Interest~~never ~~expense~~served ~~for~~with ~~the~~a ~~nine~~complaint ~~months~~or ~~ended September 30, 2009, and 2008 were $411 and $365, respectively~~summons.

7Highroad Press filed suit against us on March 17th, 2010, in the Superior Court of New Jersey for the amount of $14,353, for printing services, all of which is included in accounts payable. We intend to settle this lawsuit.

~~Accrued~~Proxy ~~Expenses~~Express filed suit against us on March 30th, 2010, in the Superior Court of New Jersey for the amount of $3233.20, for printing services. We intend to settle this lawsuit.

~~Accrued~~Netsuite ~~expenses~~filed ~~consist~~suit against us on April 30th, 2010, in the Superior Court of New Jersey for the ~~following:~~amount of $37,566 plus interest for software. We intend to fight this lawsuit as PSF never received any software or services from Netsuite.

	September 30,		December 31,
	2009		2008
Payroll expense	$	275,751	$	167,902
Payroll tax expense		450,411		379,572
Penalties		133,310		486,903
Professional fees		11,000		50,438
Interest expense		190,351		141,296
Other		2,532		—
	$	1,063,355	$	1,226,111

Andretti IV, LLC filed suit against us on May 16th, 2010, which has licensed to us, pursuant to Licensing Agreements, certain rights to use the “Andretti” name in connection with the branding and sale of our “Andretti Benelli” and “Yamati” lines of scooters. We have been in default of our obligations under the Licensing Agreements at various points in the last several years, and have been engaged in settlement agreement negotiations with Andretti IV, LLC at various times up to recently. Andretti IV, LLC terminated the Licensing Agreements on February 1, 2010. The lawsuit names the Company, Shawn Landgraf (our Chief Executive Officer) and Steve Rubakh (our President) as defendants, and seeks payments owed under the Exclusive Licensing Agreement, damages for fraudulent inducement, misrepresentations, damages to the Andretti IV name, goodwill and reputation, and preliminary injunctive relief to prevent further use by us of Andretti IV licensed rights.

1516

POWER SPORTS FACTORY, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER~~MARCH 3031, ~~2009~~2010

8Ellenoff Grossman Schole filed suit against us on June 9th, 2010, in the Civil Court of New York for the amount of $11,636.34 for legal services. We intend to settle this lawsuit.

~~Stockholders’~~16. ~~Equity~~Subsequent Events

~~Common~~We ~~Stock~~entered into a Loan Agreement (the “Loan Agreement”), dated May 25, 2010, by and between Juggernaut Financial Group, LLC (“Lender”) and Power Sports Factory, Inc., pursuant to which the Lender advanced a loan of $100,000 (the “Loan”) to us. The Loan bears interest at the rate of ten (10%) percent per annum, and is due 90 days after delivery of the funds to us, which took place on June 1, 2010. We can prepay the Loan at any time prior to maturity without penalty. We paid a loan origination fee of $7,000, plus two of our bikes from inventory.

~~The~~An ~~Company~~event isof ~~authorized~~default will occur under the Loan documents if any of the following events occurs: (a) failure to ~~issue~~pay ~~100~~any principal or interest hereunder on the day it becomes due without notice from the Lender; (b) if any representation or warranty made by the Company in the Loan Agreement or in connection with any borrowing or request for an advance thereunder,~~000~~ or in any certificate,~~000~~ ~~shares~~financial ofstatement, noor ~~par~~other ~~value~~statement ~~common~~furnished ~~stock. All~~by the ~~outstanding~~Company ~~common~~to ~~stock~~the Lender is ~~fully~~untrue ~~paid~~in any material respect at the time when made; (c) default by the Company in the observance or performance of any other covenant or agreement contained in the Loan Agreement, other than a default constituting a separate and ~~non-assessable. The~~distinct ~~total~~event ~~proceeds~~of ~~received~~default ~~for~~under Paragraph 8 of the ~~common~~Loan ~~stock~~Agreement; is(d) filing by the ~~value~~Company ~~used~~of ~~for~~a voluntary petition in bankruptcy seeking reorganization, arrangement or readjustment of debts, or any other relief under the ~~common~~Bankruptcy ~~stock.~~Code as amended or under any other insolvency act or law, state or federal, now or hereafter existing; or (e) filing of an involuntary petition against the Company in bankruptcy seeking reorganization, arrangement or readjustment of debts, or any other relief under the Bankruptcy Code as amended, or under any other insolvency act or law, state or federal, now or hereafter existing, and the continuance thereof for ninety (90) days undismissed, unbonded, or undischarged.

In ~~June~~connection ~~2008,~~with the ~~Company’s~~Loan, ~~shareholders~~we ~~approved~~pledged a12,500,000 1treasury ~~for~~shares 20of ~~reverse~~our common stock, ~~split~~which shares have piggyback rights if we file a registration statement under the Securities Act of 1933, as amended. ~~Except~~ ~~for~~During the ~~presentation~~term of the pledge agreement, if our common ~~shares~~stock ~~authorized~~closes ~~and~~at ~~issued~~$.009 per share on any trading day, the ~~consolidated~~Company ~~balance~~is ~~sheet,~~required ~~all~~immediately ~~shares~~to pledge and deliver 20,000,000 shares as additional collateral under the pledge agreement. If our common stock closes at $.007 per share ~~information~~on ~~has~~any ~~been~~trading ~~revised~~day, tothe ~~give~~Company ~~retroactive~~is ~~effect~~required immediately to pledge and deliver an additional 10,000,000 shares, for a total of 30,000,000 additional shares, as additional collateral under the ~~reverse~~pledge agreement. We also issued the Lender a two-year warrant to purchase 3,000,000 shares of our common stock, ~~split~~at an exercise price of $.03 per share, which shares have similar registration rights.

~~During~~Subsequent ~~2007,~~events ~~certain~~have ~~officers~~been ofevaluated ~~the~~through ~~Company~~June ~~contributed $175~~22,~~000~~ ~~to the Company, which is included in Additional paid-in capital on the Company’s consolidated balance sheet~~2010.

a)17

OnITEM ~~August~~2. 6,MANAGEMENT'S ~~2008,~~DISCUSSION ~~the~~AND ~~Company~~ANALYSIS ~~converted~~OF aFINANCIAL ~~$250,000~~CONDITION ~~note~~AND ~~payable~~RESULTS ~~and~~OF ~~accrued interest of $25,000 into 550,000 common shares.~~OPERATIONS

b)The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and notes thereto and the other financial information included elsewhere in this report. Certain statements contained in this report, including, without limitation, statements containing the words “believes,” “anticipates,” “expects” and words of similar import, constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including our ability to create, sustain, manage or forecast our growth; our ability to attract and retain key personnel; changes in our business strategy or development plans; competition; business disruptions; adverse publicity; and international, national and local general economic and market conditions.

~~On August 20, 2008, the company retained a consultant to provide equity research services. The Consultant was compensated 75,000 common shares for these services valued at $18,750.~~Overview

c)The Company was organized under the laws of the State of Minnesota on June 28, 1996. The Company, through the acquisition in 1997 of a Nevada corporation acquired the trademark, patent and exclusive marketing rights to, and invested in the development of a grocery cart advertising display device.

