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 September 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 September 30, 2004, there were 1,212,156,898 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
               September 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
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

                                      -2-
<PAGE>

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

                            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
September 30, 2004, and the related statement of income, retained earnings and
cash flows for the nine months period ended September 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

November 05, 2004

                    3587 LEE ROAD SHAKER HEIGHTS, OHIO 44120


                                      -3-
<PAGE>

                               AUGRID CORPORATION
                                AND SUBSIDIARIES

                       Interim Consolidated Balance Sheets
                            As of September 30, 2004

                                     ASSETS

CURRENT ASSETS                                       September 30    December 31
--------------                                       ---------        ---------
                                                        2004             2003
                                                     ---------        ---------
    Cash                                             $   3,342        $ 214,758
    Accounts Receivables                               175,765            8,195
    Inventory                                           37,230            5,414
                                                     ---------        ---------
         Total Current Assets                          216,337          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                                         $ 465,368        $ 477,398
                                                     =========        =========

              See review report and notes to financial statements.


                                      -4-
<PAGE>

                               AUGRID CORPORATION
                                AND SUBSIDIARIES

                       Interim Consolidated Balance Sheets
                            As of September 30, 2004

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
CURRENT LIABILITIES                                  September 30,   December 31
-------------------                                  -------------   -----------
                                                           2004           2003
                                                     ------------    ------------
<S>                                                  <C>             <C>
    Accounts Payable                                 $    199,057    $     86,844
    Accounts Payable to Related Parties(Note 3)           158,500         227,680
                                                     ------------    ------------
         Total Current Liabilities                        357,557         314,524

LONG-TERM DEBT

    Notes Payable to Stockholders (Note 7)              1,673,006       1,176,403
                                                     ------------    ------------
            Long-Term Debt                              1,673,006       1,176,403
                                                     ------------    ------------
    Total Liabilities                                   2,030,563       1,490,927
                                                     ------------    ------------
STOCKHOLDERS' EQUITY

     Preferred Stock $ 0.001 par value
     40,000,000 shares authorized and 9,817,500
     shares issued and outstanding                          9,818           8,318

     Common stock- with $0.001 par value
     1,960,000,000 shares
      Authorized; Shares outstanding:
         September 30, 2004 - 1,112,083,654 shares      1,112,084         554,510
    Additional paid in capital                          7,329,717       7,100,696

    Retained Earnings                                 (10,016,814)     (8,677,053)
                                                     ------------    ------------

         Total Stockholders' Equity (Deficit)          (1,565,195)     (1,013,529)
                                                     ------------    ------------

TOTAL LIABILITIES AND
    STOCKHOLDERS' EQUITY                             $    465,368    $    477,398
                                                     ============    ============
</TABLE>

              See review report and notes to financial statements.


                                      -5-
<PAGE>

                               AUGRID CORPORATION
                                AND SUBSIDIARIES

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

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

    Net Sales (Note 1)                        -0-        103,893        254,283        103,893

Cost and Expenses

    Write -Off License
    Agreement (Note 1H)                       -0-            -0-            -0-            -0-
     Cost Of Goods Sold                       -0-         25,897        184,822         25,897
General and Administrative                519,932        555,894      1,409,222      1,985,513

Income (Loss) Before Depreciation        (519,932)      (477,898)    (1,339,761)    (1,907,519)

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

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

Income (Loss) Before Income Taxes        (519,932)      (477,898)    (1,339,761)    (1,907,519)

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

       Net Income (Loss)              $  (519,932)   $  (477,898)   $(1,339,761)   $(1,907,519)
                                      ===========    ===========    ===========    ===========

    Basic and Diluted                        (.01)          (.01)          (.01)          (.01)
     Loss Per Share
</TABLE>

              See review report and notes to financial statements.


                                      -6-
<PAGE>

                               AuGRID CORPORATION

                                AND SUBSIDIARIES

             Interim Consolidated Statement of Stockholders' Deficit
                            As of September 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
Sept. 30, 2004                   1,112,083,654         1,112,084         7,329,737                     (8,677,052)         (235,231)
Net Loss                                                                                               (1,339,761)       (1,565,195)
</TABLE>

              See review report and notes to financial statements.


