UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                       For the quarter ended June 30, 2004

                                       or

                TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

           For the transition period from ____________ to ____________

                        Commission file number 000-28661

                               AUGRID CORPORATION
             (Exact name of registrant as specified in its charter)

                             AUGRID OF NEVADA, INC.
                           (Former name of registrant)

          Nevada                                          34-1878390
------------------------------                     --------------------
(State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                      Identification No.)

                        10777 Westheimer Rd - Suite 1040
                              Houston, Texas 77042
                    (Address of principal executive offices)

                                  (713)532-2000
              (Registrant's telephone number, including area code)

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

      As of June 30, 2004, there were 659,510,898 shares of the Registrant's
Common Stock, 8,317,500 of the Registrant's Class A Preferred Shares and
1,500,000 of the Registrant's Class B Preferred Shares, par value $0.001 issued
and outstanding.




<PAGE>

                               AuGRID CORPORATION
               June 30, 2004 QUARTERLY REPORT ON FORM 10-QSB
                                TABLE OF CONTENTS


                         PART I - FINANCIAL INFORMATION

Item 1.        Financial Statements........................Page 5
Item 2.        Management's Plan of Operation.............Page 20
Item 3.        Controls and Procedures....................Page 23

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings...............................................Page 23
Item 2. Risk Factors/Other Information..................................Page 23
Item 3. Changes in Securities and Use of Proceeds.......................Page 31
Item 4. Defaults Upon Senior Securities.................................Page 31
Item 5. Submission of Matters to a Vote of Security Holders.............Page 32
Item 6. Exhibits and Reports on Form 8-K................................Page 32

References in this report to the "Company", "we", "us", "our" and similar terms
means Augrid Corporation, and its wholly owned subsidiaries.


                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

      The following cautionary statements identify important factors that could
cause our actual results to differ materially from those projected in the
forward-looking statements made in this Quarterly Report on Form 10-QSB. Any
statements about our beliefs, plans, objectives, expectations, assumptions or
future events or performance are not historical facts and may be
forward-looking. These statements are often, but not always, made through the
use of words or phrases such as "will likely", "are expected to", "should", "is
anticipated", "estimated", "intends", "plans", "projection" and "outlook". Any
forward-looking statements are qualified in their entirety by reference to
various factors discussed throughout this Quarterly Report and discussed from
time to time in our filings with the Securities and Exchange Commission. Among
the significant factors that could cause our actual results to differ materially
from those expressed in the forward-looking statements are:

-    the need for additional financing
-    the potential risk of delay in implementing our business plan; and
-    the market for products.

     Because the factors referred to above could cause actual results or
outcomes to differ materially from those expressed in any forward-looking
<PAGE>

statements, persons should not place undue reliance on any of these
forward-looking statements. In addition, any forward-looking statement speaks
only as of the date on which it is made, and we undertake no obligation to
update any forward-looking statement or statements to reflect events or
circumstances after the date on which the statement is made, to reflect the
occurrence of unanticipated events or otherwise. New factors emerge from time to
time, and it is not possible for us to predict which will arise or to assess
with any precision the impact of each factor on our business or the extent to
which any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.

                                      PART I
                              FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

<PAGE>

                            HENRY L. CREEL CO., INC.
                           Certified Public Accountant
                                 (216)491-0800
                                Fax (216)491-0803


To the Board of Directors and Stockholders of
AUGRID CORPORATION


                           ACCOUNTANT'S REVIEW REPORT

We have reviewed the accompanying balance sheet of AuGRID CORPORATION as of June
30, 2004, and the related statement of income, retained earnings and cash flows
for the six months period ended June 30, 2004, in accordance with Statements on
Standards for Accounting and Review Services issued by the American Institute of
Certified Public Accountants. All information included in this financial
statement is the representation of the management of the AuGRID CORPORATION

A review consists principally of inquires of Company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.

As discussed in note 1, the Company has a going concern problem. Without
realization of additional capital and source of revenue, it would be unlikely
for the Company to continue as a going concern.

Based on my reviews, with the exception of the matter described in the above
paragraph, We are not aware of any material modifications that should be made to
the accompanying financial statements in order for them to be in conformity with
generally accepted accounting principles.

Henry L Creel Co., Inc
Cleveland, Ohio

August 10, 2004


                    3587 LEE ROAD SHAKER HEIGHTS, OHIO 44120

<PAGE>

                               AUGRID CORPORATION
                                AND SUBSIDIARIES


                       Interim Consolidated Balance Sheets
                               As of June 30, 2004


                                     ASSETS

CURRENT ASSETS                                   June 30            December 31
--------------                                     2004                 2003
                                                 -------            -----------

    Cash                                    $        403       $     214,758
    Accounts Receivables                         175,765               8,195
    Inventory                                     37,230               5,414
                                            ------------       -------------

         Total Current Assets                    213,398             228,367

PROPERTY AND EQUIPMENT (Note 1)
-------------------------------

    Machinery And Equipment                      204,831             204,831
    Furniture And Fixtures                        42,139              42,139
    Office Equipment                              66,489              66,489
                                            ------------       -------------

         Total Property At Cost                  313,459             313,459

    Less:  Accumulated Depreciation              (88,569)           ( 88,569)
                                            ------------       -------------

    Net Property and Equipment                   224,890             224,890
                                            ------------       -------------


OTHER ASSETS
------------

    Deposits Building Construction                24,141              24,141
                                            ------------       -------------

         Total Other Assets                       24,141              24,141
                                            ------------       -------------


TOTAL ASSETS                                $    462,429       $     462,429
                                            ============       =============



              See review report and notes to financial statements.


<PAGE>

                               AUGRID CORPORATION
                                AND SUBSIDIARIES

                       Interim Consolidated Balance Sheets
                               As of June 30, 2004

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
CURRENT LIABILITIES                                                June 30,         December 31
-------------------                                                  2004              2003
                                                                   --------         -----------
<S>                                                             <C>                <C>
    Accounts Payable                                            $   195,057       $      86,844
    Accounts Payable to Related Parties(Note 3)                           0             227,680
                                                                -----------       -------------
         Total Current Liabilities                                  195,057             314,524

LONG-TERM DEBT

    Notes Payable to Stockholders (Note 7)                        1,615,006           1,176,403
                                                                -----------       -------------
            Long-Term Debt                                        1,615,006           1,176,403
                                                                -----------       -------------
    Total Liabilities                                             1,810,063           1,490,927
                                                                -----------       -------------

STOCKHOLDERS' EQUITY

     Preferred Stock $ 0.001 par value
     40,000,000 shares authorized and 8,317,500
     shares issued and outstanding                                    9,818               8,318

     Common stock- with $0.001 par value
     1,960,000,000 shares
      Authorized; Shares outstanding:
         Dec 31, 2004 - 684,510,898 shares                          684,511             554,510
    Additional paid in capital                                    7,454,919           7,100,695

    Retained Earnings                                            (9,496,882)         (8,677,053)
                                                                -----------       -------------

         Total Stockholders' Equity (Deficit)                    (1,347,634)         (1,013,529)
                                                                -----------       -------------

TOTAL LIABILITIES AND
    STOCKHOLDERS' EQUITY                                       $    462,429       $     477,398
                                                               ============       =============

</TABLE>

              See review report and notes to financial statements.



