8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

Form 8-K/A

(Amendment No. 2)

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) July 22, 2005

CMKM DIAMONDS, INC.

(Exact name of registrant as specified in its charter)

Nevada	000-26919	90-0070390
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

4760 South Pecos Road, Suite 211 Las Vegas, Nevada	89121
(Address of Principal Executive Offices)	(Zip Code)

Registrant's telephone number, including area code: (702) 966-6328

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

EXPLANATORY NOTE: This Amendment No. 1 to Form 8-K is being filed to amend the Form 8-K filed on July 29, 2005 in order to attach a letter from Beckstead and Watts, LLP as an exhibit and to address certain disagreements between the Registrant and Beckstead and Watts, LLP.

Item 4.01 Changes in Registrant's Certifying Accountant

(a)        On July 22, 2005, the Registrant terminated the engagement of Beckstead and Watts, LLP (“Beckstead"), as the Registrant's independent accountants.

Beckstead did not perform an audit of the Registrant's financial statements nor perform any significant audit related functions from the time they were engaged (July 11, 2005) through the date of the termination of their engagement (July 22, 2005). However, Beckstead continued to charge the Registrant for services performed following their termination (from July 22, 2005 through July 29, 2005). Total fees billed for the 114 hours of services performed by Brad Beckstead, audit partner at Beckstead, over the 11 day period prior to their termination and the 7 day period following their termination was $51,300, which did not include $6,750 in legal fees incurred by Beckstead. The foregoing does not include a non-refundable due diligence fee of $25,000 previously paid to Beckstead before their engagement.

This is a change in accountants recommended by the Registrant's Executive Management and approved by the Registrant's Board of Directors. The Registrant is seeking a new independent accountant.

At the time Beckstead was dismissed by the Registrant; there were no disagreements between the Registrant and Beckstead on any matter of accounting principles or practices, or financial statement disclosure, or audit scope or procedure. However, the Registrant had received a draft letter from Beckstead outlining items having to do with Beckstead's ongoing audit procedures.

The Registrant attempted to meet with Beckstead to discuss its ongoing audit needs and the items mentioned in the draft letter, but Beckstead refused to meet with the Registrant. The Registrant's securities counsel issued a letter to Beckstead addressing all items raised by Beckstead's draft letter, a copy of which is attached hereto as Exhibit 99.1.

After business hours on July 28, 2005, Beckstead issued the Registrant a letter, attached hereto as Exhibit 99.2, outlining certain items Beckstead believed to be possible illegal acts. The items raised in this letter are essentially the same items raised in Beckstead's draft letter, which were fully addressed in the Exhibit 99.1 letter from Stoecklein Law Group.

Despite the contention of Beckstead, the firm never made an attempt to meet with management of the Registrant or Robert A. Maheu, acting as the Registrant's audit committee, to address the specific issues raised in either of its letters.

Beckstead refers to four possible items in need of addressing in this Current Report:

1. The possible improper personal use of corporate assets by Mr. Urban Casavant, the Registrant's sole officer and co-chairman of the board. Beckstead, based upon information provided by the Registrant, questioned whether the expenditure of approximately $4 Million, designated as “promotion and advertising" expenses, to sponsor the CMKXtreme racing team “truly advanced the best interest of CMKM". In addition, Beckstead questions whether the expenditure was a related party transaction, because of Mr. Casavant's ownership position in CMKXtreme, Inc., that may not have been presented to or approved by the Board of Directors of CMKM.

In the Registrant's opinion, it was outside the scope of Beckstead's engagement, as the Registrant's independent public accountant, to determine what “truly advanced the best interest of CMKM", especially given Beckstead's lack of professional expertise in the promotion and advertising industry. Additionally, it is unclear to the Registrant what authority Beckstead has as an independent accountant to make judgments upon business decisions without jeopardizing its independence. Numerous private and public companies spend millions of dollars to sponsor racing and other professional sports teams. Further, at the time of the expenditures Mr. Casavant was acting in the capacity as the sole officer and director of the Registrant. It is unclear how Beckstead could question whether Mr. Casavant presented to the board or whether the board approved the expenditures, when Mr. Casavant was the sole acting board member.