                                      -7-
<PAGE>

                               AUGRID CORPORATION
                                AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows
                            As of September 30, 2004
                                  September 30
                                                       2004               2003
                                                     -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES

      Net Income (Loss)                              $(1,339,761)   $(1,985,515)
  Adjustments to reconcile Net Income to
  Net Cash provided by Operating Activities:

      Depreciation                                           -0-            -0-

Changes in Operating Assets and Liabilities Net:

      Increase in A/R                                   (167,570)
      Increase(Decrease) in Accounts
      Payable Related Parties                            (69,180)         6,250
      Increase in Accounts Payables                      112,213         42,956
                                                     -----------    -----------
      Net Cash (Used) by Operating Activities         (1,464,298)    (1,936,309)

CASH FLOWS FROM INVESTING ACTIVITIES

      Increase in Inventory                              (31,816)
      Increase in Deposits-Building Construction             -0-         (2,800)
      Increase in Licensing Agreement                        -0-            -0-
Purchase of Property and Equipment                                      (60,188)
                                                     -----------    -----------

      Net Cash Used in Investing Activities              (31,816)       (62,988)

CASH FLOWS FROM FINANCING ACTIVITIES
      Proceeds from Common Stock Issuance                788,095      3,134,529
      Proceeds from Notes Payable- to Stockholders       496,603         50,000
                                                     -----------    -----------
      Net Cash Provided by Financing Activities        1,284,698      3,184,529
                                                     -----------    -----------

Increase ( Decrease) in Cash and Cash Equivalents       (211,416)     1,185,231

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

Cash and Cash Equivalents at End of Year             $     3,443    $ 1,187,205
                                                     ===========    ===========

              See review report and notes to financial statements.

                                      -8-
<PAGE>

                               AuGRID CORPORATION
                                AND SUBSIDIARIES

                          Notes to Financial Statements
                            As of September 30, 2004

Note 1      Organization and Summary of Significant Accounting Policies

              A. Organization
             AuGRID CORPORATION, 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.


                                      -9-
<PAGE>

                               AuGRID CORPORATION
                                AND SUBSIDIARIES

                          Notes to Financial Statements
                            As of September 30, 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.

                                      -10-
<PAGE>

                          Notes to Financial Statements

                            As of September 30, 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.

                                      -11-
<PAGE>

                               AuGRID CORPORATION
                                AND SUBSIDIARIES

                          Notes to Financial Statements
                            As of September 30, 2004

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 September
                  30, 2004 the company owed these related parties (Stockholders)
                  $158,500.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                  1,339,761                        2019

                                      -12-
<PAGE>

                  The Company has a net operating loss carryforward of
                  $10,016,814 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.

                                                           2004            2003
                                                           ----            ----
Income tax benefit at the statutory rate (34%)        1,339,761       3,252,581
Change in valuation allowance
State tax, net of federal benefit
Non included items
Provision for income taxes                                    0               0
                                                  =============  ==============

                                      -13-
<PAGE>

                               AuGRID CORPORATION
                                AND SUBSIDIARIES

                          Notes to Financial Statements
                            As of September 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 Companys 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 September 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                                        $     1,339,761
   Basic:
       Weighted average share of
       Common stock outstanding                          1,112,083,654
                                                    ------------------
       Basic net loss per share                                  ( .01 )
   Pro forma :
       Shares used above                                 1,112,083,654
       Pro forma adjusted to reflect
       Weighted affect of assumed
       Conversion of preferred stock                         9,817,500
                                                    ------------------
       Shares used in computing pro forma
          Basic net loss per share                       1,121,901,154
                                                    ------------------
       Pro forma basic net loss per share                        ( .01 )

Note 7            Notes Payable to Stockholders

                                      -15-
<PAGE>

                  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 $ 1,673,006.

                  Notes Payable to Stockholders- Long Term        $    1,673,006

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.