                                      -6-
<PAGE>

                               AUGRID CORPORATION
                                AND SUBSIDIARIES

                  Interim Consolidated Statements of Operations
                       For the Period Ended June 30, 2004



<TABLE>
<CAPTION>
                                                       Three Months Ended                   Six Months Ended
                                                      2004              2003             2004             2003
                                                      ----              ----             ----             ----
<S>                                             <C>             <C>                <C>             <C>
    Revenue

    Net Sales (Note 1)                             100,139               -0-          254,283               -0-

Cost and Expenses

    Write -Off License
    Agreement (Note 1H)                                 -0-              -0-               -0-              -0-
       Cost of Goods Sold                           97,828               -0-          184,822               -0-

    General and Administrative                    (292,758)      (1,507,618)         (889,290)      (1,678,562)

Income (Loss) Before Depreciation                 (290,447)      (1,507,618)         (819,829)      (1,678,562)

    Amortization                                        -0-              -0-               -0-              -0-

    Depreciation                                       (-0-)            (-0-)             (-0-)            (-0-)
                                                  ---------      -----------        ----------     ------------

Income (Loss) Before Income Taxes                 (290,447)      (1,507,618)         (819,829)      (1,678,562)

Provision for Income Taxes (Note 2)                     -0-              -0-               -0-              -0-
                                                  ---------      -----------        ----------     ------------

       Net Income (Loss)                          $(290,447)    $( 1,507,618)        $(819,829)     $(1,678,562)
                                                 ==========     ============         =========      ===========

    Basic and Diluted                                  (.01)            (.05)             (.01)            (.04)
     Loss Per Share


</TABLE>


              See review report and notes to financial statements.

                                      -7-
<PAGE>

                               AuGRID CORPORATION
                                AND SUBSIDIARIES

             Interim Consolidated Statement of Stockholders' Deficit
                               As of June 30, 2004


<TABLE>
<CAPTION>
                           Shares of       Addit.         Accum            Accum
                                           Common         Common           Paid in        Prior to         After
                                           Stock          Stock            Capital        March 18         March
                                           -----          -----            -------        --------        18 Total
                                                                                                          --------
<S>                        <C>            <C>             <C>              <C>         <C>               <C>
Balance at
 March 8, 1998                                                             (429,352)                       (429,352)

Balance at
December 31, 1998          46,629,414      46,629         1,473,469                       (429,352)       1,520,098
Net Loss                                                                                  (590,366)         500,380

Balance at
December 31, 1999          49,889,348      50,207         1,945,304                     (1,019,718)         975,475
Net Loss                                                                                  (675,719)         300,074

Balance at
December 31, 2000          58,268,469      58,586         3,653,639                     (1,695,437)       2,016,470
Net Loss                                                                                (1,171,377)         845,411

Balance at
December 31, 2001          64,364,720      64,683         3,861,286                     (2,866,814)      1,058,837
Net Loss                                                                                (1,889,445)       (840,280)

Reverse Split
50 to 1  (51,147,907)

Net Loss                                                                                  (678,212)
Balance at
December 31, 2002          13,216,813      13,535         4,517,459                     (5,434,471)        (903,477)

Balance at
December 30, 2003         554,510,898     562,828         7,100,695                     (5,434,471)      (2,229,052)
Net Loss                                                                                (3,252,581)      (1,023,529)
Balance at
December 31, 2003         684,510,898     692,829         7,456,418                     (8,677,052)        (527,805)
Net Loss                                                                                  (819,829)      (1,347,635)

</TABLE>


              See review report and notes to financial statements.

                                      -8-
<PAGE>


                               AUGRID CORPORATION
                                AND SUBSIDIARIES


                      Consolidated Statements of Cash Flows
                               As of June 30, 2004

<TABLE>
<CAPTION>
                                                                                  2004                 2003
CASH FLOWS FROM OPERATING ACTIVITIES                                              ----                 ----

<S>                                                                           <C>                  <C>
      Net Income (Loss)                                                      $(    819,829)       $ (1,678,562)
  Adjustments to reconcile Net Income to
  Net Cash provided by Operating Activities:

      Depreciation                                                                      -0-                 -0-

Changes in Operating Assets and Liabilities Net:

      (Increase) Decrease  In Accounts Receivables                                (167,570)           (500,850)
Increase(Decrease) in Accounts
      Payable Related Parties                                                     (227,680)              6,250
      Increase in Accounts Payables                                                108,213              (1,613)
                                                                              ------------          ----------
      Net Cash (Used) by Operating Activities                                   (1,106,866)         (2,174,775)

CASH FLOWS FROM INVESTING ACTIVITIES

      Increase in Inventory                                                        (31,816)                 -0-
      Increase in Licensing Agreement                                                   -0-                 -0-
Purchase of Property and Equipment                                                      -0-                 -0-
                                                                              ------------          ----------
      Net Cash Used in Investing Activities                                        (31,816)                 -0-

CASH FLOWS FROM FINANCING ACTIVITIES
      Proceeds from Common Stock Issuance                                          485,724           2,114,051
      Proceeds from Notes Payable- to Stockholders                                 438,603              50,000
                                                                              ------------          ----------
      Net Cash Provided by Financing Activities                                    924,327           2,194,051
                                                                              ------------          ----------

Increase (Decrease) in Cash and Cash Equivalents                                  (214,355)             19,276

Cash and Cash Equivalents at Beginning of Year                                     214,758               1,974
                                                                              ------------          ----------

Cash and Cash Equivalents at End of Year                                      $        403         $    21,250
                                                                              ============         ===========
</TABLE>


              See review report and notes to financial statements.


                                      -9-

<PAGE>

                               AuGRID CORPORATION
                                AND SUBSIDIARIES

                          Notes to Financial Statements
                             As of December 31, 2004

Note 1       Organization and Summary of Significant Accounting Policies

             A. Organization
             AuGRID CORPORATION, (a Development Stage Company) whose name was
             changed from Augrid of Nevada, Inc in August 17, 2002 formed under
             the laws of the State of Nevada. It is a development stage company
             whose primary business is a technology development firm
             specializing in Thin Cathode Ray Tube (TCRT) technology.

             B.  Basis of Presentation

             The financial records of the company are maintained on the accrual
             basis of accounting. The accompanying financial statements have
             been prepared on the going concern basis which contemplates the
             realization of assets and the satisfaction of liabilities in the
             normal course of business in accordance with generally accepted
             accounting principles.

             C.  Property and Equipment

             All property and equipment is stated at cost. The Company provides
             for depreciation, using the straight line method, over the
             estimated useful lives of the respective assets, as follows:

                                                                         Years
                                                                         -----
                  Machinery and Equipment       $  204,831                 10
                  Furniture and Fixtures            42,139                 10
                  Office Equipment                  66,489                 10
                                                ----------
                  Total Property & Equipment    $  313,460
                                                ==========

                  Major renewals and improvements of property and equipment are
                  capitalized, while replacements, maintenance and repairs which
                  do not improve or extend the lives of the assets are charged
                  against current operations.