On ~~August~~April 2624, ~~2008~~2007, we entered into the Share Exchange Agreement with Power Sports Factory, Inc. (“PSF”) and the shareholders of PSF. The Share Exchange Agreement provided for our acquiring all of the outstanding shares of PSF in exchange for shares of the Company’s Common Stock. On May 14, 2007, we issued 60,000,000 shares of Common Stock to Steve Rubakh, the major shareholder of PSF, and on August 31, 2007, entered into an amendment (the “Amendment”) to the Share Exchange Agreement, that provided for a ~~distributor~~completion ~~250~~of the acquisition of PSF at a closing (the “Closing”) which was held on September 5, 2007. At the Closing the Company issued 1,650,000 shares of a new Series B Convertible Preferred Stock to the shareholders of PSF, to complete the acquisition of PSF by us. Each share of Preferred Stock was converted into 10 shares of our Common Stock, effective June 9, 2008, following approval by the shareholders at a shareholders meeting held on May 28, 2008, of a 1:20 reverse split of our common stock ~~valued~~and atchanging ~~$62~~our name from Purchase Point Media Corp. to Power Sports Factory,~~500~~ Inc.

d)Through PSF’s manufacturing relationships in China, it began to import and sell Power Sports products in the United States. Our products have been marketed mainly under the “Yamati” and “Andretti”, brands. At the beginning of 2007, we made the determination to focus primarily on the sales and distribution of motor scooters. We now sell the motor scooters that we import primarily to power sports dealers and a small portion through the internet.

OnRecent August 28, 2008, the Company paid compensation to a staffing company for providing sales personnel for a total of $20,000, which was paid $10,000 in cash and 14,285 shares of common stock valued at $10,000.Developments

eOn May 1, 2009, we formed an Alternative Transportation Division named "BikeShareSource" (TM). This newly launched division will provide sustainable transportation solutions to municipalities and transit agencies, property managers and real estate developers, colleges and universities, hotels, parks and other transportation related businesses. We are, developing, distributing and operating solar powered Bike Sharing Stations, enabling bicycle sharing to be an integral part of the transportation system. In addition, we intend to partner with major universities, municipalities, transit agencies, real estate developers, hotels, parks and other transportation related businesses companies to facilitate our bike sharing solution. Our services will include sustained transportation consulting and customized solutions development, software licensing, equipment manufacturing and distribution.

OnBike ~~September~~Sharing ~~25,~~(also ~~2008~~known as Community Bicycle Programs) as it exists today is an emerging form of environmentally friendly public transportation that incorporates information technology with shared bicycles, which allows for an alternative form of one-way transit for residents and visitors of a region. Imagine a service that gives citizens the ~~Company~~convenience ~~retained~~of a ~~consultant~~bike towithout ~~provide~~all ~~long~~the ~~range~~hassles ~~investor~~of ~~relations~~storage, ~~planning~~maintenance, etc. The ~~consultant~~main ~~was~~focus ~~compensated~~of ~~250~~the division will be on Bicycle Sharing Market,~~000~~ ~~shares~~which is an emerging form of ~~common~~environmentally ~~stock~~friendly ~~valued~~public transportation that is growing at ~~$25~~a significant pace. The number of bike sharing programs worldwide nearly doubled over the last 12 months,~~000~~ according to research information provided by CityRyde, LLC. Continued growth is expected primarily due to increased environmental impact awareness, increased usage of public transit systems and greater need for ~~these~~decreased ~~services~~traffic congestion.

f)18

OnResults ~~September 29, 2008, an officer and director~~ of ~~the company, converted $40,000 of debt into 500,000 shares of common stock.~~Operations

g)Three Months Ended March 31, 2010 Compared to Three Months Ended March 31, 2009

OnDuring ~~September~~the 29three months ended March 31, ~~2008~~2010, anwe ~~officer~~had ~~and~~sales ~~director~~ of $249,508, as compared with $132,189 in the ~~company~~comparable period in 2009. Cost of sales was $287,496 ~~converted~~in 2010, as compared with $21151,~~000~~593 in 2009. We incurred a net loss of ~~debt~~$(253,607) ~~into~~in ~~262~~the three months ended March 31,~~500~~ ~~shares~~2010, as compared with a net loss of ~~common~~$(1,071,049) ~~stock~~for the comparable period in 2009, the decreased loss being primarily attributable to a decrease in our selling, general and administrative costs from $967,580 in 2009 to $164,720 in 2010, as well as the increase in net sales from $132,189 in 2009 to 249,508. Interest expense decreased from $84,065 for the three months ended March 31, 2009, to $50,899 for the three months ended March 31, 2010.

h)Liquidity and Financial Resources

OnSince ~~September~~the ~~29,~~acquisition ~~2008~~of Power Sports Factory, we have operated at a ~~consultant~~loss. We ofrely ~~the~~significantly ~~Company~~on ~~converted~~the ~~$40,000~~private placement of debt ~~into~~and ~~500,000~~equity ~~shares~~to ofpay ~~common~~operating ~~stock~~expenses.

iAs of March 31, 2010, the Company had $947 of cash on hand. The Company has incurred a net loss of $(253,607) in the three months ended March 31, 2010, and has working capital and stockholders' deficiencies of $4,194,822 and $4,186,052, respectively, at March 31, 2010. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

OnDuring ~~October~~the 1three months ended March 31, ~~2008~~2010, ~~the~~we ~~Company~~received proceeds of $31,053 from, and made net repayments on, outstanding loans payable of $86,242. We made payments to related parties of $13,348. On March 23, 2010, we issued ~~125~~4,~~000~~633,843 shares of common stock in payment of $139,015 of outstanding debt to our manufacturing partner, and also issued 1,000,000 shares to a ~~lender~~consultant as compensation valued at $2220,~~500~~000 for merger and acquisition consulting services.

j)We will require substantial additional financing to maintain operations at Power Sports Factory, and to expand our operations to continue entry into the alternative transportation area.

OnWe ~~October~~are ~~21,~~in ~~2008,~~litigation with Andretti IV LLC. We are in the ~~Company~~process ~~entered~~of ~~into~~liquidating anour ~~agreement~~obligations with aCrossroads ~~firm~~Financial. The toprincipal ~~provide~~balance ~~the~~of ~~Company~~this ~~with~~loan ~~capital~~was ~~restructuring~~$144,409 at March 31, 2010, and ~~corporate~~$232,818 ~~financing~~as ~~advice~~at December 31, 2009. ~~The~~ We ~~firm~~also ~~was~~have ~~compensated~~in ~~500~~excess of approximately $470,000 ~~shares~~in ofcollection ~~common~~litigation ~~stock~~against ~~valued~~us, atin addition to the Andretti litigation, for which we will require capital in the near term. Our obligations to the Internal Revenue Service total approximately $40700,000, including employment taxes through March 31, 2010, which includes interest and penalties.

k)We expect that sale of our inventory bikes will provide us working capital of approximately $200,000; however, we will need to raise additional capital to meet the above obligations. There is no assurance that we will be able raise additional required capital to meet obligations arising from the litigation with Andretti IV LLC and settlement with Crossroads Financial, as well as planned settlement in other litigation matters and with the Internal Revenue Service. If we are unable to meet one or more of these obligations, we could be forced to file under the Federal Bankruptcy Code for protection from creditors.