  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, thermocouples and armor plating; o development and marketing of
security-based systems software and 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 in the high-end
consumer electronics' market. OptiPure is a limited distributed product line
sold only through selected authorized dealers and distributors; manufactured by
third party suppliers in Taiwan, Hong Kong and Korea according to AuGRID's
strict specifications.

                                      -16-
<PAGE>

         Alysium Corporation, also a wholly-owned subsidiary of AuGRID, is a
diversified manufacturer and distributor. Currently, distributing specialty
sensors, drives and motors while housing AuGRID's continuing efforts in the
advancement and testing of its armor plating, Nanoparticle applications and
other emerging technologies.

         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
our strategic plan as an international developer and supplier of high-end
consumer electronics. 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 ($300,000and
specifically a maximum of Seventy Five Thousand ($75,000) per Put. This
agreement was solidified and is supported 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 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 during third
quarter 2004. In early December 2003, management discontinued its modified
compensation plan for full-time salaried employees as well as work-week
reductions for other employees. An 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 September 30, 2004 were financed by
development contracts and product sales, as well as from working capital
reserves. During the period ended September 30, 2004, our operations required $
1,339,761 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 $ 167,570 from $ 8,195 from the balance at December 31, 2003. Augrid
Corporation 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 $ 224,890 on December 31,
2003 balances.

       Other assets remained constant at $ 24,141 during 3rd Quarter 2004.

Current Liabilities increased by $ 43,033 to $ 357,557 during the period ending
September 30, 2004. Long term notes were increased by $ 496,603 to $1,673,006
during 3rd Quarter 2004.

     Although we have no material commitments for capital expenditures we are
currently evaluating several options being presented to the company. We do not
believe that we currently have sufficient liquidity to meet all of our cash
requirements for the next twelve-months, however, through cost reductions and
increased effort in marketing and negotiations to bring several deals now
pending to fruition. Additional proceeds from debentures and note agreements we
believe will offset our cash flow shortfall. A key element of our strategy is
the focus on sales and profitability together with and open eye and constant
evaluation of 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. We believe that additional funding will be
necessary to expand our market share.

                                      -18-
<PAGE>

         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.

  ITEM 3.  CONTROLS AND PROCEDURES

Beginning third quarter our Chief Financial Officer assumed the role of
Operations Officer 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/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/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.

         With the exception of our Chief Executive Officer assuming the role of
Operations Officer to evaluate and assess the current and immediate future of
both subsidiaries, our CEO assumed the duties of Chief Financial Officer, there
were no other changes 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. Officers and Directors of the company are further
reviewing contracts signed and executed on behalf on the company.

                                     PART II
                                OTHER INFORMATION

  ITEM 1.  LEGAL PROCEEDINGS

         In November 2003, Francis Iaconis, through legal proceedings, attempted
to acquire service of certified documentation to both AuGRID Corporation and its
CEO and President, M.J. Shaheed. Inadvertently, knowledge of the service was
acquired by an officer of the Company realizing Mr. Iaconis initiated legal
proceedings against a non-existent Company (AuGRID Corporation of Nevada). The
Company's legal counsel, Blakemore, Meeker and Bowler, LLP, has since accepted
service on behalf of the Company, as well as Mr. Shaheed. The firm has filed
against the allegations of defamation of character and non-payment of wages.

                                      -19-
<PAGE>

            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, through the discovery phase both in The United States and
the UK has resulted in the decision to no longer place additional financial
strain on the corporation. In the event of a likely default judgment against
Ceravision, discovery has produced, the probability of the result will mean a
minimal or no restitution awarded to AuGRID due to their current financial
position.