                  When property and equipment is disposed of, any gain or loss
                  is included in current operations.

                  D. Use of Estimates

                  The preparation of financial statements in conformity with
                  general accepted accounting principles require management to
                  make estimate and assumptions that affect the reported amounts
                  of assets and liabilities at the date of the financial
                  statement and the reported amounts of revenue and expenses
                  during the reported period. Actual results could differ from
                  those estimates.


                                      -10-

<PAGE>


                               AuGRID CORPORATION
                                AND SUBSIDIARIES


                          Notes to Financial Statements
                             As of December 31, 2004

Note 1            Organization and Summary of Significant Accounting Policies
                  (Continued)

                  E.  Going Concern

                  The company's financial statements are prepared using the
                  generally accepted accounting principles applicable to a going
                  concern, which contemplates the realization of assets and
                  liquidation of liabilities in the normal course of business.
                  However, the Company has limited source of revenue. Without
                  realization of additional capital, it would be unlikely for
                  the Company to continue as a going concern. The financial
                  statements do not include any adjustments relating to the
                  recoverability and classification of recorded assets or the
                  amount and classification of liabilities which might be
                  necessary should the company continue as a concern. The
                  Company's continuation as a going concern is dependent upon
                  its ability to generate sufficient cash flows to meet its
                  obligations on a timely basis, to obtain additional financing
                  as may be required, and ultimately to attain successful
                  operations. Management's has begun producing sales in late
                  2003.

                  F. Research and Development Expense

                  The company's policy relating to research and development and
                  patent development cost are expensed when incurred except R&D
                  machinery, equipment, and facilities which have alternative
                  future uses either in R&D activities or otherwise. Machinery,
                  equipment and facilities, which have alternate future uses
                  should be capitalized. All expenditures in conjunction with an
                  R&D project, including personnel cost, materials, equipment,
                  facilities, and intangibles, for which the company has no
                  alternative future use beyond the specific project for which
                  the items were purchased, are expensed.

                  G. Revenue Recognition

                  The company has limited amounts of Revenue.

                  H. Impairment of Long-Lived Assets & Long -Lived Assets to Be
                  Disposed Of

                  Statement of Financial Accounting Standards No. 121,
                  "Impairment of Long-Lived Assets" (SFAS 121), requires the
                  Company to review for possible impairment, assets to be held
                  for use and assets held for disposal, whenever events or
                  changes in circumstances indicate that the carrying amount may
                  not be recoverable, and in such event, to record an impairment
                  loss. The Company adopted SFAS 121 in 1998 and evaluated the
                  recoverability of long lived assets at its properties. Initial
                  adoption of SFAS 121 in 1998 did not have a material impact on
                  the Company's financial condition or results of operations.


                                      -11-
<PAGE>


                               AuGRID CORPORATION
                                AND SUBSIDIARIES

                          Notes to Financial Statements
                             As of December 31, 2004

Note 1            Organization andSummary of Significant Accounting Policies
                  ( Continued )

                  H .Impairment of Long-Lived Assets & Long -Lived Assets to Be
                  Disposed Of (Cont)

                  Up to 2000, the company recorded a charges of $1,822,907 from
                  continuing operations relating to an impairment loss on other
                  assets. Approximately $1,450,000 was due to a current
                  Licensing Agreement while $373,383 was due to a prior
                  Licensing Agreement. The company's revenue, which was
                  anticipated from future agreements of this type, had not been
                  realized as anticipated, therefore resulting in and impairment
                  loss on intangible assets.

                  I. Principals of Consolidation

                  Summit Media LLC
                  Effective October 31, 2002, the company acquired 51% of Summit
                  Media, LLC It will be used as a distribution chain for it
                  products . The acquisition was accounted under the purchase
                  method of accounting. As part of the agreement Augrid
                  Corporation will not be obligated to pay any additional
                  amounts in 2003 or 2004 based on the agreement. Due to
                  management approval Summit Media LLC is no longer in
                  existence.

                  Alysium Corporation
                  Effective August 15, 2003 the company acquired 100% ownership
                  of Alysium Corporation. The acquisition was aquired under the
                  purchase method of accounting. All significant intercompany
                  accounts and transactions have been eliminated. Subsidiary
                  losses in excess of the unrelated investors' interest are
                  charged against the company interest. Changes in the Companys
                  proportionate share of the subsidiary equity resulting from
                  the additional equity transaction in the consolidation with no
                  gain recognition due to the development stage of the
                  subsidiaries and uncertainty regarding the Companys ability to
                  continue as a going concern.

                  J.  Net Income Per Common Share
                  Basic net income per share includes no dilution and is
                  computed by dividing income available to common stockholders
                  by the weighted average number of common shares outstanding
                  for the period. Diluted net income per share reflects the
                  potential dilution of securities that could share in the
                  earnings of an entity.



                                      -12-
<PAGE>

                               AuGRID CORPORATION
                                AND SUBSIDIARIES

                          Notes to Financial Statements
                             As of December 31, 2003

Note 2            Licensing Agreement

                  The company has an agreement with Ceravision Limited.
                  Ceravision has developed and is developing certain technology
                  relating to ceramic-based field emission flat screen displays
                  and hold certain patent applications and other intellectual
                  property rights in relation to such technology and in relation
                  to manufacturing processes and equipment to produce and sell
                  such displays and components for incorporation into such
                  displays. The cost incurred in relation to this licensing
                  agreement is capitalized. The cost is amortized over a period
                  of 5 years.

Note 3            Accounts Payable to Related Parties

                  The company enter into consulting agreements with
                  Stockholders, the company has violated its agreements by being
                  delinquent in its payment to these Stockholders. At December
                  30, 2003 the company owed these related parties (Stockholders)
                  the following amounts $100,680, and $127,000 totaling
                  $227,680.These amounts relates to unpaid consulting fees and
                  cash advance to company made by stockholders not repaid. All
                  amounts due on demand with no interest. As of June 30 these
                  amounts have been forgiven.

Note 4            Income Taxes

                  There was no provision for Federal Income tax during 2004 or
                  2003 because of an unexpired net operating loss carry forward.

                  Year Ended                   Amount      Available to Year
                  -----------------            ------      -----------------
                  December 31, 1998         1,019,718                   2013
                  December 31, 1999           675,719                   2014
                  December 31, 2000         1,171,377                   2015
                  December 31, 2001         1,889,445                   2016
                  December 31, 2002           678,212                   2017
                  December 30, 2003         3,252,581                   2018
                  June 30, 2004               819,829                   2019

                  The Company has a net operating loss carry forward of
                  $9,496,882 which expires, if unused, in the years 2013 to
                  2019. The following is a reconciliation of the income tax
                  benefit computed at the federal statutory rate with the
                  provision for income taxes for the period ended 2003 and 2004.