OnCritical ~~January~~Accounting ~~7, 2009, a creditor converted $90,000 of debt into 4,500,000 shares of common stock.~~Policies

lThe Securities and Exchange Commission recently issued "Financial Reporting Release No. 60 Cautionary Advice Regarding Disclosure About Critical Accounting Policies" ("FRR 60"), suggesting companies provide additional disclosures, discussion and commentary on those accounting policies considered most critical to its business and financial reporting requirements. FRR 60 considers an accounting policy to be critical if it is important to the Company's financial condition and results of operations, and requires significant judgment and estimates on the part of management in the application of the policy. For a summary of the Company's significant accounting policies, including the critical accounting policies discussed below, please refer to the accompanying notes to the financial statements.

OnThe ~~January~~Company 7,assesses ~~2009~~potential impairment of its long-lived assets, anwhich ~~officer~~include its property and ~~director~~equipment ~~was~~and ~~issued~~its ~~526,000~~identifiable ~~shares~~intangibles such as deferred charges under the guidance of ~~common~~SFAS ~~stock~~144 "Accounting for ~~$10,521~~the Impairment or Disposal of ~~expenses~~Long-Lived Assets". The Company must continually determine if a permanent impairment of its long-lived assets has occurred and write down the assets to their fair values and charge current operations for the measured impairment.

m)19

OnCRITICAL ~~January~~ACCOUNTING ~~7, 2009, a creditor converted $20,000 of debt into 1,000,000 shares of common stock.~~ISSUES

n)The Company's discussion and analysis of its financial condition and results of operations are based upon the Company's financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of the financial statements, requires the Company to make estimates and judgments that effect the reported amount of assets, liabilities, and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to intangible assets, income taxes and contingencies and litigation. The Company bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

OnRecent ~~February~~Accounting ~~12, 2009, an officer converted $20,000 of debt into 666,666 shares of common stock.~~Pronouncements

o)The Company’s significant accounting policies are summarized in Note 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. There were no significant changes to these accounting policies during the three months ended March 31, 2010, and the Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.

OnITEM ~~February~~3. ~~18,~~QUANTITATIVE ~~2009,~~AND ~~the~~QUALITATIVE ~~company~~DISCLOSURES ~~issued~~ABOUT ~~10,000~~MARKET ~~shares of common stock to an investor for a loan extension fee of $300~~RISK.

p) We are primarily exposed to foreign currency risk, interest rate risk and credit risk.

On Foreign ~~March~~Currency 9Risk - We import products from China into the United States and market our products in North America. As a result, ~~2009~~our financial results could be affected by factors such as changes in foreign currency exchange rates or, ~~the~~if ~~company~~we ~~issued~~initiate 1our planned international operations,~~000~~ weak economic conditions in foreign markets. Because our revenues are currently denominated in U.S. dollars,~~000~~ ~~shares~~a strengthening of ~~common~~the ~~stock~~dollar tocould amake ~~senior~~our ~~sales~~products ~~executive~~less ascompetitive ain ~~retention~~foreign ~~incentive~~markets ~~package~~that ~~valued~~we atplan ~~$50~~to enter. If the Chinese Yuan strengthened against the dollar,~~000~~ our cost of imported products could increase and make us less competitive. We have not hedged foreign currency exposures related to transactions denominated in currencies other than U.S. dollars. We do not engage in financial transactions for trading or speculative purposes.

16 Interest Rate Risk - Interest rate risk refers to fluctuations in the value of a security resulting from changes in the general level of interest rates. Investments that are classified as cash and cash equivalents have original maturities of three months or less. Our interest income is sensitive to changes in the general level of U.S. interest rates. We do not have significant short-term investments, and due to the short-term nature of our investments, we believe that there is not a material risk exposure.

~~POWER~~ Credit ~~SPORTS~~Risk ~~FACTORY~~- Our accounts receivables are subject, ~~INC~~in the normal course of business, to collection risks. We regularly assess these risks and have established policies and business practices to protect against the adverse effects of collection risks. As a result we do not anticipate any material losses in this area.

~~NOTES~~ITEM TO4T. ~~UNAUDITED~~CONTROLS ~~CONSOLIDATED~~AND ~~FINANCIAL STATEMENTS~~PROCEDURES.

~~SEPTEMBER~~ The 30Company's Chief Executive Officer and its Chief Financial Officer are primarily responsible for the accuracy of the financial information that is presented in this quarterly Report. These officers have as of the close of the period covered by this Quarterly Report, ~~2009~~evaluated the Company's disclosure controls and procedures (as defined in Rules 13a-4c and 15d-14c promulgated under the Securities Exchange Act of 1934) and determined that such controls and procedures were effective in ensuring that material information relating to the Company was made known to them during the period covered by this Quarterly Report. In their evaluation, no changes were made to the Company's internal controls in this period that have materially affected, or are reasonably likely materially to affect, the Company’s internal control over financial reporting.

q)20

OnPART ~~March~~II—OTHER ~~30, 2009, the Company sold 428,570 shares of common stock to an investor for $15,000.~~INFORMATION

r)ITEM 1. LEGAL PROCEEDINGS.

OnThe ~~April 6, 2009, the~~ Company ~~sold~~is ~~2,000,000~~a ~~shares~~party ~~of common stock~~ to anthe ~~investor~~following ~~for $100,000~~lawsuits.

s)Yellow Transportation v. Power Sports Factory, Inc. The Company was sued in December, 2008, by Yellow Transportation for the sum of $28,838, plus lawful interest, attorneys’ fees and the costs of the suit, in the Superior Court of New Jersey, Camden County, for transportation services rendered by the plaintiff. The company received an entry of Judgment on November 7th, 2009 for $31,592, all of which is included in accounts payable. The Company entered into a forbearance agreement with Yellow Transportation on January 7th, 2010. The agreement requires PSF to pay $5,000 per month to Yellow for 5 months starting in January. PSF failed to make the any payment on this forbearance agreement.

OnLiberty ~~April~~Mutual ~~24,~~Insurance ~~2009~~Company v. Power Sports Factory, Inc. The plaintiff in this case has sued the Company ~~sold~~in ~~1,000,000~~the ~~shares~~Superior Court of ~~common~~New ~~stock~~Jersey, toCamden anCounty, ~~investor~~ for the sum of $5045,~~000~~096 for goods and/or services rendered, all of which is included in accounts payable.

t)Business Technology Partners, Inc. v. Power Sports Factory, Inc. The plaintiff in this case has sued the Company in the Superior Court of New Jersey, Camden County, for the sum of $137,634 for goods and/or services rendered. On October 15th, 2009 BTP and PSF reached a settlement agreement. The agreement states that PSF will pay BTP $75,000 in payments beginning on November 5th, 2009 and ending April 5th, 2010. Business Technology Partners filed a final judgment on December 7th in this case against us in the amount of $137,634, all of which is included in accounts payable.

OnFedex ~~April~~Customer 28Information Services, ~~2009~~Inc. v. Power Sports Factory, ~~the~~Inc. The Company ~~converted~~was sued in April 2009 by Fedex Customer Information Services for $909,~~000~~470 in the Superior Court of ~~debt~~New ~~into~~Jersey. 1Power Sports Factory has not answered this claim as a result of cash flow constraints and expects Fedex to obtain a judgment against us in the amount of $11,~~250~~788,~~000 shares~~ all of ~~common~~which ~~stock~~is included in accounts payable.

u)Advanstar Commnications, Inc. v. Power Sports Factory, Inc. & Shawn Landgraf Advanstar Communications filed suit against us in the Superior Court of New Jersey on August 19, 2009, for $43,955 for advertising services, all of which is included in accounts payable. The Company intends to settle this lawsuit.