            During the first quarter of 2004, AuGRID responded by affidavit to
the complaint that was filed by Francis J. Iaconis in November 2003 against
AuGrid Corporation of Nevada and Muhammad J. Shaheed. The complaint is pending
before the United States District Court, Northern District of Ohio, Eastern
Division, Case No. 1:03CV2372. The merits of Mr. Iaconis' complaint will be
contested by the company's legal counsel, Blakemore, Meeker & Bowler Co., L.P.A.
It has recently come to the company's attention that service of process upon the
company and Mr. Shaheed was insufficient and is presently in dispute. Further,
Mr. Iaconis' complaint failed to sue the real party. The company and Mr. Shaheed
take the position that they were not properly served. Therefore, as it stands,
the company and Mr. Shaheed have been advised that the proceedings are
procedurally defective. During third quarter 2004, the lawsuit entitled Francis
J. Iaconis v. AuGrid Corporation of Nevada, et al., Case No. 1:03CV2372, between
Francis J. Iaconis, AuGrid Corporation of Nevada and Muhammad J. Shaheed is
pending before the United States District Court, Northern District of Ohio. The
parties are in the discovery phase. AuGrid and Mr. Shaheed are now considering
filing a counterclaim against Mr. Iaconis. It is anticipated that trial will be
held in Summer 2005.

            During third quarter 2004, the Corporation, its officers and
securities counsel were served by Cornell Capital Partners, L.P. with a lawsuit
for breech of contract. The matter is currently being reviewed by by the
company's legal counsel with a response being prepared.

            In June and July 2003, pursuant to two agreements for investment
banking services, the Company granted Dan Rubin options to purchase a total of
280 million shares of the Company's Common Stock at purchase prices ranging from
$0.005 to $0.01 per share. The Company received an aggregate consideration from
the exercise of such options. The issuance was made by the filing of Form S-8
Registration Statement under the Securities Act of 1933. According to a General
Statement of Acquisition of Beneficial Ownership filed with the Securities and
Exchange Commission on November 6, 2003 by Mr. Rubin, he has sold majority or
all of his shares at prices ranging from $0.005 to $0.014, for an aggregate
consideration of approximately $1.9 million. On October 2, 2003, the Securities
and Exchange Commission instituted public administrative and cease-and-desist
proceedings pursuant to Section 8A of the Securities Act of 1933 ("Securities
Act") and Sections 15(b) and 21C of the Securities Exchange Act of 1934
("Exchange Act"), against the Company's former investment banker, Dan Rubin
("Rubin") and his firm, Rubin Investment Group, Inc. ("RIG"), and two companies
unrelated to AuGRID. On October 3, 2003, the Company severed all relationships
with Rubin and RIG. On October 7, 2003, the United States District Court,
Eastern District of New York issued a subpoena to the Company requesting all
documentation in the Company's possession regarding Rubin and RIG. The Company
has complied with such subpoena and has cooperated with all governmental
authorities in this matter.

                                      -20-
<PAGE>

            Most recently, several class action suits have been brought against
Mr. Rubin for various fraudulent activities by the companies he and his
organization victimized. Through corporate counsel AuGRID intends to pursue
legal action against Mr. Rubin and his firm Rubin Investment Group in the same
manner.

           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

         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
$ 519,932 and $ 477,898 for the 3rd quarter ended September 30, 2004 and 2003.
As of September 30, 2004, we had an accumulated deficit of approximately $
10,016,814 million. 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.

                                      -21-
<PAGE>

      Our business may be substantially hurt if we are unable to meet our future
capital requirements. Our business strategy requires substantial capital to
manufacture, 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
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:

                                      -22-
<PAGE>

      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. 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.

                                      -23-
<PAGE>

         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.

         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.

                                      -24-
<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.

                                      -25-
<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 September 30,
2004, we are in default of several outstanding loans and services and have
approximately $1.9 million of debt, including various accounts receivables and
approximately $ 1.3 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.

                                      -26-
<PAGE>

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

         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, Chief Executive Officer and
interim CFO, 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 and has exercised this right in several decisions deemed in the best
interest of the company.

                                      -27-
<PAGE>

         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
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 issued
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 September 30, 2004, we had 1,212,156,898 shares of our common
stock outstanding. As a result of the reverse split executed on October 7, 2004
and a re-issuance of non-dilutive shares the current number of shares
outstanding as of November 1, 2004 32,222,005 shares. Our board has the ability,
without further stockholder approval, to issue up to approximately 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.

                                      -28-
<PAGE>

         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.