<TABLE>
<CAPTION>
                                                                                  2004                 2003
                                                                                  ----                 ----
                  <S>                                                          <C>                <C>
                  Income tax benefit at the statutory rate (34%)               819,829            3,252,581
                  Change in valuation allowance
                  State tax, net of federal benefit
                  Non included items
                  Provision for income taxes                                         0                    0
                                                                               -------            ---------
</TABLE>


                                      -13-
<PAGE>


                               AuGRID CORPORATION
                                AND SUBSIDIARIES

                          Notes to Financial Statements
                             As of December 31, 2004

Note 5            Capitalization

                  On March 1, 1998, Augrid Corporation`s current controlling
                  stockholders purchased controlling interest in Ironwood
                  Ventures via the purchase of approximately 4,616,111 shares of
                  Common Stock of Ironwood Ventures' in private transactions;
                  this represented approximately 62.2 percent (62.2%) of
                  Ironwood Ventures' issued and outstanding Common Stock.

                  On March 2, 1998, Ironwood Ventures' executed a forward stock
                  split of its stock, 6.06571228 to 1. In addition, Ironwood
                  Ventures' increased its authorized shares to 90,000,000 common
                  shares, par value $0.001, 10,000,000 preferred shares, par
                  value $0.001, and changed its name to AuGRID of Nevada, Inc

                  On March 12, 1998, Ironwood Ventures' - now called AuGRID of
                  Nevada, Inc - executed an asset purchase agreement purchasing
                  substantially all of the assets of Augrid Corporation, a
                  Delaware corporation hereinafter referred to as "Augrid of
                  Delaware", a company under common control by the control
                  stockholders of the Ironwood Ventures', for 1,000,000 newly
                  issued shares of the Ironwood Ventures'. This was not a third
                  party, arms length transaction, and due to the development
                  stage and specialized nature of the assets\technology that
                  Ironwood


                  Ventures' purchased, the Company's management is unable to
                  determine how this transaction would compare to a similar arms
                  length transaction. The shares of common stock were spun off
                  to Augrid of Delaware shareholders on a pro-rate basis on
                  March 13, 1998.

                  On August 17, 2002 at the Company's annual shareholders
                  meeting the company changed its name to AuGRID Corporation and
                  initiated a 50 to 1 reverse split which decreased the amount
                  of shares outstanding to 13,216,813 outstanding at March 31,
                  2003.


                                      -14-
<PAGE>

                               AuGRID CORPORATION
                                AND SUBSIDIARIES


                          Notes to Financial Statements
                             As of December 31, 2004

Note 6            Net Loss Per Share

                  The Company follows the provisions of Statement of Financial
                  Accounting Standards No. 128, earnings per share (SFAS 128)
                  The following table presents the calculation.

                      Net Loss                                     $  819,829
                  Basic:
                      Weighted average share of
                      Common stock outstanding                    684,510,898
                                                                 ------------
                      Basic net loss per share                             (.01)
                  Pro forma :
                      Shares used above                           684,510,898
                      Pro forma adjusted to reflect
                      Weighted affect of assumed
                      Conversion of preferred stock                 8,317,500
                                                                 ------------
                      Shares used in computing pro forma
                         Basic net loss per share                 692,828,398
                                                                 ------------
                      Pro forma basic net loss per share                   (.01)

Note 7            Notes Payable to Stockholders

                  Notes payable to stockholders represents demand notes that
                  matured on 01/28/01 with interest at 12%. The matured notes
                  were converted into 18 Month Demand notes at 10% interest
                  totaling $ 1,615,006.

                  Notes Payable to Stockholders- Long Term       $    1,615,006

Note 8            Reclassification

                  Certain balances have been reclassified in the 2001 and from
                  inception to March 31, 2003 consolidated financial statements
                  to conform to the 2004 presentation.

Note 9            Commitments

                  Employment Agreements - The Company has entered into
                  employment agreements that extend to December 31, 2008 with
                  three officers. The employment agreements set forth annual
                  compensation to its officers of between $225,000 and $175,000
                  each. Compensation is adjusted annually based on the cost of
                  living index plus seven percent per annum base increase; plus
                  an eight and one-half percent bonus of net pretax income
                  exclusive of the 401(k)/profit-sharing contribution.


                                      -15-
<PAGE>

ITEM 2. MANAGEMENT'S PLAN OF OPERATION

      The following discussion and analysis should be read in conjunction with
the Financial Statements and Notes thereto appearing elsewhere in this Quarterly
Report. Certain statements in this Quarterly Report, which are not statements of
historical fact, are forward-looking statements. See "Special Note Regarding
Forward-Looking Information" on Page 2.


Overview

         AuGRID Corporation operates within three business segments:

            o     designing, marketing and distributing consumer electronics,
                  principally in plasma televisions;
            o     development and marketing of nanotechnology-based products,
                  including thermocouples and armor plating;
            o     development and marketing of security-based systems utilizing
                  Radio Frequency Identification (RFID)-technology

      Through our wholly-owned subsidiary, OptiPure LLC, a Nevada limited
liability corporation, we design, market and distribute high-end consumer
electronics. We formed OptiPure in July 2003 to establish distribution channels
for innovative electronic devices as well as our future Field Emission Display
(FED) technology. Our goal is to become a provider in the high-end consumer
electronics arena by fulfilling a need in the marketplace. We believe that
through an array of highly original and technologically advanced product lines,
OptiPure's electronic devices address the niche market often ignored or
over-looked by other manufacturers and distribution companies, high-end consumer
electronics, specialty motor-coach and the marine industry. OptiPure is a
limited distributed product line manufactured by third party suppliers in
Taiwan, Hong Kong and Korea according to AuGRID's strict specifications, and is
intended that it will be sold only through selected authorized dealers and
distributors.

      Alysium Corporation, also a wholly-owned subsidiary of AuGRID, is a
manufacturing concern specializing in the fields of thermalcouple advancement,
nanotechnology and armor plating. Alysium is a diversified manufacturer and
distributor. Currently, Alysium is manufacturing and delivering next generation
thermocouples, distributing specialty sensors, drives and motors while
continuing the advancement and testing of its armor plating.

      Our executive offices are located at 10777 Westheimer Rd. - Suite 1040,
Houston, Texas 77042, and our telephone number is (713) 532.2000. We also lease
and maintain an 8,000-square foot manufacturing facility with a state of the art
ISO Clean Room at 3636 Dime Circle, Austin, Texas 78744 for our wholly owned
subsidiary, Alysium Corporation.


Liquidity and Capital Resources.

      We have experienced cash flow shortages due to operating losses primarily
attributable to research, development, marketing and other costs associated with


                                      -16-
<PAGE>

our strategic plan as an international developer and supplier of Plasma
Televisions and Thermocouples as well as a distributor of specialty motors and
drives. Cash flows from operations have not been sufficient to meet our
obligations. Therefore, we have had to raise funds through several financing
transactions. At least until we reach breakeven volume in sales and develop
and/or acquire the capability to manufacture and sell our products profitably,
we will need to continue to rely on cash from external financing sources. Augrid
is seeking new investment capital to fund research and development and create
new market opportunities. In order to fund our growth in the market, we will
need additional capital to further these development programs and augment our
intellectual properties.