2. The possible loans to officers and directors of the Registrant in violation of Section 402 of the Sarbanes-Oxley Act of 2002.

The Registrant filed a Form 15 on July 22, 2003, which the Registrant believed suspended its reporting obligations under the 34 Act. On February 17, 2005, the Registrant filed an amended Form 15, thereby reinstating its reporting obligations under the 34 Act. Assuming the Registrant's reporting status was suspended immediately upon filing the original Form 15 on July 22, 2003, loans made to officers and directors, if any, from July 22, 2003 through the reinstatement of the Registrant's reporting obligations under the 34 Act could not be in violation of the Sarbanes-Oxley Act of 2002, as the Registrant would not have been subject to the provisions of Sarbanes-Oxley. On several occasions, both before and after Beckstead's engagement, the Registrant discussed with Beckstead, and Beckstead was fully aware of the Registrant's willingness to address any possible reporting deficiencies and, the disclosure obligations related to those deficiencies, if any, that would be made once final determinations were made.

3. The Registrant's books and records are in Beckstead's opinion, at this point and time, unauditable because they are incomplete, and the records that exist have been improperly maintained. The unavailability of corporate records appears to be a violation of the 1934 Act.

Since the Registrant's initial meetings with Beckstead in June prior to their engagement and throughout Beckstead's due diligence period, the Registrant was entirely upfront and honest in disclosing to Beckstead not all documents required to commence an audit were in the possession of current management and the Registrant was using its best efforts to obtain records

from prior management. The Registrant's board of directors was forthcoming in stating it was currently unable to provide enough information to Beckstead for the purpose of performing general audit procedures. This information was fully disclosed to Beckstead prior to their choosing to accept an additional $75,000 and engage as the Registrant's auditor.

4. The completion and possible failure to disclose related party transactions between; the Registrant and US Canadian Minerals, Inc., the Registrant and its officers and directors, including Urban Casavant, and potential stockholders of the Registrant.

The Registrant, as discussed above, believed it did not have to file periodic reports from July 22, 2003 through February 17, 2005, therefore Beckstead's point over the disclosure of related party transactions is unfounded. It has always been the Registrant's intentions to fully and completely disclose all related party and other relevant transactions as part of its audited financial statements when they are completed, as was discussed with Beckstead on several occasions. Further, Urban Casavant, as the acting sole officer and director of the Registrant, had full authority to enter into transactions on behalf of the Registrant.

Beckstead's letter further advised the Registrant that the actions it identified may have a material adverse impact on the Registrant's financial statements for at least the following reasons, although Beckstead was not able to quantify the amounts at the present time:

1. The related party transactions may or may not be recoverable assets on CMKM's balance sheet and, to the extent they are not recoverable, the reserve for recoverability will impact CMKM's statement of operations and other financial statements;

2. The apparent loans to officers and directors may or may not be recoverable assets on CMKM's balance sheet and, to the extent they are not recoverable, the reserve for recoverability will impact CMKM's statement of operations and other financial statements;

3. We do not have sufficient information to determine whether the apparent improper use of corporate assets should be classified as an expense or an asset;

4. The apparent violations of the securities laws described above may result in SEC enforcement action against CMKM which could result in a significant expenditure of corporate assets in defense, and may result in fines, penalties, and damages;

5. The apparent violations may result in civil litigation or criminal enforcement, which may also result in fines, penalties, and damages.

Item 9.01 Exhibits

(c) Exhibit.

Exhibit Number	Exhibit Title of Description
99.1	Letter from Stoecklein Law Group to Beckstead and Watts, LLP dated July 28, 2005.
99.2	Letter from Beckstead and Watts, LLP dated July 28, 2005

SIGNATURES

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

CMKM DIAMONDS, INC.