OnAicco, ~~May~~Inc. ~~11,~~v. ~~2009~~Power Sports Factory, ~~the~~Inc. The Company ~~converted~~was ~~$286~~sued on September 23rd,~~430~~ of2009 ~~debt~~by ~~comprised~~Aicco ofInc for $~~240~~22,~~000~~397 in ~~principal~~the ~~and~~Superior ~~$46~~Court of New Jersey,~~430~~ all of which is included in ~~accrued~~accounts ~~interest~~payable. ~~into~~Power ~~4,163,487~~Sports ~~shares~~Factory has not answered this claim as a result of ~~common~~cash ~~stock~~flow constraints and expects Aicco to obtain a judgment against us in the amount of $22,397.

RR Donnelly and Sons. v). Power Sports Factory, Inc. RR Donnelly and Sons filed suit against us in the Superior Court of New Jersey on September 25, 2009, for $7,855 for printing services, all of which is included in accounts payable. The Company intends to settle this lawsuit.

OnCananwill ~~May~~Inc. ~~11,~~v. ~~2009~~Power Sports Factory, Inc. Cannanwill Inc. filed suit against us in the ~~company~~Superior ~~converted~~Court of New Jersey on October 1, 2009, for $~~250~~20,~~000~~457 for financing services, all of which is included in accounts payable. ~~due~~Power toSports ~~its~~Factory ~~manufacturing~~has ~~supplier~~not ~~into~~answered ~~4,604,428~~this ~~shares~~complaint as a result of ~~common~~cash ~~stock~~flow constraints and expects Cananwill to obtain a judgment against us in the amount of $20,457.

w)5WPR v. Power Sports Factory, Inc. 5WPR. filed suit against us in the Superior Court of New York on October 21, 2009, for $33,000 for Public Relations services. The Company intends to contest this lawsuit as 5WPR never performed any services under the contract.

On1st Priority 1st ~~July~~Priority 23filed suit against us in the Superior Court of New Jersey on October 22, 2009, ~~the~~for ~~Company~~$41,538 ~~sold~~for ~~828~~shipping services,~~800~~ ~~shares~~all of ~~common~~which ~~stock~~is ~~for~~included in accounts payable. Power Sports Factory has not answered this complaint as a result of cash flow constraints and expects 1st Priority to obtain a judgment against us in the amount of $41,~~440~~538.

x)USA MotorToys v. Power Sports Factory, Inc. On November 9, 2009 the Company received a notice of entry of judgment against Power Sports Factory in the fourth judicial district Court of Utah for $22,085. The Company intends to contest this lawsuit as Power Sports Factory was never served with a complaint or summons.

~~On July 24, 2009, the Company sold 830,000 shares of common stock for $41,500.~~21

y)Highroad Press filed suit against us on March 17th, 2010, in the Superior Court of New Jersey for the amount of $14,353, for printing services, all of which is included in accounts payable. We intend to settle this lawsuit.

OnProxy ~~July~~Express ~~28,~~filed ~~2009,~~suit ~~the~~against ~~Company~~us ~~sold~~on ~~828~~March 30th,~~000~~ ~~shares~~2010, in the Superior Court of ~~common~~New ~~stock~~Jersey for the amount of $413233.20,~~480~~ for printing services. We intend to settle this lawsuit.

z)Netsuite filed suit against us on April 30th, 2010, in the Superior Court of New Jersey for the amount of $37,566 plus interest for software. We intend to fight this lawsuit as PSF never received any software or services from Netsuite.

OnAndretti ~~August~~IV, 24LLC filed suit against us on May 16th, ~~2009~~2010, which has licensed to us, pursuant to Licensing Agreements, certain rights to use the “Andretti” name in connection with the branding and sale of our “Andretti Benelli” and “Yamati” lines of scooters. We have been in default of our obligations under the Licensing Agreements at various points in the last several years, and have been engaged in settlement agreement negotiations with Andretti IV, LLC at various times up to recently. Andretti IV, LLC terminated the Licensing Agreements on February 1, 2010. The lawsuit names the Company, ~~issued~~Shawn ~~250~~Landgraf (our Chief Executive Officer) and Steve Rubakh (our President) as defendants,~~000~~ ~~shares~~and ofseeks ~~common~~payments ~~stock~~owed under the Exclusive Licensing Agreement, damages for ~~$12~~fraudulent inducement,~~500~~ misrepresentations, damages to the Andretti IV name, goodwill and reputation, and preliminary injunctive relief to prevent further use by us of ~~consulting~~Andretti ~~fees~~IV licensed rights.

~~aa)~~Ellenoff Grossman Schole filed suit against us on June 9th, 2010, in the Civil Court of New York for the amount of $11,636.34 for legal services. We intend to settle this lawsuit.

OnITEM ~~August~~1A. ~~14,~~RISK ~~2009, the company entered into a consulting agreement and issued 300,000 shares of common stock for services in the amount of $15,000~~FACTORS.

~~bb)~~Not applicable.

OnITEM ~~August~~2. ~~24,~~UNREGISTERED ~~2009,~~SALES ~~the~~OF ~~Company~~EQUITY ~~sold~~SECURITIES ~~441,220~~AND ~~shares~~USE ofOF ~~common stock to an investor for $44,122~~PROCEEDS.

~~cc)~~The following table sets forth the sales of unregistered securities since the Company’s last report filed under this item.

On September 4, 2009, the Company sold 600,000 shares of common stock for $30,000.

Date	Title and Amount (1)	Purchaser	Principal Underwriter	Total Offering Price/ Underwriting Discounts
March 3, 2010	300,000 shares of Common Stock	Account payable conversion.	NA	$.04 per share/NA
March 23, 2010	4,533,843 shares of Common Stock.	Manufacturing partner.	NA	$.03 per share/NA
March 23, 2010	1,000,000 shares of Common Stock	Consultant.	NA	$.02 per share/NA

dd(1) The issuances to suppliers, lenders, consultants, investors and employees are viewed by the Company as exempt from registration under the Securities Act of 1933, as amended (“Securities Act”), alternatively, as transactions either not involving any public offering, or as exempt under the provisions of Regulation D or Rule 701 promulgated by the SEC under the Securities Act.

OnITEM ~~September~~3. ~~30,~~DEFAULTS ~~2009,~~UPON ~~the~~SENIOR ~~Company issued Crossroads’ Financial 250,000 shares of common stock as additional compensation per our current inventory financing line~~SECURITIES.

~~Preferred~~Not ~~Stock~~applicable.

aITEM 4. (REMOVED AND RESERVED).

~~During~~ITEM ~~2007,~~5. ~~the~~OTHER ~~Company sold 54,000 shares of Series B Convertible Preferred Stock and received proceeds of $270,000~~INFORMATION.

Not applicable.

b)ITEM 6. EXHIBITS.

During 2007, the Company issued 333,316 shares of Series B Convertible Preferred Stock in exchange for the liquidation of $1,663,000 of Company debt.