In late December 2003, we entered into a Standby Equity Distribution Agreement
with Cornell Capital Partners, LP. Pursuant to the Standby Equity Distribution
Agreement, we may, at our discretion, periodically issue and sell shares of our
common stock for a total purchase price of $10 million. If we request advances
under the Standby Equity Distribution Agreement, Cornell Capital Partners will
purchase shares of common stock of AuGRID for 97% of the lowest closing bid
price on the Over-the-Counter Bulletin Board or other principal market on which
our common stock is traded for the 5 days immediately following the advance
notice date. Cornell Capital Partners will retain 5% of each advance under the
Standby Equity Distribution Agreement. We may not request advances in excess of
a total of $10 million. The aggregate dollar amount of all Puts in any
thirty-day calendar period is Three Hundred Thousand Dollars ($300,000) and
specifically a maximum of Seventy Five Thousand ($75,000) per Put. This
agreement was solidified under the guidance of the law firm of Kirkpatrick and
Lockhart, LLP.
In January, 2004 and again in April, 2004, we issued a Secured Convertible
Debenture to Cornell Capital Partners in the principal amount of $150,000 each.
The convertible debenture is convertible into shares of our common stock as a
price per share that is equal to the lesser of: (i) an amount equal to 100% of
the closing bid price of our common stock as of the date of the convertible
debenture or (ii) an amount equal to 80% of the average of the lowest
daily-volume-weighted average price of our common stock for the five trading
days immediately preceding the conversion date. The convertible debenture
accrues interest at a rate of 5% per year and is convertible at the holder's
option. The convertible debenture may be paid in cash or converted into shares
of our common stock unless converted earlier by the holder. Except after an
event of default, as set forth in the Secured Convertible Debenture the holder
cannot convert such debenture for a number of shares of common stock of AuGRID
in excess of that number of shares which, upon giving effect to such conversion,
would cause the aggregate number of shares of common stock beneficially held by
such holder and its affiliated to exceed 9.997% of the outstanding shares of
common stock of AuGRID.

In the absence of outside financing, we believe that we have sufficient cash to
operate for approximately one (1) month. The Company should benefit in fiscal
2004 from expense reductions through the reduction in the number of employees
and other expenses undertaken in fiscal 2003. However, the Company's current
sources of funds are not sufficient to provide the working capital for material
growth, and it would be required to obtain additional debt or equity financing
to support such growth.


                                      -17-
<PAGE>

Throughout 2004, management reassessed its current resource allocations and
overhead costs. Management implemented several cost reduction programs including
personnel reductions, work-week modifications and other cost restraint endeavors
to achieve these goals. Personnel levels have again been reduced. In early
December 2003, management discontinued its modified compensation plan for
full-time salaried employees as well as work-week reductions for other
employees. Because of the workforce reductions and other cost containment
policies, the Company continues to realize a reduction in monthly cash outlays
via these cost reductions without impact to our current operations.

Our operations during the period ended June 30, 2004 were financed by
development contracts and product sales, as well as from working capital
reserves. During the period ended June 30, 2004, our operations required
$819,829 more in cash than was generated. We have minimized research and
development spending and increased sales, marketing and administrative expenses
necessary for expansion to meet customer demand. Accounts receivable increased
by $167,570from $8,195 from the balance at December 31, 2003. Augrid Corporation
will began several new development contacts in the third quarter, as noted
throughout this Form 10-QSB, which we anticipate will increase receivables in
future quarters. Fixed assets increased by $0 from $313,459 on December 31, 2003
balances.

       Other assets remained constant at $24,141 during 2nd Quarter 2004.

Current Liabilities decreased by $119,467 to $195,057 during the period ending
June 30, 2004. Long term notes were increased by $438,603 to $1,615,006 during
2nd Quarter 2004

      We have no material commitments for capital expenditures. We do not
believe that we have sufficient liquidity to meet all of our cash requirements
for the next twelve months, however, through cost reductions and increased
marketing efforts together with additional proceeds from debentures and note
agreements we believe we will offset a portion of our cash flow shortfall. A key
element of our strategy is to evaluate opportunities to expand through
acquisition of companies engaged in similar and related complementary
businesses. Any additional acquisitions may require additional capital, although
there can be no assurances that any acquisitions will be completed. Also, we
believe that additional funding will be necessary to expand our market share.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
the appropriate application of certain accounting policies, many of which
require estimates and assumptions about future events and their effect on
amounts reported in the financial statements and related notes. Since future
events and their effect cannot be determined with certainty, the actual results
will inevitably differ from the estimates. Such differences could be material to
the financial statements.

                                      -18-
<PAGE>

ITEM 3.  CONTROLS AND PROCEDURES

As of the end of the period covered by this report, our Company conducted an
evaluation, under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer, of our disclosure controls and
procedures (as defined in Rules 13a-15(e) of the Exchange Act). Based on this
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our company's disclosure controls and procedures are effective to ensure
that information required to be disclosed by us in reports that we file or
submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms.

      There was no change in our internal controls which are included within
disclosure controls and procedures during our most recently completed fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, our internal controls.

                                     PART II
                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      In October 2003, the Company engaged the services of Baker & Hostetler,
LLP to initiate legal proceedings and investigate the viability of the Company's
Global Exclusive Licensing Agreement with Ceravision Limited, UK. To date, the
process continues to be in the discovery phase. A complaint was filed by Francis
J. Iaconis in November 2003 against AuGrid Corporation of Nevada and Muhammad J.
Shaheed in the United States District Court, Northern District of Ohio, Eastern
Division, Case No. 1:03CV2372. Previously, a default was entered against the
company and Mr. Shaheed. The company and Mr. Shaheed moved to set aside the
default entry based on improper service, improper party and lack of
jurisdiction. Mr. Iaconis responded to the motion, to which the company and Mr.
Shaheed filed a reply. After consideration of the pleadings, the Court ordered
Mr. Iaconis to show why the Court should exercise jurisdiction over the matter.
Accordingly, the Court ordered Mr. Iaconis to file such amended complaint no
later than June 28, 2004. Mr. Iaconis filed his Amended Complaint on June 28,
2004. The company and Mr. Shaheed filed their answer on July 19, 2004, denying
all material allegations of the merits of Mr. Iaconis' Amended Complaint,
including, but not limited to, lack of jurisdiction. On August 4, 2004, the
Court vacated the entry of default. The matter is pending before the Court.
There are no other material pending legal proceedings to which AuGRID
Corporation or its subsidiaries are a party to or of which any of their property
is the subject.

ITEM 2. RISK FACTORS AND OTHER INFORMATION

Factors that May Affect Future Results and Market Price of Our Stock


                                      -19-
<PAGE>

      We face a number of substantial risks. Our business, financial condition
or results of operations could be harmed by any of these risks. The trading
price of our common stock could decline due to any of these risks, and they
should be considered in connection with the other information contained in this
Quarterly Report on Form 10-QSB.