By:		/s/ Urban Casavant
	Urban Casavant,		President and Chief Executive Officer

Date: August 1, 2005

EX-99

STOECKLEIN LAW GROUP, A PROFESSIONAL CORPORATION

PRACTICE LIMITED TO FEDERAL SECURITIES

Emerald Plaza	Telephone: (619) 595-4882
402 West Broadway	Facsimile: (619) 595-4883
Suite 400	email: djs@slgseclaw.com
San Diego, California 92101	web: www.slgseclaw.com

July 28, 2005

VIA FACSIMILE: 702-362-0540

Brad Beckstead, CPA

Beckstead & Watts, LLP

2425 West Horizon Ridge Parkway

Henderson, Nevada 89052

Re: CMKM DIAMONDS, INC.

Dear Mr. Beckstead:

Our firm acknowledges receipt of your letter dated July 26, 2005 wherein you have refused to return funds belonging to CMKM Diamonds, Inc. ("CMKM”) based upon your apparent misunderstanding of the word termination. Your firm was properly terminated as CMKM's independent accountants effective July 22, 2005, only eleven days following your engagement and receipt of an additional $75,000. Contrary to your belief, you are not entitled to retain funds not earned by your firm after July 22, 2005.

Prior to your termination, at the request of the CMKM Board of Directors, we requested your presence in the offices of Securities Law Institute for a meeting to discuss your concerns and converse about CMKM's ongoing audit needs, to our dismay you denied our request, effectively refusing to provide the services your firm was engaged to perform on behalf of CMKM. The primary purpose of this meeting was to discuss your unfounded and premature "draft” letter dated July 20, 2005. This letter raised serious concerns with CMKM's Board of Directors as to your professional competence and ulterior motives for issuing a "draft” 10A letter outside the scope and procedures mandated by Section 10A of the Securities Exchange Act of 1934, as amended (the "34 Act”).

As CMKM's independent accountant you were required to have "procedures designed to provide reasonable assurance of detecting illegal acts that would have a direct and material effect on the determination of financial statement amounts.”¹ It is unclear what procedures you could have possibly designed to provide reasonable assurance of detecting illegal acts when in your own letter you made references to; CMKM books and records being unauditable because they are incomplete, the banking records [are] inadequate for obtaining competent evidential matter, and

_________________________

1Section 10A(a)(1)

Beckstead-CMKM Letter

July 28, 2005

Page 2 of 5

you were unable to quantify the amounts involved because you had not been provided sufficient information to do so.

Due to the Board's concerns and your apparent unwillingness to perform services for which you were retained or meet with your client, the Board determined it to be in the best interest of CMKM to terminate your engagement as its independent certifying accountant. Your firm's desire to engage outside counsel due to your inability to fully comprehend the depth of the requirements necessary for drafting a 10A letter is outside the scope of your engagement and CMKM should not be made to suffer these costs. Therefore, we are hereby demanding you remit to our firm, on behalf of CMKM, any unbilled portion of your retainer immediately.

On or about June 22, 2005, almost one full month prior to your engagement, CMKM paid your firm a non-refundable due diligence fee of $25,000. CMKM understood your due diligence period to be for the sole purpose of allowing unfettered access to all currently available financial and corporate information pertaining to the activities of CMKM thereby allowing your firm a sound basis for either accepting or declining the audit engagement.

Following the payment of the non-refundable $25,000 fee, CMKM and its associated professionals cooperated with you fully. You were encouraged to engage a geologist of your choice to travel with you to Canada to witness CMKM's ongoing drilling program and meet with CMKM's professionals handling the Canadian operations. In addition, several offers were made to you to take a trip to Ecuador, again with any professionals you deemed necessary, to observe a gold pour at the Yellow River facility where ore from the American Shaft was being processed. Further, during your due diligence period you were made completely aware of the current lack of complete books and records and the ongoing processes CMKM was undertaking to compile the required information necessary for you to design your audit procedures as well as address all areas of concern. You assured CMKM of your willingness to work through the process and allow management adequate time for gathering significant information outside of its current control.