31.1		Certification of Chief Executive Officer Pursuant to Section 302 of The Sarbanes Oxley Act of 2002
31.2		Certification of Chief Financial Officer Pursuant to Section 302 of The Sarbanes Oxley Act of 2002.
32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Oxley Act of 2002
32.2		32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Oxley Act of 2002.

c)23

~~During 2007, the Company issued 265,900 shares of Series B Convertible Preferred Stock for services with a fair value of $726,950.~~SIGNATURES

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

OnPOWER ~~January~~SPORTS 18FACTORY, ~~2008, the Company retained a firm to provide management consulting, business advisory, shareholder information and public relation services~~INC. ~~The~~By: ~~term~~/s/ ofShawn ~~the~~Landgraf ~~agreement~~Shawn isLandgraf ~~one~~Chief ~~year.~~Executive ~~The Company issued 35,000 Series B Convertible shares for services to be performed with a fair value $43,750 and paid $2,500 per month as compensation under the agreement.~~Officer

e)Date: June 23, 2010

~~On March~~ 24~~, 2008, the Company issued 389 shares of Series B Convertible Preferred Stock for services valued at $1,712.~~

f)EXHIBIT INDEX

On April 1, 2008, the Company retained a marketing consultant for $15,000. On April 21, 2008, the consultant agreed to convert his payable into 3,000 shares of Series B Convertible Shares.

31.1		Certification of Chief Executive Officer Pursuant to Section 302 of The Sarbanes Oxley Act of 2002
31.2		Certification of Chief Financial Officer Pursuant to Section 302 of The Sarbanes Oxley Act of 2002.
32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Oxley Act of 2002
32.2		32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Oxley Act of 2002.

POWER SPORTS FACTORY, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

On April 24, 2008, the Company paid compensation to staffing company for providing permanent accounting personnel for a total of $10,272, which was paid $7,191 in cash and 514 shares of Series B Convertible Preferred Shares.

On May 16, 2008, the Company issued MCMC, LLC. 200 shares of Series B Convertible Preferred Shares.

In June 2008, the Board of Directors converted all shares of Series B Convertible Preferred shares outstanding on that date into shares of common stock at the rate of 10 shares for each share of Series B Convertible Preferred Stock.

Income Taxes

The Company adopted the provisions of FASB ASC 740, “Income Taxes” (ASC 740”) on January 1, 2007. As a result of the implementation of FIN 48, the Company recognized no adjustment in the net liability for unrecognized income tax benefits.

10.

Warrants

During January 2008, the Company issued a warrant to purchase 200,000 common shares at an exercise price of $0.01 per share. The warrant expires December 31, 2017. The fair value of the warrant is estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for the warrant in 2008: dividend yields of 0%, expected volatility of 218% and expected life of 10 years.

Summary of warrant activity as of September 30, 2009 and the changes during the nine months ended September 30, 2009:

Weighted

Average

Remaining

Aggregate

Warrants

Exercise Price

Contractual Term

Intrinsic Value

Outstanding at January 1, 2009

200,000

0.01

9.5

Granted

––

Exercised

––

Forfeited, expired or cancelled

––

Outstanding at September 30, 2009

200,000

0.01

9.5

Exercisable at September 30, 2009

200,000

0.01

9.5

Dividend Payable

In September 2007, the Company entered into a share exchange agreement with the shareholders of PSF. Following the share exchange, the Company would transfer its existing business relating to the development of lastword® to its subsidiary, The Last Word Inc. To distribute the existing business of the Company to the shareholders, the Board of Directors of PPMC declared a dividend, payable in common stock of our subsidiary holding the lastword® technology, at the rate of one share of common stock of the subsidiary for each share of common stock of PPMC owned on the record date. The Board of Directors of PPMC used May 2, 2007, as the record date for this share dividend, with a payment date as soon as practicable thereafter. Prior to the payment of this dividend, our subsidiary holding the lastword® technology will have to file a registration statement under the Securities Act of 1933 with, and have the filing declared effective by, the SEC. As of December 31, 2008 and December 31, 2007, the dividend payable in the amount of $673,176 represents the net liabilities that would be assumed by The Last Word Inc.

POWER SPORTS FACTORY, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

13.

Commitments and Contingencies

On April 1, 2007, the Company hired two consultants to provide transition management services, business planning, managerial systems analysis, sales and distribution assistance and inventory management systems services. Both contracts are each $15,000 per month and can be terminated at will when the Company decides that the services have been completed and/or are no longer necessary. One contract ceased on May 15, 2008. The other contract ceased on August 15 2008.

On May 15, 2007, the Company entered into an exclusive licensing agreement with Andretti IV, LLC, a Pennsylvanian limited liability company to brand motorcycles and scooters. The term of the agreement is through December 31, 2017. Royalties under the agreement are tied to motorcycle and scooter sales branded under the “Andretti line”. The agreement calls for a minimum annual guarantee. After year two of the agreement, if the Company does not sell a certain minimum number of motorcycles and scooters under the “Andretti Line” it may elect to terminate the licensing agreement. A minimum payment of $250,000 was due under the agreement on March 31, 2008. A minimum payment of $250,000 was also due on July 31, 2008. These two payments totaling $500,000 represent the minimum annual guarantee owed to Andretti IV LLC for 2008. In addition, after certain volume targets are met, Andretti IV LLC receives a per bike fee. A consultant working for the Company co-guaranteed the minimum annual guarantee for the first two years and receives a 4.1667% of the license fees as a fee throughout the life of the license related to that work. The consultant subsequently became an officer and director of the Company. On January 1, 2008, the Company issued a warrant to Andretti IV, LLC, pursuant to their May 15, 2007 agreement, to purchase 200,000 common shares following the effectiveness of the Reverse Split at an exercise price equal to $.01 per share. The warrant expires December 31, 2017. The Company issued the warrant as part of the consideration to Andretti IV LLC in connection with the original license agreement signed in May 2007. The Company paid $50,000 as a licensing fee in 2007. The Company has paid $50,000 in 2008. The warrant has been accounted for in the financial statements.

On June 1, 2007, the Company hired Steven A. Kempenich as its Chief Executive Officer and a director of the Company. His contract is a two-year agreement at $16,666 per month. In March, 2009, Mr. Kempenich sued the Company, and our directors and executives, Shawn Landgraf and Steven Rubakh, for, inter alia, breach of contract and the covenant of good faith and fair dealing, unjust enrichment, promissory estoppel, tortious interference with contract, trade libel, and violation of the New Jersey Wage Act. On July 24, 2009 (the “Settlement Date”), we agreed to settle all matters involved in this case on the following basis: we would pay to Mr. Kempenich $10,000 within 30 days of the Settlement Date and would deliver to Mr. Kempenich shares of the Company’s common stock from certificates issued to an existing shareholder in September 2007 worth $15,000, the number of shares to be calculated by averaging the market prices of our common stock over the 30 days prior to the Settlement Date; Mr. Kempenich would be removed as a guarantor on two corporate loans, and the Defendants jointly and severally agreed to indemnify Mr. Kempenich against any liability under these loans; the parties agreed to mutual non-disparagement and non-defamation and that any public representations would be consistent therewith.

In accordance with the settlement agreement with Mr. Kempenich, on September 1st, 2009, we completed payment of $10,000 and transfer by an existing shareholder of 258,621 shares of our common stock to Mr. Kempenich (the number of shares being calculated to be worth $15,000 based on the 30 day average price of 5.8 cents for our common stock). Power Sports Factory was able write off $133,223 in debt as a result of this settlement.