ITEM 3.  CHANGES IN SECURITIES/USE OF PROCEEDS/SUBSEQUENT EVENTS

            In a written action without a meeting, the Board of Directors (the
"Board") of AuGRID Corporation (the "Company") unanimously approved and majority
shareholders approved a one-to-one hundred (1:100) split of the Company's
outstanding common stock (a reverse split). The Board deemed the reverse split
to be advisable in order to attract the additional equity funding that the
Company needs to continue operations.

A majority of the Company's stockholders, acting by written consent, has adopted
the reverse split approved by the Board. The effective date of the split was
October 7, 2004. The transfer agent for the Company's common and preferred
stock, Signature Stock Transfer, Inc., will contact each stockholder after the
effective date with instructions regarding the exchange of old shares
certificates for new shares certificates reflecting the split.

As a result of the reverse split, each one hundred (100) shares of the Company's
common stock prior to the split was represented by one (1) new share of the
Company's common stock after the split. Market reaction cannot be predicted with
any degree of certainty, and thus it cannot be known what effect the split will
have on the price per share of the Company's common stock.

The authorized capital stock as well as the Preferred Stock of the Company will
be unaffected by the reverse split and will continue to consist of 1,960,000,000
shares of common stock and 40,000,000 shares of preferred stock, classes A and
B. This should ensure availability to the Company of adequate shares for use in
equity funding and business combinations. However, although the Company is
actively engaged in discussions relating to funding and mergers, there is in
place no definitive agreement with any third party with respect to an investment
in the Company or a merger.

Shares of the Company's common stock trade on the Over-the-Counter Bulletin

Board ("OTCBB") under the symbol "AGRD." On September 10, 2004, the National

Association of Securities Dealers, Inc. and the OTCBB were notified of the

impending reverse stock split and its effective date.

The 2004 Annual Meeting of Stockholders of AuGRID CORPORATION., a Nevada
corporation (the "Company" or "AuGRID"), was held on Friday, October 22, 2004,
at the Marriot Cleveland Key Center, 127 Public Square, Cleveland, Ohio 44114 at
9:00 a.m. EST.

A quorum was present and the following matters were approved (i) the election of
members of AuGRID's Board of Directors, (ii) the ratification of the engagement
of the Company's independent auditors for the year ending December 31, 2005. In
addition, the board approved a gifting program to all shareholders of record
dated July 14, 2002. Each shareholder will be gifted their position as of that,
specified date. Signature Stock Transfer, the company's transfer agent of
record, will assist the company in the blanket issuance late fourth quarter 2004
and early first quarter 2005. Furthermore, the executive officers as well as the
Board of Directors have approved the review of all S8 registrations completed
for consultants during 2004. This review will evaluate the compensation paid for
consulting services rendered, a recall of shares will be issued for
unsatisfactory or lack of services rendered.

                                      -29-
<PAGE>

  ITEM 4.  DEFAULTS UPON SENIOR SECURITIES

      Currently there are several convertible debentures that have matured.
There is currently approximately $ 1.3 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

  Two matters were submitted to a vote of shareholders during the third quarter
  of 2004 at The Annual Shareholders Meeting for AuGRID Corporation. A quorum
  was present and the following matters were approved (i) the election of
  members of AuGRID's Board of Directors, (ii) the ratification of the
  engagement of the Company's independent auditors for the year ending December
  31, 2005.

  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

                                      -30-
<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:  November 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>                                   <C>
/s/ M.J. Shaheed                            President, CEO and Chairman of the Board               November 12, 2004
----------------------------                (principal executive/financial officer)
M.J. Shaheed

/s/ Stan Chapman                            Chief Operations Officer and Director                 November 12, 2004
----------------------------                (principal operations and accounting officer)
Stan Chapman

/s/MaryF. Sloat-Horoszko                    Secretary and Director                                November 12, 2004
---------------------------
Mary F. Sloat-Horoszko
                                                                                                  November 12, 2004
/s/ Essa Mashni                             Director
---------------------------
Essa Mashni
</TABLE>

                                      -31-