As part of your due diligence procedures, you issued "CMKM Mining, Inc.” a thirteen item list detailing information you deemed crucial to your decision of whether or not to establish an auditor-client relationship. Over the ensuing few weeks, you were provided full access to all of CMKM's currently available corporate and financial records in an attempt to satisfy the requirements on your list. Further, management and CMKM's other professionals worked with you to comply with your requests for items on the list. However, despite everyone's best efforts less than 25% of the items on the list were ever satisfied.

In addition, during your due diligence period you discussed with our office the contents of a call you had with an employee of a regulatory agency, wherein you were told by her it was not in your best interest to engage CMKM as an audit client.

Despite CMKM's inability to provide you with all of the requested items, on July 11, 2005, your firm chose to engage CMKM as an audit client and demanded a retainer of $100,000, of which $75,000 was paid, towards an estimated total audit fee of $350,000. The Board engaged your firm in good faith and fairly presented to you the current status of CMKM's books, records and other documentation prior to your engagement, as was confirmed to you during your due

Beckstead-CMKM Letter

July 28, 2005

Page 3 of 5

diligence period. Nonetheless, after accepting $100,000 and almost a month of due diligence, in just seven business days your firm recklessly rushed to conclusions not previously drawn during your due diligence period regardless of the fact no new information surfaced pertaining to CMKM. Further, all documents available at the time of your termination were also available during your due diligence period.

You have informed us of subsequent calls you had with the government employee following your engagement as CMKM's auditor, after which you informed us of her request to assist in locating individuals that may have been previously associated with CMKM. In a follow-up conversation with our office, you informed us that assisting the government with an investigation "may impair your independence.” Subsequent to these additional calls with the government employee, your demeanor towards CMKM totally changed, as evidenced by your blatant refusal to meet with your client following issuance of your draft letter. It's not apparent the extent of the conversations you had with this government employee, but from your subsequent actions it appears you no longer desired to be CMKM's independent auditor. However, under the terms of your engagement, it is CMKM's opinion you had to create cause in order to terminate the engagement and keep all funds remaining under your retainer.

On July 20, 2005, without any discussion or attempt by your firm to contact CMKM or its management, our firm received a draft letter from your office purportedly addressed to the CMKM Board. However, this draft letter contained numerous and grave errors. Most notably, you knowingly addressed the letter to a non-board member (Mr. Michael Williams), which if delivered may have been a violation of Section 10 of the 34 Act.

CMKM is prepared to respond and clarify your gross misunderstanding as to the items outlined in your premature "draft” letter on a point-by-point basis, understanding CMKM filed a Form 15 on July 22, 2003 thereby suspending its reporting obligations under the 34 Act, until the filing of an amended Form 15 on February 17, 2005:

First, you questioned the economic substance of a transaction between CMKM and US Canadian Minerals ("UCAD”), a company CMKM has business dealings with and with which your firm was previously the independent accountant, whereby Urban Casavant and his family "advanced” UCAD approximately $15 million. You had the opportunity to verbally question Mr. Casavant on this subject and during this process you were informed Mr. Casavant made an investment into UCAD, not advances. Mr. Casavant's personal investments are well outside the scope of CMKM's audit. You were entirely informed of CMKM's intentions to fully disclose any and all related party transactions, when identified, in its financial statements and the notes thereto, when completed. Regardless of Mr. Casavant's forthright cooperation and honest answers to your questions pertaining to his personal investments, you felt it imperative to make unfounded speculations as to the origins of the funds, even though in your own words "it's not apparent how the Casavants obtained the $15 Million”.