On October 11, 2007, the Company retained a firm to provide corporate communications and Investor relations. The agreement is for one year which automatically renews unless either party elects to terminate the agreement with a notice of termination no later than sixty days prior to the end of the term. Fees for these services are $5,000 per month and 20,000 shares of common stock. Fees are earned but deferred until the seventh month at which time the deferred fees are paid in equal amounts along with the current fees as they are incurred. The Company paid $24,000 as consulting fees in 2007 of which $14,000 was paid with 1,000 shares of preferred stock.

POWER SPORTS FACTORY, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

Effective January 1, 2008, the Company entered into a monthly agency retainer agreement with a marketing and advertising firm to provide the company with services at a fee of $25,000 per month. This agreement ceased at the end of May, 2008.

On January 18, 2008, the Company retained a firm to provide management consulting, business advisory, shareholder information and public relation services. The term of the agreement is one year. The Company issued 35,000 Series B Convertible shares and pays $2,500 per month as compensation under the agreement.

On May 14, 2008, the Company signed an agreement with Road America Motor Club, Inc., to provide a 24 hour road-side assistance program to Andretti motorbike owners. The agreement commenced as of April 1, 2008 and continues for an initial term of two years, or until terminated by either party according to the terms of the agreement. The Company pays for the enrollment of each bike properly entered into the company warranty program for a period of one year subject to term and conditions.

On June 27, 2008, the Company entered into a second licensing agreement with Andretti IV, LLC, to further utilize the name Andretti in the branding and sale of its Yamati brand line. The term of the agreement is through December 31, 2018. Royalties under the agreement are tied to motorcycle and scooter sales branded under the “Andretti Yamati line”. The agreement calls for a Minimum Annual Guarantee. Minimum payment of $45,000 was due on September 30, 2008. A minimum payment of $45,000 is also due on December 31, 2008. These payments have not been made. After year two of the agreement, if the Company does not sell a certain minimum number of motorcycles and scooters under the “Andretti Yamati Line” it may elect to terminate the licensing agreement.

On July 16, 2008, the Company entered into contracts with a storage company to provide warehousing and logistics services on the west coast of the United States. This contract requires fees for storage and handling of our motor bike inventory which are incurred monthly on a per bike basis.

On August 15, 2008, the Company hired Shawn Landgraf as the chief executive officer. His salary is $120,000 per year. He does not have a contract at this time.

On October 1, 2008, the Company entered into a premium finance agreement with Cananwill Inc., for the purchase of additional insurance. The total amount financed was $67,500, with an annual percentage rate of 8.84% and monthly payments of $7,026.50. This contract was terminated on March 1, 2009. There is an outstanding balance of $54,393.

On October 1, 2008, the Company entered into a premium finance agreement with Cananwill Inc., for the purchase of additional insurance. The total amount financed was $27,000, with an annual percentage rate of 8.59% and monthly payments of $2,807.44. This contract was terminated on March 1, 2009. There is an outstanding balance of $21,753.

On October 23, 2008, the Company entered into an exclusive distribution agreement with Eurospeed, Inc., to distribute its Andretti product line to new and used automotive dealers in the U. S. and Canada. The agreement calls for an initial purchase of six hundred units before November 30, 2008 and a minimum of seventy-five hundred units over the first twelve months of the agreement. The Company’s manufacturer has agreed to supply Eurospeed with product in the event that the Company defaults under its manufacturing agreement. The initial purchase date had been extended to December 30, 2008. As of April, 2009 Eurospeed had not placed an initial order due to financing constraints. This agreement has expired.

On January 20, 2009, the Company entered into a modification of its licensing agreement with Andretti IV, LLC, for payments due for the year 2008. As of December 31, 2008, PSF had a balance of $540,000 due to Andretti IV, LLC. Under the restructuring agreement, PSF made a commitment to pay $250,000 by February 6, 2009, agreed to execute a note for $87,000 due March 30, 2009, and convert $58,000 into 1,000,000 shares of common stock. Upon receipt of the payments, and payment in full of the note, Andretti IV, LLC, agreed to forgive the remaining balance due for 2008. On April 24, 2009, the Company made a $50,000 payment towards this agreement.

POWER SPORTS FACTORY, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

On March 31, 2009, the Company subleased a portion of its warehouse space at its headquarters. The sublease is on a month-to-month basis for 6,000 square feet at a monthly rate including CAM charges of $3,250.

August 1st, 2009 the signed a letter of intent with Boyesen Engineering. The two companies have agreed to form a new wholly owned subsidiary of Power Sports Factory to design, manufacture and distribute all-new proprietary products and exclusively market all patented engine technologies owned by Boyesen Engineering.

14.

Subsequent Events

On October 23, 2009, the Company entered into a modification of its licensing agreement with Andretti IV, LLC, for payments due for the year 2008 and 2009. As of September 30, 2009, PSF had a balance of $1,340,000 due to Andretti IV, LLC. Under the restructuring agreement, PSF made a commitment to pay $30,000 by October 23, 2009, $60,000 by December 1 and $60,000 by January 1,2010. Upon receipt of the payments, and payment in full of the note, Andretti IV, LLC, agreed to forgive the remaining balance due for 2008 and 2009. On October 23, 2009, the Company made a $30,000 payment towards this agreement. The balance of the agreement is pending.

On October 28 the company issued 500,000 shares of common stock as compensation for consultants that facilitated our letter of intent with Boyeson Engineering.

On October 28, 2009, the Company sold 1,000,000 shares of common stock to an investor for $50,000.

November 1st, 2009, the company retained a consultant to assist in fund raising. The Consultant was compensated 425,000 common shares for these services.

Legal Proceedings

Liberty Mutual Insurance Company v. Power Sports Factory, Inc. The plaintiff in this case has sued the Company in the Superior Court of New Jersey, Camden County, for the sum of $45,096 for goods and/or services rendered. We have answered the complaint denying that the Company owes any amounts to plaintiff, and the case is in discovery.

Business Technology Partners, Inc. v. Power Sports Factory, Inc. The plaintiff in this case has sued the Company in the Superior Court of New Jersey, Camden County, for the sum of $134,965.12 for goods and/or services rendered. The parties to this case have reached the following settlement. PSF will pay defendant $75,000 on the following dates: $25,000 on November 5, 2009, $25,000 on December 5, 2009, $15,000 on January 5, 2010 and $10,000 on April 5, 2010. We did not make the initial payment on November 5th, 2009.

Justin Gasarch v. Power Sports Factory, Inc. The plaintiff in this case filed suit against the Company, Shawn Landgraf, our Chief Executive Officer, and a Company consultant on July 9, 2009. On April 24, 2009 loaned the Company $25,000 with a maturity date of May 24, 2009. Shawn Landgraf and the consultant sued in this case had personally guaranteed the loan. The Company intends to settle this lawsuit.

Fedex Customer Information Services, Inc. v. Power Sports Factory, Inc. The Company was sued in April 2009 by Fedex Customer Information Services for $9,470 in the Superior Court of New Jersey. The Company intends to settle this lawsuit.

POWER SPORTS FACTORY, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

Advanstar Commnications, Inc. v. Power Sports Factory, Inc. & Shawn Landgraf Advanstar Communications filed suit against us in the Superior Court of New Jersey on August 19, 2009, for $43,955 for advertising services. The Company intends to settle this lawsuit.