Factors Concerning Our Business

      We have incurred losses since our inception. We incurred net losses of
$290,447 and $1,507,618 for the 2nd quarters ended June 30, 2004 and 2003. As of
June 30, 2004, we had an accumulated deficit of approximately $9,496,882. We
expect to incur significant operating expenses over the next several years in
connection with the continued development and expansion of our business. Our
expenses include product development and marketing expenses relating to products
that will not be introduced and will not generate revenue until later periods,
if at all. We expect we will continue to experience losses and negative cash
flow, some of which could be significant. Results of operations will depend upon
numerous factors, some of which are beyond our control, including market
acceptance of our products, new product introductions and competition.

      Our limited operating history and the rapidly evolving nature of our
industry make it difficult to forecast our future results.

      Prior to 2003, our operations consisted primarily of research and
development efforts. As a result of our limited operating history, our
historical financial and operating information is of limited value in predicting
our future operating results. In addition, any evaluation of our business and
prospects must be made in light of the risks and difficulties encountered by
companies offering products or services in new and rapidly evolving markets. The
markets for digital display devices, thermocouples, armor plating and security
oriented software are rapidly evolving, and it is difficult to forecast the
future growth rate, if any, or size of the market for our products. We may not
accurately forecast customer behavior and recognize or respond to emerging
trends, changing preferences or competitive factors facing us, and, therefore,
we may fail to make accurate financial forecasts. Our current and future expense
levels are based largely on our investment plans and estimates of future
revenue. As a result, we may be unable to adjust our spending in a timely manner
to compensate for any unexpected revenue shortfall, which would harm our
operating results.

      Our business may be substantially hurt if we are unable to meet our future
capital requirements.

      Our business strategy requires substantial capital to market and promote
our product lines. We plan to implement our aggressive sales and marketing plan,
provide for adequate working capital to meet the projected demand for our
products and repay debt over the next twelve months. To do this, we will require
approximately $15 million to meet our goals and advance our technologies, all of
which we anticipate will come from offerings of our securities through several
instruments.

         Any inability or delay in raising capital is likely to leave us with
insufficient cash to meet the requirements of our aggressive budget and impede


                                      -20-
<PAGE>

our ability to pursue our business plan. In addition, development opportunities
and other contingencies may arise, which could require additional capital. Any
inability to obtain required future financing would likely have a materially
adverse effect on our business and could require that we significantly reduce or
suspend our operations, seek a merger partner or sell some or substantially all
of our assets. We presently have no arrangements or understandings with any
prospective merger partner or prospective purchaser of our assets.

      If we issue additional stock to raise capital, your percentage ownership
in us would be reduced. Additional financing may not be available when needed on
terms acceptable to us or at all. If we raise funds through debt financing, we
will have to pay interest and may be subject to restrictive covenants. If we
cannot raise necessary additional capital on acceptable terms, we may not be
able to develop or enhance our products, take advantage of future opportunities
or respond to competitive pressures or unanticipated industry changes.

      We depend substantially on our relationships with a small number of OEMs,
and our failure to maintain or expand these relationships would reduce our
revenue and gross profit or otherwise harm our business.

      Specific to Alysium Corporation, we anticipate that we will derive a
substantial portion of our revenue from the sale of our products to the small
number of OEM customers we currently serve. While in the long term a substantial
portion of our revenue is projected to be from the thermocouple and defense
market, we expect that our current OEM customers will continue to account for a
consistent flow of revenue and a small portion of our gross profit for the
foreseeable future. Our specialty motors and drives distribution has been
consistent and is need of additional financing to meet customer demands and
maintain specific inventory numbers. The loss of any of these customers, or a
material decrease in revenue from these customers, would reduce our gross profit
or otherwise harm our business.

      As a result of our dependency on a small number of OEMs, any problems
those customers experience could harm our operating results. Some of the factors
that affect the business of our OEM customers, all of which are beyond our
control, include: o the competition these customers face and the market
acceptance of their products:

            o     the engineering, marketing and management capabilities of
                  these customers and the technical challenges that they face in
                  developing their products;

            o     the financial and other resources of these customers; and

            o     new governmental regulations or changes in taxes or tariffs
                  applicable to these customers.

The inability of our OEM customers to successfully address any of these risks
could harm our business.


                                      -21-
<PAGE>

      We are dependent on our suppliers, and the inability of these suppliers to
continue to deliver, or the refusal to deliver our products could significantly
harm our business.

      We do not have agreements with any of our third party Asian suppliers
requiring them to continue to manufacture our Optipure Products. In this
competitive market alternative sources are available but may require up to 30
days-to-initiate delivery of our product lines. This delay would adversely
affect our ability to meet promised demand for our products and harm our
business.

      Competition in our industry is intense and is likely to continue to
increase, which could result in price reductions, decreased customer orders,
reduced product margins and loss of market share, any of which could harm our
business.

      Our industry is competitive and we expect competition to intensify in the
future. We have many primary competitors located in the United States and
globally in the display and thermocouple industries. Additional competitors are
likely to enter our industry in the future.

      Many of our current competitors and potential competitors have longer
operating histories and significantly greater financial, technical, sales and
marketing resources and in some cases greater name recognition than we do. As a
result, these competitors are able to devote greater resources to the
development, promotion, sale and support of their products. In addition, our
competitors that have large market capitalizations or cash reserves are in a
better position to acquire other companies in order to gain new technologies or
products that may displace our products. Any of these potential acquisitions
could give our competitors a strategic advantage. In addition, some of our
current competitors and potential competitors have greater brand name
recognition, a more extensive customer base, more developed distribution
channels and broader product offerings than we do. These companies can use their
broader customer base and product offerings, or adopt aggressive pricing
policies, to gain market share. Increased competition in the market may result
in price reductions, decreased customer orders, reduced profit margins and loss
of market share, any of which could harm our business.

      The market for our thermocouples, specialty motors and drives and consumer
electronics is constantly changing. If we do not respond to changes in a timely
manner, the market for our products could decrease.

      The market for our products is characterized by rapidly changing trends
and technological advancements, new and improved product introductions, changes
in customer requirements and evolving industry standards. Our future success
will depend to a substantial extent on our ability to develop, introduce and
support cost-effective new products and technologies on a timely basis, hence
our continued focus on research and development. If we fail to develop and
deploy new cost-effective products and technologies or enhancements of existing
products on a timely basis, or if we experience delays in the development,
introduction or enhancement of our products and technologies, the market for our
products could decrease and our business will suffer.


                                      -22-
<PAGE>

      The development of new, technologically advanced products is a complex and
uncertain process requiring high levels of innovation and highly skilled
engineering and development personnel, as well as the accurate anticipation of
technological and market trends. We may not be able to identify, develop,
manufacture, market or support new or enhanced products on a timely basis, if at
all. Furthermore, our new products may never gain market acceptance, and we may
not be able to respond effectively to product announcements by competitors,
technological changes or emerging industry standards. Our failure to respond to
product announcements, technological changes or changes in industry standards
would likely prevent our products from gaining market acceptance and harm our
business.