Second, you raised an issue as to the relationship between CMKXtreme, Inc. and CMKM and "whether the use of the funds [$4 million for ‘promotion and advertising'] truly advanced the best interest of CMKM.” We are unaware of any expertise your firm has in

Beckstead-CMKM Letter

July 28, 2005

Page 4 of 5

the promotion and advertising industries, however, numerous public companies pay millions of dollars per year to sponsor racing and other professional sports teams. Additionally, it is unclear to us what authority you have as an independent accountant to make judgments upon business decisions made by CMKM management without jeopardizing your independence. CMKM's sponsorship of the CMKXtreme racing team has garnered tremendous publicity and has been greatly appreciated by its stockholders. As the sole officer and director of CMKM at the time of the payments, Mr. Casavant, irregardless of his ownership position in CMKXtreme, had full authority to expend corporate funds to promote and advertise CMKM.

Third, assuming CMKM's reporting status was suspended immediately upon filing the original Form 15 on July 22, 2003, loans made to officers and directors, if any, from July 22, 2003 through February 17, 2005 could not be in violation of the Sarbanes-Oxley Act of 2002, as CMKM would not be considered an Issuer, therefore it would not be subject to the provisions of Sarbanes-Oxley. It was fully understood by you CMKM would address any possible reporting deficiencies and, disclosure obligations related to those deficiencies, if any, would be made once final determinations were made. You openly admit CMKM's books and records are incomplete, which you knew before your engagement, but still felt it relevant to prematurely make unsubstantiated assumptions as to a potential violation.

Fourth, since its initial meetings in June pertaining to the audit of CMKM and throughout your due diligence period, CMKM was entirely upfront and honest in disclosing to your firm not all documents required to commence an audit were in the possession of current management and CMKM was using its best efforts to obtain records from prior management. The Board was forthcoming in stating it was currently unable to provide enough information to your firm for the purpose of performing general audit procedures. Even with this upfront and honest disclosure, you chose to, within only 7 business days, chastise CMKM for the current state of their books and records knowing full well this information was fully disclosed to you prior to you choosing to accept an additional $75,000 and engage as CMKM's auditor.

Lastly, because of CMKM's belief it did not have to file periodic reports from July 22, 2003 through February 17, 2005, your concern over the disclosure of related party transactions is unfounded. Further, Urban Casavant, as the sole officer and director of CMKM, had complete authority to enter into transactions on behalf of CMKM, whether these transactions were with related parties or not. In addition, it has always been CMKM's intentions to fully and completely disclose all related party and other relevant transactions as part of its audited financial statements when they are completed, as was discussed with you on several occasions.

In closing, your actions in holding CMKM's funds hostage and the potential defamatory and baseless statements contained in your "draft” letter are truly disappointing. You were made fully aware of CMKM's current status prior to your engagement, however, you chose to engage them, take an additional $75,000 and then within only days, without any attempt to talk with management or any of the other professionals engaged by CMKM, write a letter which contained

Beckstead-CMKM Letter

July 28, 2005

Page 5 of 5

completely baseless claims. Attempting to create cause was the only way for you to end your engagement with CMKM, which would coincidently entitle you to keep any remaining funds you had on retainer. You have recklessly attempted to create cause by failing to comply with the requirements of 10A, refusing to meet with management and/or the Board and continuing with your incessant desire to force public disclosure of your draft letter. Your actions have forced CMKM to expend significant additional time and resources into responding to these issues, thus diverting precious resources from its major goals of increasing stockholder value and regaining its reporting status.

Regards,

/s/ Stoecklein Law Group

Stoecklein Law Group

cc:	Urban Casavant
	Robert A. Maheu

EX-99

Beckstead and Watts, LLP

Certified Public Accountants

                                2425 W. Horizon Ridge Parkway

Henderson, NV 89052

702.257.1984 tel

702.362.0540 fax

VIA FACSIMILE AND USPS MAIL

July 29, 2005

Securities and Exchange Commission

100 F. Street

Washington, D.C. 20549-7010

Re:    CMKM Diamonds, Inc.