RR Donnelly and Sons. v. Power Sports Factory, Inc. RR Donnelly and Sons filed suit against us in the Superior Court of New Jersey on September 25, 2009, for $7,855 for printing services. The Company intends to settle this lawsuit.

Cananwill Inc. v. Power Sports Factory, Inc. Cannanwill Inc. filed suit against us in the Superior Court of New Jersey on October 1, 2009, for $20,456.47 for financing services. The Company intends to settle this lawsuit.

5WPR v. Power Sports Factory, Inc. 5WPR. filed suit against us in the Superior Court of New York on October 21, 2009, for $33,000 for Public Relations services. The Company intends to fight this lawsuit as 5WPR never performed any services under the contract.

USA MotorToys v. Power Sports Factory, Inc. On November 9, 2009 we received a notice of entry of judgment against Power Sports Factory in the fourth judicial district Court of Utah for $22,085. The Company intends to contest this as Power Sports Factory was never served with a complaint or summons.

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and notes thereto and the other financial information included elsewhere in this report. Certain statements contained in this report, including, without limitation, statements containing the words “believes,” “anticipates,” “expects” and words of similar import, constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including our ability to create, sustain, manage or forecast our growth; our ability to attract and retain key personnel; changes in our business strategy or development plans; competition; business disruptions; adverse publicity; and international, national and local general economic and market conditions.

Overview

The Company was organized under the laws of the State of Minnesota on June 28, 1996. The Company, through the acquisition in 1997 of a Nevada corporation acquired the trademark, patent and exclusive marketing rights to, and invested in the development of a grocery cart advertising display device.

On April 24, 2007, we entered into the Share Exchange Agreement with Power Sports Factory, Inc. (“PSF”) and the shareholders of PSF. The Share Exchange Agreement provided for our acquiring all of the outstanding shares of PSF in exchange for shares of the Company’s Common Stock. On May 14, 2007, we issued 60,000,000 shares of Common Stock to Steve Rubakh, the major shareholder of PSF, and on August 31, 2007, entered into an amendment (the “Amendment”) to the Share Exchange Agreement, that provided for a completion of the acquisition of PSF at a closing (the “Closing”) which was held on September 5, 2007. At the Closing the Company issued 1,650,000 shares of a new Series B Convertible Preferred Stock to the shareholders of PSF, to complete the acquisition of PSF by us. Each share of Preferred Stock was converted into 10 shares of our Common Stock effective June 9, 2008, following approval by the shareholders at a shareholders meeting held on May 28, 2008, of a 1:20 reverse split of our common stock and changing our name from Purchase Point Media Corp. to Power Sports Factory, Inc.

Through PSF’s manufacturing relationships in China, it began to import and sell Power Sports products in the United States. Our products have been marketed mainly under the “Yamati” and “Andretti”, brands. At the beginning of 2007, we made the determination to focus primarily on the sales and distribution of motor scooters. We now sell the motor scooters that we import primarily to power sports dealers and a small portion through the internet.

Recent Developments

On May 1, 2009, we formed an Alternative Transportation Division named "BikeShareSource" (TM). This newly launched division will provide sustainable transportation solutions to municipalities and transit agencies, property managers and real estate developers, colleges and universities, hotels, parks and other transportation related businesses. We intend to plan, develop, distribute and operate solar powered Bike Sharing Stations, enabling bicycle sharing to be an integral part of the transportation system. In addition, we intend to partner with major car sharing companies to facilitate our bike sharing solution. Our services will include sustained transportation consulting and customized solutions development, software licensing, equipment manufacturing and distribution. In May, 2009, we announced that we entered into a Joint Venture Agreement with CityRyde LLC, the premier Bike Share Consulting Company. CityRyde will provide us with product design, RFP development, and help grow our “Bike Share Source” Division. In August, 2009, we placed an order for Bike Sharing Systems, we will deploy our first installation in Philadelphia in the fourth quarter of 2009 in conjunction with our joint venture with CityRyde LLC.

Results of Operations

Nine Months Ended, September 30, 2009 Compared to Nine Months Ended September 30, 2008

During the nine months ended September 30, 2009, we incurred a net loss of $1,517,398 as compared with a net loss of $2,602,164 for the comparable period in 2008, the decreased loss being primarily attributable to a decrease in our selling, general and administrative costs from $2,921,994 in 2008 to $1,318,513 in 2009, partially attributable to forgiveness of accrued expenses in the amount of $675,000 resulting from a settlement with the Internal Revenue Service, coupled with a decrease in net sales from $2,081,750 in 2008 to $507,705 in 2009, with cost of sales being $1,650,120 and $506,702, respectively, for these periods. Non-cash compensation increased in 2009 to $100,821 from

$-0- in 2008. Interest expense increased from $108,996 for the nine months ended September 30, 2008, to $198,669 for the nine months ended September 30, 2009.

Three Months Ended September 30, 2009 Compared to Three Months Ended September 30, 2008

During the three months ended September 30, 2009, we incurred a net loss of $23,366, as compared with a net loss of $837,726 for the comparable period in 2008, the decreased loss being primarily attributable to a decrease in our selling, general and administrative costs from $809,198 in 2008 to $41,310 in 2009, which is partially attributable to forgiveness of accrued expenses in the amount of approximately $675,000 resulting from a settlement with the Internal Revenue Service, offset by a decrease in net sales from $671,616 in 2008 to $157,338 in 2009, with cost of sales being $658,601 and $183,959, respectively in these periods. Interest expense increased from $39,436 for the three months ended September 30, 2008, to $76,439 for the three months ended September 30, 2009.

Liquidity and Financial Resources

Since the acquisition of Power Sports Factory, we have operated at a loss. We rely significantly on the private placement of debt and equity to pay operating expenses.

As of September 30, 2009, the Company had $1,722 of cash on hand. The Company has incurred a net loss of $1,517,398 in the nine months ended September 30, 2009, and has working capital and stockholders' deficiencies of $4,818,465 and $1,570,287, respectively, at September 30, 2009. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

During the nine months ended September 30, 2009, we received proceeds of $363,542 from equity financing and proceeds net of repayments from loans payable of $143,745. We received proceeds of $5,000 from a loan from a related party, and made a payment of $17,655 on a note to a related party. We also had forgiveness of debt in the amount of approximately $133,223 attributable the settlement with Steven Kempenich. We will require substantial additional financing to maintain operations at Power Sports Factory, and to expand our operations to continue the launch of our new Andretti brand.

We are required under our Settlement Agreement with Andretti IV LLC to make two final settlement payments of $60,000 on or before December 1, 2009 and of $60,000 on or before January 1, 2010. We are in the process of liquidating our obligations with Crossroads Financial. The principal balance of this loan was $377,214 September 30, 2009, and $343,088 as November 13, 2009. We expect to have the Crossroads Financial balance paid off by December 31, 2009. We also have approximately $373,474 in collection litigation against us, for which we will require capital in the near term. Our obligations to the Internal Revenue Service total approximately $583,721, including employment taxes through September 30, 2009, which includes interest and penalties.

We expect that sale of our inventory bikes will provide us working capital of approximately $200,000; however, we will need to raise additional capital to meet the above obligations. There is no assurance that we will be able raise additional required capital to meet obligations arising from the settlements with Andretti IV LLC and Crossroads Financial, as well as planned settlement in litigation matters and with the Internal Revenue Service. If we are unable to meet one or more of these obligations, we could be forced to file under the Federal Bankruptcy Code for protection from creditors.