      If we do not successfully establish strong brand identity in the markets
we are currently serving, we may be unable to achieve widespread acceptance of
our products.

      We believe that establishing and strengthening both of our subsidiaries'
products is critical to achieving widespread acceptance of our future products
and to establishing key strategic relationships. The importance of brand
recognition will increase as current and potential competitors enter the market
with competing products. Our ability to promote and position our brand depends
largely on the success of our marketing efforts and our ability to provide high
quality products and customer support. These activities are expensive and we may
not generate a corresponding increase in customers or revenue to justify these
costs. If we fail to establish and maintain our brand, or if our brand value is
damaged or diluted, we may be unable to attract new customers and compete
effectively.

      We rely on patents, trademarks, trade secrets and confidentiality
agreements to protect our proprietary rights, which afford only limited
protection.

      Our success depends upon our ability to protect our proprietary rights. We
rely on a combination of patent, trademark and trade secret laws, as well as
confidentiality and non-disclosure agreements with our employees, customers,
suppliers and others to establish and protect our proprietary rights. The
protection of patentable inventions is important to our future opportunities. It
is possible that:

      o     our pending patent applications may not result in the issuance of
            patents;

      o     we may not apply for or obtain effective patent protection in every
            country in which we do business;

      o     our patents may not be broad enough to protect our proprietary
            rights;

      o     any issued patent could be successfully challenged by one or more
            third parties, which could result in our loss of the right to
            prevent others from using the inventions claimed in those patents;
            and

      o     current and future competitors may independently develop similar
            technology, duplicate our products or design new products in a way
            that circumvents our patents.


                                      -23-
<PAGE>

      Existing trademark and trade secret laws and confidentiality agreements
afford only limited protection. In addition, the laws of some foreign countries
do not protect our proprietary rights to the same extent as do the laws of the
United States, and policing the unauthorized use of our products is difficult.
Any failure to adequately protect our proprietary rights could result in our
competitors offering similar products, potentially resulting in the loss of some
of our competitive advantage and a decrease in our revenue. Infringement claims
and lawsuits would likely be expensive to resolve and would require management's
time and resources and, therefore, could harm our business.

      Our success depends on retaining our key personnel, including M.J.
Shaheed, our President and Chief Executive Officer, the loss of whom could
disrupt our operations or otherwise harm our business.

      Our success depends on the continued contributions of our senior
management, particularly M.J. Shaheed, our President and Chief Executive
Officer, and other key engineering, sales and marketing and operations
personnel. Competition for employees in our industry can be intense. We have
employment agreements with three executives, but do not have key man life
insurance policies covering any of our executives. In addition, all of the
capital stock and options held by the members of our management are vested.
There can be no assurance that we will retain our key employees or be able to
hire replacements. Our loss of any key employee or an inability to replace lost
key employees and add new key employees as we grow could disrupt our operations
or otherwise harm our business.

      Our international sales will likely account for a significant amount of
our revenue in the future, which may expose us to political, regulatory,
economic, foreign exchange and operational risks.

      Because we intend to sell our products worldwide, our business is subject
to risks associated with doing business internationally. Significant management
attention and financial resources are needed to develop our international sales,
support and distribution channels and manufacturing. Our future results could be
harmed by a variety of factors related to international operations, including:

      o     foreign currency exchange rate fluctuations;
      o     seasonal fluctuations in sales;
      o     changes in a specific country's or region's political or economic
            condition, particularly in emerging markets;
      o     unusual or burdensome foreign laws or regulatory requirements or
            unexpected changes to those laws or requirements;
      o     trade protection measures and import or export licensing
            requirements,
      o     potentially adverse tax consequences;
      o     longer accounts receivable collection cycles and difficulties in
            collecting accounts receivables;
      o     difficulty in managing widespread sales, development and
            manufacturing operations; and
      o     less effective protection of intellectual property.


                                      -24-
<PAGE>

      In the future, some or all of our international revenue and expenses may
be denominated in foreign currencies. Accordingly, we could experience the risks
of fluctuating currencies and may choose to engage in currency hedging
activities. In addition, if we conduct sales in local currencies, we may engage
in hedging activities, which may not be successful and could expose us to
additional risks.

      Our business may continue to be affected by our substantial debt and
restrictions under debt covenants.

      We have a significant amount of debt. Our debt service obligations could
have material adverse consequences to our security holders. As of June 30, 2004,
we are in default of several outstanding loans and services and have
approximately $1.8 million of debt, including various accounts receivables and
approximately $ 1.6 million of secured debt owed to various parties including
but not limited to; Blakemore, Meeker and Bowler, Brouse McDowell, LLP, James
Coco, Just the Two of US, GATO Corp, Tom Paige and William Scala.

      The level of our indebtedness could have important consequences to us and
our stockholders including, but not limited to, the following:

      o     our ability to obtain additional financing in the future may be
            impaired;
      o     a significant portion of our cash flow from operations must be
            dedicated to the payment of principal and interest on our
            indebtedness, thereby reducing the funds available to us for our
            operations;
      o     we may be substantially more leveraged than certain of our
            competitors, which may place us at a competitive disadvantage; and o
            our substantial debt may limit our flexibility to adjust to changing
            market conditions, reduce our ability to withstand competitive
            pressures and make us more vulnerable to a downturn in general
            economic conditions or our business.

      Our ability to make scheduled payments and comply with our debt covenants
or to refinance our debt obligations will depend upon our future financial and
operating performance, which will be affected by prevailing economic conditions
and financial, business and other factors which are beyond our control. Cash
flow from operations and other capital resources may not be sufficient for
payment of our debt in the future. In the absence of such operating results and
resources, we could face substantial liquidity problems and might be required to
dispose of material assets or operations to meet our debt service and other
obligations.

      If we are unable to pay our debt, we may be required to take actions such
as reducing or delaying planned expansion and capital expenditures, selling
assets, restructuring or refinancing our indebtedness or seeking additional
equity capital. We cannot predict whether any of these actions could be affected
on satisfactory terms, if at all.

      We have implemented anti-takeover provisions that could discourage a third
party from acquiring us and consequently decrease the market value of your
investment.


                                      -25-
<PAGE>

      Our Certificate of Incorporation and bylaws contain provisions that may
have the effect of delaying or preventing a change of control or changes in
management that a stockholder might consider favorable. Our Certificate of
Inception and bylaws, provide for a classified board of directors, allow our
board to designate "blank check" preferred stock, and limit who may call special
meetings of stockholders. These provisions may delay or impede a merger, tender
offer or proxy contest involving us. Any delay or prevention of a change of
control transaction or changes in management could cause the market price of our
common stock to decline.

      Future sales of common stock or senior securities could adversely affect
our common stock price and dilute your interest.

      We may issue additional capital stock in future financing. If a trading
market for our common stock were to develop, sales of substantial amounts of
such shares of common stock or the availability of substantial amounts of such
shares for sale could adversely affect prevailing market prices for our common
stock.

      In addition, we could issue other series or classes of preferred stock
having rights, preferences and powers senior to those of our common stock,
including the right to receive dividends and preferences upon liquidation,
dissolution or winding-up in excess of, or prior to, the rights of the holders
of our common stock. This could reduce or eliminate the amounts that would
otherwise have been available to pay dividends on the common stock.