        Commission file no. 000-26919 and 333-53808

Ladies and Gentlemen:

Beckstead and Watts, LLP was previously engaged as principal accountant to audit the consolidated financial statements of CMKM Diamonds, Inc. (the "Registrant") as of and for the years ended 2004 and 2003 and as of and for the three months ended 2002. On July 22, 2005, we were terminated prior to completion of the audits.

We are in receipt of Form 8K - Notice of Change of Auditors dated July 28, 2005 which was filed with the US Securities and Exchange Commission without the opportunity for our firm to review and provide a response letter.

This firm disagrees with the statements in the Form 8-K filed by CMKM Diamonds, Inc. for the reasons stated in the attached letter sent to CMKM Diamonds on July 28, 2005.

Sincerely,

/s/ Beckstead and Watts, LLP

Beckstead and Watts, LLP

Attachment

cc: CMKM Diamonds, Inc.

Beckstead and Watts, LLP

Certified Public Accountants

2425 W. Horizon Ridge Parkway

Henderson, NV 89052

702.257.1984 tel

702.362.0540 fax

VIA FACSIMILE AND USPS MAIL

(Facsimile transmitted to Stoecklein Law Group as representative of the

Board of Directors of CMKM Diamonds, Inc.

Originals mailed via Certified USPS to the address below.)

July 28, 2005

Mr. Urban Casavant

CEO and Director

CMKM Diamonds,

4760 S. Pecos Road, Ste. 211

Las Vegas, NV 89121

Mr. Robert Maheu

Chair of the Audit Committee and Director

CMKM Diamonds, Inc.

4760 S. Pecos Road, Ste. 211

Las Vegas, NV 89121

Gentlemen:

You are, to our knowledge, the directors of CMKM Diamonds, Inc, ("CMKM"), a company whose common stock is registered under the Securities Exchange Act of I934 (the "1934 Act") and is trading on the over-the-counter market (quoted on the pink sheets).   This firm was appointed as auditors for CMKM on July 11, 2005 (announced in a Form 8-K filed by CMKM on July 15. 2005).

We received a letter from your counsel, Donald J. Stoecklein, Esq. of Stoecklein Law Group, dated July 28, 2005. That letter contains a number of misstatements and misunderstandings. It is our intention to resolve those matters in this letter and to provide you notification as required by Section 10A of the Securities Exchange Act of 1934, as amended (the "1934 Act").

First, and among the most important of all, is his statement that CMKM is not an "issuer” as defined by Sarbanes-Oxley and therefore is not subject to the provisions of that act or the SEC reporting requirements following the initial Form 15 filing on July 22, 2003. On February 17, 2005, CMKM filed an amendment to that Form 15 which stated very clearly:

This Amendment No, 1 to Form 15 is being filed to amend the Form 15 initially filed on July 22, 2003 (the "Original Filing"), with the Securities and Exchange Commission In order to revoke the Original Filing. As of the date of the Original Filing Casavant Mining Kimberlite International, Inc. had approximately 698 stockholders of record, thereby making the use of Form 15 inapplicable.

CMKM Diamonds, Inc.

July 28, 2005

Page 2 of 5

The Original Filing is hereby superseded and revoked with respect to the information set forth in this Amendment No. 1. Casavant Mining Kimberlite International, Inc. will be required to submit filings under Section 12g of the Securities Exchange Act of 1934, as amended.

With the original Form 15 inapplicable, it is clear that CMKM was and remained an issuer for the purposes of Sarbanes-Oxley and the filing requirements of the 1934 Act notwithstanding the wrongful filing in 2003 of the Form 15. If Mr. Stoecklein will provide to us an unqualified legal opinion that CMKM was not an "issuer” as defined by Sarbanes-Oxley and was not subject to the reporting requirements of the 1934 Act after July 22, 2003, we will be pleased to review his opinion letter and consider it.

Secondly, we disagree with his understanding of our letter of July 27, 2005 and our engagement letter. We understand the word "termination" and we will account for the funds on deposit once our statutorily required services are completed as stated in our earlier response. Mr. Stoecklein's efforts to imply to the contrary are disingenuous.