Critical Accounting Policies

The Securities and Exchange Commission recently issued "Financial Reporting Release No. 60 Cautionary Advice Regarding Disclosure About Critical Accounting Policies" ("FRR 60"), suggesting companies provide additional disclosures, discussion and commentary on those accounting policies considered most critical to its business and financial reporting requirements. FRR 60 considers an accounting policy to be critical if it is important to the Company's financial condition and results of operations, and requires significant judgment and estimates on the part of management in the application of the policy. For a summary of the Company's significant accounting policies, including the critical accounting policies discussed below, please refer to the accompanying notes to the financial statements.

The Company assesses potential impairment of its long-lived assets, which include its property and equipment and its identifiable intangibles such as deferred charges under the guidance of SFAS 144 "Accounting for the Impairment or Disposal of Long-Lived Assets". The Company must continually determine if a permanent impairment of its long-lived assets has occurred and write down the assets to their fair values and charge current operations for the measured impairment.

CRITICAL ACCOUNTING ISSUES

The Company's discussion and analysis of its financial condition and results of operations are based upon the Company's financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of the financial statements, requires the Company to make estimates and judgments that effect the reported amount of assets, liabilities, and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to intangible assets, income taxes and contingencies and litigation. The Company bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

NEW FINANCIAL ACCOUNTING STANDARDS

During the second quarter of 2009, the Company implemented additional interim disclosures about fair value of financial instruments, as required by FASB ASC Paragraph 825-10-65-1. Prior to implementation, disclosures about fair values of financial instruments were only required to be disclosed annually. As the required modifications only related to additional disclosures of fair values of financial instruments in interim financial statements, the adoption did not affect the Company’s financial position or results of operations.

Beginning in the second quarter of 2009, the Company must disclose the date through which subsequent events have been evaluated, in accordance with the requirements in FASB ASC Paragraph 855-10-50-1. With regards to the condensed consolidated financial statements and notes to those financial statements contained in this Form 10-Q, the Company has evaluated all subsequent events through November 18, 2009 (the date the Company’s financial statement are issued).

During the third quarter of 2009, the Company adopted the FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles in accordance with FASB ASC Topic 105, “Generally Accepted Accounting Principles” (the “Codification”). The Codification has become the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. Effective with the Company’s adoption on July 1, 2009, the Codification has superseded all prior non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification has become non-authoritative. As the adoption of the Codification only affected how specific references to GAAP literature have been disclosed in the notes to the Company’s condensed consolidated financial statements, it did not result in any impact on the Company’s results of operations, financial condition or cash flows.

Updates to the FASB Codification Applicable to the Company

The FASB has published FASB Accounting Standards Update No. 2009-12, Fair Value Measurements and Disclosures (Topic 820)—Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). This Update amends Subtopic 820-10, Fair Value Measurements and Disclosures—Overall, to permit a reporting entity to measure the fair value of certain investments on the basis of the net asset value per share of the investment (or its equivalent). This Update also requires new disclosures, by major category of investments, about the attributes of investments included within the scope of this amendment to the Codification. The guidance in this Update

is effective for interim and annual periods ending after December 15, 2009. The Company does not expect the adoption of this standard to have an impact on the Company’s results of operations, financial condition or cash flows.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are primarily exposed to foreign currency risk, interest rate risk and credit risk.

Foreign Currency Risk - We import products from China into the United States and market our products in North America. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or, if we initiate our planned international operations, weak economic conditions in foreign markets. Because our revenues are currently denominated in U.S. dollars, a strengthening of the dollar could make our products less competitive in foreign markets that we plan to enter. If the Chinese Yuan strengthened against the dollar, our cost of imported products could increase and make us less competitive. We have not hedged foreign currency exposures related to transactions denominated in currencies other than U.S. dollars. We do not engage in financial transactions for trading or speculative purposes.

Interest Rate Risk - Interest rate risk refers to fluctuations in the value of a security resulting from changes in the general level of interest rates. Investments that are classified as cash and cash equivalents have original maturities of three months or less. Our interest income is sensitive to changes in the general level of U.S. interest rates. We do not have significant short-term investments, and due to the short-term nature of our investments, we believe that there is not a material risk exposure.

Credit Risk - Our accounts receivables are subject, in the normal course of business, to collection risks. We regularly assess these risks and have established policies and business practices to protect against the adverse effects of collection risks. As a result we do not anticipate any material losses in this area.

ITEM 4T.

CONTROLS AND PROCEDURES.

The Company's Chief Executive Officer and its Chief Financial Officer are primarily responsible for the accuracy of the financial information that is presented in this quarterly Report. These officers have as of the close of the period covered by this Quarterly Report, evaluated the Company's disclosure controls and procedures (as defined in Rules 13a-4c and 15d-14c promulgated under the Securities Exchange Act of 1934) and determined that such controls and procedures were effective in ensuring that material information relating to the Company was made known to them during the period covered by this Quarterly Report. In their evaluation, no changes were made to the Company's internal controls in this period that have materially affected, or are reasonably likely materially to affect, the Company’s internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

The Company is a party to the following lawsuits.

USA MotorToys v. Power Sports Factory, Inc. On November 9, 2009 we received a notice of entry of judgment against Power Sports Factory in the fourth judicial district Court of Utah for $22,085. The Company intends to fight this as Power Sports Factory was never served with a complaint or summons.

ITEM 1A.

RISK FACTORS.

Not applicable.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

The following table sets forth the sales of unregistered securities since the Company’s last report filed under this item.

Date	Title and Amount (1)	Purchaser	Principal Underwriter	Total Offering Price/ Underwriting Discounts
August 14, 2009	300,000 shares of common stock.	Consultant.	NA	$15,000/NA
August 24, 2009	250,000 shares of common stock.	Consultant.	NA	$12,500/NA
August 24, 2009	441,220 shares of common stock.	Private Investor.	NA	$44,122/NA

(1) The issuances to suppliers, lenders, consultants, investors and employees are viewed by the Company as exempt from registration under the Securities Act of 1933, as amended (“Securities Act”), alternatively, as transactions either not involving any public offering, or as exempt under the provisions of Regulation D or Rule 701 promulgated by the SEC under the Securities Act.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.

ITEM 5.

OTHER INFORMATION.

Not applicable.

ITEM 6. EXHIBITS.

31.1		Certification of Chief Executive Officer Pursuant to Section 302 of The Sarbanes Oxley Act of 2002
31.2		Certification of Chief Financial Officer Pursuant to Section 302 of The Sarbanes Oxley Act of 2002.
32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Oxley Act of 2002
32.2		32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Oxley Act of 2002.

SIGNATURES

POWER SPORTS FACTORY, INC. By: /s/ Shawn Landgraf Shawn Landgraf Chief Executive Officer

Date: November 19, 2009

EXHIBIT INDEX

31.1		Certification of Chief Executive Officer Pursuant to Section 302 of The Sarbanes Oxley Act of 2002
31.2		Certification of Chief Financial Officer Pursuant to Section 302 of The Sarbanes Oxley Act of 2002.
32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Oxley Act of 2002
32.2		32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Oxley Act of 2002.

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