      Because our executive officers' and directors' liabilities are limited,
your rights against them in a civil lawsuit may be limited.

      We will indemnify any executive officer, director or former executive
officer or director, and may indemnify any other officer or employee, to the
full extent permitted by Nevada law. This could include indemnification for
liabilities under securities laws enacted for stockholder protection, though the
SEC thinks this indemnification is against public policy.

      M.J. Shaheed, our President and Chief Executive Officer, owns a
significant portion of our outstanding common and preferred stock and his
interests may be different from, and conflict with, your own.

      The interests of our management could conflict with the interests of our
other stockholders. M.J. Shaheed, our President and Chief Executive Officer,
beneficially owns a percentage of our outstanding common stock and 71% of our
preferred stock convertible at a rate of 25 to 1 to common shares and 50% of our
preferred stock convertible at a rate of 200 to 1 common shares. Accordingly,
Mr. Shaheed has the power to influence the election of our directors and the
approval of actions for which the approval of our stockholders is required.

      We do not expect to pay dividends.

      We do not anticipate paying cash dividends in the foreseeable future. We
presently intend to reinvest our cash back into the company rather than paying
dividends to our common stockholders. As a result, your ability to realize any


                                      -26-
<PAGE>

return on your investment in our common stock will likely result only from your
sale of some or all of your shares.

      The issuance of additional shares of common stock, including shares
issuable upon conversion of the outstanding notes and preferred stock and the
exercise of outstanding options and warrants, will dilute the interests of our
stockholders.

      As of June 25, 2004, we had 659,510,898 shares of our common stock
outstanding. Our board has the ability, without further stockholder approval, to
issue up to approximately 1,310,489,102 million additional shares of common
stock. Such issuance may result in a reduction of the book value or market price
of our outstanding common shares. Issuance of additional common stock will
reduce the proportionate ownership and voting power of the then existing
stockholders. Thus, the percentage of shares owned by all existing stockholders
will be reduced proportionately as options and warrants are exercised and
convertible notes are converted.

      Our board of directors, without seeking stockholder approval, may
designate and issue up to 21,682,500 shares of preferred stock Class A and up to
8,500,000 shares of preferred stock Class B, and the sale of such shares may
adversely impact the market price of shares of common stock.

      Our Certificate of Incorporation allows our board of directors to issue at
any time without further stockholder approval up to 40,000,000 shares of
combined preferred stock, classes A & B. Such shares may be issued and sold upon
such terms and conditions as our board of directors may determine, including the
amount of consideration for which the shares may be issued and sold in one or
more series, and such voting rights, designations, preferences and other rights,
qualifications, limitations and restrictions as our board of directors may
determine and as registered in a certificate of designation filed with The
Secretary of State, State of Nevada.

      We have designated 30,000,000 shares of Series A Preferred Stock, the
rights, privileges and preferences of which are described under "Description of
Securities - Preferred Stock - Series A Preferred Stock and Series B Preferred
Stock". There are currently issued and outstanding 8,317,500 shares of Series A
Preferred Stock, convertible at a rate of 25:1 into the Company's common stock.
We may issue up to an additional 21,682,500 shares of Series A Preferred Stock
in the future. There are currently issued and outstanding 1,500,000 shares of
Series B Preferred Stock, convertible at a rate of 200:1 into Company's common
stock. We may issue up to an additional 8,500,000 shares of Series B Preferred
Stock in the future.

      Sales of a substantial number of shares of preferred stock, or the fact
that our board of directors may determine the rights, privileges and preferences
of one or more classes or series of preferred stock, may discourage a future
acquisition of our company, including an acquisition in which you might
otherwise receive a premium for your shares. As a result, stockholders who might
desire to participate in such a transaction may not have the opportunity to do
so.


                                      -27-
<PAGE>

ITEM 3.   CHANGES IN SECURITIES AND USE OF PROCEEDS

During the second quarter of 2004, with a recommendation of the board of
directors, a Certificate of Designation was filed with The Secretary of State,
State of Nevada, determining and specifying the rights of a Series B preferred
stock. The Series A preferred stock was divided and all rights and privileges
were outlined in the filed document; including but not limited to the ability
for all shareholders of common and preferred stock to receive notification and
vote, together, as one class. The Company prepared and on July 20, 2004, filed
with the SEC, an information statement with no requirement of vote to the
shareholders, making notification of an authorization by majority shareholders
of an increase in the number of shares of common stock to 2,000,000,000 shares.
The paperwork was filed and accepted by the State of Nevada in June 2004.


ITEM 4. DEFAULTS UPON SENIOR SECURITIES


      Currently there are several convertible debentures that have matured.
There is currently approximately $ 1.6 million of secured debt owed to various
parties including but not limited to; Blakemore, Meeker and Bowler, Brouse
McDowell, LLP, James Coco, Just the Two of US, GATO Corp, Tom Paige and William
Scala.

ITEM 5. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of shareholders during the fourth quarter of
our fiscal year ended June 30, 2004, however, a 14C Information Statement with
no requirement of vote to the shareholders, making notification of an
authorization by majority shareholders of an increase in the number of shares of
common stock to 2,000,000,000 shares was prepared and filed on July 20, 2004.
The paperwork was filed and accepted by the State of Nevada in June 2004.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

                  31.1  Certification of Chief Executive Officer Pursuant to
                        Section 302
                  31.2  Certification of Chief Financial Officer Pursuant to
                        Section 302
                  32.1  Certification of Chief Executive Officer Pursuant to 18
                        U.S.C. Section 1350 as Adopted Pursuant to Section 906
                        of Sarbanes-Oxley Act of 2002
                  32.2  Certification of Chief Financial Officer Pursuant to 18
                        U.S.C. Section 1350 as Adopted Pursuant to Section 906
                        of Sarbanes-Oxley Act of 2002
                  33.1  Certificate of Designation filed with The Secretary of
                        State, The State of Nevada


                                      -28-
<PAGE>

                                   SIGNATURES

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

                                              AuGRID Corporation


                                              /s/ M.J. Shaheed
                                              ---------------------------------
                                              By:  M.J. Shaheed
                                                   President,  Chief Executive
                                                   Officer and Chairman of the
                                                   Board (principal executive
                                                   officer)


Date:  August 12, 2004

      In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE                    TITLE                                                 DATE
<S>                          <C>                                                   <S>
/s/ M.J. Shaheed             President, CEO and Chairman of the Board              August 12, 2004
----------------------------
M.J. Shaheed                 (principal executive officer)

/s/ Stan Chapman             Chief Financial Officer and Director                  August 12, 2004
----------------------------
Stan Chapman                 (principal financial and accounting officer)

/s/MaryF. Sloat-Horoszko     Secretary and Director                                August 12, 2004
----------------------------
Mary F. Sloat-Horoszko

/s/ Essa Mashni              Director                                              August 12, 2004
----------------------------
Essa Mashni
</TABLE>



                                      -29-