As auditors, we are subject to a number of rules and regulations, including Section 10A of the 1934 Act. Under Section 10A(a)(1), in conducting our audit of CMKM, we are obligated to implement "procedures designed to provide reasonable assurance of detecting illegal acts that would have a direct and material effect on the determination of financial statements amounts." Should we detect or otherwise become aware of information indicating that an illegal act has or may have occurred (whether or not perceived to have a material effect on the financial statements of the issuer), we have an obligation to report the information to management and, if management does not take what we consider to be appropriate remedial action, we have an obligation to report the act to the audit committee. See Section 10A(b)(1) and (2) of the 1934 Act and the rules thereunder.

In performing our audit procedures, we have become aware of information relating to possible illegal acts, including (without limitation) the following:

We have received information relating to the possible improper personal use of corporate assets. Information we have uncovered indicates that Mr. Casavant may have caused CMKM to advance approximately $4 Million to the benefit of CMKXtreme, Inc. in the name of "promotion and advertising”. Based on the information provided to us, it caused us to question whether the use of the funds truly advanced the best interest of CMKM. Additionally, it appears that Mr. Casavant owns CMKXtreme, and that this may have been a related party transaction that may not have been presented to or approved by the Board of Directors of CMKM. We fully understand marketing issues raised by Mr. Stoecklein in his letter, but we are unaware how any such transactions benefited CMKM.

We have received information that indicates that CMKM may have made loans to its officers and directors in violation of the requirements of Section 402 of the Sarbanes-Oxley Act of 2002 (codified at §13(k) of the 1934 Act). Our information indicates that Mr. Casavant and others related to CMKM may have advanced themselves undetermined amount of money without adequate explanation or documentation. Mr. Stoecklein makes the argument that, because of the Form 15 that was improperly filed, CMKM was not subject to the requirements of the Sarbanes-Oxley act at the time in question.

 CMKM Diamonds, Inc.

July 28. 2005

Page 3 of 5

It is our understanding that Form 15 was not available to CMKM at the time and therefore was ineffective to relieve CMKM of any obligations. As noted above, we are willing to review an unqualified opinion letter from Mr. Stoecklein on that point.

The CMKM books and records are, at this point and time, unauditable because they are incomplete, and the records that exist have been improperly maintained. The volume of transactions via wire transfer and cashiers checks render the banking records inadequate for obtaining competent evidential matter necessary to render an audit opinion letter, in Mr. Stoecklein's letter, he admits that CMKM was able to provide us less than 25% of the information that we requested at the commencement of the audit "despite everyone's best efforts." The unavailability of corporate records appears to be a violation of the 1934 Act,

including Section 13(a)(2) of the 1934 Act (added in 1977). Mr. Stoecklein raises the disingenuous argument that if the records are unauditable, how can we be aware of any illegal acts. First of all, having records that are not auditable is itself an illegal act under Section 13(a)(2) and other provisions of the 1934 Act. Secondly, the other information set forth herein was obtained from the records that were available.

In addition to completing what appear to be related party transactions without proper authority to do so, it appears that CMKM management may also have failed to disclose related-party transactions as required under the 1934 Act. Among the possible related party transactions which we believe may have been inadequately disclosed are:

• Transactions with US Canadian Minerals, Inc.;

• The personal use of corporate assets discussed above;

• The loans to the officers and directors discussed above; and

• Significant monetary and stock transactions with individuals and entities who appear to be CMKM shareholders and/or prior officers and directors of the Company.

Mr. Stoecklein makes the argument that there was no need to disclose these related party transactions because (as a result of filing a Form 15 improperly in July 2003) CMKM was not subject to the reporting requirements of the 1934 Act and, therefore, not obligated to disclose related party transactions, While this is an interesting argument, that is not our understanding of the situation. Once again, however, we will review an unqualified legal opinion from Mr. Stoecklein to that effect.

We have notified management, including the president and chief executive officer, of our concerns, and we met with CMKM's counsel as management's representative on July 20, 2005 to discuss these matters. We received no information to alleviate our concerns, and in fact obtained further information that enhanced our concerns. In his letter, Mr. Stoecklein makes note of the fact that we were invited to a subsequent meeting at CMKM's offices and chose not to appear. That is correct, but we also asked CMKM to provide us a written response to our concerns. We believed that a written response was appropriate in the circumstances and would have been significantly more

CMKM Diamonds, Inc.

July 28, 2005

Page 4 of 5

valuable than an oral response at a meeting. We believe that Mr. Stoecklein's letter constitutes a written response, and this letter is our response to Mr. Stoecklein's letter.

In accordance with the requirements of Section 10A(b)(A) of the 1934 Act, we hereby advise you that the actions we have identified (including those set forth above) may have a material adverse impact on CMKM's financial statements for at least the following reasons, although we are not able to quantify the amounts at the present time:

1. The related party transactions may or may not be recoverable assets on CMKM's balance sheet and, to the extent they are not recoverable, the  reserve for recoverability will impact CMKM's statement of operations and other financial statements;

2. The apparent loans to officers and directors may or may not be recoverable assets on CMKM's balance sheet and, to the extent they are not recoverable, the reserve for recoverability will impact CMKM's statement of operations and other financial statements;

3. We do not have sufficient information to determine whether the apparent improper use of corporate assets should be classified as an expense or an asset;

4. The apparent violations of the securities laws described above may result in SEC enforcement action against CMKM which could result in a significant expenditure of corporate assets in defense, and may result in fines, penalties, and damages;

5. The apparent violations may result in civil litigation or criminal enforcement, which may also result in fines, penalties, and damages.

We are unable to quantify the amounts involved because we have not been provided sufficient information to do so, and because CMKM's books and records are, in their current state, inadequate and unauditable.

You should consider this letter to be a report under Section 10A(b)(2) of the 1934 Act.

Your receipt of this letter requires that you consider the requirements of Section 10A(b)(3) of the 1934 Act. For your convenience, Section 10A(b)(3) provides as follows:

Notice to commission; response to failure to notify, - An issuer whose board of directors receives a report under paragraph (2) shall inform the Commission by notice not later than 1 business day after the receipt of such report and shall furnish the registered public accounting firm making such report with a copy of the notice furnished to the Commission."

CMKM Diamonds, Inc.

July 28, 2005

Page 5 of 5

Section 10A(b)(3) (b) further states that "If the registered public accounting firm falls to receive a copy of the notice before the expiration of the required 1-business day period, the registered public accounting firm shall;

1. Resign from the engagement; or

2. Furnish to the Commission a copy of its report (or the documentation of any oral report given) not later than one business day following such failure to receive notice."

 We would also point out the requirements of Form 8-K - that CMKM is obligated to file, within four business days of our dismissal, a Form 8-K responding to the Information in item 304 of Regulation SB. We were dismissed on Friday, July 22. The Form 8-K was due to be filed with the SEC not later than 5:00 pm Washington time today - and it has not been filed. Consequently CMKM is delinquent in its reporting obligations and, therefore, appears to have committed further acts in violation of the 1934 Act.

Should CMKM determine to file a Form 8-K, this letter should be attached thereto unless CMKM can provide an acceptable explanation to any of the issues raised and the requested legal opinion on the effect of an improperly filed Form 15. In your response to item 304 of Regulation SB, we point out:

Item 304(a)(1)(iv): We believe that there are disagreements of the sort that need to be mentioned in response to this item, as set forth in the foregoing.

We also point out to you that' Section 10A(b)(3) has a one business day requirement for notification to the Commission. Please let us know if you have any questions regarding the foregoing.

Sincerely,

/s/ Beckstead and Watts, LLP

Beckstead and Watts, LLP

co: Donald J. Stoecklein, Esq.